[GRRN] Impact of Waste Industry Consolidation on Recycling
RecycleWorlds (anderson@msn.fullfeed.com)
Mon, 28 Jun 1999 12:03:59 -0500
In the last few months, there has been a lively debate on how waste
industry consolidation will impact recycling. I have expressed the concern
that recycling is the only real threat to the waste oligopoly's looming
market power as the endgame of consolidation approaches. That is to say,
if tipping fees are doubled, then market driven expansion of recycling can
double diversion rates and make trash hikes unsustainable. Consequently I
opined that the waste giants will be under enormous financial pressure to
jack up recycling costs in tandem with trash hauling increases -- at least
on the margin where recycling might be expanded (e.g. organics). Gary has
countered that he expects the integrated waste haulers to cast off
low-producing recycle operations where they can be bought up by independent
recyclers, and, with higher tipping fees, recycling will become more
attractive.
This issue of Waste News ("Small recycler grabs big contract," 6/28
issue, p. 9) gives some evidence in support of both points of view. On the
one hand, according to the article, Waste Management increased its bid
price to renew its recycle contract with Richmond VA by 40%. On the other
hand, a local independent recycler, Tidewater Fibre, submitted a winning
bid 5% lower than WMI's.
Let's keep track of unfurling events to see which hypothesis if
supported by the facts over time.
Peter
____________________________________
Peter Anderson
RecycleWorlds Consulting
4513 Vernon Blvd. Ste. 15
Madison, WI 53705-4964
Phone:(608) 231-1100/Fax: (608) 233-0011
E-mail:recycle@msn.fullfeed.com