H ow the markets and supporting infrastructure for scrap tires have

developed and continue to evolve truly is a function of state and federal scrap tire laws and regulations. Some states (Arkansas, Ohio, Tennessee and Washington) even push the management of scrap tires to the county level. Add a smattering of federal guidelines and you have a considerable web of varying and inconsistently enforced scrap tire pro- grams. If this were not enough, every year a number of states tweak, slightly modify or completely overhaul their scrap tire program. This situation certainly presents its own spe- cial challenges to the tire recycling industry.

Despite these challenges, at the end of 2001 the overall number of scrap tires going to an end use market increased from previ- ous levels. In 200 1, nearly 78 percent (2 18 million) of the 28 1 million scrap tires went to an end use, as compared to 66 percent (178 million) of the 270 million scrap tires gen- erated in 1998.

Fostering good business The markets for scrap tires expanded con-

siderably over that period. So, what factors assist in the development of sustainable scrap tire markets? Once again, the impact of state scrap tire programs is considerable. Markets and the supporting infrastructure thrive where and when a strong regulatory framework exists (including, but not limited to, mani- fests, limited ability to landfill tires, bonding requirements for storage and processing scrap tires, and licensing of tire collectors and haulers), enforcement of these regulations, timely processing of permit applications, grants or loans for expansion of end user mar- kets, and competition.

This last aspect, competition, is very much a double-edged sword. The desirable free- market system comes with some unavoid- able downsides. One of the unfortunate real- ities of the scrap tire world is the relative ease of entering the industry. In most cases, few barriers exist to becoming a scrap tire col- lector or hauler. In some states, the process to obtain a permit to become a scrap tire

processor also is relatively easy. A common obstacle faced by these new entrants is how to penetrate the marketplace, either to gain access to the flow of scrap tires or to sell their products.

The most typical approach, and as well as the most debilitating, is for a new entrant to offer its goods or services for less than its more established competitors. There is noth- ing wrong with lowering prices; this is a func- tion of competition. However, sometimes new entrants are seduced by the idea of instant cash flow. They fail to understand - or they ignore - the real costs ("I lose 10 cents on every tire collected but I make it up on volume! ").

In cases where there are many new entrants at the same time in any given area or a succession of new entrants in any given area, within six months to a year, there is a series of bankruptcies, closures and newly abandoned stockpiles. While it is common for the more recent entrant to fold up first, in

Michael Blumenthal is senior technical director with the Rubber Manufacturers Association (Washing- ton). He may be reached at (202) 682-4882 or michael@rma.org.

~esoctrce Recycling September 2002

Like many other processors, TriVitro also produces high-volume, lower-priced recycled glass products, such as sandblasting material and filter media.

Rubbed the right way As in sandblasting media, the abrasive nature of processed cullet can be used as a market advantage in other products.

Earthstone International (Santa Fe, New Mexico) produces a clog- resistant sanding block from recycled glass. The sand blocks are available in a variety of consistencies in order to be used on wood, drywall or metal. he company also makes a recycled glass product used to remove food and grease from grill surfaces, such as backyard barbecue grills.

Trapped in glass Abilene, Texas has been pulverizing scrap glass for the ast eight years, with much of the material used as road base, sand fi , ers and

er applications.

\ pipe bedding applications. But the city also uses glass in seve \ .a1 oth-

\ One of the more innovative uses is at the municipal golf cd rse,

where processed amber glass replaces sand in traps, thus impro \ ing drainage characteristics. ',,

I '< I / Classy glass The uses of cullet are endless and some are stunning.

Nancy Judd, the executive director of the New Mexico Coalition (Santa Fe), is widely noted for her organizing fashion shows. Her latest dress, sponsored by the Glass Institute (Alexandria, Virginia), is a full-length gown made from recycled red upholstery of crushed clear cullet from an Albuquerque individually glued to the dress.

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- another region, as are the states of Louisiana, Mississippi and Texas.

