Will Recycling Survive the Recession?

TerraCycle Tom-Blog
The recycling industry is in a state of panic, hit by two forces beyond its control. The first problem is the economy (go figure). Demand for consumer products is down; retailers are focusing on price versus value. China (the manufacturer of the world's products) is not ordering recycled polymer. Indeed, a large number of factories in China are closing down due to lack of demand. On top of this, as recycling is a commodity industry, the price of plastic is directly related to the price of gas, and gas prices are low. If you make virgin plastic, your costs are directly dependent on energy costs. However, if you are a recycler, your costs are not in the making of the plastic, but in the collection and sorting of it--and these costs are not as dependent on energy costs. Therefore, recyclers are faced with a problem that may be beyond a solution: They are forced to collect and incur costs (due to their municipal collection contracts) on a material that is worth 50% of what it used to be months ago and they cannot sell it anyway since there is less demand. The result of all of this is predictable: recycling centers are closing at a record pace. My prediction is that if nothing changed in '09 the recycling industry could die! (Too bad you can't short recycling).