Without China, US Companies Stress Quality For Industry Survival

China’s import bans have led to market turmoil both domestically and abroad; though, China shows no signs of backing down, as the government is focused on long-term environmental gains rather than easing short-term economic upheaval. Chinese officials are equally adamant on cutting dependency on foreign commodities.


As the government implements import bans and fails to renew import licenses, mills have struggled to find acceptable recyclable feedstock, instead turning to virgin fibers to keep their machines running – a practice in direct opposition to claims of environmentalism. Manufacturers have also had to contend with skyrocketing prices for domestically-sourced old corrugated containers (OCC), or cardboard.


While manufacturers have been hit the hardest in China, material recovery facility (MRF) operators in the US must grapple with higher sorting costs compounded by falling commodity prices. US companies have recognized quality is the key to the recycling industry’s survival and have, therefore, begun expanding labor forces and increasing use of sorting technology. However, they must also contend with plummeting material values: OCC prices in the US have fallen by at least a third and single-stream tons have lost about half of their value.


During a webinar hosted by The Recycling Partnership, facility operators across the country discuss how they’ve responded to China’s import policies and the struggles they currently face, the general theme being quality.


Quality products rely on quality inputs.


At Casella Recycling in the Northeast, Bob Cappadona, the company’s vice president, and partners aimed to tighten quality controls of incoming materials and decided to expand labor, placing more workers at unloading points, along sorting lines, and near balers to inspect for quality. Breaking bales has become common practice at all six of their MRFs to guarantee values remain high.


The South Bayside Waste Management Authority (SBWMA), a public waste management agency in Northern California, is doing much the same, hiring more sorters and inspecting one in ten bales for quality assurance.


Hiring more workers alone won’t cut it. Equipment investments are a must.


While companies like Casella are expanding their workforce, Bill Keegan, president of Dem-Con Companies in Minnesota, has had a difficult time hiring new sorting workers as unemployment in the area is as low as 3 percent. Worker shortages have encouraged the company to experiment with new technology. Just recently, Dem-Con installed an optical sorter and plans to test robotics on the line – automation can create efficiencies and boost processing capacity without the ongoing cost of labor.


Recycling is both a business and public endeavor. Municipalities must play their part.


Certain materials are more difficult to move than others due to China’s bans, specifically film, according to Keegan. To prevent further challenges and added costs, his company communicates with municipalities to ensure they aren’t expanding the variety of recyclables collected, especially since even standard items have been warehoused with greater frequency.


Contractual negotiations are also changing. Dem-Con has called for contracts that reflect the true cost of recycling, distributing risk fairly between both parties. Keegan has said that they simply avoid contracts that are not both “transparent and sustainable”.


Leveraging the “Amazon effect” to increase values.


As consumers spend more and more money online, the volumes of cardboard in the bin have increased exponentially. This is good news for recyclers as OCC fetches higher prices than mixed paper – even if both commodity values have plummeted.


Cardboard has always been a relatively more stable commodity, demanding greater prices even as other material values destabilized. Because of this, many MRFs put little stock in meticulous separation as OCC revenues were a given. Now, however, companies such as Balcones Resources in Texas are pushing quality where they can, separating greater volumes of OCC while reducing volumes of low-quality mixed paper.


The long-term reality is the US needs to find alternative markets.


China has not renewed permits since May and has yet to offer any clues regarding 2018 import permits despite the difficulty of sourcing recyclables domestically and far-reaching economic disruptions. As far as the paper and board industry is concerned, China will likely import more virgin fibers and finished paperboard products and less recovered paper. If US recyclers and exporters want to stay afloat, they will just have to seek alternative markets, such as Southeast Asia, India, and the Middle East.


If you generate, handle, or process waste and would like to strengthen your position in this uncertain market, please contact our industry veterans at Berg Mill Supply. As we have done in the past, Berg Mill continues to work hard on creating solutions to overcome fluctuating commodity markets, including opening markets in other countries, forging strategic alliances, and improving domestic processing capabilities.