In these areas are located several relatively large-scale scrap tire companies that just now are in the beginning phases of vertically inte- grating their operations. These companies have their own collection network, process whole tires into a complete range of reduced- size particles and make products from their

some cases the more established player is forced out of business simply because it no longer can withstand the continuous barsage of downward pressure on tip fees or on the sale of tire-derived products. One factor that contributes to expanding markets is stable, if not rising prices for scrap tie-derived prod- ucts.

neering applications (tire shreds used in landfill construction, road construction and the like), ground rubber applications (20 mesh and smaller, e.g., tire rubber-modified asphalt, molded/extruded products) and larg- er-sized ground rubber (% inch to 10 mesh, e.g., playground surfacing, soil amendment and mulch, to name a few). Only two states (California and Florida) utilize all of these

federal effort to sfimulate this market. In 1991, Congress intended to implement a fed- eral mandate to increase the amount of ground rubber used in federally funded high- ways. The mandate was unfunded, which was not well received by the highway com- munity. Furthemore, a series of perceptions about this technology cast it in an unfavor- able light. Even though these perceptions

most dramatic example of how gov- Achievements and ernmental policy affects a market. challenges The enhancements that tire rubber Certain parts of the U.S. have supplies to asphalt binders are well reached, or are about to reach, a documented, yet only Asizona, Cal- point where equilibrium can be ifornia and Florida actively incor- found between supply and demand. porate it into paving projects. New In the mid-Atlantic region, this Mexico, South Carolina and Texas includes Delaware, Florida, Geor- are beginning to use this material on gia, Maryland, North Carolina, a more regular basis, but other state South Carolina and Virginia. departments of transportation Toward the middle of the country, (DOTS) still are skeptical or this situation is seen in Illinois, adamantly opposed. Iowa, Michigan, Minnesota, Mis- To a certain extent, resistance to this souri and Ohio. New England is technology can be traced back to a

own supply. Clearly, this is positive, but it does not mean that scrap tire processors have access to all the possible markets for scrap tires. So scrap tire businesses look to state policies as a driving force in the development of markets for scrap tires.

Currently, scrap tires have four major markets: tire-derived fuel (TDF), civil engi-

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markets, and even in these states some tires are landfilled. (For more on-California's situation, see "Changing Tires" elsewhere in this issue). All other states, through pol- icy or agency preference, limit or exclude one or more of these markets from taking hold.

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1 ~ e s o u r c e Recycling September 2002

were wrong, the mandate caused widespread, adverse reaction from state DOT& This reaction was so strong that not only did the DOTS not use any tire rubber in asphalt pavement, it hardened their resist- anc'e to it. Furthermore, their reaction resulted in the mandate's repeal two years later. However, resentment toward this technolo- gy lingers many years after the repeal took effect.

The mandate had another, unforeseen effect. Many entrepre- neurs, excited by the allure of virtually guaranteed tire rubber proj- ects, quickly got into the industry. From 1991 through 1995, the industry witnessed an explosive growth of ground rubber produc- tion capacity. Unfortunately, the mandate failed to generate demand for all the rubber produced, and few other markets developed at that time. The result of this imbalance was a severe "market correction" in the ground rubber sector.

Some state agencies have dictated which markets will thrive with- in their state boundaries. For example, TDF use is being limited by the difficulty of the permitting process in some states. Elsewhere, TDF markets must compete against other scrap tire markets that were created and are funded by state grants. Civil engineering appli- cations are restricted through onerous testing procedures or simply not encouraged because someone at the regulatory agency does not like the idea of placing tire shreds in the ground.

What has evolved from this are states that now rely on a single market, and in some cases a single company, to manage all the state's scrap tires. While this approach may be considered successful because the tires are not stockpiled or landfilled, it has created a sit- uation in which the stability of a state scrap tire program hinges on the solvency of that single company. If that company fails, stock- piles are not far behind. Arizona now is facing this very situation. Ironically, this is the second time in seven years that Arizona has experienced the same problem.

