Low Redemption Value Seen Stunting Consumer Motivation : Some Centers Close as Container Recycling Lags

Three recycling companies that operate most of California’s 2,400 redemption centers have been forced to close several because the public is not returning enough aluminum cans, glass bottles and plastic containers under the state’s new anti-litter law.

Industry spokesmen said the problem is simple--the redemption value of 1 cent for each container is not enough to insure profitability or to motivate consumers to turn in the containers.

“The recyclers are slowly twisting in the wind,” Ron Schweitzer, general manager of the Orange County-based Mobile Recycling Center, said Monday. “It’s something that has to be acknowledged.”

Some Are Closing

That company will close 10% of its 240 centers by the end of the month and more closures are likely by the Fourth of July weekend, Schweitzer said.

Another company, Virginia-based Environmental Products Corp., said it has slowed delivery of more than 800 automated machines--designed to accept aluminum cans, glass bottles and plastic containers--until next year because of unspecified losses.

“No doubt about it, we’re struggling,” Bruce H. DeWoolfson, the firm’s president, said. “We would probably have to suffer losses for three to five years before we could see volumes up to the levels to make it a viable business.”

It already has deployed 450 of the machines statewide.

Losses may reach “several million dollars” each for Mobile Recycling and Environmental Products, spokesmen for the two companies said.

Officials Not Concerned

Officials of the state Conservation Department’s recycling division, which oversees the program, say they are not concerned at this point about the closures.

“They represent about 1% of all the centers right now,” said spokeswoman Mercedes Azar. She and others believe it is too early to complain about the 1-cent redemption level. “This is still the shaking down period,” she said.

But some Sacramento lawmakers are alarmed at the closures. “I find this extremely disturbing and it has the potential of wrecking the network (of recycling centers),” said Assemblyman Burt Margolin (D-Los Angeles), author of the refundable beverage container law.

He said he would seek an increase in the refunds if the trend continues.

Since the program went into effect Oct. 1, state-authorized centers in 2,500 zones statewide began accepting the containers. Under the program, grocers were required to set up recycling centers to accept the returnable bottles, cans and containers.

Political Compromise

The new law, however, was a compromise, resulting from more than 20 years of lobbying in the Legislature, where recycling efforts were opposed by the beverage industry and others. Part of the compromise was the agreement that the redemption value for each container be 1 cent.

If a 65% return level is not achieved by Jan. 1, 1990, the redemption value will automatically increase to 2 cents. If the 65% level is not met by Jan. 1, 1993, the return value will go to 3 cents.

As of Feb. 1, the rates of return were 57% for aluminum cans, 46% for glass bottles and .02% for plastic containers.

The program has been plagued with problems.

One major recycler, 20/20 Recycle Centers of Irvine, has had to close some of its 900 igloo-shaped centers because of a lack of returns. But company officials blame a saturation of redemption centers in some areas of Northern California for those closures. It also has had to contend with local requirements from some cities and property owners for fees and permits to set up the centers.

But the recycling firms said the biggest problem is that the 1-cent return is not enough.

Schweitzer and others said they are lobbying for new legislation that would increase the redemption value to 2 1/2 cents, with other increases to 5 cents by 1990.

Those increases would be in line with eight other states that also offer 5-cent returns on containers, they argue.