Christmas Season Recycling

As we near the end of 2009, I think it best to simply say this year was primarily flat in terms of pricing and marketing for scrap paper and plastic. Sure there were some upward trends and certainly some recovery from a year ago, but overall most of the supply and demand is in decent balance.

Various regions of the country saw somewhat different trends. If it was weather in the Southeast shortening the supply of OCC, a slowdown of exporting out of the various ports or the overall doldrums of the economy, there just wasn’t a lot of excitement.

There are mills in the Northeast and some in the Southeast who are a bit concerned over supply and are building inventories. Do the suppliers have the product? We’ll know soon enough after the Christmas season what comes out or not because so much is based on what you and I buy retail and recycle the cartons.

Our company made major strides coming off of a year of re-building after our fire. With extra efforts and working double time, we were able to survive, increase our customer base and yes, increase our overall volumes as a result. We overcame the attrition of not our customers, but their volumes, and are sitting in the best position we have been in years.

All of us at our respective companies wish everyone a healthy and happy holiday season.

The Perfect Storm

Some call the current markets for scrap paper the “perfect storm”. The calm before what could amount to rapidly rising cardboard and other grades early next year. Actually, things have been a little quiet for months. We have gone out of our way to create alternative markets for all of the materials being offered to us, keeping them out of land fills. Alternative markets don’t necessarily follow conventional supply and demand markets, so the opportunity to increase our business and reduce customers hauling and land fill costs are great.

Our sister company, Industrialbags.com is trying to increase their volumes for supplying industrial and commercial plastic bags, lumber wrap and various films. We prefer to work only with domestic suppliers and manufacturers so we have to be quite creative to offset foreign pricing, which always seems a little lower, as is their quality.

Give us the opportunity of working with you on marketing any difficult to market item(s), complete destruction of any materials or supplying most poly bags and wraps.

Rollercoaster Ride

What a roller coaster market we seem to be in. Less than a month after most grades of paper and plastic continued climbing, some have cooled off, while the unexpected ones continue to rise. It is almost impossible to forecast, except to possibly say we continue in a tough economy, there has been some improvements but we have a long way to go.

Markets appear to be in balance between supply and demand, which is a treat if we think back to a year ago and the free fall.

Local efforts to re-build on recycling projects that has taken years to put together and were hurt with last year’s market downturn, are once again in jeopardy, but this time because of a small item called flow control.

In Columbus we have a board of trustees that controls the agency SWACO, our solid waste authority whose revenues come from tipping fees, in other words, dump charges on every ton of garbage, recyclables, etc. that gets into the landfill. Years ago they permitted, through waivers, haulers and recyclers to haul trash out of county for processing, recycling and some land filling. With the economic downturn they claim their revenue has dropped and they may be bankrupt by the end of next year. What do they do, send notices out that the waivers will end by 12/31/09. They want more trash!!

There isn’t one member of the board or in an executive position at SWACO with a solid background in hauling, recycling or operating a private business. They only know how to play the political game saying “we are SWACO, we can do what we want”. Don’t we all wish life was that easy?

September Tital Wave

Just as many of us thought supply and demand were heading back into balance, September rolls in like a tidal wave of demand. Almost all paper grades went up from $5.00 to $20.00 per ton, a significant increase, the higher end grades went up as much as $50.00 per ton.

What is this showing us? With some of the exporting slowing a bit due to customs becoming far more stringent, especially in China, along with balances more in line, our domestic mills are becoming stronger and their demand is increasing. What does this mean? Could it be that the economy is finally making a turn for the better? Keep in mind that waste paper goes into making cartons and other paper products that will be in demand just a few months from now. Therefore, might many mills be seeing their orders increasing based on real demands in the near future?

I would be remiss to not acknowledge that our company, Grossman Environmental Recycling, Inc. just won The Best Recycling Company in Columbus, something each of us are very proud of. We thank Columbus and the readers of C.E.O. Magazine who was responsible for this voted award.

In Like A LION

August came in like a lion with regards to most grades of scrap paper. Fueled in large part by export demands, cardboard/OCC increased by $5.00 to $15.00 per ton in most markets. Many of the domestic paper mills are claiming they are in good shape based on supply and demand; however, several mills in the Southwest are paying premiums to bring in raw materials out of the Midwest.

The gap between exporting of cardboard and domestic consumption is widening. Domestic, Southeast mills are paying approximately $80.00 to $85.00 per ton, while exporting out of that region is approaching $125.00/ton. This same situation was the catalyst for vastly increasing pricing over the last couple of years leading up to the collapse when the exporters pulled back overnight and our general economy was worsening day by day. Let’s think caution this second time around.

Perception.

Perception--- A way of understanding or interpreting something; accurately, or inaccurately might be the facts.

This is what is going on in our industry at the present time. Of course we acknowledge a recession, less recyclables coming out, and just maybe the demand is starting to improve. Is it real? Are economic changes occurring for the better?

The stock market is saying so. Will that last? No one knows for sure, but what we all know, is if we all sit back and just talk about how bad things are, no one is doing anything, the public is not spending, etc., then no, nothing will happen for the better. But, if we are positive, the glass is really half full, we use our talents which have been fine tuned over these past few months, then maybe, just maybe, we can watch things improve, which they should.

Perception!

Central Ohio Landfilling

When central Ohio's landfill near Grove City opened its gates to surrounding counties, officials were sure they could lure more paying customers with a big bargain.

For just a dollar extra per ton, private haulers could avoid trucking trash halfway across the state.

The $36.50 per ton that the outside garbage would generate for the Solid Waste Authority of Central Ohio would plug a $1.5 million hole in this year's $32 million operating budget.

