Recycling Works The newsletter of DPPEA's Recycling Business Assistance Center Vol. 2, No. 4, November 1996

International Opportunities for North Carolina Recycling Businesses

by Bobbi Tousey, RBAC Manager

North Carolina's strong recycling industry is in excellent position to exploit the inevitable growth of recycling in emerging markets in Asia, Latin America, and Central and Eastern Europe over the next decade. North Carolina firms that are seeking new markets for their goods and services must identify those countries in which demand is likely to grow over the next decade and position themselves in those markets early.

Kenan Institute Study

The RBAC contracted with the Kenan Institute of Private Enterprise at UNC-Chapel Hill to assess the opportunities for North Carolina recycling companies to expand their businesses in one of the fastest growing economic regions of the world - East and Southeast Asia. Dr. Dennis Rondinelli, Director of the Kenan Institute's Center for Global Business Research, conducted extensive research on eight countries including South Korea, Singapore, Indonesia, Thailand, Taiwan, China, Malaysia, and the Philippines. Dr. Rondinelli's report, Business Opportunities in Asia for the North Carolina Recycling Industry: A Market Assessment, is now available through the RBAC.

The report looks at recycling opportunities in each country, describes the factors driving the markets for recycling in Asia, and discusses strategies for entering the markets. The following is an excerpt from the introduction to Dr. Rondinelli's report.

Report Excerpt

"Asians have recycled wastes informally for decades if not centuries. The relative poverty in which most Asians lived before the middle of the 20th century provided an incentive to minimize waste and to reuse any materials for which a good use could be found.

"With rapid economic growth, industrialization, and urbanization in most East and Southeast Asian countries over the past 30 years, however, new forces are driving the growth of the commercial recycling industry. In the newly industrialized countries of South Korea, Taiwan, Hong Kong, and Singapore, for example, solid waste disposal has become a major problem; and natural resources such as timber and petroleum that supply virgin materials for manufacturing are in short supply.

Important Component

"The inadequacy of landfill capacity and the high cost of incineration, along with an increasing public acceptance of environmental controls, are focusing greater attention on the opportunities for recycling. In many of the poorer but growing Southeast Asian countries and in China, traditional forms of recycling are still prevalent, but commercial recycling will inevitably emerge as an important component of environmental management over the next decade.

Time for Market Positioning

"Although the recycling industry in most East and Southeast Asian countries is in the early stages of development, this is precisely the time North Carolina companies need to position themselves in the market. The industry in most Asian countries is not yet structured, opportunities for recycling are only beginning to be identified, recycling systems are just emerging, and processing facilities are limited to a few locations, usually the largest cities.

"It is in the early stages of market development, however, that the best long-term opportunities emerge not only for the sale of recycling equipment and services but also for the transfer of commercial expertise and technical assistance in developing recycling systems. These systems are also prime targets for exporting recycled feedstock and developing new products from recycled materials.

"In order to position themselves in the market for long-term growth, North Carolina companies need to monitor the emergence of the recycling industry, assess changes in the forces driving the market for recycling equipment and services and for recycled materials, and identify specific opportunities that will allow them to enter and sustain themselves in the market efficiently."

To obtain a copy of the report, call Bobbi Tousey at 919-715-6522.

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RBAC Holds C&D Roundtable

by Diane Minor, RBAC Waste Reduction Associate

A roundtable discussion for professionals involved in construction and demolition (C&D) of buildings and/or the recycling of C&D materials was held at the NC Division of Pollution Prevention and Environmental Assistance (DPPEA) in August. The RBAC convened the meeting to discuss the best strategies for market development of C&D wastes in North Carolina. Discussions focused on the climate for C&D recycling, infrastructure needs, the role of source reduction in construction, and the role of state government in meeting the needs of this sector of the recycling industry.

The Climate for C&D Wastes

The participants expressed concern about the fluctuation of prices for C&D materials. Markets appear and disappear quickly. This instability poses difficulties for a processor who responds to a market by separating and stockpiling a material and then finds that the market has disappeared. Thus, the processor cannot depend on selling by-products but must make financial plans on tipping revenues only.

Other concerns included landfills and dumping, transportation costs, volume requirements, and building codes.

