It’s been happening gradually, but the recycling landscape has changed significantly in the last several years. All family-owned recycling companies in Massachusetts would probably tell you the same thing. Increased competition and pressure from larger organizations has made it more and more challenging for small businesses to continue operating. Multiple Massachusetts recycling companies have shut down recently, and it’s reasonable for waste generators to expect to see more expensive corporate entities take their place.
The Recycling Industry is Changing
Waste and recycling companies have always been the subject of industry mergers and acquisitions. This includes private, public, and family-owned companies. Large organizations with substantial capital may have several reasons to acquire smaller waste and recycling companies. They may be looking for a quick way to grow market share. Buying smaller recycling companies can also be a way for large corporations to move into a new area of the country that they project to be ripe for expansion.
Organizations that buy recycling companies may also have varying goals for how they’ll use the physical space and resources they get. Sometimes the goal is to acquire landfill or regional processing capacity, contracted tonnage, strategic locations or more.
It’s not just recycling companies that are seeing large corporations create industry disruptions right now. If you were to ask any business broker about what they’ve seen over the last several years, they would quickly confirm that this kind of shift is happening to both waste and recycling companies as well as other smaller companies across many other industries.
Recent market conditions have made this an ideal time for large players to make these kinds of purchases. The dramatically increasing value of commercial real estate is one factor. Smaller companies are being priced out of their own spaces and can’t afford to stay open. The ongoing financial and staffing challenges created by the pandemic have also weakened many businesses throughout the country. Smaller companies that are closing down make attractive acquisition targets for organizations that want to expand into a new market or geographical area. If you’re a corporation that needs a recycling processing facility, it’s much more cost effective to acquire an existing site with operational infrastructure than to pay sky-high prices for commercial real estate and then pay to build a facility from the ground up.
What This Means for Massachusetts Recycling Companies
In the past several years, a number of Massachusetts recycling companies have decided to shut their doors for various reasons. High real estate prices and pandemic-related challenges have contributed to some of those closures. If you’ve read our recent blogs about China’s National Sword policy, you know that American recycling companies have been navigating a lot of changes recently.
Specifically, recycling companies are struggling with diminishing volumes. Right now, tonnage growth in our industry typically comes from municipal sources. Waste generated by commercial generators such as printers (both high-grade printers and newspaper printers) has continued to shrink. With less tonnage available, it can be exceedingly difficult to operate a profitable recycling facility. Having the ability to diversify, and being ready to adjust and change as markets require, are key when trying to operate a lucrative business.
How will increased interest from large corporations affect the recycling market in New England going forward? We would suspect that as larger and larger players in our industry buy out small companies, costs will increase. Fewer players equate to less competition so the corporately-owned recycling companies that remain will be able to inflate their prices. It’s possible that businesses needing disposal of recyclable materials are going to see costs rise significantly over the next decade.
Miller Recycling has been a family-run company since the business started in 1942 as Frank Miller & Son. Our decades of experience in the waste and recycling industry have given us deep knowledge about navigating industry changes and challenges. We’re proud to be one of the oldest recycling companies in Massachusetts. If your business needs a more efficient or cost-effective way to manage your recyclable material, contact me today.