Survival of the fittest

"The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book, you either do it right or you get eliminated.”

While this quote on the inefficiencies of corporate America stems from Gordon Gekko’s famous “greed is good” speech in Oliver Stone’s 1987 film “Wall Street,” the same sentiment could have served as a warning shot to the bad actors in the recycling industry prior to the summer of 2017.

After years of recyclers being able to package and sell off highly contaminated bales to foreign markets, China closed the floodgates overnight in the form of a strict import ban on incoming materials at the beginning of this year. This action has led to a domino effect that has recyclers across the country hurting economically and desperate to find markets for their materials.

In the scramble to make sense of the new economic model, the choice is clear: Recyclers can either clean up their processes and increase their purity rates or be faced with the prospect of going out of business.

The good news is that for those who’ve made a commitment to producing cleaner bales, there are still opportunities.

According to Waste Connections CEO Ron Mittelstaedt, who spoke recently at Wastecon 2018, China’s ban is opening up some previously shuttered domestic markets.

“[China’s actions] are forcing the industry to find markets domestically,” he said at the event. “I think if there is a quality product put out by us as a company or us as an industry, markets will develop. Now, whether that is an economic model that works long term is a different discussion. But there will be markets for a quality product, and they will be domestic.”

In this issue’s cover story, Ron Gonen, co-founder of New York City-based Closed Loop Partners, echoes Mittelstaedt’s sentiment, saying that there are still buyers for those who are willing to make the investment in new technologies.

“I think we’re starting to see a shift,” Gonen says. “We’re seeing companies that have high-quality bales being able to weather the disruption [caused by China], and I think they’re going to come out on top. ... High-quality bales are moving, that’s the main thing. And if you produce high-quality bales, there are people in the market who want to work with you. That is something that I think is getting lost in the whole China conversation.”

While there is sure to be no shortage of competition for recyclers in the coming years, there appears to be some reasons for optimism on the horizon.

It’s just going to come down to the question of who’s willing to evolve to meet the demands of the market that’ll determine who survives in the post-China world of U.S. recycling.

Check out “Closing the Gap” to see what Closed Loop Partners is doing today to help recyclers meet the new demands of the market.