Recycling industry struggling to survive

Nothing is immune to the global economic downturn not even the cost of recycling.

KELLY HODEL/Waikato Times

THROW AWAY: Sean Bovill from Waikato Pump Services tosses bottles into the recycling bin at Hamilton's refuse transfer station.

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Waikato people could soon be paying for recycling services if the world commodity market does not improve, industry leaders warn.

The Government is investigating a multimillion-dollar bailout of the recycling industry as contractors stockpile paper and glass they can not sell.

Some recycling services in other parts of the country have been axed, material stockpiled and jobs cut as councils and contractors battle a huge drop in world demand for recycled products due to the economic downturn.

Tom Nickels, managing director of Transpacific Industries New Zealand the firm contracted to provide recycling services and waste collection for the Hamilton City Council, said the company had a "degree of protection" through long-term contracts with firms which bought the recyclables it collected. But it would be "increasingly exposed to the true commodity price, which is not very attractive at the moment".

Mr Nickels said charging for recycling could happen in the next six to 12 months if demand and pricing for recyclable commodities did not improve.

"If it (the recession) does continue for long enough, I think we'll reach the point where the recycling industry will have to be charging the source to pick up the recyclables, because it won't be economically viable otherwise. It's likely if pricing stays where it is. It's not our preference, but of course we have to remain in business."

He said the "value equation" in the recycling industry had moved, and the situation would need to be monitored closely.

Hamilton City Council spokeswoman Christine Watson said the council's contract with Trans-pacific would be up for annual review in October or November. The review took into account the performance of the contractor. The Consumer Price Index component of the contract would be affected by economic conditions.

"Part of that (review) could potentially be a review of charges," she said.

"We would look to there being a minimal impact on ratepayers, and even managing that down to zero if that situation occurs."

Hamilton property owners' rates incorporated the recycling services charges, and Miss Watson said the council "would really look to avoid" charging for kerbside collection or dropping off recyclables at the city's refuse transfer station.

About 800 tonnes of recyclables are collected in Hamilton every month.

Matthew Nant, chief executive of Smart Environmental Ltd the firm with waste and recycling contracts for Waipa, Matamata-Piako, Thames-Coromandel and Hauraki district councils, agreed that if an economic recovery did not occur in the next few months, companies would need to "take measures" to ensure the profitability of their recycling operations.

Mr Nant said those measures could be a change to services (from weekly to fortnightly collection), restrictions on the product collected, or "some mechanism with the councils themselves to share the cost".

It was feasible more of the cost of recycling would need to passed on to ratepayers, but that would be the councils' decisions.

He said it would be around "three months, before you'd have to take some action".

"We'll be discussing the whole spectrum of options with councils. The margins aren't big in this game."

The various councils said their kerbside recycling operations were not in danger of being axed.

  See Raglan's Recycle Police, A10