The start of every year brings with it fresh challenges, opportunities and unknowns. When it comes to the solid waste and recycling industries, 2018 is no different. While some issues like worker safety and retention seem evergreen, changes in global end markets have brought new concerns and compliance challenges for industry participants.
Where we are today
The waste industry has been enjoying the benefits of improved pricing and volume in the rebounding economy following the Great Recession. Improved waste volumes, which began to rebound in 2014, have helped support operating costs and foster improved pricing. Overall, there is optimism for waste collection pricing and volume trends heading into 2018, as industry participants expect a continuation of steady growth.
“Collection pricing is slowly increasing at about the pace of inflation (2 percent). Waste volume increased in 2017 as a general proposition, and if the increased growth in the economy continues in 2018, I expect it to increase again this year,” David Biderman, executive director and CEO of the Silver Spring, Maryland-based Solid Waste Association of North America (SWANA), says.
Darrell Smith, president and CEO of the National Waste and Recycling Association (NWRA), Arlington, Virginia, agrees that competition is keeping collection pricing reasonable overall, yet notes that variances in land costs and other regional variables have led to fluctuations in disposal costs across the country.
Thanks in large part to the booming construction industry, landfill volumes were also up last year, which is a trend that is expected to continue.
“Landfill volumes were up significantly in 2017, mostly related to increased manufacturing and construction and an overall better economy. On the residential side, pricing remains competitive in most markets. We expect both trends to continue,” Amanda Pratt, director of corporate communications for Colerain Township, Ohio-based Rumpke Waste & Recycling, says.
One thing to watch for, according to Biderman, is rising interest rates, which could have a negative impact on housing starts—a key indicator of waste sector health. This could negatively impact the industry in the “medium- to long-term” future, Biderman says.
Other metrics to keep an eye on include gross domestic product (GDP) and consumer price index (CPI) growth. These economic indicators have been historically subdued in recent years, which could portend future headwinds for the industry moving forward.
Dealing with China’s National Sword
China’s National Sword customs inspection policy and imports ban, which was first announced in July 2017 and became effective at the beginning of this year, is perhaps the biggest question mark facing the industry as we head through the first quarter. The regulation stipulates that only 0.5 percent of materials in a given bale of recyclables imported to China can be contaminated. This has affected the value of certain materials—most notably mixed paper and plastics. The ban, which has drawn pointed criticism from the waste and recycling industry for being overly restrictive, is challenging companies to find new ways of doing business.
“NWRA has always supported China’s efforts to improve its environment,” Smith explains. “However, we believe there are better ways to achieve those goals than to tighten restrictions on imported recyclables. We have said before that the 0.5 percent standard would be nearly impossible for our members to meet, and it could cause some short-term disruptions in the industry. However, it could also present opportunities as our members continue to adjust.”
Biderman acknowledges that China’s ban has already had profound impacts on the industry.
“We already have recyclables going to landfills in Oregon and Canada, to waste-to-energy facilities in Massachusetts. Bales are being piled up in parking lots and material recovery facilities (MRFs) in both the U.S. and Canada. While some material is moving to Southeast Asia and India, I am not confident that these countries will be able to take all of the material that China has taken in the past few years. It will be several years before additional domestic capacity comes on line,” Biderman says.
On a micro level, the ban has necessitated the need for waste haulers and processors to be more thorough in their sorting processes.
“China’s import restrictions place greater pressure on our MRF processing facilities,” Steve Sargent, director of recycling, Rumpke, says. “We may have to potentially slow our sorting lines, add more sorters or increase our capital expenditures on new equipment.
“In the long run, the import restrictions may possibly spur more investment in domestic consumers of fiber and plastics, but that investment will take some time before it impacts the demand of these materials. In the short term, our costs will probably increase, while at the same time, the value of these materials, especially mixed paper and plastics, will decrease. This could lead to more shared-risk processing contracts with our customers.”
The more stringent contamination requirements are expected to place an added emphasis on implementing new technologies to help improve sorting efficiencies. Investments in new and better equipment could help companies cut labor costs and reduce contaminants.
