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Ontario hikes recycling fees substantially on off-road tires

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TORONTO—Newly instituted tire stewardship fees under the Ontario Tire Stewardship (OTS) Used Tires Program have stirred an outcry from some tire dealers and farmers who point to their “inequality.”

The fees underwent major changes, effective April 1, that resulted in slight decreases for passenger and light truck tires but massive increases for some off-the-road tires.

Some stakeholders are protesting the fee hikes, but OTS Executive Director Andrew Horsman said the change is part of ongoing plans to make the program more efficient and equitable for stewards and end-users alike.

Mr. Horsman announced the changes in a blog posting on the OTS website, www.rethink-tires.ca. In the blog, he explained that the OTS Used Tires Program is funded by fees paid by stewards—that is, tire manufacturers and first importers in Ontario.

“The fee, which is set in consultation with the stewards, covers the costs of managing used tires to prevent them from ending up in landfills or being burned,” Mr. Horsman said. “It also ensures that there is no cost for the disposal of your used tires.”

When the OTS first started collecting stewardship fees in September 2009, the fees ranged from $5.84 (Canadian) for each new passenger or light truck tire sold in Ontario to $250.20 for each OTR tire with a rim diameter over 39 inches.

The new fee structure, which was posted on the OTS website two months before it went into effect, classifies tires by weight rather than size.

The stewardship fee per passenger and light truck tire drops to $5.69 under the new fee structure, and the fee for medium truck tires stays the same at $14.65.

However, the fee for large off-road pneumatic tires and large solid and resilient tires skyrockets under the new structure.

For any tire weighing between 375 and 700 kilograms, the new stewardship fee is $352.80. The fee rises to $546.84 for tires weighing between 700 and 1,200 kilograms, and $1,311.24 for tires above 1,200 kilograms.

According to Mr. Horsman, weight is a much more accurate way of calculating the actual cost of recycling a tire than rim size. However, retailers who sell OTR tires to mining, forestry and agricultural businesses—and who, like other tire retailers, must pass on most of the cost of stewardship fees to those customers—sounded notes of warning about the new fee structure.

“I think our members feel there's a lot of inequality in the new fees,” said Mike McClory, owner of London, Ontario-based Remco Tire Distributors Ltd. and president of the Ontario Tire Dealers Association. “They haven't done a very thorough study of the effects of the new fees on customers for agricultural and off-road tires,” he told Tire Business.

Mr. Horsman said the OTS has conducted a consultation program on the new fees since last August with both stewards and end-users.

“There's a real concern about whether the increase in costs will cause an increase in cross-border tire sales,” he said. “We have to address the gray market issue and make sure there is a level playing field for Ontario tire dealers.”

Mr. Horsman and other stakeholders met April 1 on this issue, and the OTS will issue its recommendations very soon on how to mitigate the gray market problem, he said.

“Of course, how stewards choose to pass on the fee is something we don't control,” he said. “We're also talking to end-users about the benefits we provide them. We have abolished disposal fees and cleaned up tire piles. We have removed 500,000 scrap tires from piles in the last couple of years, 250,000 of them from farms.”

Thanks to the Used Tires Program, Ontario now has a healthy recycled rubber industry, according to Mr. Horsman, who noted, “We're adjusting incentive payments and transport rates to improve market growth and bring costs down.”

The program already has reduced transport rates by 10 percent, he said.

OTS is a non-profit corporation set up under Ontario's Waste Diversion Act for the express purpose of addressing the province's scrap tire situation. In mid-February, after 31/2 years in operation, OTS celebrated the recycling of 50 million tires in Ontario under its auspices.



To reach this reporter: mmoore@ crain.com; 202-662-7211.
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