By Marie Binette
At one time, the Canadian scrap recycling industry had somewhat predictable ebbs and flows. Recyclers came to expect the scrap trade, tied heavily to commodities markets, would generally rise and fall with the value of raw materials and seasonal market demands. Changes to international trade and environmental policy in the past 18 months have meant dramatic shifts for the industry, however, with Canadian recyclers facing many of the same issues as their U.S. counterparts as well as some uniquely Canadian challenges as of late.
Tracy Shaw has served as president and CEO of the Canadian Association of Recycling Industries since 2015. She took on the position in what was then considered a very busy time for the Canadian recycling industry, tackling increasing stewardship policies, rail transportation issues, and burdensome metals theft legislation. Since then, the need for strong advocacy has only increased, as Canada has felt the shock of China’s import bans and proposed changes to definitions in the Basel Convention were announced.
Last June, CARI welcomed Matthew Zubick as its new chair for a two-year term. Zubick is the manager of London, Ontario–based John Zubick Ltd., a 73-year-old recycling business that has supported CARI’s efforts for decades. Bringing an “unwavering positivity and a fresh perspective,” Shaw says, he has aimed his sights on continuing to improve CARI’s communications, boost advocacy, and create more value for association members.
In conversations with Marie Binette, CARI’s communications manager, Shaw and Zubick described what the past year and a half has meant for Canadian recyclers and what issues they expect will affect the industry in the months and years to come. The interviews have been combined and edited for clarity.
In the past year, China banned the import of numerous raw secondary materials. How have the changes to China’s trade policy affected the Canadian recycling industry?
Tracy Shaw: China is Canada’s second biggest market (after the United States). Although Canadian exporters have sought alternative markets, there is no other country in the world with China’s processing capacity. Plastic scrap exports were hit especially hard; CCIC Canada issued 50% fewer certificates for exporting plastic scrap in the first year and then reduced them further. Volumes [of plastics Canadian recyclers exported to China] fell 30%–40%. Recyclers managed to find markets for some plastic grades domestically and sought alternative markets for others. Some municipalities stopped collecting plastics or were forced to stockpile.
On the positive side, we have begun to see some Canadian companies innovating and investing in new technologies that produce higher-grade material. However, [this is] not enough to accommodate for the loss of the Chinese market.
Matt Zubick: Other homes for material are slowly being established, but it will take time to replace what China was handling. I find it exciting that in response to this, there is an emergence of responsible domestic solutions [that’s] starting to take shape. Our industry has traditionally been very successful at innovating and adapting—we just need an opportunity. Finding responsible domestic solutions will be a huge issue for Canadian recyclers but also a great opportunity.
TS: The full consequences of the Chinese import restrictions remain to be seen. We are seeing other countries following China’s lead in imposing restrictions on scrap imports under the guise of environmentalism, and this gives the false impression that recycling is ineffective or that scrap is not a valuable resource. India recently announced a ban on scrap plastics imports. Days later this ban was postponed [for a few months], but the country is a major importer of plastic scrap, so we’re monitoring this situation closely.
Despite the impending additional restrictions on steel, aluminum, and copper due to take effect in China in June, exports of these materials [from Canada] to China were at their highest in 2018. This shows that the Chinese see value in these metals.
The Trump administration levied tariffs on steel and aluminum imports from Canada and other countries in 2018. Have these tariffs affected CARI members?
TS: The [Section] 232 tariffs do not directly apply to scrap steel and aluminum, but they have affected the market for these materials by reducing the demand for scrap in some circumstances. This may be the case for recyclers supplying scrap to consuming businesses that [produce] semi-finished products that are subject to the tariffs, though we haven’t heard a great deal of member feedback on this issue.
What will the United States-Mexico-Canada Agreement (the “new NAFTA”) mean for Canadian recyclers?
TS: NAFTA was an important agreement for the recycling industry, as we are heavily integrated [across the Canadian–U.S. border]. We are pleased that scrap commodities will remain tariff-free under the USMCA, and that it will support the use of industry specifications for materials. Rules of origin classifications for waste and scrap have not changed under the new trade deal, and we are hoping that now these negotiations have wrapped up, government officials will shift focus to negotiating the removal of the 232 tariffs.
Recent proposed changes to the Basel Convention threaten to redefine and recategorize recycling and limit exports of scrap. What would the effect of those changes be?
TS: The text of the convention is very thorough in outlining the conditions for exporting waste and recyclable materials. It defines recyclable material; it defines who is a recycler. Changes to those definitions would have major repercussions to the global recycling industry. It could construct a barrier to unrefined scrap exports, thereby reducing access to secondary commodities for developing nations.
Many international and federal environmental policy definitions are drawn from the language in the Basel Convention, so we could see a trickle-down effect where Canadian laws are updated to reflect changes to Basel definitions. The Canadian Environmental Protection Act is one piece of legislation that could be impacted.
How is the Canadian economy performing?
TS: While [Canada’s] economy has been relatively resilient over recent years, lower oil prices and trade tensions are starting to take their toll. Canada’s economy is export-driven and heavily dependent on commodities. Because of that, we rely on a strong global economy—and, in particular, a strong U.S. economy. The United States remains our biggest trading partner.
Canada’s federal government is imposing a national carbon-pricing plan later this year in an attempt to curb emissions. Will this policy affect recyclers?
TS: The carbon-pricing plan differs somewhat by region. Most provinces and territories have imposed a carbon tax—or had one imposed on them; some have cap-and-trade programs or a combination of the two. The carbon tax is levied on fuel and [fuel] production and distribution companies, so it’s not applied to recyclers directly. However, the costs of these levies are being passed to consumers, so basic business costs—the cost of gasoline, oil, propane—have increased and will continue to do so.
