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Sunday, 31 August 2014 22:00

Data Dump? Commercial waste volumes add weight to region’s economic recovery

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It seems one man’s garbage is another man’s economic indicator.

If you want to get a sense of how the West Michigan economy is doing, take a look at commercial waste volumes at the nearest landfill or recycling center. That’s according to local waste industry operators  and economists who ascribe to the theory that waste processing facilities see an uptick in material volumes during a period of economic growth.

The increasing waste volumes at Kent County landfills serve as one measure of an improving local economy, said Doug Wood, director of the Kent County Department of Public Works (DPW).

Waste generation rose 4 percent from a low of 700,000 tons in 2010 to 728,000 tons in 2013, according to DPW data. That growth followed an eight-year period starting in 2002 in which waste volumes declined 43 percent, Wood said.

“In 2011, volumes really started to turn around, and every year after that waste goes up more,” Wood said. “If you take into consideration waste generation and recycling, I think we can definitely see growth in the economy.”

A significant uptick in construction and demolition waste, followed by industrial waste from manufacturers and other sources, has driven waste volumes higher at Kent County landfills in recent years, he said.

Wood expects commercial waste volumes to increase again in 2014 based on year-to-date numbers at the South Kent Landfill in Byron Center, where waste was up 10,000 tons compared to the same period a year ago, and at the North Kent Transfer Station in Rockford, where volumes were up 4,000 tons in the same time frame.

While waste may not be a leading indicator, it’s one way to gauge how the local economy is performing, Wood said.

An MiBiz analysis shows that local waste volumes over about the last decade and a half generally track with other traditional economic indicators, such as commercial building permits and jobs numbers.

The reason behind that correlation is quite simple, said Paul Isely, chair of the economics department at the Grand Valley State University Seidman College of Business in Grand Rapids. Long-term trend data show that economic growth leads to the generation of more commercial waste, he said.

“(Waste volumes) are not the best forecaster, but the data adds to many other pieces that are saying that things are good and getting better,” Isely said. “The indicator is useful in that it adds weight to that story.”

Tracking commercial waste volumes provides economists with a so-called “coincidence indicator” that shows where the economy is today but does not necessarily help them predict where it will be six months or a year from now, he said.

Isely also notes that only commercial waste volumes — from construction and demolition activities and industrial sources, for example — have been proven to correlate with GDP growth. The same cannot be said for residential waste, he said.

Regional commercial recycling activity also appears to tell a similar story as waste volumes.

Grand Rapids-based Recycling Concepts of West Michigan Inc. more than doubled its weekly volume from about 500,000 pounds per week in 2009 to more 1 million pounds currently, said CFO Tim White. The majority of that increase was the result of additional volume from established customers rather than new business, he said.

In general, increased manufacturing production in the region is responsible for the majority of the recent spike in recycling volumes, with plastics from the automotive industry leading the pack, sources said.

“The biggest jump … that we’ve seen … would have to be automotive because the industry went into the tank (and) became nonexistent in 2009,” White said. “Now that production is increasing, we’re seeing mainly plastics coming out of automotive along with some corrugated and cardboard.”

Another key material to watch is paper, said Jeff Padnos, president of Holland-based recycler Louis Padnos Iron and Metal Co. Paper serves as a gauge of economic activity because it’s ubiquitous in commercial businesses, he said.

While volumes of other materials like plastics are on the rise, Padnos Inc. has seen an approximate 23 percent increase in recyclable paper volumes from 2011 to 2014 when taking into account volumes from January through July of each year, Padnos said.

“Recycled paper products are a great indicator of growth since it’s used across industries,” he said. “All products that are being shipped need boxes.”

Similarly, White at Recycling Concepts cites the growing volume of incoming pallets at its facility — along with an uptick in paper and plastic waste from the food and beverage industry — as further proof the economy is picking up.

“You can tell that people are moving more material with the increase in pallets coming into our facility,” White said.

While the volume of recyclable material headed to recycling centers is on the rise, sources note that a growing “zero waste to landfill” movement among local manufacturers and the adoption of other sustainable business practices may detract from waste volumes in the future.

As companies move to trim costs and boost profit margins, the amount of waste they generate could be overshadowed by improvements in production efficiencies. In essence, companies are focused on creating less waste throughout their operations, Isely said.

For waste to hold out as an economic indicator, “companies have to grow fast enough to overcome the fact that they are becoming more efficient,” Isely said.

Read 2574 times Last modified on Sunday, 31 August 2014 23:04

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