A rough spot for recycling

Aisles where forklifts once shuttled are packed tight with baled cardboard and paper. A mountain of cardboard 30 feet high sits in the middle of a concrete tipping floor. Mike Lunow, manager of Waste Management's recycling plant in northeast Minneapolis, is running out of storage space.

He has stockpiled 1,400 bales of paper -- all that he can handle without creating safety or fire hazards -- and has shipped more to a warehouse.

The scene is typical across the country, where the market has plunged for wastepaper, aluminum, plastic and other products, leaving them worth only a small fraction of what they sold for just two months ago.

"This is a big dramatic downturn," said Susan Young, director of solid waste and recycling services for the city of Minneapolis. "We all got used to China buying everything they could get their hands on."

China and India have virtually stopped buying scrap steel, copper, used paper and other products because of the recession. U.S. manufacturers that use recycled materials in car parts, packaging, insulation and other products also don't need as much because U.S. consumers are buying fewer vehicles, appliances and new homes.

The result is a huge backup in recycled materials nationally -- and much lower prices for the bales of paper and compacted cubes of plastic and aluminum that firms such as Waste Management, Minnesota's largest recycler, can process and sell.

"We continue to encourage people to recycle at high levels, and hopefully the market will come around," said Waste Management spokeswoman Julie Ketchum. "We're waiting it out with everyone else, with the national economy the way it is."

Market fell faster, steeper

Recycling has had its ups and downs, including a rough spot in 1997. But nothing this dramatic has occurred since the 1970s, said David Hopkins, a professor at the University of Minnesota's Carlson School of Management. "This is probably a larger swing in terms of the speed of it happening, and the severity of it," he said.

Wastepaper was selling for $100 to $120 per ton in October, Hopkins said. In only six weeks it has dropped to $15 to $25 per ton. Copper, steel and other metals have dropped by about 80 percent, aluminum cans by about 50 percent, and some plastics by more than 90 percent, Hopkins said.

Minnesota may be better off than some states because its recycling programs have developed many local markets, such as plastic lumber manufacturers and glass container firms, said Wayne Gjerde of the Minnesota Pollution Control Agency (MPCA). Coastal states, on the other hand, tend to ship more of their recyclables abroad and now have few alternatives, he said.

Gjerde, the state's recycling market development director, knows one thing that won't happen in Minnesota, regardless of how bad the markets get. "No one can landfill material that is collected for recycling," he said. "That is against state law."

Because prices are lower, the city won't make as much money this year from selling recyclables to manufacturers, Young said. But it won't lose money either because some of the contracts set floor price levels for the materials.

Everybody's watching

For Eureka Recycling, which serves St. Paul, Maplewood, Roseville, Lauderdale, Arden Hills, St. Louis Park and many private companies, it now costs almost as much to collect and process paper as it makes selling it.

As a result, said CEO Susan Hubbard, the nonprofit recycling company has met with its customers in recent weeks. None plans to drop materials now being picked up, she said, but all are watching the markets closely.

If low prices persist, some cities may dip into reserve funds that they established with $5 million in profits that Eureka returned to them in recent years when commodity prices were high, Hubbard said. Otherwise, they may need to raise fees, she said.

The true value of recycling goes far beyond market prices, said Mark Rust, solid waste planner for the MPCA.

Recycling contributes $3 billion to the state's economy and sustains 20,000 jobs, he said. Its environmental benefits include less mining and timber harvesting, less water and energy use, and fewer global-warming emissions.

To consider dismantling any recycling programs on the basis of a few weeks of low prices would be a huge miscalculation, he said.

"The sky is definitely not falling," said Rust. "It's a cyclical thing and a testament to just how mainstream recycling has become."