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Forget Tariffs! China’s Affecting An Industry Close To Home And Your Town Is Worried.

Mayor Beam Furr, China Banning Waste

With Mayor Beam FurrMayor and elected Commissioner for Broward County Commission District 6

China just threw a curveball at the global recycling industry.

For decades, the U.S. shipped containers full of scrap and waste to China. Dogged by its own environmental problems, in 2017, China set limits on what it would accept for recycling from other nations.  Then, in April 2018, China went further. It extended its ban to dozens of other recyclable materials.

As a result, counties across the U.S. have recycling waste piling up, with nowhere to go.  To discuss the China ban on recyclable goods, Steve speaks with Beam Furr, the Mayor and elected Commissioner for Broward County, Florida.

Crowd Sourcing Could Help Solve America’s Recycling Crisis

Steve wants to educate Americans on this recycling crisis. Crowd-sourcing could spur innovative new solutions and solve our waste problem. Ideally, we should recycle right here at home, without having to ship the materials elsewhere.

Quid Pro Quo Worked Well

Before the ban, commercial recyclers would pay counties as much as $150 per ton to haul away their trash and ship it to China for a profit.  China, in turn, would clean up and recycle our waste, use it to produce new goods, and ship some of it right back to us.

This quid pro quo worked because China paid us for our waste. In addition, they got extremely low-cost raw material from us, such as metals from used cars and toasters.

Recycling Revenues Have Dried Up

Under the new ban, commercial recyclers find it hard to turn a profit from our waste.  Consequently, recycling payouts, if they exist at all, have dropped from $150 to $5 per ton or lower.  In many cases, counties have to pay to have their recyclable waste hauled away.

Data shows that 55% of our waste gets buried in landfills, 33% gets recycled, and 12% goes to incinerators to produce electricity.  Landfills and incinerators are expensive to operate. Costs keep rising year on year, so cities need to team up and share recycling resources.

Americans To The Rescue

While the going was good, Americans did not pay much attention to what went into waste and what went into recycling bins.  Fortunately, the tide is turning.  Americans are now far more aware of the impact our waste has on local landfills and the environment. Most of us are willing to do more to save the planet.

Mayor Furr believes this ban will force us to find ways to close the loop and use recyclable resources ourselves.  Waste export isn’t a dependable option.  So Broward County, for one, is looking at options such as having its citizens run county-owned public resource recovery centers.  Such centers educate the public on more efficient recycling and innovative options such as turning plastic into sea walls or turning glass into sand.

Turning glass into sand was successfully tested by the City of Hollywood in Florida.  When varying amounts of pulverized glass were mixed in with sand, one couldn’t tell the difference.  However, final approval requires an assessment of the proposed solution’s environmental impacts. It’s important, for example, to determine how this innovation would affect the sea turtles.

Mayor Furr remains hopeful that Americans will develop ways to reuse these resources.  The China ban could be an opportunity to rise up in true American style and solve this pressing problem.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

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Steve Pomeranz: Beam Furr was sworn in as the new mayor of Broward County in November of 2017, where he previously served as vice-mayor under former mayor Barbara Sharief. Now, I’ve asked Mayor Furr to join me today because frankly, most cities and counties in the US are facing a big problem that many of us don’t know about and that could very well affect our health and environment. You know, bluntly, right now our recycling programs are not working anymore. And something needs to be done. All right, so it’s not about nuclear proliferation or human rights, but this is an important issue and it’s a local issue and it could affect us all directly. Welcome to the show, Mayor Furr.

Mayor Beam Furr: Thank you, Steve, glad to be here.

Steve Pomeranz: I’ve been reading a lot of articles recently describing this serious problem, and I wanted to ask you, to help us understand, how it started. And I want to help spread the word here to get the wisdom of the crowd, so to speak, out there of our listeners to help solve it.

So, why has recycling, as we know it, stopped working?

Mayor Beam Furr: It’s probably mainly due to market conditions. It’s a shame because it’s at a time where I think you’re seeing the public wanting to be more environmentally sensitive on these things. They actually want to be doing recycling. It’s a time that many countries that were buying our goods are not. China has quit buying much of our recycled resources and for various reasons, some having to do with contamination. Our stuff isn’t as pure when it goes into the recycling. So people are putting pizza boxes in there, and they shouldn’t. And then, those market conditions are probably the biggest reason that we are having a problem with it.

Steve Pomeranz: Well, US exports about one third of its recycling, and nearly half of that goes to China, so about 17% of that goes to China. And China’s just set new rules. They are trying to protect their own environment and put a limit on the amount of materials that they’ll receive, is that right?

Mayor Beam Furr: That is right, that’s correct. And it has to do with contamination, and what we’re going to have to do is, if we’re going to get that market back, we’re going to have to educate everybody as to what goes in that big blue bin. What can go in, what can’t go in.

Steve Pomeranz: There’s confusion about that, I mean, because I take it pretty seriously. I’m not a fanatic or anything, but I do pay attention to it. And what kind of plastics, certain kinds of plastic are yes, certain kinds are no. Sometimes we have these big boxes from online delivery, and you’ve got to cut them up and get them into the right size.

And we don’t know, well, is this paper good? Is this the glossy paper? It’s pretty confusing for us as consumers to kind of keep up with this. But getting back to the China issue, since they’ve, in essence, stopped buying from us, the price is dropped, I’ve read, from $150 a ton to, in some cases, $5 a ton.

What has that done to Broward County’s balance of payments?

