The demand for and price of recycled material is down. Low oil prices have made it more cost effective for producers to make new plastic than to use recycled material. And because plastic is so inexpensive to produce, manufacturers are opting to use it instead of paper, which means Americans are recycling less paper and more plastic.
As a result, the material ratio of recyclables is shifting, making them more expensive to process and the bales less profitable to sell. Increased contamination in the recycling stream is adding even more to processing costs.
Over the last four years, Waste Management has not only seen its profits drop, it has actually reported losses during some quarters. The company will have closed 10 percent of its facilities by the end of the year, and another 10 percent are in danger of closing. Other recycling companies are closing up shop altogether.
“This is a crisis for the future of recycling,” David Steiner, CEO of Waste Management, is reported as saying. “Momentum has been up…for the last 20 years, and now it’s stalling.”
The company, however, is not planning to shutter its recycling business completely. Waste Management looking to save its recycling business by auditing waste streams and buckling down on cities that are going over agreed-to contamination rates. The company has launched a comprehensive campaign to educate people on proper recycling practices and is also renegotiating contracts so that it can use recycling revenues to cover processing costs before sharing the earnings with cities.
Some recyclers are criticizing Waste Management’s CEO for using loaded words like “crisis” to describe what they believe are cyclical conditions impacting the industry. Others say Waste Management cannot claim to be a victim of the problems it created with the establishment of the single-stream recycling system.
Steiner, however, says that a sense of urgency is needed to spur the industry-wide changes that are necessary to increase recycling rates and protect recyclers from changes in the commodity markets.
Photo credit: recycling bales via Shutterstock