What laws and regulations on the provincial level could pose a burden to recyclers?
TS: Stewardship and circular economy programs are our greatest concern at the provincial level. Stewardship programs cover a wide range of products and materials depending on the province they are based in. CARI is currently monitoring stewardship plans out of British Columbia and Ontario that deal with electronic outdoor power equipment and waste electrical and electronic equipment, respectively. These two provinces continue to be the most ambitious in Canada in terms of stewardship and “zero-waste” goals.
Many of these types of programs aim to minimize valuable resources being sent to landfill and reduce greenhouse gas emissions, which are values CARI supports. Our message with these programs is that recyclers are the problem-solvers, not the problem, and that market-based systems are the best method of diverting material for recycling.
CARI’s advocacy efforts toward “zero-waste” programs often highlight that many products and materials are currently being collected well and recycled within the existing network, and that imposing more legislation can interfere with value streams that are already moving materials through the market efficiently.
Is the Canadian recycling industry still experiencing industry consolidation?
TS: We still see some medium-sized business consolidating, but the larger vertical integration trend seems to have slowed in recent years.
What are some of the greatest operational challenges Canadian recyclers face right now?
MZ: Increased efficiencies have been a fundamental concern for us. As competition is always present, we are continuously mindful of finding better ways of doing things. Being aware of new technologies or machinery, reevaluating procedures, and streamlining processes are more important than ever.
Focusing on efficiencies has also affected our health and safety and environmental programs. Accidents are kryptonite to productivity. Even taking the moral obligation out of the equation, accidents are disruptive, claims are costly, and employee morale is affected.
Rather than seeing health and safety as an external function that is being forced on us, [John Zubick’s is] choosing to see it as an essential part of our operations that needs to be considered from the ground up. From our perspective, health and safety and productivity should be considered interdependent rather than separate functions. With this mindset, we are striving to make our processes efficient and safe at the same time. If we can find a common-sense solution that fits in with our natural processes, then it is more likely to be effective and save on costs.
Have recent changes to Canada’s environmental policies and compliance standards affected business?
MZ: Absolutely. However necessary, a new compliance standard can be disruptive to the companies that are required to follow it. The level of reporting requirements and system checklists seems to be constantly increasing, and these requirements all take time and effort to complete. We see these requirements as simply the cost of doing business, and we try to minimize the disruption by marrying a new requirement with one of our current procedures or reports.
What is the biggest issue you see for Canadian recyclers today?
TS: In the current political climate, trade uncertainty is the biggest issue for Canadian recyclers. The Canadian domestic market is relatively small. Our industry operates in global markets, and Canadian business investment and economic growth in general is dependent on steady free and fair trade.
While it’s important to tackle global environmental issues, the plastics “crisis” can’t be solved by simply banning straws; there must be a market for scrap material. We need to educate the public about the availability and quality of products manufactured with recycled content, the recyclability of those products, and the importance of choosing recycled and recyclable products to support the recycling industry.
At the day-to-day level, recyclers are finding it increasingly difficult to attract and retain workers.
MZ: It has always taken extra effort to find skilled drivers, specialized trades, and career employees, but now, with the recent spike in [Ontario’s] minimum wage, we have needed to reevaluate and adjust. We are still finding amazing employees, but it is taking more effort to do so.
TS: The labor shortage isn’t unique to Canadian recyclers (or to the recycling industry), but it will be a problem for the foreseeable future.
What’s the biggest challenge you see for CARI in the future?
TS: Broadly put, a lack of understanding of the industry. Only a few months ago, I was asked by a federal government representative why “half of what’s collected in the blue bins goes to landfill.” Misconceptions about recycling—like that one—lead to harmful and inappropriate legislation and regulations. We’ve seen that with metals theft legislation, stewardship programs, and trade restrictions. Canada’s government still categorizes recycling as an activity of the waste industry, not an industry of its own. We need governments to treat scrap as an essential resource.
MZ: I also think that stewardship programs have the potential to disrupt the Canadian recycling industry, depending on how they are implemented. We need to be perceived as part of the solution and not part of the problem. This is something that we are trying to advocate through CARI. There is already a network of responsible Canadian recyclers across the country—all we need is a market or an opportunity.
TS: We also need to change the public’s mindset about recycling. Individual recycling operations fight opposition from neighbors who see only a “dirty” scrapyard and don’t understand the economic and environmental benefits that these businesses bring to their community.
MZ: It is getting better as awareness of recycling increases, but I do feel that our industry struggles with an image problem. A lot of news stories don’t seem to acknowledge the positive environmental impact for-profit recyclers create. We are, in a sense, the original “green” industry—our companies prevent valuable resources from being relegated to landfills.
Unfortunately, misperceptions about our industry can affect business at the local level and beyond. Recyclers may face increased regulation or even be forced to move if they have trouble in their local community. On a broader level, misunderstanding of our industry can mean unnecessary stewardship programs or even changes to what materials are considered recyclable altogether.
What are some positive ways recyclers can improve community relations given this persistent image problem?
MZ: At John Zubick’s, we are continuously trying to improve our image, and we use a number of strategies other recyclers could likely use, too. We’ve improved the curb appeal of our company to help combat the “dirty” scrapyard perception. We support local events, schools and charities, and nearby businesses. We also offer information about other local recycling resources on our website to help community members understand what materials belong in which recycling stream.
I think one of the best ways recyclers can improve public relations is to open their doors to their community. We offer tours to school groups, scouting and guiding groups, photography clubs, and anyone else who is interested. A yard tour is a great way to teach the public about the positive ways recyclers impact the community, from protecting the environment to producing jobs for the local workforce.
Marie Binette is the communications manager for the Canadian Association of Recycling Industries, which is based in Ottawa, Ontario.