Educating the consumer
Reducing contaminants starts at the consumer level, and industry stakeholders acknowledge that the waste and recycling sector needs to do a better job educating citizens to comply with industry guidelines.
“There are dozens of recycling posters and communication tools that aspire to tell people what is recyclable,” Biderman says. “With contamination rates of 15 to 25 percent in some systems, these tools are not achieving their objective. We need to take a fresh look at the messages and update them for 2018 and beyond.”
He notes that providing messaging in multiple languages, simplifying infographics and being more direct in what is and isn’t permissible to recycle can help better inform citizens.
Pratt adds that the industry needs to do a better job of making messaging consistent and uniform if it expects consumers to be more conscientious in their habits.
“As an industry, it has never been more important to collaborate and align our messaging when it comes to recycling,” Pratt says. “Consistent messaging will help us best cultivate our desired outcomes. MRF operators, manufacturers and customers have to understand each other’s challenges and needs and then explore solutions that help us all continue to grow recycling in a productive way.”
Worker safety and retention
Worker safety has long been a topic of concern in the public and private waste and recycling industry, and that is sure to continue in 2018.
According to a recent report from the Bureau of Labor Statistics, waste and recycling remains the fifth-most dangerous field of employment. Industry organizations are attempting to cut down on workplace injuries by focusing more on outreach efforts and oversight aimed at worker safety.
“NWRA and its members have undertaken numerous initiatives that represent a comprehensive approach to improving safety for workers in the waste and recycling industry, including hosting safety seminars in cities nationwide for haulers, processors and other stakeholders involved in the collection process; development of safety manuals for use by drivers and workers in the industry; and the creation of the first-of-its-kind driver certification program for waste and recycling collection vehicle operators.” Smith says.
One of the central challenges to improving worker safety is that it is a multifaceted problem with no central cause. While there might not be one magic bullet to remedy the problem, Biderman notes that a greater emphasis needs to be placed on prioritizing safety over expediency.
“Unfortunately, there are a wide variety of reasons why solid waste workers and third-parties (usually other drivers and pedestrians) are killed or injured in accidents,” Biderman says. “There is not a single ‘root cause,’ which makes our industry so challenging. We need to change the culture of the industry by making safety part of the DNA of every single employee by making sure productivity doesn’t supersede safety and ensuring that all workers are aware of best practices and get the resources they need to do the job safely.”
Pratt notes that Rumpke is doing its part to reemphasize the importance of in-house training to help protect the safety of its workers.
“It will be several years before additional domestic capacity comes on line.” – David Biderman, CEO, SWANA
“[We need] more training, more diligence and more technology,” Pratt says. “We are constantly looking at more effective ways to educate our team and proactively address safety issues, from safety audits and inspections, to continuing education programs, to new technology. [We need to do better at] monitoring and preventing incidents. As we implement these tactics, we are evaluating them to determine which strategies are creating the best outcomes.”
In addition to protecting today’s workers, the need to recruit the next generation is growing in importance.
New employees are the lifeblood of the collection industry. However, public perception has made it more difficult for the industry to attract younger people to these blue-collar jobs. According Biderman, reaching the next generation is a matter of finding new and innovative ways to market the profession.
“The challenge of attracting drivers and mechanics in the industry is a growing concern, as candidly, not a lot of people grow up aspiring to driving or working on a waste collection vehicle,” Biderman says. “Several companies have taken innovative steps in recent years to attract potential workers, including targeting former military personnel and the increased use of social media.”
Biderman cited Houston-based Waste Management’s recent announcement that it was providing $2,000 bonuses to its workers as an example of a creative way to attract new employees while retaining those already on the payroll.
For Rumpke, attracting new and better employees isn’t just about cultivating the next generation, it’s about reaching its potential as a business.
“Rumpke employees are the most important part of our business, and therefore, with them lies our greatest opportunity for continued progress,” Pratt says. “We are going to remain focused on developing our people through career pathing and more training to help them best do their jobs, while building the careers they want to create.”