Falling prices, rising stacks; Economy trashes market for tons of recycled goods.
WESTBORO - E.L. Harvey & Sons receives about 500 tons of recycled goods each day, and in good times those materials are quickly shipped to mills and plants that turn them into new products.
But these aren't good times. In today's weak global economy, many of those recycled products have nowhere to go.
Like other recycling facilities around the country, E.L. Harvey is stockpiling bales of old corrugated containers, plastic and tin, waiting for an opportunity to sell them.
The sudden drop in demand for recycled goods started last fall. From September to December, prices nosedived. Corrugated sold for $115 a ton last summer; the price dropped to $40 a ton in October, and $25 a ton in December. It costs E.L. Harvey $35 a ton just to process and store that corrugated.
The reasons for the downturn are simple, industry experts say. Consumers are buying less, so manufacturers are making less. And if manufacturers are making less, they don't need as much raw material - or recycled goods.
Chinese mills aren't buying recycled goods from the United States, which directly hits companies such as E.L. Harvey.
"No one wants it. The boats to China have virtually stopped," said John L. Robinson, a building manager, as he watched a massive baler squeeze old corrugated boxes into impenetrable cubes.
E.L. Harvey is storing 600 tons to 700 tons of corrugated, stacked bale upon bale 14 feet high. Usually, the company doesn't need to store more than 100 tons of corrugated at a time. The facility has enough storage space for now, but the piles are growing, inching into the parking area and leaving less room for trucks to drive around the grounds.
Bales of low-grade metals and plastics are also piling up. There's still a market for some of the higher-grade materials.
Ben A. Harvey, executive vice president of the family-owned rubbish removal and recycling business, said this is the worst market he's seen in 37 years on the job.
"We knew the market was coming down, but we did not anticipate it tanking the way it did in that short time," he said.
Although volatility is expected in commodity markets, prices had been rising steadily before they suddenly dropped last fall.
He estimated that typically, 50 percent to 60 percent of the recycled corrugated collected in New England is shipped internationally, while the rest is processed in the United States or Canada. E.L. Harvey typically exports 10 percent to 20 percent of its corrugated
overseas, all to mills in China.
The market is bad for almost all recyclables. Bob Garino, director of commodities at the Institute of Scrap Recycling Industries, said American steel mills that were operating at 80 percent capacity last year are now running at less than 50 percent. "Demand and production are way off," he said. But the situation is perhaps most acute for corrugated, because compared to other materials corrugated is recycled in huge amounts. It is the biggest part of the waste stream.
"There's really been a meltdown in the recycling market," said Bruce J. Parker, president and chief executive of the National Solid Wastes Management Association. "Recycling, like so many other things, has caught up with this global recession the world is facing."
Before October, the price of newsprint was $120 per ton. Now it costs $20 per ton just to get rid of it, he said.
Some recyclers are paying fees to get rid of materials; others are being forced to pay for space to store them.
Many industry experts say they're hoping the markets will show signs of a turnaround by summer. Mr. Parker said a lot may depend on President-elect Obama's stimulus package and how it gets dollars back to the average consumer. "If you're not buying products, there's no need for recyclables," he said.
Despite the down economy, the message from environmentalists and those who work in the waste industry is clear: Keep recycling.
Public perception of recycling has changed since the concept was introduced in the 1980s, Mr. Parker said. "Now we understand the stakes are much, much higher," he said.
Molly Fraust, manager of the Mass Recycles Paper Campaign, said recycling has environmental and financial benefits.
"It still makes sense for people to be recycling," she said. "We don't want anyone to change their habits. Recycling markets have recovered from similar downturns in the 1970s and early 1990s. We do bounce back."
A 2006 Department of Environmental Protection study found that of the 3 million tons of waste paper and cardboard disposed of in Massachusetts, a little less than half was recycled. "There's a lot of opportunity there," Ms. Fraust said.
The recycling industry supports 1,400 businesses and 19,000 jobs in Massachusetts, according to DEP.
"People do feel very green-conscious," she said. "I think that helps. But when you do have negative attention toward something, people wonder if it's worth their time and energy."
In cities and towns with municipal contracts for waste services, residents might not realize how much the recycling industry is struggling. But in towns such as Millbury, where residents subscribe to a hauler or drive their waste to the dump themselves, the effects are felt sooner and harder.
Katherine J. Fairbanks, owner of a small company called Millbury Rubbish Removal, said it's costing her more to recycle a ton of waste than to throw it away. She pays tipping fees of $80 or $90 per ton to dump garbage. She used to make $10 to $20 for each ton of recycled goods she turned in, but now she estimated she's paying as much as $100 to get rid of those same goods.
Ms. Fairbanks recently began charging higher fees to her customers, who number fewer than 1,000 and live in Millbury, Sutton and other towns.
"People need to know it's costing money," she said. "We're not just pulling these fees out of the sky. If I don't charge my customers, I will go out of business."
Massachusetts state law makes it illegal to incinerate recyclables or put them in a landfill. Eight other states and many municipalities have similar laws, according to NSWMA.
Some people are speculating that the higher cost of recycling could be pushing small haulers to throw recyclables out with the trash. The DEP conducts spot inspections at various locations to enforce state law. A DEP spokesman said the department hasn't observed any noncompliance.
"It's taken a lot of education to get people up to speed on recycling, and I'm afraid everyone is going to lose ground," Ms. Fairbanks said.
Marc D. Pellegrino, chief operations officer for Pellegrino Trucking Co. in Shrewsbury, said his business has been able to avoid fees for disposing of recyclables because it has good relationships with area facilities and generally brings in large volumes of waste. The family-owned business has contracts to collect trash and recycling for Northboro and Shrewsbury, about 15,000 dwellings together. Mr. Pellegrino said although he collects hefty credits on recyclables when markets are good, he doesn't depend on those.
"We do not rely on the recycling market like other companies do," he said. "You can't predict it ... It's good when it's good and it's bad when it's bad."
If the company is forced to pay fees for recycling in the future, it can't transfer those fees to the town without renegotiating the contract. "As far as the town budget and our contract goes, if there's a charge related to the company's materials, it's Pellegrino Trucking that has to pay the charge," said Nancy E. Allen, Shrewsbury's public health director.
Mr. Pellegrino is hoping things will improve in a few months. "If I could go to a psychic and find out, I'd do it tomorrow," he said.
Contact Priyanka Dayal by e-mail at email@example.com.
ART: PHOTOS; CHART; GRAPH
CUTLINE: (1) With a weakened global economy, demand for old corrugated containers has plummeted, leaving Westboro-based recycler E.L. Harvey & Sons to store 600 tons to 700 tons of corrugated, stacked bale upon bale 14 feet high. John L. Robinson, a building manager, walks past stacks of bales. (2) An employee of Westboro-based recycler E.L. Harvey & Sons moves old corrugated containers to be compacted and baled. (3) Paul E. Degnan, plant manager, E.L. Harvey & Sons in Westboro, stands near bales of old corrugated containers that used to be quickly shipped to plants for manufacture into new products. But with the recession, demand for recycled corrugated, the biggest component of the waste stream, has evaporated. (CHART) Composition of waste (GRAPH) Falling Prices
PHOTOG: (PHOTOS) T&G Staff Photos/MARK C. IDE (CHART) T&G Staff/STACEY ARSENAULT
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|Publication:||Telegram & Gazette (Worcester, MA)|
|Date:||Jan 11, 2009|
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