Five years ago, the idea that there could be a bidding war for scrap tires in the near future would have been ridiculed. To many, the prospect that there will be sufficient demand to consume 100 percent of the annual generation of scrap tires seems far-fetched, implausible. Neither idea should be scoffed at.
Today, scrap tires are in short supply in several regions. Furthermore, situations are unfolding in the scrap tire industry and within many state governments suggesting that sufficient markets can be developed within the next five years that can consume the 240 million to 250 million scrap tires generated every year.
Incredulous? How about this: In New England, there will soon be four pulp and paper mill boilers using tire-derived fuel (TDF) in addition to an existing dedicated scrap-tires-to-energy facility. Market demand for TDF could consume 22 million tires a year there.
With the growing use of scrap tires in civil engineering applications, total consumption could exceed 25 million scrap tires a year, far more than the New England region generates.
This demand will be met by improving the efficiency of scrap tire collection, abating stock piles, and importing needed tires from other regions. One result of this elevated market demand has been downward pressure on the region's tipping fees.
Within the next 12 months, Illinois, a state generating 10 million to 12 million scrap tires a year, will have an annual demand for up to 24 million scrap tires. Again, the results will be significantly
lower tipping fees and tires being imported from neighboring states.
California generates 28 million to 30 million scrap tires each year. Within the next 18 months, all of these tires should have markets. In Southern California, five cement companies should consume some 10 million to 14 million scrap tires a year. Add in the tires going to the ground rubber markets, and annual demand should exceed 17 million scrap tires.
In central California, TDF demand is driven by the scrap-tires-to-energy facility near Modesto and another cement kiln, which together will consume 6 million to 7 million scrap tires a year. In Northern California, the cement industry will consume another 3 million to 4 million a year.
These are not isolated cases. In Tennessee, Maryland, Virginia, Florida, Alabama and Utah, major markets for scrap tires are in place or are being actively developed. Today, there are markets for more than 40 percent of the scrap tires generated yearly.
In some states, scrap tire monofills are included among the acceptable uses (markets) for scrap tires. If the monofilled tires are included in the total going to acceptable end uses, there would be some 43-45 percent of the annual scrap tires having markets.
By mid-1995 that total should reach 50 percent. Few other recovered materials will reach that level in the same time frame.
When you consider that the scrap tire industry has existed only for 10 years, and that as recently as 1990 demand for scrap tires was a mere 11 percent of the annual generation, the advancements made in this industry become all the more amazing.
Are we now free and clear, coasting downhill to the finish line of 100 percent market demand? Unfortunately, no. Many issues remain which, if not adequately addressed, could slow down-if not set back-any further marketplace success.
One of the most critical issues this industry must face is its own success. With increased market demand, there comes increased visibility and scrutiny, as well as opposition to some of the market applications.
It is apparent to the Scrap Tire Management Council (STMC) that this industry is at a crossroads: If the industry is to continue expanding, it must become more structured and shed both its image and its mentality of being a crude and dirty business.
Continued increases in market demand will be a function of the improvements made not only to that image, but to the way the industry approaches existing and potential markets. The driving forces needed to develop these markets are a high level of quality, consistency and dependability on which those markets can rely.
In September, the STMC and the Clean Washington Center sponsored ``Scrap Tire '94, A Business Development Conference.''
The intent of the three-day event was to help the scrap tire industry better understand the nature of the markets and convey the message that the solution to scrap tire problems is market-based.
Expanding markets are a function of developing and implementing sound market analyses and business practices. Some of the messages conveyed at Scrap Tire '94 were simple, some more complex. Some of the basic messages cited were:
No matter which scrap tire product is being generated-TDF, ground rubber or shreds for civil engineering applications-it must meet the end-user's specifications;
Recycled products do not necessarily fetch prices higher than virgin materials or products;
There needs to be a ``fit'' for the use of scrap tire materials in a product or application. In other words, the use of TDF, ground rubber or other processed scrap tires must yield an advantage to the end-user.
