Improving the Economics of Your Recycling Program
Ever wonder why some recycling programs always seem to get good deals, while it seems like you are paying more and more to have your recyclables taken away? Ever wonder how even in the worst markets some recycling programs always find someone to take their stuff, when it seems impossible for you to get someone to take your stuff without paying and arm and a leg to do so? If you have felt that frustration, chances are, those other programs understand more about recycling markets that you do. Don’t worry though, with a modicum of understanding about recycling markets, you too will be able to significantly improve the economics of your recycling program.
As I wrote about in my first post, recycling is a manufacturing process, the only reason that we’re able to keep our recyclables out of the trash is because someone can use them to manufacture a new product.
Each manufacturer makes a slightly different product. As such, each has a slightly different list of what they can and cannot use to make that product. Every product made, whether from recycled content or not, needs to have certain properties. We need cups and bottles that don’t have a big gaping hole in the side. We need copy paper that runs through pretty complicated equipment. To make the products that meet our specifications, manufacturers need to use certain materials as inputs.
Ultimately, knowing what you’ve got and what a manufacturer wants can make the difference between whether or not you get paid top dollar for your recyclables. And when markets are bad, it can also make the difference between whether your materials actually get recycled or whether they end up in the trash.
As you start to look at recycling markets, one of the singularly most important things to understand is a term called “outthrows.” In my opinion, the single greatest failing of the recycling industry over the past 20+ years is that we have not adequately explained outthrows to the general public. Unfortunately, we tend to explain recycling in black and white terms. In that world, things are either recyclable or they’re not. Outthrows are the gray area of the recycling world, as far as the market is concerned. Outthrows are the 3rd category of stuff – and the one that causes most of the confusion about recycling. There are things that mills want (e.g. newspaper at a mill that makes recycled newspaper), and things that they don’t want (e.g. glass at the mill that makes recycled newspaper). The third categories are outthrows, which are things that they don’t really want but can live with in small quantities. Outhrows are typically things that won’t really cause any problems at the recycling mill, but also don’t really provide any benefits. In the paper world, outthrows are typically inferior quality papers. If you are making new recycled-content printing and writing paper, you need to make that from old high-quality printing and writing paper. If there are some newspapers and cereal boxes mixed into that old printing and writing paper, it won’t really hurt anything, but most of the fibers are too short to make into printing and writing paper and will pass right through the mill and out the back side as waste. Add too much of the inferior quality paper and you cannot cost-effectively make the new recycled-content printing and writing paper and over time, the mill fails.
So how are you supposed to find out what a mill wants? Every mill has a mill spec sheet that tells you what they do and don’t want. However, many if not most of you probably don’t deal directly with a mill, or maybe your stuff ultimately goes to several different mills. What are you supposed to do then?
To help provide some standardization, there is a trade association called ISRI – the Institute for Scrap Recycling Industries. ISRI publishes one of the most important documents in the recycling industry, the scrap specifications circular. The scrap specifications circular defines different grades of materials and contract terms for buying and selling materials. There are literally hundreds of different types and grades of recyclable materials, all with different qualities and values. All have different things that they want, different things that they don’t want, and different amounts of acceptable outthrows in the mix. Trying to market recyclables without understanding the basics of these scrap specification grades is like saying that Morton’s Steakhouse and Burger King are of equal quality because they both serve meat.
I also highly recommend finding a market pricing index (such as the Official Board Markets Yellow Sheet for paper or the American Metals Market for scrap metal). This will give you a good ballpark estimate for what the most popular grades of material are selling for in your general geographic area. It doesn’t mean that is exactly what you’ll get. You’ll likely get a bit less, and may get a bit more, but at least this gives you an index that shows how that price will rise and fall with seasonal and annual demands.
Once you know what you’ve got and have an idea what it is worth, might be amazed at how much the economics of your program improve.