How does $1 per ton generate $1.5 million of profit to plug the hole? If Charging $36.50 per ton on the tonnage they now get loses them $1.5 million then how will $1 per ton more on the 60,000 tons that Mills says needs (see below) get them back even. This math does not work. Someone should dig into this and find out what is going on.

"We sat down individually with each company and explained what we were trying to do," said Ron Mills, SWACO's executive director. He figured haulers would seize the savings.

This shows his total lack of understanding of the market. If they can’t figure this out, how can anyone trust that they are going to come up with another scheme that is better?

But six weeks later, not a single one has taken the offer. So today, SWACO officials told private haulers that they're considering Plan B: Bring us your trash or we'll force you to use our landfill.

SWACO's board told Mills to begin talking with private haulers about imposing flow control, meaning that garbage collected within SWACO's central Ohio area would have to go to its landfill in Jackson Township near Grove City.

Did the Board do this by resolution? Did all Board members agree with this?

Currently, haulers take about 25 percent of central Ohio garbage to their private landfills.

Mills figures he doesn't need all that trash to operate in the black; recapturing just 60,000 of the 350,000 tons that 19 haulers truck off each year would balance SWACO's books.

How is SWACO going to manage who gets to go out and who is subject to the flow control. It is leaving now for only one reason: IT IS CHEAPER. Are they going to pick winners and losers? Make some haulers stay in the county and let others go out?

But that could cost other communities, said Kathy Trent of Waste Management, which owns a landfill near Newark.

"We have about 4,000 customers in Franklin County, and we own and operate a transfer station in Canal Winchester, and what you're talking about could impact their communities, too," Trent said.

Canal Winchester collects fees for hosting the transfer station. Waste Management is the largest garbage exporter in the county, trucking out 169,000 tons in 2008.
Haulers are allowed to do so under waivers granted by SWACO. Those waivers, however, expire Dec. 31, and SWACO could instead require that the local landfill be used.
Bradley N. Frick, chairman of SWACO's board of trustees, said SWACO must notify haulers this fall if it intends to make a change.

This fall is too late. Some communities and private companies are looking at bids and proposals now as they plan next year’s budget. The sheer uncertainty causes prices to be higher.

Until now, the waivers have been a good deal for both sides. Happy haulers don't file lawsuits, and each ton of trash dumped elsewhere preserves the lifespan of SWACO's landfill. SWACO still collects a $5-per-ton generation fee, no matter where the trash is buried.

SWACO also collects the Waiver Fee which goes to pay off the Trash Plant debt no matter where the waste is dumped. So this entire issue has nothing to do with recycling, yard waste, household hazardous waste, education, trash plant debt, Rastra, blah blah blah. It has to do with the COST of running the SWACO landfill. The costs are higher than they were expected; the costs are higher than they need to be; and revenues are down. So their only solution is to force people to pay more. When is anyone going to look at their costs and why they are higher? The board made a strategic decision to take over running the landfill.

But trash receipts have plunged. Dumping is expected to be down by 60,000 tons this year as people buy less and throw away less.

There is another huge reason that the reported has missed and SWACO is not disclosing. Their cost are higher than they predicted. Why are they higher? Because when Waste Management ran the landfill for them, there could be drops if waste receipts of hundreds of thousands of tons and waste management by contract could not charge them more money. SWACO covered their risks by pushing that to the private sector. Now, they have assumed all the risk and it is being balanced on the backs of the waste generators. This did not need to happen and can be fixed by contracting for landfill services by the private sector. It is an option that at least should be explored and more importantly should be drilled into by the reporter. There are other reasons for this dilemma that are not being disclosed. This is a cost issue not only a revenue issue. No one is willing to talk about costs. How do they spend their money on salaries, benefits, perks, etc. They just bought out a bunch of people with early retirement and are hiring the same people or positions back. Doesn’t make sense. Look at costs.

To recoup lost revenue, SWACO's board approved a plan in May to accept trash from outlying counties. Trustees said they'd rather trade landfill life to avoid raising dumping fees, which large customers such as the city of Columbus can't afford.
"All we have to do is not renew the waivers," Mills said.

This is a very arrogant attitude. The last time they did this they got sued big time by MidAMerica Waste and got their funds tied up for years. They should take a more “hat in hand” attitude and work with haulers and be more inclusive to have them help solve problems to get back to a win win including allowing more recycling and waste reduction. This is not good.

SWACO is essentially saying to the community that the number one priority is to send waste to the landfill and reducing reliance on landfills is secondary at best. But, SWACO was created to reduce reliance on landfills. It is right in the Ohio Revised Code. They have a plan that shows that. They are violating everything they were established for.

They are worried about raising tipping fees. In 1994 the tipping was more than doubled and all the communities including Columbus agreed to that because the amount of waste landfilled went down by over 80 percent.

Having cheap landfills is not the only way to save money. Even in the face of increasing tip fees if Columbus, the suburbs and businesses would reduce their waste they can save money. With higher fuel costs, people conserve gas, drive less, buy more fuel efficient automobiles, etc. Then the market drove costs down. Simply keeping costs the same and supplying more waste does not help long-term conservation efforts or costs as we will simply run out of landfill sooner and have higher long term costs. SWACO is supposed to figure this out and lead the way. They are going to the wrong way.

Finally, they are taking a defeatist attitude. They are saying to the community that with the priority of filling the landfill we can only recycle after we have filled the landfill. They have artificially set a cap on how much waste we can recycle because everything must go to the landfill and we can recycle only what is left. This is again wrongheaded.