It's a recession for recyclers, too

Posted Dec 11th 2008 3:16PM by Joseph Lazzaro
Filed under: Bad News, Recession

It's one of the the most frustrating and unfortunate aspects of the U.S. and global recessions: a noble sector, a win-win-win all around, is facing dire times.

The recycling sector is being decimated by the economic slowdown. Many industry players may not survive, the whole process of creating new from the old seems to be stalled, and all over the globe piles of plastic, cardboard, newspaper/paper, and metal, among other re-useables, are piling up, The New York Times reported.

And the reason is obvious enough: demand for consumer goods and other finished products is declining, globally, and that means the chief manufacturing centers of the world - - China being the largest - - don't need the recyclable materials that a year ago were so much in demand, The Times reported. Prices have plunged: paper, down to $20 a ton from $105 a ton; plastic bottles to 2 cents a pound, down from 13 cents a pound; aluminum to 30 cents a pound, from $1 a pound.

Economist Peter Dawson told BloggingStocks expanded storage capabilities during this recession means recyclers will be able to hold more than 10 times the recycled material than during the last U.S. recession in 2001-2002, but there are financial and storage limits.

"Storage can only go so far. There's only so much room. Even more pressing are the financial demands. Many recyclers will go bankrupt if demand does not pick up in the second half of 2009. Their cash flow will not be high enough to cover expenses and we know the situation regarding trying to get a loan from a bank to bridge you over," Dawson said. "Many banks will just balk at that. It's a darn shame."

Eventually, municipalities and others seeking to unload recyclable material will have to revert to landfills, if demand continues to fall or if it becomes cheaper to dump than recycle, Dawson said.

Economic Analysis: It is frustrating that one of the few win/win commerce stories of this decade - - recycling - - has been hit so hard by the U.S. and global recessions. Perhaps the Obama Administration and the new Congress can provide another tax incentive or two to help the sector - - a sector that eliminates a remarkable amount of waste. Still, given the magnitude of the economy's other problems on Washington's plate, it will be understandable if the issue is not addressed in 2009, from a public policy standpoint.

Tags: China, emerging markets, environment, inthenews, landfills, raw materials, recyclers, recycling