As stark as it was, he made his point.
During his speech on tire recycling at the Clemson Tire Industry Conference, David L. Forrester, president and CEO of TIRES Inc. and Global Tire Recyling Inc., presented a slide titled, ``A Detailed List of Those Who Made Millions in Tire Recycling.''
Underneath the title was a blank page.
If nobody's getting rich in tire recycling, changing dynamics in that industry are creating more opportunities to make a living and make products of value and importance, according to both Mr. Forrester and to Dana N. Humphrey, Malcolm Long professor of civil engineering at the University of Maine.
Mr. Forrester described in detail the economics of tire recycling, presenting different scenarios for a tire monofill operator, a crumb rubber manufacturer and fabricators of both 1- and 2-inch sizes of tire-derived fuel (TDF).
One constant in all those scenarios, however, is the necessity of the tipping fee-the fee scrap tire generators pay processors to take their tires. All four business scenarios depend on tipping fees to stay alive, Mr. Forrester said, but all except the monofill require a fee of at least $70 to $80 per ton. Processors with low overhead and excellent operations, he added, can be reasonably profitable at the $75-per-ton level.
Tipping fees, however, are extremely sensitive to the dynamics of scrap tire supply and demand, Mr. Forrester said. In the early 1990s, for example, market pressure drove fees downward amid the growth of TDF markets, initial successes in civil engineering applications and an apparent federal mandate for crumb-rubber-modified asphalt.
The Intermodal Surface Transportation Efficiency Act (ISTEA), he said, held the promise of increasing demand for rubberized asphalt tenfold to 2 billion from 200 million pounds in the space of five years. Because of this, more than 100 new crumb rubber processors started up.
``But ISTEA died,'' Mr. Forrester said. ``The states fought it, the contractors fought it, and finally the industry just told Congress to give it up.''
This meant the failure of more than 90 percent of all scrap tire processors by the late 1990s, he said. It also meant that tipping fees moved up for TDF producers, which saw continuing moderate growth through the period, and for suppliers for civil engineering applications, which also saw growth but only in regions where the geography supported the technology.
Mr. Forrester projected that the market dynamics for the scrap tire industry would be very similar in 2005-2010 as they were in 2000-2005. Through the decade TDF, rubber mulch and infill will grow at a double-digit pace, he said, while crumb rubber, civil engineering and rubberized asphalt will grow at a slower pace.
Some of the larger processing companies came to grief trying to consolidate the market, according to Mr. Forrester. ``Most large players were trying to consolidate the market with no strong operations and very high overhead,'' he said.
Consolidation attempts over the next five years will be made by stronger, more financially sound players, he said, so that tipping fees-which were stable to slightly up in the early 2000s-will be lower by 2010.
To survive in the scrap tire market, processors need to study the historical and geographical factors of wherever they plan to open for business, according to Mr. Forrester. For example, Florida is strictly a crumb rubber market because of lack of demand for TDF and a low water table that forbids the use of scrap tires in civil engineering projects.
On the other hand, monofills dominate the market in the Carolinas, making for a very stable market situation, Mr. Forrester said. Monofill operators enjoy a $7- to $25-per-ton profit advantage over non-monofills, he added, and many are starting to segue into product manufacturing, though in the end monofills run counter to market development.
There are many threats to scrap tire processors, according to Mr. Forrester. These include changes in tire composition, making them more difficult to process; strong markets being made obsolete by new products or government prohibitions; continuing fire and safety issues; possible product liability lawsuits from injuries on playgrounds or athletic fields; and market pricing without fuel surcharges.
``None of us was smart enough to have fuel surcharges built into our contracts,'' he said. ``A $75-per-ton tipping fee was a lot more tenable at $1.10 per gallon for diesel than at $3.''
Nevertheless, he predicted a thriving scrap tire market for the remainder of the decade. TDF will remain ``the big kahuna,'' he said, but outdoor surfacing markets and high-value fine powders also have great potential, particularly coupled with growing trends for stronger operations, more professional relationships and better service.
Tire-derived aggregate for civil engineering-usually in shards of 3 to 12 inches-is proving its worth in those projects that call for its unique blend of properties, according to Mr. Humphrey.
``I love weak soil,'' he said. ``That creates the conditions in which tire-derived aggregate excels.''
Engineers who haven't dealt with scrap tires tend to think of them as a waste product, Mr. Humphrey said. Tire shards have properties engineers need and are willing to buy. They are one-third the weight of soil, with one-half the earth pressure; they are eight times better as a thermal insulator; they are highly permeable; and they offer superb vibration dampening.
``Tire-derived aggregate is often the cheapest altermative if you need its unique properties,'' Mr. Humphrey said. A passenger rail line in San Jose, Calif., for example, spread a layer of tire-derived aggregate under the tracks at $121 per foot, as opposed to a reinforced concrete slab supported by special rubber pads on another concrete slab.
The slabs cost $600 to $1,000 per foot, meaning that the use of scrap tires saved the rail line more than $1 million in construction costs, Mr. Humphrey said.