Once upon a time in the recycling business, profit came from purchasing product from clients, then sorting it, processing it and selling it.
But times are changing. The commodities resale model no longer works on its own. Selling recyclable materials in today’s market isn’t a viable way to offset costs or produce revenue.
Why have the dynamics changed?
Despite the enthusiasm of individuals and businesses who eagerly participate in recycling — usually motivated by environmental reasons — recycling businesses depend on certain market conditions and economic incentives.
Let’s recap a few changes that the recycling industry has borne the brunt of in recent months:
- China — which previously had imported two-thirds of the world’s plastic waste — introduced severe restrictions that effectively halted waste shipments to China.
- Commodity prices have decreased thanks to the longstanding low price of petroleum, making new product cheaper to produce.
- Manufacturers have figured out how to use less material in the production of bottles and packaging.
- As community recycling participation has increased, so have the costs of trying to sort, handle and transport collected materials that are intended for recycling, but arrive contaminated (such as with food).
So, how should recycling companies change?
Doug Shafer, CFO of Recycle 1, says that recycling companies should transition to a different business model: “Those recyclers that can morph into a service offering, rather than just a product processor, are going to be the ones that survive.”
What might this service offering look like? Think of it this way: Businesses already contract all types of external services to perform functions not handled internally — services like janitorial services or landscape services.
Recycling companies have the expertise and equipment to become outside vendors that help other businesses, such as those in manufacturing, achieve landfill-free or zero-waste status.
Here are some ways recycling-as-a-service can continue to drive revenue and add value:
- Provide staff to work onsite at a client’s company to perform and manage all of the recycling and waste duties required by that company.
- Create and divert streams of unmarketable plastics from the client’s site as a fuel for waste-to-energy usage.
- Provide consulting services, as well, by training a client’s staff on how to recycle properly to help eliminate contamination.
- Identify and help execute additional, improved waste diversion practices.
In sum, the recycling industry is ripe for change in a changing world. Adding services to an existing process-and-profit business model, or adjusting entirely to a services model can ensure continued growth for recycling companies.
Recycle 1 is an industry expert and on the leading edge of this coming wave of change. Contact us to find out more about how they can help your company start, transform, or improve its recycling program.