If trending bans on everything from plastic straws to polystyrene containers are any indication, there's growing awareness about the need to reduce waste. Yet according to a 2018 report from the Environmental Protection Agency, which uses data from 2015 (the most recent year available), recycling rates increased less than 1 percent between 2010 and 2015.
The problem, according to Illinois-based Lakeshore Recycling Systems CEO Alan T. Handley, is economical. For the typical solid waste and recycling companies in many parts of the country, taking waste to the landfill is much more profitable than diverting or recycling it. There's no financial incentive to reduce waste.
“The status quo is profitable because they're making such a large margin at the landfill, at least in the Midwest," Handley says.
Lakeshore Recycling Systems (LRS), the largest independent waste company in the state, is trying to change that status quo. The company, which controls about 35 percent of outbound waste in the greater Chicago area, diverts more than half of the 2.5 million tons of collected materials away from the landfill every year. And it's able to reduce waste while remaining profitable.
“You can't attack this market in traditional ways, and the way we approach recycling is completely different from the ways the industry has been operated for the last 150 years," he says.
In 2017, LRS was the first privately held waste and recycling company in the country to use an aerobic digester to recycle preconsumer food waste, as well as to implement RFID (radio frequency identification) technology for residential containers in two of the communities it serves. These are just two examples of how LRS is changing the industry ways.
“I consider ourselves vanguards on the cutting edge of innovation because we're willing to take risks and chances that others won't take," Handley says.
Technology Enables Innovation
At typical single-stream recycling facilities, you'll find busy employees sorting recycled items into proper categories. At the LRS materials recovery facility (MRF) at the edge of Chicago—one of the company's 10 MRFs—the job falls to SamurAI.
This sorting robot, powered by artificial intelligence, is both faster and smarter than a human. It picks more pieces every minute, while being better at recognizing “dirty" material. This results in saved labor costs and a cleaner, thus more profitable, stream.
SamurAI was another industry first for Lakeshore. The company was the first in the nation to adopt the technology from Machinex (one of a few manufacturers of AI-powered recycling robots).
The key to the future of recycling in this country, I believe, is to reduce the costs as much as possible, rather than shipping material to other countries.
—Alan T. Handley, CEO, Lakeshore Recycling Systems
The move came largely out of necessity. Following the crash of the paper recycling market in China in 2017, prices for recyclables dropped quickly. At the same time, changes to minimum-wage laws drove labor costs up, and that's on top of a tight labor supply.
By then, LRS had already spent $8.5 million on the single-stream recycling system at the facility, the single-largest capital outlay to date—and a sizable investment for a company its size. SamurAI, along with an automated optical sorter and other improvements to the system, added another $2 million in costs.
“To be successful, if you really believe in recycling, you need a combination of automation and robotics to remove the human element from the recycling as much as possible," Handley says.
Between the optical sorter and the robot, the human element at this facility has shrunk by about 32 percent. By fall, manual labor should decrease by another third, once three more robots join the ranks. So far, there's been no layoffs, as labor balanced itself out through attrition.
“My mission is to remove all human labor from our recycling operations, other than presort, over the next two years," Handley says. “We're constantly working with leading AI and robot companies in this space to look for creative ways to eliminate the human element out of the single-stream and other recycling operations."
Pioneering Other Tech
Lakeshore Recycling, which employs 900 people and strives to become a “zero-waste" company, has received numerous awards and recognitions for its innovative efforts. But LRS is not resting on its laurels. The aerobic digester pilot project is a case in point.
The digester produces no methane gas, water pollution or odor as a result of turning food-manufacturing scraps into compost. The technology saves costs because the scraps would otherwise have to be trucked long distances to a farm. Yet the industry doesn't eagerly embrace technological advancements like this “if they can't get widespread adaptation or scale rapidly," Handley says.
As the first installation of EcoloCap's aerobic digester, LRS tested the technology while learning its operating costs. The project was small scale—the system can only process 15 tons of waste a day (converting it into about 3-5 tons of compost). Handley hopes the technology will generate more interest once the manufacturer can scale up the vessel to accommodate larger volumes.
“If we can make recycling less expensive, more people would do it," he says. “That's really the key."
Circular Supply Chain: The Next Frontier
The idea of a reverse, or circular supply chain—putting returned goods and recycled materials back into products—is a hot topic in the manufacturing industry. From the supply chain management perspective, it would not only reduce waste and carbon emissions but could also potentially save costs.
“It gives the manufacturer a consistent, high-quality supply of feedstock, in a geographically central location, at a known price," Handley says.
Recyclers would also save costs by eliminating the need to move the materials long distance. Plus, they would have consistent demand and pricing. This, according to Handley, is one of the best ways to increase recycling rates.
“The key to the future of recycling in this country, I believe, is to reduce the costs as much as possible, rather than shipping material to other countries," he says.
LRS, for one, is ready. Handley says the recyclables supply is there. So is interest from consumer-product companies. What's currently missing is what he calls the intermediate assets—a way to put the recycled materials like plastics into a form that manufacturers can use.
The company has been in discussion with various large manufacturers. Handley hopes that technical assistance and research and development funding from organizations such as Closed Loop Partners (a group of leading global companies) will help advance the efforts.
Closed Loop Partners partially funded the LRS single-stream recycling system at a below-market interest rate. Bridget Croke, who heads external affairs at Closed Loop, says that Lakeshore Recycling has a best-in-class business model for maximizing recycling opportunities. And the company has proven that it can build a strong business by meeting the zero-waste goals of its customers while saving millions of dollars.
“There's so much news out there perpetuating the myth that recycling is collapsing," Croke says. “Lakeshore shows that this is far from the truth."
Based on EPA's 2018 report (which uses numbers from 2015, the latest available), the U.S. recycling and composting rate, 34.7 percent, is nearly the same as 2010 (34 percent). And per capita, Americans generate about 70 percent more waste now than in the 1960s.
Handley believes that the consumer sentiment would have to be much stronger to influence the recycling industry. Instead, he says the answer is in the circular supply chain. He expects to see that develop in the Chicago area in the next three years.
“While asking the consumer to drive change works, it's slow," he says. “If you really want to push recycling, you have to start thinking about how to integrate the recycling operations directly with the large consumer-products companies."
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