Before purchasing a scrap tire processing system, the potential operator must survey the prospective market(s) and determine the specifications that will be required to meet their needs. Then purchase the system that will generate the desired products.
When seeking financial assistance, do not state that scrap tires are a major environmental danger, that many landfills do not accept them or that scrap tires pose environmental dangers.
These are not sufficient justifications to enter the scrap tire industry or to entice a financial backer to commit any resources to a project. Even stating that there are strong markets and ever-increasing demand for scrap-tire-generated products will likely be an unconvincing argument.
Facts, market surveys, interviews with potential end-users and a well-thought-out business plan will gain the attention of most financial institutions.
Part of the answer is the Chicago Board of Trade (CBOT). The CBOT, along with the National Recycling Coalition and other interested parties, is developing a computerized national market system for trading recovered scrap products.
The first commodities on the system, glass cullet and certain recovered plastics, should be traded by early next year.
One of the STMC's biggest projects for 1995 is to work with the CBOT to add scrap-tire- and rubber-derived materials to this trading system to help elevate them to commodity status. This will be achieved through a three-stage process.
First-stage activities started with the development by the STMC of a standardized listing for the terminology used in this industry. This publication, the Glossary of Terminology, was the result of a true collaboration with the tire and scrap tire industries.
With the standard terminology and definitions in place, the Council has been working with three subcommittees of the American Society of Testing & Materials (ASTM).
With two of these subcommittees, the STMC is developing consensus standards for ground rubber and tire derived fuel materials. In the third, the Council is coordinating an effort to develop standard construction practices for scrap tires in civil engineering applications. These activities should be completed within 18 months.
The second phase will consist of two parts. The first will be to develop standard testing protocols for all scrap-tire-generated products. The second will be to set standards for accrediting laboratories for doing the actual testing. In an effort to use existing resources, the Council is trying to enlist the American Chemical Society's Rubber Division as a partner in this aspect of the project.
The third phase will be to deliver the ASTM/industry-accepted standards to the CBOT, to work with them in meeting their other requirements, and publicizing this service to both generators and end-users of tire-derived products.
The great advantage in having ground rubber and TDF as commodities on the CBOT is the stability this will bring to the market.
End-users get access to market information from around the country and expand their supply sources. They also will have the comfort of knowing they will receive what they order.
Any disputes will be handled by the CBOT. For the producer of scrap-tire-derived materials, it expands market boundaries and will give access to price information, enabling them to gain a sense of their efficiency. The CBOT system also will give potential market entrants a realistic picture of market conditions.
Finally, being a commodity traded on the CBOT should go a long way toward removing some of the stigmas attached to this industry. This improved image is needed to change the way the environmental community and the general public views the scrap tire industry.
While we believe the increased demand for scrap-tire-generated products can be sustained by industry, state government programs still can have a direct impact on the marketplace.
How can a regulatory agency assist in the continued growth of environmentally sound and cost-efficient markets? Level the playing field by designing and imple-menting a comprehensive program.
In our view, a comprehensive state scrap tire program has several key elements. They are:
1) An effective program of permitting or licensing of haulers and processors;
2) A market development program for scrap tire end-users;
3) A stockpile abatement program, based on the rate of market development;
4) Limited-period funding, based on appropriate and dedicated user fees, to initiate the program, assist in market development and aid in stockpile abatement;
5) An effective system of accountability, e.g. manifests; and
6) As markets develop, a phased ban on landfilling scrap tires.
The combination of effective scrap tire regulation, sound business management and comprehensive technical information will, over time, result in development of increased market demand.
How will we know if, and when, progress is being made? Look for the lowering of tipping fees.
Success begets success. With the continued increase in scrap tire applications, and with the greater publicity about these expanding uses, we anticipate achieving the goal of sufficient market demand for all the annually generated scrap tires by the year 2000.
Mr. Blumenthal is executive director of the Scrap Tire Management Council in Washington.