Government and Sustainability

Global factors shrink Kent recycling revenue

Haulers bringing in household recyclables will have to pay to dump them.

July 3, 2015
| By Pete Daly |
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Over the last 25 years, the Kent County Department of Public Works has taken in and processed more than 300,000 tons of recyclable material — plastic jugs and containers, tin cans and aluminum cat food cans, newspapers and other paper, glass bottles and jars — at no cost to the commercial trash haulers who bring it in along with their customers’ non-recyclable trash.

Due to economic factors beyond Kent County’s control, however, that’s about to change.

Starting Jan. 2, the county will charge haulers $10 a ton to dump household recyclables at the Kent County Recycling Facility on Wealthy Street in southwest Grand Rapids.

Across the country, recycling centers are struggling with critically low commodity values for the recyclable material they recover.

“A three-year trend of lower commodity values, combined with increasing single-stream recycling contamination at the curb, has pushed many self-supporting recycling operations for municipal and private companies alike into the red,” said Dar Baas, director of the Kent County Department of Public Works, which owns and operates the recycling center.

He said over the last three years the commodity values have dropped by half.

Selling prices of scrap plastic, cardboard, paper and metals are down almost across the board — across the nation — for several reasons. One is the low price of petroleum, which is used to produce plastic. Another is the slowing economy in China, which has long been a major customer for recycled commodities. Still another factor is the very strong U.S. dollar in global currency exchange rates, making it more expensive for the rest of the world to buy U.S. products.

According to Kristen Wieland, community relations coordinator at the recycling center, the current price for all but one of the recovered commodities is lower than last year. The one exception is mixed No. 3-7 plastic, which commands an average price of $78.10 a ton, compared to $55.28 in 2014. However, it is a mixture of the lowest grades of plastics for recycling and constitutes the lowest volume of commodities the center produces, with value of $49,558 in 2014 out of a total of $2.7 million for all commodity sales.

Aluminum is $750 a ton; it was $906 in 2014. Random scrap metal is $133; it was $220. Tin cans are worth $151 per ton; last year that was $261. Plastic milk jugs (No. 2) are $597; it was $948. Plastic grocery bags are worth $35; they were $50. No. 8 newsprint is almost $61; it was $64.32. No. 2 HDPE colored plastic is $494; it was $589.

Tipping fees — charged to the hauler when a truck tips its load on the processing floor — are common in the recycling industry, and $10 per ton remains low, according to Kent County. Most recycling trucks carry between one and five tons.

Baas said the new fee does not completely make up the revenue shortfalls, and the DPW will have to provide a backup for operational costs while the county works to increase recycling facility efficiencies and develop a sustainable financial model for the recycling center.

Some trash pickup companies with customers in Kent County already are upset with the county because of its plan to require them to pass on to customers a new surcharge equivalent to about $1.68 per year, per household.

But the new fee for recycling, which is an unrelated issue, may not generate as much criticism.

“I think it reflects the reality that recyclables are a commodity and they increase and decrease in value. Ten dollars a ton is a bargain; I’m surprised that it was free this long, based on what’s going on industry-wide,” said John E. Van Tholen, president of Green Valley Recycling & Disposal Service in Comstock Park.

Van Tholen said he is familiar with other recycling facilities in Michigan and Indiana that are charging haulers $30 or more per ton.

Last month there was a national convention of the waste disposal industry, and the CEO of Waste Management, one of the largest companies in the industry, said recycling is “broken” because of the drop in the scrap commodity prices.

“When you sell the output for less than what your output costs are, you don’t make money,” said David Steiner.

Steve Carr, an executive with Republic Services, said recycled material can cost from $65 to $100 to process, compared to the cost of $20 to $40 for dumping it in a landfill. Some of the recovered materials, particularly glass, actually have no market and are simply given away. That has been the case at the Kent County facility, which found a Chicago company to take away its glass without charging the county a hauling fee. Both sides consider it a fair deal.

Landfills are expensive to develop and maintain, so recycling as a means of reducing material going into landfills has long been a major reason for recycling.

“Residential recycling is critical to Kent County’s integrated solid waste management system and the emerging circular economy,” said Baas.

“We encourage residents to participate in curbside recycling programs offered by our municipal and private waste-hauler partners to provide manufacturing feedstock to the market place, economic value and jobs, while reducing dependency on landfills.”

With the price for recycled materials so low, Chinese buyers are looking more critically at the amount of non-recyclable trash that comes mixed in with the recycled commodity.

Kent County has a “single stream” recycling system, where all recyclables arrive mixed together. But Baas said the county sees a lot of non-recyclable items end up at the recycling plant.

“We need to get that (amount) down. We need to get the message out to everyone. Everyone’s going to have to work at it because it costs us about $100,000” a year to separate the trash from the recyclables.

In 2014, almost 4,500 tons — 14 percent of the nearly 32,000 tons taken in at the county facility — was trash.

Baas said he does not get upset with people making an occasional mistake, “but sometimes people intentionally put trash” in recycle containers.

The typical homeowner generates about 500 pounds of recyclable refuse a year, according to Baas. The average amount of pure trash is roughly estimated at about one ton per household.

When the new Kent County recycling plant opened in 2010, commodity prices were much higher and enabled the county to forego a tipping fee for haulers. Although a fee is now necessary, Baas said the DPW will invite “stakeholders” — haulers, in particular — to help the county develop a revenue-share program when commodity prices go back up. The plan should support operation costs at the plant while paying haulers a dividend “when possible.”

Prices “really tanked” in the last three years, but Baas said commodities are a cyclical market and the prices will one day rebound.

“We try to sell locally,” said Baas, but much recovered material is handled by brokers and ends up far away.

The largest volume of material recovered and sold at the Kent County recycling facility is No. 8 newsprint, according to Wieland. Baas said a new paper mill in Indiana is expected to buy the paper, but the going prices are still determined on a global basis.

Wieland said the No. 3-7 low-grade plastic has a growing market. It includes things like yogurt cups, bulky plastics like buckets and other rigid products.

“Markets for this material are growing, likely because they’re inexpensive to purchase compared with other plastic grades. We have relationships locally with companies like Bata Plastics, who work with the furniture industry to incorporate this material into office furniture, like office chair seats. Low-grade plastics can also be used as an alternative fuel,” said Wieland.

Van Tholen said a tipping fee is just a small part of the cost incurred by haulers who collect recyclable refuse. Other significant costs are the trucks and equipment and employee payroll and benefits. Overall, however, recycling is a much smaller part of the haulers’ business — most of it is trash.

“Like any cost a business has to deal with, when the cost goes up, you certainly have to look at the possibility of passing it along to your customers,” said Van Tholen.

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