With paper generation and commodity prices down, the nation’s largest waste and recycling company is finding it hard to make its recycling business make financial sense.
That’s the main takeaway from Waste Management’s 2014 Sustainability Report, which provides an unfettered look at the challenges facing part of the publicly traded firm’s business that relates to recycling.
“We’re focusing on the hard choices confronting our customers, our company and others who want to get to zero waste,” CEO David Steiner writes in the report’s opening remarks. “To be sustainable over time, our operations must make economic sense.”
He added that in light of profitability challenges in recycling, WM invested “virtually nothing” in its recycling operations in 2014.
Recycling accounted for 17 percent of the company’s revenues in 2013.
While WM processed 15 million tons of recyclables during the year – up about 16 percent from the 12.9 million tons processed in 2012 – the firm continued to see the material stream evolve. According to the report, WM’s MRFs were designed to see 80 percent paper, but in today’s climate, they’re actually taking in closer to 60 percent fiber.
All told, 8.9 million tons of paper were processed by WM in 2013, with a third of that total coming from cardboard and a quarter coming from newspaper. Paper accounted for about 59 percent of the material processed by the company.
Plastics accounted for just 3 percent of WM’s processing tonnages, coming in at just about 432,000 tons.
Organics processing totals are included in the company’s recycling totals, and in 2013 WM handled 2.5 million tons in that arena. Composting and anaerobic digestion are both mentioned in the report, but the company does not specify how much material went to each of those systems.
The general increase in recycling nationwide is helping WM close in on meeting its 2020 goal of recovering 20 million tons of material per year, but higher tonnages have been accompanied by higher contamination rates. The report states WM’s 133 MRFs had an average 16 percent contamination rate in 2013, with plastic bags requiring crews to “stop our machinery six to eight times a day to cut them out – a waste of time and money.”
“Better consumer education on how to recycle is sorely needed,” the report states. WM recently launched a campaign – called “Recycle Often. Recycle Right.” – to help foster that educational push.
The current West Coast port dispute is also presenting major challenges to WM in the recycling realm. In recent comments made to CNBC , Steiner pointed out fiber was being hit particularly hard as a result of the slowdowns.
“You can’t move product overseas, and you have got slowdown of demand from China,” he said. “So, paper prices are at multi-year lows.”