Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 21, 1993 TAG: 9302200023
SECTION: BUSINESS PAGE: D1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Long
A PROFIT PROBLEM
TALK about recycling and at some point there will be confusion.But much of the misunderstanding that surrounds the issue is related to a pollyanna-ish belief that recycling is profitable.
A few weeks ago, Cycle Systems Inc. stopped accepting No. 2 colored plastic for recycling. That's the plastic used to make detergent bottles, fabric softener and skin lotion.
The company's decision didn't mean that the colored plastic no longer can be reused, however. It means Cycle Systems can't make a profit, or maybe even cover costs, by selling the plastic for reuse.
"The economics of all recycling are generally unfavorable," said EdCallis, who oversees the recycling efforts of the Kroger Co.'s Roanoke-based mid- Atlantic region. Which is why Cycle Systems doesn't want the colored No. 2 plastic anymore.
While evironment-friendly in spirit, the company still is a for-profit business, says Ken Beachum, its materials buyer.
Cycle Systems, a 75-year-old Roanoke-based family company, processes used items, which it then sells to mills that turn the material into new items. The company's income is what it can get for the materials. Whether it pays a business for waste such as paper or glass depends on the waste product's resale value after processing.
Companies like Handy Dump Inc. of Roanoke are another type of operation. The 16-year-old family company makes its money hauling waste, not processing it for resale, although it does process waste from its customers.
Handy Dump will haul and process its customer's waste or haul and dump its customers' waste depending upon the customer's preference. The customer preference sometimes is based on cost.
Even if a company has to pay a recycling company to take its waste, however, it still can be more economical to recycle than to dump the waste in the landfill. For instance, a business might have to pay a recyle company $10 to $30 a ton to take its mixed waste paper, but it would cost $25 a ton to dump. There are hauling costs in either case.
"A lot of what we do is explain that there's not a lot of gold in your garbage," said Dee Dudley, sales manager and a vice president at Handy Dump.
And the prices that recycle companies pay and what those companies get from mills jump up and down with supply and demand.
Waste materials are the pork bellies of affluence.
Like agricultural and mineral commodities commonly traded on the financial markets, used paper, aluminum cans, glass jars, plastics, copper are commodities with fluctuating values.
The bottom line: The more people recycle, the less their trash brings in the marketplace.
For example, in the early 1990s, used cardboard brought more than $80 a ton. Now mills, such as Westvaco that mix recyled material in the manufacture of new paper products, pay around $20 to $40 a ton.
"And you have to pay someone to take newspapers," Dudley said.
The adage that one person's trash is another's gold doesn't always apply.
It's not inconceiveable for a company or even a municipal government to have to spend $300 a ton to recycle a material that is sold for $70 to $100 a ton while that same ton of waste could be dumped in a landfill for $60-$70.
For instance, Kroger Co. gets a small discount on the plastic bags it buys because it supplies the manufacturer with used bags it collects from customers.
Kroger collects 30,000 pounds of recycled plastic bags a month at the 113 stores in its Mid-Atlantic Region. The bags are returned to the manufacturer where they are ground up, processed and used in new bag production. That's what's called closed-loop recycling.
However, the discount comes nowhere near covering the grocer's costs of checking and sorting bags, cleaning out contamination like food or paper, baling the bags and hauling them, said Ed Callis, manager of store operation services for the region.
Recycling doesn't necessarily save money. What recycling does is save space in the landfill.
And what's true for Kroger is true for the other grocery chains' programs and for many other companies' efforts to keep materials out of the landscape.
Ten years ago, when the city of Salem began recycling aluminum cans, the city was selling the cans to a recycling company for 45 cents a pound.
The value of a pound of used cans is now in the 20-cent to 25-cent range, said Jim Fender, Salem's director of solid waste management.
What Salem gets for cans "doesn't even come close to the recovery costs," said Fender.
But profit isn't the motive for Salem. Again, it's keeping materials out of a landfill and meeting state mandates for recycling.
However, there is a dollar and cents connection. Landfills cost money, too. The pricetag for the regional landfill and the transfer station under construction for the Roanoke Valley is $36 million. This expense will drive the new facility's opening dump or tipping fee to $55 to $60 a ton.
The higher dump fees will hit small businesses hard, said Dudley of Handy Dump.
An average convenience store used to paying about $600 a year for dump fees, will be paying $1,500, she said.
\ Waste management experts say consumers and businesses have to keep remembering that it has always cost to manage our throwaways, which we discard at an average of 5 pounds per person per day.
The public hasn't always been so aware of the costs, said Dudley of Handy Dump. Trash collection traditionally has been discussed as a service to citizens not as an expense for them, she said.
Dudley also is spokesperson for the Business Recycling Network, a group of some 40 businesses that meet to exchange ideas on recycling.
Such networks can be an avenue for companies to find new sources for their waste material.
For example, the matchup didn't happen through the network, but The Computer Store in Salem saves the styrofoam "peanuts" from the shipments it gets in and gives them to The Packaging Store to use as packaging for large commercial shipments.
The Packaging Store also accepts the "peanuts" from individuals. The national franchise company is so committed to recycling that it encloses an 800 tollfree number in each of its packages so a recipient can call to find out where the "peanuts" can be recycled in the area the package is received.
Some businesses like Salem Frame Co., and other wood-related industries, use their waste to produce energy for their own manufacturing processes. For instance, Salem Frame heats its furniture-frame factory by burning its waste wood.
Haulers and recycling companies applaud area businesses for their efforts at recycling. Some of the businesses spend a lot of money to recyle, Dudley said.
But for many small businesses, recycling has to be cost efficient. This means that when it costs more to recycle than it does to dump, the decision might be to send the material to a landfill.
That "stopping point," as Dudley calls it, is the price above the total of the landfill cost and the hauler's cost.
For example, the Roanoke area is close to paper mills that take used paper so the cost of hauling is not high and no matter what the mills pay for paper, recycling is a better deal than paying to put the paper in a landfill.
"Business is self-correcting," said Dudley. "The last thing any business want to do is pay a landfill bill."
The inclination of business is to eliminate waste and not have to handle it, she said.
Dudley said wooden pallets used to ship many supplies on often become problems for business, plus they take up a lot of space in landfills.
"I tell companies the answer to that is to tell the company you're buying from not to ship on the pallets," she said.
Businesses can force other businesses to become more conscious. Kroger's Callis, for example, said his company has turned down suppliers of bags that couldn't guarantee the use of at least 5 percent of recycled plastic in the recipe for new bag production.
Sears, Roebuck and Co. is another example.
A year or so ago, the national retailer launched a "reduce, re-use and recycle" program that put pressure on its suppliers to cut down on packaging of merchandise.
The results:
It reduced cardboard packaging in 1992 by 2.8 million pounds or 60 percent from 1990 volume.
By deciding to display lingerie on racks without packaging, Sears persuaded suppliers like Warner's to reduce their use of cartons and paperboard inserts, and as a result Sears cut 455,000 pounds of cardboard out of its waste since 1988.