Mayor Beam Furr: Well, it’s causing all kinds of consternation and it’s putting it mildly. Because, where cities were actually making money with recycling, now it could be in the future we’re having to actually pay to recycle unless we find some way to close the loop and use those resources ourselves.

Steve Pomeranz: Well, right now it’s being handled by private enterprise. Private companies like Waste Management, I guess, they buy the material from you and then they’re responsible. They’re selling it to China and making a profit as a middleman. They are no longer making profits in this area, they’re probably experiencing loses. So, is a solution to create a public agency, create your own resource recovery centers? Because counties and state municipalities don’t have to make a profit.

Mayor Beam Furr: Yeah, that’s exactly right. If we’re trying to outsource this and have a private company do it, they’re not going to make any money.

They can’t make enough money to justify it. But, as a service, for and just for doing the right thing and to protect the environment, it makes sense for the public to create a waste management system on their own. And as long as we’re providing the service, we don’t have to make a profit. We don’t want to take a big loss, but I think we could break even on this.

Steve Pomeranz: What’s going on with the excess material now, I mean it’s not like this stuff goes away, it gets stockpiled somewhere and then has to be put into the landfill, I guess. Is that what’s happening?

Mayor Beam Furr: Unfortunately, on some of it, it is. We’re still trying to find buyers for everything that we can. In Broward County, we actually burn a lot of these goods, and we turn it into electricity.

Steve Pomeranz: Yeah.

Mayor Beam Furr: When people see those incinerators that’s around Dixie highway, I mean, on 441, that’s an incinerator. That actually creates electricity, and we get recycling credits for that. But the others, unfortunately, if it can’t be sent to China and it can’t be burned, then it’s going into the landfill.

Steve Pomeranz: I read that 55% gets buried in landfills, 33% gets recycled, and 12.5% goes to incinerators. You’re saying that Broward County has incinerators; doesn’t Dade County also put a large amount of their material in incinerators?

Mayor Beam Furr: Yes, so does Palm Beach. Palm Beach just built two brand new ones just a couple years ago. And we had two, but one of them now has been disassembled, which is too bad. And, the company that did it is also the same company that owns the landfill. It was more profitable for them, I imagine, as a business decision to close the incinerator and to use the landfill. So that tells you something right there.

Steve Pomeranz: Broward County disbanded their own resources recovery board, why was that disbanded? What happened?

Mayor Beam Furr: That was, we have 31 cities in the county. 27 of them were part of the resource recovery board, and we had an inter-local agreement, between all the cities for 20 years, and that was to help buy the two incinerators. But the incinerators weren’t put in our name; they were in Waste Management’s name, which is unfortunate.

Steve Pomeranz: Mm-hm, yeah.

Mayor Beam Furr: Otherwise, we would still have two incinerators. While that was going on, there was kind of an escalation of prices of the tipping fee, that’s the amount that you pay per ton for disposal. It kept going up and up and up until right about when the bonds were paid off. I think cities were looking at that as that price was going to be there forever. And it wasn’t, once the bonds were paid off, it was going to drop. But a number of things started to happen around that same time. Some of the people wanted to get in on the competition.

They felt like Waste Management had a monopoly. So you had a couple of other players come in and entice the cities to go a different way and try to do recycling in a different way. And that caused a break up of the resource recovery board. I think what people have seen now—not people—cities, are recognizing this needs to be a regional activity, this needs to be a regional system where you can have economic flow control because these systems are too expensive for one city to go and do it by themselves.

Steve Pomeranz: Yeah

Mayor Beam Furr: And we just had a consultant, has been working for the last six months, and they are putting forth some recommendations. And their recommendation is to do exactly what you were talking about, is to build a public center, that the public would run it. We might have somebody operate it, but we would own it and it would be in our hands.

Steve Pomeranz: Well, this sounds like long-term timelines to get something like that done. In the meantime, you’ll have to cope with all of this excess material. What are you going to do with it? What other solutions are on the table? I mean, we’re talking about exporting this material to other countries. Now we’re talking about kind of keeping it local, building incinerators. Is there a possibility of creating a place to actually create products, like turning plastic into sea walls, as we had talked about before the show, or turning glass into sand and these kinds of ideas?
Can we do those things locally quickly?

Mayor Beam Furr: I think we can. We did an experience with the glass in the sand back in 2008 in Hollywood, and I actually had a chance to literally walk on the sand, I couldn’t tell the difference. They had mixed it, they did different proportions, 25-75, 50-50, 75-25, with a mixture of glass to pulverized, I meant to say, sand to pulverized glass. And you couldn’t tell.

But they have to make sure that it all works for the turtles and for everything else. But those are good possibilities. I think you’re going to see in the United States a lot of people trying to find innovative ways to use these resources. And for cities and for counties, it’s going to become an economic necessity to figure out a way to use those. But we’ve been using plastic wood in our parks and on the beach and for years, and this is a chance to use it even more.

Steve Pomeranz: We’re putting it out there for all your listeners.
This is an opportunity. I’m sure there’s going to be a lot of requests for proposals and the like. So if you’re in this business, and you’re looking for opportunity, this is probably a good time now that China is out of the deal. My guest is Mayor Beam Furr, the mayor of Broward County.

If you have a question or comment about what we’ve just discussed, don’t forget to go and visit us at stevepomeranz.com. Mayor Furr, thank you so much for joining me.

Mayor Beam Furr: Thank you very much, Steve, enjoyed it.

Steve Pomeranz: Thank you.