A Global Problem in Need of Local Solutions
The U.S. recycling industry has had a rough few years. The industry has seen scandal, mass bankruptcy, and a disruptive level of volatility in the commodity market. All of this turmoil has made recycling more difficult and expensive for the consumer. However, there is reason for optimism that the industry can overcome the current challenges and emerge stronger than ever. Colorado Industrial Recycling has seen opportunity in the current chaos, and we have made some radical changes to our business over the last few years. We hope our response to this crisis can provide an example to other recyclers and help move our industry to a future that is healthier and more sustainable.
Make no mistake about it, the last few years have been tough. For the first time ever, the dark underbelly of recycling has begun to receive mainstream media attention. The industry has been rocked by a series of news stories highlighting the unethical and sometimes illegal practices of several very prominent recyclers. Indeed, there have been several high-profile investigative reports that have brought to light that much of the plastics, clothing, appliances, and electronic waste directed to be recycled is actually being landfilled, or, worse, simply exported and dumped upon impoverished countries in Asia, Latin America, and Africa.
Beyond these scandals, the industry has experienced other difficulties as well. Recycling in today’s marketplace is not as simple and cost effective as it has been in the past. In recent years, several recyclers have gone out of business and many of those that have remained have significantly cut services. Most collection sites in today’s marketplace are much more restrictive about what they will and will not accept. Consumers have also experienced volatility when it comes to service fees and commodity pricing for recycled goods. As a result, it is much more difficult for the average consumer to recycle today than it was just a few years ago.
Most people support recycling as a concept, but, with so much dysfunction in the industry, it is understandable that many consumers are questioning if recycling is still beneficial. What is going on in the industry? How can the industry win back the trust of the consumer?
The good news is that recycling is still viable for most types of materials. When done ethically, recycling is also very beneficial. It is estimated that recycling creates more than 9 times the amount jobs produced by landfilling material. Further, recycling also has a significant impact on climate change. Recycling reduces the need to mine virgin materials. This is very significant, because mining is an extremely carbon intensive industry. Reducing the need for mining translates to significant reductions in greenhouse gas emissions. Clearly, recycling is still an important and worthy endeavor. The current turmoil in the industry does not invalidate its benefits.
If recycling is so beneficial, then how did the U.S. industry get down this negative path? The answer lies in a trend that developed over the course of several decades in the industry. Starting in the 1970s, the globalization of the commodity market steered U.S. recyclers away from domestic processing and towards exporting raw recyclables through the international market. Starting around that time, the industry focused efforts and investment on making collection cheap and easy for the consumer. Unfortunately, this focus on providing cheap and convenient recycling services necessitated the pursuit of cheap outlets to process the collected material. Domestic processors, with high wages and stringent environmental regulatory requirements, were bypassed as the demand for cost reduction steered more and more material to developing countries. The result was the apocalyptic dump sites highlighted in the investigative reports we have all seen all over the news. With few environmental regulations in place, foreign processors in these countries cherrypicked higher value commodities from these loads and simply dumped the lower value material. This scavenging behavior allowed these processors to accept virtually all loads from the U.S. with little regard for quality control. With foreign buyers willing to accept everything, U.S. recyclers had little incentive to produce clean segregated goods. Decade by decade, the quality of material produced in U.S. recycling facilities got worse and worse.
This laissez faire market dynamic started to collapse about ten years ago. The exposure of international dumping created pressure both within U.S. and in the international community to put an end to international dump sites. This eventually led to the market imploding completely in 2017 when the Chinese government launched a new initiative to clean up the Chinese recycling industry. They referred to the initiative as Operation National Sword. Overnight, China implemented a strict policy to inspect virtually all shipping containers coming from American and European recyclers. Operational National Sword placed strict requirements to reject loads with cross-contamination issues. After years of neglecting quality control, the technologies and procedures in place in most U.S. recycling yards no longer were capable of producing goods that met these new Chinese regulations. With China no longer an option, the other Asian, African, and South American markets were soon overwhelmed with material. Suddenly, the U.S. recycling industry found itself with no outlet for many of the recycled goods being collected. A bottleneck was created as material began stockpiling in warehouses and recycling yards until the market collapsed. The bankruptcies, service reductions, and price volatility can largely be traced to this central problem.
While it has created hardship, the market disturbance ultimately could become the best thing to happen to the industry. Shipping all our recycled material overseas atrophied domestic processing and gave the U.S. consumer a false impression of what was happening to the material going into the recycling bin. Cutting off dump sites overseas has the potential to force the U.S. to reconceptualize how recycled goods are managed. It can potentially create a market demand to invest in better processing technologies and help us build capacity for domestic processing.
The need to develop in-house processing was one of the primary motivations for Colorado Industrial Recycling to invest in our Eldan Wire Processing Plant. Frustrated by the volatility and lack of transparency from end processors, Colorado Industrial Recycling began to investigate in-house processing options starting about fifteen years ago. As a relatively small recycler in a big global market, this leap into processing material ourselves was a daunting aspiration. It ended up taking years to investigate the technology and find the resources to make it happen. We had to acquire the yard space, outfit a building, purchase the equipment, and develop the operational procedures to make it happen. In 2019, we partnered with Eldan Recycling out of Denmark to install a state-of-art wire and cable processing plant. The technology allows us to fulfill the full cycle of the recycling process within the scope of our operations. We now can collect wire and cable from generators and transform it into a product that can go directly into the manufacturing stream without involving outside parties.
While making the investment was financially very difficult, the equipment we bought has allowed us to offer the customer top level product quality, output efficiency, and environmental deliverables. By processing wire and cable ourselves, Colorado Industrial Recycling, can also offer transparency and accountability. When material goes overseas, the consumer has no way to verify what happens next. When we receive wire at our facility, our customers can come in and tour our plant and see exactly what happens to the material they send us.
Colorado Industrial Recycling’s investment in a wire processing plant is representative of the kind of investments the industry needs to make as whole. For too long, our nation has disassociated ourselves from the costs of our consumption. The waste generated by our community became the problem of some other community oceans away. This behavior was never sustainable. It was inevitable it would lead to the kinds of problems we are seeing in the recycling industry. The U.S. needs to find ways of dealing with our own waste. As we have demonstrated at our small recycling facility, the current environment can be a catalyst for making this needed transition. The development of domestic end processors will ultimately lead us to a better industry. Things may be rocky in the short-term, but there is reason to be optimistic that a better tomorrow is coming.