Dive Brief:
- During a recent interview with CNBC, Waste Management CEO David Steiner said the industry is in a "recycling recession" and that his company is reducing its investment in the field because it has become less profitable, as reported by The Street.
- Steiner noted that recycling used to account for 12% of the company's business five years ago, as compared to 8% now.
- As profits in this area decrease, WM has reduced its investment in recycling from $300 to $400 million per year to under $20 million per year.
Dive Insight:
Low oil prices were cited as the main cause for this "recycling recession," which Steiner said has been going on for the past four years. While that has been good for fleet management costs, it has made fiber and plastics less profitable for the company.
Steiner went on to say that for recycling to be profitable, "you either need to draw down the processing cost or you need to drive up the price on the back-end," or both. "And what I like to say is, 'If we're disinvesting in recycling, think what the other folks are doing that don't have other parts of business to fall back on," he continued.
These comments followed a recent speech at the Resource Recycling Conference in which Steiner discussed the challenges of recycling and called for potential collection subsidies for more challenging materials. WM processed 11 million tons of recyclables last year and has no plans to stop doing that, but is beginning to focus more on materials where some profit can still be made such as fiber, plastic bottles and metals.
