When Glenn and Bill Leach left the trucking business to start a recycling company two years ago, they thought they were getting in on the ground floor of a growing industry.
They successfully bid on a contract to sort Baltimore's cans, bottles and other containers. Mortgaging their homes and other real estate to raise the $300,000 they needed, they began operating in a former animal shelter in West Baltimore last September.
But plummeting prices for recycled plastics, glass and aluminum not only eliminated the profits the brothers envisioned; they're operating at a loss.
And the planned expansion of the city's curbside recycling program will make the company's cash-flow problems worse unless the city agrees to change its contract with G&L, said Glenn Leach, the general manager.
Currently the company is not making enough money to meet its $3,000-a-week payroll. Instead, it is relying on money remaining from a $50,000 loan from Baltimore Development Corp. as well as loans from friends and family to pay its workers, Glenn Leach said.
City dump trucks now bring 50 tons of tin, aluminum, plastic and glass to the recovery station off Franklin Street each week. That number is expected to increase to about 250 tons as the program goes citywide by March 14.
The city hopes the recycling program will cut trash collection in half and save money on garbage disposal.
When G&L first made its proposal to the city early in 1990, the brothers figured on making $50 a ton selling the recyclable materials to processing plants. They even agreed to pay the city a couple of dollars for each ton dropped off at the recovery center.
But since that time, the price of aluminum has fallen from 50 cents a pound to 30 cents a pound and glass from $70 a ton to $15 a ton, Bill Leach said. At one point, the price of virgin plastic was so low that manufacturers could buy it more cheaply than recycled plastics, making it difficult for G&L to find anyone to buy the plastics.
As a result, G&L is making only $18 to $20 a ton, Glenn Leach said, and is no longer paying the city a fee for the materials.
Another difficulty that wasn't foreseen was the change in the city's collection method.
After pilot studies, the city decided it would be more efficient and less costly for it to initiate a "blue bag" program. Under that program, begun in January, residents put their cans, bottles and jugs into recyclable blue garbage bags for once-a-week collection. Before, residents put the recyclables in plastic bins or other containers that were emptied into the dump trucks.
Paper, which is kept separate, is sorted and recycled by another company.
With about 90 percent of the recyclables coming to G&L now in blue bags, the company has had to hire hire two additional workers just to open the bags, said Charles Deshazo, one of the G&L partners.
G&L has asked the city to pay it a "tipping fee" for handling the materials. Mr. Deshazo, who declined to say how much the company is seeking, says even if the city pays a fee, it would still be less than the cost of burning the trash or dumping it in a landfill.
The recyclables G&L sorts go to processing factories throughout the East Coast. The brown and clear glass goes to North Carolina, plastics to York, Pa., and aluminum and tin is processed in Baltimore. The pile of green glass on G&L's lot grows larger because the firm has yet to find someone who will pay for it. Ironically, it also hasn't found a market for the blue recycling bags.
Kenneth Strong, coordinator of the city's recycling effort, said it is premature to say whether the city will amend its contract with G&L or negotiate a new one when it expires in July.
"We're happy with the relationship we have so far," he said.
Lori Scozzafava, the state's recycling coordinator, said that while prices for recycled materials have dropped, there still is a market for most materials and, in some cases, demand appears to be increasing.