• Processors of C&D materials have tough competition from inert debris landfills and improper disposal of C&D materials on private land. Processors would get more materials if the tipping fee at local landfills were higher or if the practice of dumping on a friend's land for a small fee were less entrenched.
• Some markets require a large supply of homogeneous material. For example, for the Department of Transportation to justify the effort to certify that a material meets specifications, it often requires a very large volume of locally available materials for its projects.
• Outdated building code requirements often are barriers to reuse of building components; for example, building codes require labels for all structural lumber, but items such as reusable windows do not have such warranty information.
• The high costs of transporting materials to markets are a major barrier for C&D processors. It was suggested that these costs could be alleviated if collection and storage were regionalized. Certain materials that currently do not have markets could be monofilled regionally for the possibility of later mining.

Infrastructure Needs

One way to regionalize the stockpiling of these materials would be to set up special structures for their collection at local landfills. A tiered cost system for separated C&D materials and a specified area for the materials to be stockpiled would simplify matters for some processors. However, because they depend on tipping fee revenues for their operations, some landfill managers are reluctant to offer lower tipping fees for separated materials.

The separation of materials on the job site has its own set of challenges. OSHA regulations require that a construction site be kept clean. Instead of spending crew time on site cleaning each evening, the builder can have workers place materials in designated areas or containers. This kind of cleanup operation must be a provision of subcontractor contracts. A problem with setting up such containers on site is that neighbors use them to dispose furniture and other household items.

Source Reduction in Construction

To reduce material waste during construction, builders can use CAD (computer aided design) planning. Computers should also be used on site to manage materials; for example, waste would be reduced if components were delivered in the size needed. Source reduction also occurs with the increased use of prefabricated trusses and wall sections. Tract and modular homes generate less waste than stick-built structures, and the economics of reduced labor costs promotes these uses.

The Role of State Government

The group agreed that a primary focus for state government in C&D market development should be education on C&D waste for the general public as well as for contractors. The public needs to recognize that waste containers on construction sites are not available for their personal use, and builders need to use more planning with computers to reduce cutting and the need for lumber. Other areas for state government assistance concerned specifications, financial incentives, and solid waste rules.

• If architects would specify components in standard cuts, time spent for on-site cutting and dealing with wastes would be reduced. However, redesign of the length of the wood could affect many other components such as wallboard. The state could look to universities for research on these ideas.
• Financial incentives such as construction loans for buildings designed to minimize waste, demonstration projects, and tournaments for good C&D handling could raise visibility and interest as well as promote development of new methods for C&D processing and reuse.
• There appear to be inconsistencies in the current rules affecting proper disposal of C&D wastes. A review of the effects of the solid waste rules on recycling C&D wastes should be made, and inconsistencies need to be resolved.

The RBAC team was encouraged by the interest and involvement of the roundtable attendees and plans to hold other sessions on specific aspects of C&D recycling.

For more information, contact DPPEA's John Nelms at (919) 715-6514 or Diane Minor at (919) 715-6516.

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Carolinas Collaborate on Southeast Recycling Investment Forum Events

by Matt Ewadinger, RBAC Market Development Specialist

The second annual Southeastern Recycling Investment Forum has expanded its regional scope by including as project partners the North Carolina Recycling Business Assistance Center and the Southern States Waste Management Coalition. The Forum will be coordinated by the South Carolina Recycling Market Development Advisory Council (SC RMDAC), a program of the South Carolina Department of Commerce.

Like the first forum conducted by the SC RMDAC and KirkWorks in November 1995, the upcoming event will bring together a number of investors and economic development officials and from 10 to 15 promising recycling, reuse, composting, and waste reduction firms in need of additional capital. The forum will be held in Charleston, S.C., on February 10, 1997.

Presentation Training

Prior to the forum, a presentation training session will be held to provide early review and critique of selected company business plans, executive summaries, and presentations. Hosted by the NC Small Business & Technology Development Center, the training session will be held January 17, 1997, at the Ben Craig Center in Charlotte.

The training session will include "mock" presentations by company representatives and critiques of those presentations by experts from the financial, recycling, and economic development communities. Presenters will be provided a video tape of their presentation and accompanying critique. In addition, a pre-training video designed to help presenters formulate business plans and make presentations to the financial community is in development.

Application Information

Applications will be accepted from promising recyclers in the Southeast to make featured presentations at the event. Investors, venture capital firms, commercial banks, governmental funding sources, and parties interested in the growth of the recycling industry are expected to attend.

Funding for the project is being provided by U.S. Environmental Protection Agency Region IV through its Jobs-Through-Recycling Program.

To register for the recycling investment forum or to obtain a business presenter's application form, call Ted Campbell of the South Carolina Recycling Market Development Advisory Council at (803) 737-0477.

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Recycling You Can Sink Your Teeth Into!

