Dive Brief:
- The city of Houston has decided to let go of Waste Management as its recycler, severing negotiations over a new recycling contract. The current contract for recycling services expires on March 16.
- Waste Management had insisted on a six-year, $18 million contract, which would have compensated for losses that the company has sustained throughout recycling services. However, the new contract would have been nearly double what the city is currently paying, and Houston is facing a budget gap for the coming fiscal year of $145 million to $160 million.
- Houston Mayor Sylvester Turner has said he is currently negotiating with other companies to provide recycling services, however disruption of service is possible after the current contract expires.
Dive Insight:
Financial burdens on both sides caused the relationship between Waste Management and its hometown of Houston to fizzle. While Waste Management is losing money from recycling, Houston is struggling — to the point where the city may layoff employees due to budget shortfalls.
In an email to Melanie Scruggs of the Texas Campaign for the Environment Fund, Waste Management CEO David Steiner said: "The truth is that we have been losing over $1,000,000 per year on the contract, and a year ago we told the City that we could not continue to lose that amount of money. They completely ignored our request for a year. Then, two weeks ago the Mayor called me. He said that he realizes that we are not in the business of losing money, but could we just continue to lose for another 18 months so that he would not look bad as a politician ... I offered him three or four alternatives. For two weeks they ignored us, did not try to reach a solution, and then came out and called us the bad guys. We want to continue to recycle in Houston. I hope you will let our Mayor know that you would like him to have constructive discussions to find a solution. We stand ready and willing to talk."
No matter who Houston picks as a recycler, the process of recycling won't be easy. A new $95-per-ton processing fee for recyclables, based on commodities’ current value, means each ton will cost Houston almost $50, which is nearly double the cost to landfill. Two years ago the city made $25 per ton for its recyclables.
