How does recycled paper get transformed into new products?
June 15, 2015
John Shegerian: Welcome back to another edition of Green Is Good. We’re here in beautiful downtown Vancouver at the ISRI edition of Green Is Good. And when I say the ISRI edition, this is ISRI’s annual conference – here in Vancouver this year for the first time ever, and Green Is Good is broadcasting from the beautiful downtown convention center in Vancouver. We’re so excited and honored to have with us today Joel Litman. He is the president and CEO of Texas Recycling. And to learn more about Texas Recycling, go to www.texasrecycling.com. Welcome to Green Is Good, Joel. Joel Litman: Thank you John. Glad to be here. John Shegerian: You know Joel, you have a family business. I want you to share a little bit with our audience the Joel Litman story and how you got to be running as President and CEO of Texas Recycling. Then, we’re going to go more into exactly what you do over there. Joel Litman: Sure. Well it’s interesting because folks think a family business is ‘I’ve been in it since birth.’ And actually my father and my brother and myself, who have been in the business, got in late in life. We all had different career paths. John Shegerian: Wow. Joel Litman: My background, I was in journalism. I was a sports writer. I worked in public relations for a family business. But it was just getting to be – it was time to move on. John Shegerian: Right. Joel Litman: And my father bought a scrap business when he was in his early 50s and he asked if I would join him. So I spent a week’s vacation down there and turned in my coat and tie for a pair of work boots and jeans and just said, “This is the opportunity for me,” and I joined him and have been in it for 30 years now. John Shegerian: Thirty years. And a week’s vacation became a career. Joel Litman: It did. John Shegerian: A new career. Joel Litman: It really did. And I haven’t missed a coat and tie since. John Shegerian: Wow. I was reading all about you before today, before having you on the show, and I loved reading about your thesis on recycling. On, especially, the new generation of recycling. How responsible recycling isn’t free anymore. Can you explain what you mean by that concept? Your thesis on responsible recycling is not free. Joel Litman: Right. Well, recycling, if you look past, John, over the years, it has always been incentive based. To get the material, we have to pay you to bring it to us otherwise you’ll put it in the trash. Well, with costs and so forth and all the low-hanging fruit gone, it costs us now to go get it. And especially now as there is more – you’re diving deeper into the waste-stream and handling more products that are hard to recycle, it costs to do that. So we’ll get folks and they’ll want us to pick up their material. And depending on the volume we’ll do it, but we may have to charge you for it. “Well, I’m not going to do that.” “Well, then put it in a landfill.” “Well, I don’t want to do that.” “Well, then you’re going to have to pay us to come out and pick it up and send it to whomever to get it made into another product and recycle.” John Shegerian: So, in essence, really recycling is another service just like a doctor or lawyer or accountant. Responsible recycling with the right infrastructure that you have run the right way is another service industry. Joel Litman: It is. Now we do work with a lot of our commercial B2B businesses where we do rebate them for the material. John Shegerian: Got you. Joel Litman: But for the folks that have 100 pounds of this or 50 pounds of that or they want to recycle something that is very hard to process, there is a charge for that. And a lot of companies, especially the bigger companies, are realizing that. That it is another line item expense. And to be responsible they realize that there is a cost, but they’re keeping it out of a landfill and it’s being made into another project. John Shegerian: So, Texas Recycling. Let’s talk about Texas Recycling. Where are you located actually in Texas? Joel Litman: We’re in Dallas. John Shegerian: You’re in Dallas. Joel Litman: Right. John Shegerian: And what core products does Texas Recycling recycle? Joel Litman: We’re a large boutique in the industry and we primarily focus right on what they call “high grades” or “deinked” grades of paper. This is a material that would come from commercial printers, offices, newspapers that folks bring into us so kind of more of a high-end. We also handle corrugated, chipboard, paper that is made by packaging industries. John Shegerian: So, walk us through a day in the life of…. Joel Litman: We’re open five-and-a-half days a week. Our day starts at six in the morning. Our trucks will go out, pick