Read It and Reap : Newspaper Recycling Is Big Business These Days
Two years ago, many newspaper recycling businesses were folding under piles of almost worthless paper. With used newspapers fetching a paltry $20 per ton, collecting them often wasn’t worth the effort. Recycling centers in Southern California and the nation closed, and papers collected curbside rotted in warehouses. Waste haulers were paid to dump them in landfills.
Today, thanks to escalating demand and a stronger economy, a ton of newspaper--enough to fill a pickup truck--will fetch between $100 and $150 at local collection centers. Scavengers are grabbing papers set out for curbside collection, virtually overloading recycling centers while robbing cities of revenue.
“Everyone’s saving their newspapers. I’ve got a line at the door,” said Jeff Johnson, plant manager at Basic Fibres, a Los Angeles recycling center.
Newspaper recycling, virtually in the dumps a few years ago, is now a booming business, thanks to record newsprint prices, more paper mills and stronger market incentives.
Everyone, it seems, is trying to cash in on recycling. Wood products companies have invested billions of dollars in recent years in mills designed to reprocess paper. Waste management companies--instead of dumping paper in landfills--are scrambling to acquire local recycling centers and proclaiming themselves among the world’s largest recyclers. Even the Chicago Board of Trade is getting involved, planning to open an electronic marketplace this fall for trading recyclable goods.
Several factors are contributing to the boom.
For one, recycling has become fashionable, aided in part by environmentalists’ promotional campaigns and teachers’ discussions about it in lessons on global responsibility. As a result, 70% of the U.S. population participates in recycling programs, according to Resource Recycling magazine. The United States recycled 38.9 million tons of paper in 1994, almost double the 20.5 million tons recovered in 1985, according to the Paper Recycler newsletter.
Meanwhile, state and federal government initiatives--such as President Clinton’s 1993 executive order requiring that printing and writing paper used by the U.S. government be made from 20% recovered paper--created new demand for recycled material. Cities--including Los Angeles and many others in Southern California--instituted curbside recycling programs to comply with waste reduction mandates.
Outside the United States, demand for recyclables is growing as developing countries look for new sources of materials. In 1994, nearly 8 million tons of recovered paper was exported from the United States, often bound for South Korea, Taiwan and Japan, according to the American Forest and Paper Assn. Much of this paper departed from Los Angeles, the world’s largest port for exporting recyclable materials.
The wood products industry has responded to these factors by developing more efficient paper-processing technology and increasing its capacity to reprocess old paper, bringing 86 new mills on-line since 1990.
Weyerhaeuser, the giant forest products company, now owns 28 recycling facilities in the United States and Canada--seven purchased in the last two years. It is also buying back used paper from customers such as Kmart. The wood products industry found that using old paper as raw material is more cost-effective--and politically palatable--than putting chain saws to trees.
WMX Technologies, the nation’s largest waste management company, today operates 151 recycling centers, up from 116 last year. Competitor Browning-Ferris Industries has 112 recycling facilities, up from 97 two years ago. High demand for recyclable material has reduced the volume of trash going into the landfills, contributing to falling dump prices that have diminished profits for waste companies that own them.
Recycling is “the fastest-growing component of our business,” Browning-Ferris spokesman Peter Block said.
Meanwhile, newspaper collectors with pickup trucks--called scavengers by cities and resourceful entrepreneurs by recycling centers--snatch newspapers from municipal recycling bins and cash them in. The city of Los Angeles says such activity robs it of $2.16 million in annual revenue, but it’s a boon to the recycling centers.
Perhaps the best indicator that recycling has matured as a self-sustaining industry is the emergence of the electronic recyclables marketplace, a new project of the Chicago Board of Trade. There, beginning this fall, cities and collection centers seeking to sell used plastic and glass will be able to link with prospective buyers via computer.
CBOT will add paper to the list of tradable commodities next, senior economist Mike Walsh said. It hopes the recyclables marketplace will make it easier for smaller cities, recycling centers and other businesses to stay in business and compete with the industry giants, he said.
Companies in the recycling business say they’re better prepared than ever to weather the next economic downturn, thanks to industry investments and more consistent demand for old newspapers.
“I don’t think the market will collapse, because the capacity of recycled paper mills is so much greater than it was five years ago,” Browning-Ferris President William Ruckelshaus said.
However, developing new uses for old newsprint is essential to continued growth, they say. GreenStone Industries of Bethesda, Md., reprocesses newspapers into housing insulation that is cheaper, more efficient and more enviro-friendly than traditional fiberglass, Chief Financial Officer John Bernardi said.
Converting old newspapers into spray-on gardening mulch and bedding for livestock is also promising, though more economical when used paper is cheap, said venture capitalist Mark Koulogeorge of First Analysis Corp. in Chicago.
Pulling more paper out of the waste stream is another environmental and business challenge. Forty percent of all paper used in the United States is recovered for recycling, but the paper industry wants to extract another 10%.
“It’s not as easy as the first 40%,” said Barry Polsky, spokesman for the American Forest and Paper Assn. “Lots of it will have to come from offices. It’s difficult to get people to separate paper. Even when you do, you get pizzas thrown in with the reusable paper.”
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Paper Profits
Prices for used newspapers have been soaring thanks to the high cost of newsprint and a developed recycling infrastructure. Quarterly prices* per ton in the Los Angeles-San Francisco market: ‘95: $165 * Prices reflect paper mill purchase prices and represent contract rather than spot or premium sales.
Sources: Pulp & Paper Week, Paper Recyler
