US recycling: 'I don't even think we have an industry'

Collapse in demand for packaging in China hits US processors and exporters of recyclable material

• Dan Glaister in Los Angeles
• guardian.co.uk, Friday 9 January 2009 00.05 GMT

Steve Young sits back in his chair and glances up from his figures. "I don't even think we have an industry. That's how bad it is."

Young, president of Allan Company, a Los Angeles processor and exporter of recyclable materials, nods towards the window. "Across the street we would process 600 customers on a weekday, 1,000 at the weekend," he says. "The whole spectrum – the homeowner who has stockpiled aluminium cans, the bar down the street that has a load of beer bottles, the liquor store with used cardboard. Now it's probably half that number."

Young is on the frontline of a crash in commodity prices that has seen the global market for recycled paper, cardboard, plastic, metals and glass all but disappear. In three weeks in October, the price of paper went from $200 to $20 a ton, corrugated cardboard dropped from $250 a ton in August to $100 in December. It is the worst he has seen since founding the company in 1963.

The scene at one of his company's yards across the street tells the story. Skips half filled with scrap metal line the entrance, while a trickle of customers in pick-up trucks, station wagons and saloon cars unload their pickings. These are the little people who make a living on the back of the recycling industry, plundering other people's rubbish to remove beer bottles, tin cans, newspapers, anything that might carry a price at a recycling plant. But in recent weeks the clink of late-night scavengers removing bottles from bins before the morning collection has disappeared.

"Normally this would be crowded with people," says Rich Hubbard, vice-president of operations at Allan Company. But with the decline in prices, it does not pay. "It's $20 a tonne," he says of cardboard. "So you can get maybe $12 of cardboard in a truck. Add on four or five hours of your time, money for gas, it doesn't add up. I don't know what the guys who normally do this are doing for work now. They're hustlers, they must be doing something, but they're not picking up cardboard."

The US industry is suffering from a decline in demand from its principal market, China. The US exported 11m tonnes of scrap paper to China last year with a value of $11.5bn. California is the principal point of departure for recyclables as they head to Asia's paper mills. The Chinese typically use the paper from the US to make packaging material for the exports they send, typically, back to the US.

Everything seemed fine with China, says Nan Drake of Gold Coast Recycling in Ventura county, an hour north of Los Angeles, until after the Olympics. "The Chinese just kept going," she says. "The boom during the Olympics just covered things up. There was no gradual decline, it just went boom."

Gold Coast, which processes 1,600 tonnes of recyclables a day for seven cities in the area, has already laid off some of its pickers - employees, who sort through recycled waste by hand as it travels along a conveyor belt. Others have been less fortunate.

"The people who are going broke in this time are not going to come back," says Drake. "They're the little guys, they're not coming back."In the long term Drake hopes the crisis will spur a home-grown solution, with US mills taking the place of foreign markets. But she is concerned that once recycling ceases to be profitable, it will not be practised with the alacrity that has seen California save half of its solid waste from landfill. "We don't want to create a panic and say this is the end of recycling," says Drake, "but we need to continue to educate people."

Wes Muir of Waste Management, one of the US's biggest collection and recycling companies, believes recycling will weather a temporary dip in the commodities markets. "There's a strong commitment to recycling," he says. "People think it needs to be done and predicated on the belief that garbage is not a waste, it is a resource that reduces the need for the extraction of raw materials. We don't see a backpedalling … it's ingrained into the culture."

One short-term solution available to the larger companies is to store the materials in the hope that the market will rebound, a strategy pursued, albeit reluctantly, by Young. "We're only storing what we can't sell," he says. "Nobody wants to pay that bill."