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Market forces push recyclers to get creative

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Neil Johnson
March 8, 2015

JANESVILLE—Among the many industries where competition is king, few face more market volatility and pressures of cost and demand than recycling handlers and waste haulers.

The latest wild card is a recent dramatic dip in market prices for paper, cardboard and metals that some say is driven by a recent drop in natural gas, oil and energy prices.

That's macro. Locally, smaller, trickier forces are at play.

Garbage haulers are now willing to drive 40 miles or more to get the best bang for their buck on tipping fees. Pickup truck-driving metal scrappers now show up at recycling handlers armed with smartphones that can deliver hourly market prices on steel, copper and aluminum.

In what could be the most challenging landscape in years, the trash wars have reached new heights.

At Alter Metal Recycling at 1753 Beloit Ave., Janesville, facility manager Todd Pember pointed a gun-shaped electronic scanner at a copper pipe. The instrument, which costs about the price of a new car, showed the pipe was 98.97 percent copper.

For Pember, certainty matters more than ever. Recyclable metal prices have plunged in the last few months to an eight-year low, Alter account executive Derrick Brion said.

The market dip is being driven by lower fuel and energy costs in recent weeks, which make it cheaper for producers of fabricated metal to buy imported material, much of it from Canada, Brion said.

Alter is a large corporate metal recycling handler and dealer with 11 local sites in Wisconsin and more than 50 nationwide.

Each local site handles a blend of customers, including those that contract for rollaway commercial scrap dumpsters and small scrap collectors who bring in materials to sell.

The local market, depending on fuel and metal prices, can span a 40-mile radius with a side rail that includes Chicago, and it's driven in large part by customers who have a choice of dozens of area scrap metal handlers.

Small-scale metal scrappers who sell to recyclers know this, and they've gotten savvier than ever.

"These guys have a $50 dollar pickup truck, a load of copper, and a $400 iPhone with apps that give them constant updates on metal market prices," Pember said. "They can tell you what's going this minute. They probably know the market better than I do."

As scrap metal handlers such as Alter press to buy and sell in the biggest volumes possible, small-scale, drive-in customers are becoming more vital. But they can be elusive.

A recent dip in gas prices has made it viable even for the smallest-scale scrappers to drive 40 miles or more in search of recycling handlers who'll pay the best rates.

At the same time, commercial metal recyclers are more willing to venture greater distances to collect scrap metal in large supply from commercial customers.

Some scrap metal recyclers, Alter included, are more willing now to allow commercial customers to include scrap cardboard and even plastic along with metal, although metal recyclers won't pay much for nonmetal items.

"Our customers are producing them, and if there's a way to make money on it, why wouldn't we?" Brion said.

Low energy and fuel costs have also hammered the market on paper and cardboard recyclables.

Brian Jongetjes, who runs John's Disposal, a family-owned waste and recycling hauler based at 107 County U in Whitewater, called paper and cardboard prices a "bummer."

It would be a bigger bummer if Jongetjes didn't have single-stream recycling sorting centers at the company's Whitewater and Racine locations.

Single stream is the model that Janesville put in place under its own curbside recycling collection in 2013.

The logic is that single-stream recycling takes material sorting out of the hands of customers, which in turn boosts recycling and keeps more paper and plastic out of the landfill.

It's worked so far. Single-stream pickup has increased recycling in Janesville at a time when the state DNR reports residential recycling is flat or on the decline.

Despite a tough market for recyclables, John's Disposal's single-stream recycling sorting sets it apart from larger corporate waste haulers. It's one way John's competes to fill a niche as a smaller company geared toward hauling residential garbage and recycling.

Jongetjes said about 80 percent of the company's business, both garbage and recycling, is based on residential customers, some of which are served through contracts the company holds with municipalities such as the city of Milton.

John's serves 400,000 residences across Rock, Jefferson, Walworth and Dane counties and the Milwaukee area

Jongetjes estimates most large corporate waste and recycling haulers do less than half of their business through residential collection.

The garbage-hauling side is trickier. Volume isn't king if it costs too much to tip at the landfill.

Jongetjes said state tipping fees can rival some landfills' own fees for a 10-ton load of garbage.

That's a major factor prompting some area haulers to truck waste to Illinois landfills, where state fees are lower.

Local landfill operators now are competing on tipping rates to attract and keep large-scale waste-hauling contracts at a time when haulers will drive past one landfill en route to another landfill 30 or 40 miles away.

The city of Janesville, for instance, moved last year to close off public disclosure of negotiations for most of its contracts with garbage haulers who dump at the city-owned landfill on Black Bridge Road.

Officials say they hope that will help the city compete against private landfill operators who aren't required to disclose contracts.

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