Because of slumping demand and falling prices, the recycling divisions of trash-hauling companies are facing big losses this year
Trash means cash—or at least it did a year ago. When the global economy was chugging along, mills were willing to pay good money for old paper, aluminum, and glass. No more. With the recession, prices for recyclables have plunged more than 60% in the past nine months as demand for everything from newspapers to bottled juices has shriveled. Says Johnny Gold, an executive with the Newark Group, a paper recycler: "Business stinks."
The recycling boom has turned into a bust. One company that's feeling the pain big time is Waste Management (WMI). With $13.4 billion in revenues last year, the Houston-based company is the nation's largest trash hauler. In late 2007, Waste Management set a goal of tripling the amount of trash it recycles, to 20 million tons a year by 2020. But now the company says its recycling division is headed for a $98 million loss this year. To cope, it's scrambling to change the way it purchases and sells recyclables, even as it continues to invest in the business. "The days of irrational exuberance based on commodity prices are over," says Patrick J. DeRueda, the head of Waste Management's Recycle America division.
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