Recycling Disposes of the Little Guy
A giant aluminum-can shredding machine that has sat rusting at C & M Metals since 1986 is almost certain to be idle for another year.
The $100,000 machine is a visible reminder to C & M owner Garrett Monroe of how scrap yards like his in Los Angeles have struggled since the state began subsidizing bigger competitors that operate supermarket recycling centers.
An Assembly committee earlier this week voted unanimously to extend the program for another year after key provisions of the law expired Jan. 1. The measure is expected to pass the Assembly as early as Friday and be sent on to Gov. Gray Davis.
The law “is hard to justify,” Monroe said as he ran a hand along the shredder, which is partially dismantled and surrounded by bins of parts. “We did a lot more business back when we did the cans.”
The supermarket recyclers say the subsidies are the only way consumers can be assured of having a convenient place to bring their beverage containers, since without the state’s help, many of those sites would not be profitable to operate. But the independent recyclers, who handle the bulk of the state’s scrap materials, say the government in effect is giving their competitors an unfair edge.
“Everybody who is unfamiliar with the problem says, ‘What harm can there possibly be in continuing this program?’ ” said Michael Robinson, attorney for Allan Co., a Baldwin Park-based recycler with 225 employees throughout the state. “That’s like saying, ‘Well, he’s been bleeding for an hour. What’s the difference if we let him bleed for another hour?’ ”
With the 1986 program, the Legislature wanted to encourage consumers to return their aluminum, plastic and glass containers. So it required retailers to allow recycling centers near their stores and granted subsidies of up to $2,000 per month to the operators.
Long-established scrap yards, which collected iron, copper, machine parts and other reusable materials in addition to beverage containers, were not entitled to the state aid offered to the so-called convenience-zone operators.
After the law took effect, larger companies were able to cut deals with grocery chains and other retailers. By contrast, most of the 800 independents--many of them started by immigrants, minorities and others who had more drive than capital--could not offer service on the same scale and were unable to break into the new convenience-zone business.
Today, about 85% of the supermarket collection sites are owned by two companies--Tomra Pacific Inc., a division of Norway-based Tomra Systems, and 20/20 Recycle Centers. State records list almost 1,900 supermarket sites that were eligible for the subsidies.
“I don’t think you can blame the convenience people or feel sorry for the old-line people if Ralphs and Vons and Albertson’s . . . did not want to have to deal with a lot of independent contractors but would rather have uniform, across-the-board services,” said Lee Johnson, president of 20/20 and chairman of Recyclers for Consumer Convenience.
And rather than create inequities, Johnson says, the state money helps level the playing field.
The Legislature wanted to create as many recycling opportunities as possible. But small, dispersed collection sites do not have the economy of scale of scrap yards that collect their materials at one site. Thus the supermarket sites needed some incentive to make their operations work.
Without the state payments, most of the convenience collection sites would fail, Johnson said, adding that would not be in the best interests of consumers.
“Why should I apologize because my investors were willing to put their capital at risk to develop an infrastructure that works, that satisfies the grocers and the consumers?” Johnson said. “If you are charging a deposit and you force the consumer to pay the deposit and you do not give them a convenient means of being reimbursed that deposit, then you are in essence creating a hidden tax.”
Before the Legislature passed the law, C & M Metals handled a million pounds of aluminum cans annually. More important, customers who brought in their soda containers usually carted along their other recyclable items as well, Monroe said. But with the new program, C & M had a state-supported competitor on every corner. And some offered customers more money for their beverage containers than the unsubsidized businesses could. C & M gave up on the aluminum-can business.
Lawrence J. Goldzband, who oversees the recycling program as director of the state Department of Conservation, said the state subsidies are just one of many reasons the recycling law needs to be overhauled to keep pace with the times.
What’s more, Goldzband said, scrap yards account for more than two-thirds of the recyclables in the beverage container program. The supermarket site operators handle less than 20%, he said, while 2% of containers are collected in curbside recycling programs.
“I think the [independent yards] have a very legitimate beef,” Goldzband said. “To me, it really doesn’t make much sense to subsidize the operators who are in the supermarket parking lots.
“Convenience-zone operators are scared of having to compete on a level playing field, and they’re scared of having to negotiate with supermarkets to be on their grounds, and that to me is really shortsighted,” Goldzband said.
Convenience-zone operators who meet a minimum collection requirement are eligible for a portion of $18.5 million in what the state calls handling fees.
That rankles Shin Chang, owner of Am-Mex Recycling in Los Angeles.
“I don’t mind fair competition, but when there’s people doing the same thing as us and the government gives them money, I have a problem,” Chang said. “They’re killing us.”
