Secondary commodity markets are cyclical as are commodity markets in general. Anyone who has been in the recycling industry for some time is aware of this fact. However, sometimes the factors that affect the swings in commodity markets have less to do with supply-and-demand fundamentals and more to do with politics or other factors, which is what we’re experiencing now as markets adjust to China’s changing scrap import policies and the trade war between that country and the U.S.
While circumstances are difficult, it doesn’t mean that opportunity doesn’t exist.
In discussions with recyclers, they often compare the present market with what they experienced during the Great Recession. During that time, pricing plunged and demand for recovered fiber and other recyclables all but came to a halt.
Duluth, Georgia-based Recycling Management Resources (RMR), the subject of this month’s cover story, “Expanding with energy,” was founded in 2008 just as the effects of the Great Recession were being felt in the U.S.
As Managing Editor Megan Smalley writes, recovered fiber markets were difficult at that time and economic uncertainty prevailed, yet RMR was able to find opportunities to grow by servicing accounts that other companies were no longer willing or able to service.
“While circumstances are difficult, it doesn’t mean that opportunity doesn’t exist.”
“Competitors were not picking up supply, so they started calling us,” RMR’s Reece Whitley says. “It was an opportunity for us to step in and say, ‘We can come over and pick up your cardboard. We can’t pay anything, but we will pick it up.’”
Whitley says RMR’s small size worked in its favor. “We couldn’t sell product for very much money. But we were so small. We had five employees. We didn’t have huge payrolls. We had a small warehouse with a small rent payment. It was good fortune, and we were able to make it through.”
The company made new connections and accessed supply that would have been harder to access if it weren’t for the turmoil created by the Great Recession.
Opportunity presents itself in markets of all kinds. This one is no different. What has your company done differently during this time of turmoil to grow in the recycling sector while other businesses might be shrinking? Let me know by emailing me at email@example.com. I’d love to hear from you.