In the runup to the 2019 Resource Recycling Conference and Trade Show in New Orleans, we’re offering Q&As with a few of the industry leaders who will be taking the stage.
This week we check in with Mitch Kessler, a consultant with decades of experience helping municipalities and others develop frameworks for cost-effective waste management and materials recovery.
Kessler is moderating a session called Contracting at a Tipping Point, which will bring together a handful of state and local officials to discuss challenges they are seeing in negotiations with MRF operators as markets for recycled commodities undergo unprecedented declines.
What’s the single most contentious issue between communities and private materials processors?
The most explicit contentious issue is understanding, defining, and agreeing to what contamination is. The most important issue not being verbalized is defining, actively listening and communicating objectives which are clear. Recycling is not a short-term battle. It’s a critical part of a long-term waste management solution. Currently, the public and private sector objectives are out of alignment. It boils down to basic communication and both parties actively listening and hearing the other party’s objectives.
What leverage, if any, does the public sector have in contract negotiations today?
Leverage is hard to find these days; the private processors appear to have all the leverage right now. There is an obvious resetting in the marketplace that needs to occur, and recycling processing only works if all the costs are covered. The loss of leverage is mainly the result of the public sector outsourcing a critical infrastructure and public utility service: recycling.
“Currently, the public and private sector objectives are out of alignment. It boils down to basic communication and both parties actively listening and hearing the other party’s objectives.”
How can leverage be regained?
First, creating long-term, win-win, sustainable public/private partnerships that benefit both parties. Second, evaluating whether a public-ownership scenario helps you accomplish your long-term processing objectives. There are numerous successful examples of a throwback to the early days of government ownership and private operation of MRFs or processing facilities.
What level of risk should communities ultimately shoulder when it comes to navigating current and future market conditions for recyclables?
Risk needs to be fully transparent and equitable – not in concept, but in action. The community should pay the actual processing costs. Then the parties should share the revenue in both up and down markets. Clearly defining and understanding what makes up the processing costs requires in-depth and thorough analysis, followed by a transparent discussion. We also need to remember that local government should not be doing this all alone. States, regions and the federal government need to shoulder some of the responsibility to address market risk and development.
“The community should pay the actual processing costs. Then the parties should share the revenue in both up and down markets.”
What do you foresee in the immediate future in recycling contracting?
We are all going through trials and tribulations during this down-market period. The light at the end of the tunnel is truly equitable public/private partnerships and developing mutual respect for each side’s objectives and, eventually, an upturn in commodity pricing.
Kessler will be moderating the Contracting at a Tipping Point concurrent session Wednesday, Aug. 28 at 10:30 a.m. Speakers on the panel include Brooke Nash of the Massachusetts Department of Environmental Protection, Randy Rudd of the Emerald Coast Utilities Authority (Pensacola, Fla.) and Joe Dawson of Charleston County, S.C.
Head to rrconference.com for the full schedule of events and to register today!