Asian tensions ripple into Md. Recycler loses profits as China jars nerves in the Taiwan Strait

March 15, 1996|By Mark Guidera | Mark Guidera,SUN STAFF

When China fired unarmed missiles into waters near Taiwan's two main ports last week, Richard C. Clements, vice president of a Baltimore recycling operation, worried that his company might feel the sting. He was right.

The ripples from events half a world away washed up on Mr. Clements doorstep this week when a steamship line hired to transport 1,000 tons of newspapers and other waste paper to customers in Asia informed him that the trip to Taiwan had been canceled. His company's profit loss: $3,000.

For now, the experience of Mr. Clements' company, Inner Harbor Recycling LLC, is considered unusual by shipping experts and waste paper processors.

But waste paper industry experts say such errant cancellations of shipping to Taiwan could be a signal of what's in store for other U.S. waste paper businesses with customers in the forest-depleted Far East if tensions in the Taiwan Strait worsen.

And should shipping lines start canceling many trips to Asia as a result of increased tensions in the region, the potential for waste paper overload here at home could be significant, experts said.

Paper mills in Taiwan and South Korea countries with scant natural wood resources are huge customers for the recyclable paper waste collected throughout the United States by municipalities and counties, noted Louise Phelan of Paper Recycling International, a nationwide waste paper processor with customers in the Far East.

Of the 10.4 million tons of waste paper exported for recycling from the United States last year, she said, almost 2.5 million tons 24 percent was exported to mills in Taiwan and South Korea.

While some of that is shipped out of East Coast ports like #F Baltimore, the majority of U.S. waste paper purchased by mills in Asia is shipped from ports on the West Coast because of its proximity to Asian customers.

Ms. Phelan said her company, which also has customers in Mexico, Europe and elsewhere, is monitoring the situation in the Taiwan Strait closely.

George Chen, director of Paramus, N.J.-based Tzeng Long USA, Inc., one of the largest U.S. suppliers of recyclable waste paper to Taiwan and South Korea, said that he has not seen any trend in steamship lines canceling trips bound for Taiwan and Asia.

But the paper processing industry, he said, will watch closely the March 23 presidential election in Taiwan, its first direct presidential elections, said Mr. Chen. China's missile tests are // considered an attempt to frighten people from voting for President Lee Teng-hui, who China believes favors independence for the island.

"So far, so good. But in April there may be difficulty. Especially if there is more military movement after the election," said Mr. Chen.

Tom Layton, owner of Owl Corp., another Baltimore-based waste paper processor with recycling mill customers in the Far East, said his company is also monitoring the situation between Taiwan and China.

The company had one shipping line cancel a shipment bound for Taiwan last week, but that hasn't been disruptive to business, he said.

Paper Recycling International, the nationwide paper recycling company, said it has been assured by the major shipping lines it uses for Far East orders that there are no major changes expected in steamship travel to the region.

Mr. Chen, whose company also operates several paper pulp mills in Taiwan, said that at the very least waste paper processors could see freight fees to Asia increased if tensions worsen in the Taiwan Strait.

Such increased costs would hurt business in the already glutted waste paper market where profit margins are thin, said Mr. Clements.

"The ripple effects of this could be enormous," said Mr. Clements.

"We're talking about jobs lost and substantial tonnage [of waste paper] that might have to be land filled at a potentially huge expense to the taxpayers.

"It could trickle all the way down to the small business guy suddenly told by a waste hauler they'll have to pay to have their cardboard trash picked up," he said.

Mr. Clements said that should more steamship lines cancel shipments to Inner Harbor Recycling's customers in Asia, he'll probably have to scale back the year-old operation, laying off some of his 20-person labor force.

His worst case scenario: refusing waste paper from Harford County, Cecil County and area municipalities the company accept newspapers and other waste paper from that has been collected from residents and businesses.

"Most people don't see how this thing could come home to effect them," said Mr. Clements.

Pub Date: 3/15/96

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