The next time you make a visit to your dentist, especially if you are having a cavity filled, ask if the office participates in a program to recycle the amalgam residue generated from the practice. Remind the dentist that about 50 percent of all amalgam compounds contain mercury. Dental Recycling North America, Inc. (DRNA), of Hackensack, N.J., markets an EPA-certified system that captures and recycles amalgam particles containing mercury at the dental office or clinic. DRNA installs and maintains the system, recycles the mercury, and provides a reclamation certificate to the participating dentist. Five North Carolina dentists are currently using DRNA's system. For more information on the DRNA system, contact Robert M. Donnelly, DRNA President, at (201) 489-4436. For a list of companies providing recycling services to the dental industry or for a copy of a DPPEA Fact Sheet on dental waste management, contact Jeff Poupart of DPPEA at (919) 715-6515 or (800) 763-0136.

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Polymer Reclaim & Exchange Starts Up Pilot Program To Recycle Vinyl Siding

by Matt Ewadinger, RBAC Market Development Specialist

Polymer Reclaim & Exchange, Inc. (PRE), of Mebane, N.C., a processor of a variety of post-industrial plastics, is successfully operating a small-scale vinyl siding aggregation and processing program in cooperation with the Wayne County Landfill and a number of manufactured home facilities. In February 1996, PRE responded to a Request for Proposals and was awarded a grant to conduct a feedstock conversion demonstration project by the NC Recycling Business Assistance Center to expand its vinyl siding recycling program.

The goal of the project is to expand current collection and processing efforts from 110,000 pounds to 310,000 pounds per month, which works out to 3.7 million pounds of vinyl scrap diverted from North Carolina landfills each year. The Vinyl Siding Institute estimates total annual sales of vinyl siding in North Carolina to be 60 million pounds, and that amount is increasing regularly. Assuming a waste factor of 8 percent, a total of 4.8 million pounds of vinyl scrap is produced in the state each year.

Project Components

PRE's pilot program targeted a representative sampling of vinyl siding distributors, large-scale construction companies, and producers of manufactured homes. These industries were selected because they generate large quantities of siding scrap, they can segregate it, and they wish to minimize landfill costs. PRE undertook the following activities to implement the program:

• Negotiated long-term agreements with the facilities;
• Introduced scrap quality control procedures into the companies' production systems;
• Supplied either collection containers or high-density balers; and
• Worked out regular pick-up schedules.

PRE has also successfully tested the concept at the Wayne County landfill over an extended period; as a result, Wayne County is considering formal legislation to ban vinyl siding from its landfill. In addition, the Alamance County landfill has recently begun to collect vinyl siding for shipment to PRE.

Expansion Strategy

Chuck Cooper, PRE Secretary/ Treasurer, explains the company's strategy: "Rather than trying to locate collection containers at individual construction sites, we will initially contract with large vinyl siding distributors, large-scale construction companies, and landfill officials from five fast-growing counties and/or municipalities to place vinyl siding collection containers at the respective sites." Cooper points out that this project will build upon the success of the original pilot program as it will collect incrementally larger volumes of known quality material at centralized, supervised locations.

To accomplish the increased collection and expand production capacity to 3.7 million pounds per year, PRE will implement the following program components:

• Build and distribute sufficient containers,
• Train key personnel to assure quality,
• Notify the local contractors,
• Provide the material handling means to move the containers under a variety of conditions, and
• Upgrade and extend processing to three shifts while maintaining quality to the end markets.

The project will employ 16 permanent, full-time people dedicated exclusively to vinyl siding recovery.

For more information about PRE, contact Chuck Cooper at (919) 563-2499

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The 1996 William S. Lee Quality Jobs and Expansion Act

by Jay Tilley, RBAC Economic Development Representative

The 1996 North Carolina General Assembly passed very significant legislation to make our state more competitive in the area of economic development. Named for the late Bill Lee, chair of the Economic Development Commission during the time these guidelines were drafted, the William S. Lee Quality Jobs and Expansion Act will help development efforts for North Carolina's recycling markets as well as for all development and expansion opportunities in the state. The following is an overview of the legislation and the dates provisions take effect.

Corporate Income Tax Reduction

The corporate income tax will be reduced from 7.75 percent to 6.9 percent over four years: to 7.5 percent in 1997; 7.25 percent in 1998; 7.00 percent in 1999; and 6.9 percent in 2000.

