Shortly after the COVID-19 pandemic hit North America, Recycling Today surveyed our readership to gauge the impact of the outbreak on their operations. An initial survey was sent out via SurveyMonkey to our readers March 24. A second survey was dispatched April 10. The results indicate significant changes to inbound material volumes. Some respondents also report that their companies have had to lay off staff as they adjust to the changes that have affected their operations and cash flow.
We received 255 responses to our initial survey and 83 responses to our second survey. Charts with the results are presented below, and the full results of the first survey can be accessed here, while those from the second survey can be accessed here.
In the second survey, we also asked our readers to identify the primary material type they handled. The majority of respondents at 31.33 percent handle metals, while 16.87 percent handle plastic, 13.25 percent handle paper and 6.02 percent handle electronics. Nearly 33 percent of respondents say they handle materials other than these, indicating residential recyclables in most cases.
Regardless of sector served, many respondents mention the uncertainty that characterizes the current business environment. “Customer demand is chaotic and fluctuating wildly,” one respondent says. “Several major customers are doing temporary shutdowns with minimal notice. We expect more uncertainty over the next few weeks.”
“The biggest challenge we have is the unknown,” another respondent says. “Though we continue to operate on a reduced schedule, if any of the material supply chain breaks down, we will be severely impacted. As it is today, we are projecting our cash flow challenges will impact our business through 2021.”
A scrap metal broker whose business is based on exports indicates his company has not been actively trading since the pandemic was declared March 11. “[We are just trying to fulfill old orders, which also [is] a great risk in terms of market.” He mentioned the exposure that applies to goods en route to their destinations as his company is unsure of whether the buyers will honor their commitments and ‘dead slow’ payments.
A metals processor adds, “Not only has incoming scrap flow decreased, but inventory value has decreased considerably with metal prices tanking.”
Many scrap metal processors have closed their retail operations in response to the COVID-19 outbreak. One respondent says, “We have limited our retail operations no longer purchasing material from public but continue to support our industrial and commercial accounts that are still in operation. We have taken the CDC advice seriously limiting operations to be a safe distance, staggering employee lunches and breaks, providing latex gloves and N95 face masks, installing multiple hand sanitizer dispensers throughout the facility and providing drivers and scale operations with personal bottles of hand sanitizer. We believe in being honest in our communication with our employees and our customers will allow us to successfully navigate through these trying times.”
“The scrap business is significantly affected by COVID-19,” a respondent says. “Our export business is 60 percent down and expected to remain this way. Our suppliers and customers are all working on reduced hours, and it is very difficult for us to continue this way.”
“Steel mills aren't taking as many orders,” another respondent notes. “A normal month for us is to ship 20 to 30 100-ton railcar loads, and for April we have eight loads contracted. Nonferrous prices are down and shipments of those are reduced also.”
One respondent points to the need to close his company’s smelter, adding that half of the operation’s employees are working from home for minimal salary. He says that if things do not change before July, layoffs will be necessary.
An automotive recycler says, “Revenue is down 50 percent right now. Also, [it’s] very hard to buy cars with the price of steel so low.”
Some survey respondents have expressed concern for their employees’ potential to be exposed to the virus. “[The] virus is said to last three days on surfaces,” one respondent based in Hawaii says. “[We] will be sending instructional notice to customers to double-bag and tie any rubbish infected by the virus from people quarantining in their households or take it to the hospital for incineration.”
The respondent adds that his company is considered “critical” and has been asked to remain in operation while other businesses have been asked to shutter during Hawaii’s shelter-at-home period.
An operator of a dual-stream MRF comments, “Our containers line does not allow for 6 feet of separation between staff, so we have had to temporarily close that line. We will be able to run our fiber line once we have enough healthy staff to do so.”
“OCC (old corrugated containers) generation is down slightly and demand is increasing,” a respondent says. “SOP (sorted office paper) generation is down 70 percent, and demand is increasing. Residential generation is up modestly, demand for GW (groundwood) grades is off. Printing grades generation is steady, demand is up.”
A plastics reprocessor points to decreased recycled resin sales because of the impact on retail sales. “Most injection molders and blow extrusion companies cut down their production,” she says, adding that some operations have even been closed.
Another respondent says his company continues to buy and ship bales of plastics at its normal rate. “As far as resin sales, we have seen decline in automotive grade resins, but our demand for household cleaning and personal care packaging has drastically increased.”
“The impact of falling resin prices has a cascading effect,” another respondent notes. “We see recycled materials projects delayed and companies focusing on priorities and delaying recycled content initiatives.”
Consumers and generators were making changes daily as of late March, a respondent says.
“Everyone we’re talking to, both upstream and downstream vendors/customers, are in panic mode,” according to a respondent. “Material inflow is stagnant as companies shut down, and downstream outlets are drying up as vendors seek to conserve cash. Gridlock is going to get worse. Nothing [is] coming in and [there is] nowhere to get fair value for what you have.”
“We expect the financial impacts of the [coronavirus] pandemic to worsen across all aspects of our company the longer businesses are closed due to the virus,” a survey respondent says.
“We believe this will take many months to recover as we anticipate consumer confidence to start spending will take at minimum a strong economic quarter to recover,” one respondent says. “As a result, the lack of material in the supply chain will linger into the third and potentially the fourth quarter of 2020.”
A manufacturer who supplies equipment to the industry says, “[S]ome purchases from customers are on hold, but we are still working, and we are still [generating] new quotes and having sales take place. It seems to be causing a slowdown more than anything.”
One respondent chooses to look at the opportunities the outbreak provides, saying, “It’s a terrible event, however, it did give us the opportunity to step back and assess our business plan and goals. We also had some downtime to focus on cleanup and organization.”