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Resource Recyclirzg September 2 0 0 2 m

Markets and outlooks Table 1 gives the breakout of the markets for scrap tires for 1998 and 2001. not including

suggest that the number of scrap tires going to TDF remained the same. Actually, the number of facilities using TDF decreased, Table 1 in millions of tires

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... retreaded tires. By clcfinition, a used (or worn) tirc is a tire that can continue to serve its original PLI~POSC a~id can be retreaded. A scrap tirc, however, is a tire that no longcr can be usetl for its original purpose. While retrcacling tires is a true form of rcusc oncl serves a valuablc role in the industry, i t hac no bearing on the numbcr of scrap tircs gen- erated and, therefore, is 11ot ;I market for \cmp tires.

Tire-derived fuel. 'fhe data in Tablc I

has been encouraging. Over the past two years, the number of tires used in civil engi- neering applications doubled. This increase is due largely to the acceptance of tire shreds in landfill construction. Tire shreds can be used as drainage material for leachate sys- tems, lightweight backfill material for gas venting systems and alternative daily cover. With the acceptance of landfill applications and a series of technical training semiliars on these applications, this market segment is expected to continue to increase, although it seems unlikely that its use will double by the end of 2003.

Ground rubber. The finer-sized ground rubber markets (20 to 200 mesh) appear to be stable, but insufficient to consume all of the supply currently available. The ainount of tire rubber modified asphalt paving may be depressed for the next several years due to budget issues in California. This situation likely will worsen the conditions that ground rubber producers are experiencing, and pre- cipitate a consolidation in which supply

Source: Rubber Manufacturers Association, 2002.

- but the amount of TDF consumed at those facilities increased. The outlook for the TDF market is posi~ivc. Appi.oxirnately 10 addi- tional fi~cilities are likely to begin using TDF by the miclcllc of 2003. Factors contribut- ing to this expansion incluclc ricing cncrgy costs, instability in natural gas and oil prices, and the availability of higher-quality TDF chips.

Civil mginccring. The increased use of tirc shreds in civil engineering applications

grossly outweighs demand. In contrast, the demand for larger-sized

ground lubber particles (0.5 inch to 10 mesh, or "crumbled rubber") is expanding in response to market demand for playground cover, rubberized running tracks, soil

Market - 2001 1998 Tire-derived fuel 11 5 114 Civil engineering

applications 40 20 Ground rubber

(all-inclusive) 33 15 Export 15 15 Punchedlstamped

products 8 8 Agricultural/

miscellaneous 7 5.5

amendments and horticultural uses. Two priinaiy factors are causing the current short- fall of this size range. First, this is still a rel- atively new market arena, and few scrap tire processors have focused on these market possibilities. Secoiid, only a limited num- ber of processing systems can make large- scale volunles of this material. As more processors become aware of the potential, more attention will be focused on these appli- cations.

Equipment. As for equipment issues, new processing systems have been designed and are about to be introduced into the U.S. market (see sidebar). More than likely, the current shortfall in "crumbled" supply will be addressed within a year. What remains to

Reader service # 58

Reso~wce Recycli??g September 2002

be seen is whether the industry will witness another rush of processing capacity.

Balancing your tires The goal of the scrap tire industry must be to produce and sell higher-value-added prod- ucts. Without a greater return on investment,

the scrap tire industry will be condemned to marginal profitability and rampant turnover. But skewing the marketplace to focus exclu- sively on higher-value-added products at the expense of other high-volume consuming markets ignores the true economics of the industry and becomes a recipe for complete

market failure. Government involvement ii the marketplace should be restricted to inci dences in which the market has failed. Fo scrap tires, the market basically is workin; well. The effectiveness of state scrap tire pro grams will continue to foretell the success o failure of scrap tire markets. RF

Reader service # 261

~esource Recycling September 2002

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