Investment Tax Credit
(Effective August 1, 1996)

The investment tax credit equals 7 percent of the excess value (above the applicable threshold) of machinery and equipment placed in service in N.C. by eligible new or expanding firms. The credit is taken in equal installments over the seven years after the machinery and equipment are first placed in service, which is generally the date they are capitalized on the books. The "enterprise factors" of the county in which the firm operates determine the threshold value:

Tier 1 (10 most distressed counties)	$0
Tier 2 (Next 15 counties) $100,000	$200,000
Tier 3 (Next 25 counties)	$500,000
Tier 4 (Next 25 counties)	$1,000,000
Tier 5 (Next 25 counties)	$1,000,000

Job Creation Tax Credit
(Effective August 1, 1996)

The legislation increases an existing credit for job creation and expands it from 50 to all 100 North Carolina counties. Firms with at least 5 full-time employees who work 40 or more weeks during the taxable year can take a credit (in equal installments over four years) for each new job created. The enterprise factor of the area in which the jobs are created determines the amount of tax credit per job:

Tier 1 (10 most distressed counties)	$12,500
Tier 2 (Next 15 counties)	$4,000
Tier 3 (Next 25 counties)	$3,000
Tier 4 (Next 25 counties)	$1,000
Tier 5 (Next 25 counties)	$500

Worker Training Tax Credit
(Effective July 1, 1997)

Firms eligible for the job creation or investment tax credit can take a credit of 50 percent (up to $500 credit value for each employee trained) against eligible training expenses if the firm provides training for five or more employees. If the firm is located in Tier 1, the maximum credit is $1,000 per employee.

Research and Development Tax Credit
(Effective July 1, 1996)

The R&D tax credit enables firms that qualify for the federal Research and Experimentation Tax Credit to take a state tax credit equal to 5 percent of the state's apportioned share of the taxpayer's expenditures for R&D.

Additional Benefits for "Tier 1" Firms

In addition to higher job creation and worker training tax credits, firms located in Tier 1 counties receive access to a special utilities fund and priority status and waiver of local match requirements for Community Development Block Grant Economic Development grants and Industrial Development Fund loans and grants.

Business Property Tax Credit
(Effective August 1, 1996)

The credit equals 4.5 percent of tangible personal business property capitalized under the tax code up to a maximum single-year credit of $4,500. The credit is taken in five equal installments beginning in the taxable year the property is placed in service.

Note: All business sectors are eligible for this credit.

All tax credits can be taken against the income or franchise tax and have a 5-year carry forward for each eligible year. The total value of credits cannot exceed 50 percent of annual tax liability. Eligible firms are in manufacturing and processing, warehousing and distribution, and data processing industries and pay at least 110 percent of the average county wage.

For more information on the 1996 William S. Lee Quality Jobs and Expansion Act, contact Jay Tilley, RBAC Industrial Development Specialist, at (919) 715-6409.

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US Department of Commerce Sponsors "Environmental Technologies Matchmaker '97"

The US Department of Commerce invites companies that wish to capitalize on expanding export opportunities for environmental technologies in Europe to join the Environmental Technologies Matchmaker Trade Delegation to Madrid, Barcelona, and Milan on March 13-22, 1997.

Opportunities for marketing in Italy will include the TAU Expo, the second largest environmental show in Europe. As the world's fifth largest economy, Italy is a major importer of U.S. products. Its current economic recovery and its need to meet European Union (EU) environmental standards give strong momentum to the environmental technologies sector.

In Spain, the environmental technology market is expected to grow by 12 percent per year, and Spanish industry will need to invest $12 billion in the 1990's to meet EU standards. Companies participating in the delegation will have opportunity to find business partner's in Spain's two largest cities.

The Matchmaker Delegation will give companies a strategic point of entry to these fast-growing markets. Costs are $2,000 for the two Spain stops and $2,400 for the 4-day program at TAU Expo.

The Matchmaker '97 features:

• Marketability analysis of your product/service in each country.
• In-country publicity for your product/service prior to the delegation.
• One-on-one business appointments with pre-screened contacts.
• Participation in the TAU Expo, one of Europe's leading environmental and pollution control shows.
• Convenient meeting facilities and hospitality for the delegation members.
• Expert market and trade finance briefings in each of the markets.
• Pre-and post-event export counseling by Department of Commerce Commercial Specialists.
• Full logistical support, including interpreters, throughout the delegation.

For more information and application materials, telephone Linda F. Jones of the Greensboro Export Assistance Center at 910-333-5345 or fax 910-333-5158.

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North Carolina Market Prices for Recyclables

Prices current as of October 1, 1996

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RBAC is on the NET!! Visit us at http://www.p2pays.org/

The NC Division of Pollution Prevention and Environmental Assistance provides free, non-regulatory technical assistance and education on methods to eliminate, reduce, or recycle wastes before they become pollutants or require disposal.

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