up material from folks that have either generated the scrap from the night before or they’re running 24-hour operations, commercial printers. We’ll pick up the material and bring it back to us. We dump it, and we’ll sort out the different grades of paper, then we’ll bale it up and ship it to paper mills. John Shegerian: Approximately how many grades would that separation be in a given day? Joel Litman: We’ll handle, John, paper-wise, we’ll handle about seven to 10 different grades of paper, which is down from 20 we handled years ago. John Shegerian: Really. Joel Litman: But because of the change in technology and process we’re able to combine some of those grades and the paper mills can handle a little more variety. John Shegerian: Share a little bit about volumes. Approximately how big is the volume that you would bring in at any given day at Texas Recycling? Joel Litman: In a given day we could handle 200 tons a day. That may not sound like a lot. John Shegerian: It’s a lot. Joel Litman: But it’s a lot of paper. John Shegerian: And how is the marketplace now for recycled paper? Is it growing? Is it receding? Is it flat? Joel Litman: It depends on where it’s going. We sell to tissue mills that make what they call “away from home tissue.” So when you’re at the convention center and you have a cocktail napkin, this is what our paper is made into. When you’re on an airline or a hotel and use the tissue products from them, that’s what our product is made into. John Shegerian: You’re kidding. Joel Litman: We sell the corrugated, manufactured and make boxes. So if manufacturing is strong, then there is product to put in boxes so they’ll make more boxes. We’ve worked in the past with newspapers and newsprint. Of course, newspapers are kind of a dying industry. But a lot of folks are using newspaper now as insulation for their homes. John Shegerian: Right. Joel Litman: When you buy an egg carton it may be a grey, molded carton. John Shegerian: Right. Joel Litman: That’s made from newsprint. So there is demand for it. It’s very cyclical though. John Shegerian: Help me in a couple of ways here understand. Help our audience understand. Is all paper in our paper products recyclable? Joel Litman: Yes, but… John Shegerian: OK. Let me hear the ‘but’. Joel Litman: In other words, it depends. It depends. John Shegerian: OK. Joel Litman: For instance, at home, people have a pizza box. John Shegerian: The famous pizza box recycling story. Joel Litman: That’s right. Yeah, the pizza box can be recycled. But you’ve got to take the pizza out. Because the paper mills, they want paper. They don’t want food. They don’t want grease. They don’t want anything that can damage their equipment. Because they’re running the scrap paper through very sophisticated machines and they’re not designed to handle food. John Shegerian: So just like other commodities, the more liberated your commodity is the more valuable potentially it is. Joel Litman: Correct. John Shegerian: So no junk in it. Joel Litman: No contaminants. John Shegerian: No contaminants. Joel Litman: No contaminants. John Shegerian: So with pizza, it’s the pizza that wrecks the recyclability of the box. It’s not the box itself. Joel Litman: Correct. John Shegerian: It’s very recyclable. But no pizza in it. Joel Litman: Right. No pizza. No grease. If you get, for instance, a menu and maybe the menu is laminated on both sides. John Shegerian: Yeah. Joel Litman: Well, it’s paper inside, but the mills don’t have a way to get that plastic off the paper. John Shegerian: Got you. Joel Litman: So that is the challenge. John Shegerian: So what other misconceptions are out there around the paper recycling industry that you can share with our audience and open up our minds and awareness a little bit more to things that we think that we know, but we really don’t know? Joel Litman: Again, to the first one, you said where everything can be recycled. John Shegerian: Right. Joel Litman: Everything can be collected. Because what we really do is we’re collectors. We don’t do the recycling actually. We sell to paper mills. They do the actual recycling. John Shegerian: Right. Joel Litman: So people say, “Well, I have something to recycle,” do we take it? Well, we don’t because we don’t have a place to sell it to. And because if we sell to someone, they have to make a product out of it. So it really comes into economics. If there is no product to be made from it, then there is no use to collect it for recycling. So that is a big misconception. John Shegerian: What’s the cost benefit, though, of making products such as this tablet here out of virgin versus recycled materials? Joel Litman: The cost benefits are, for something like this or this for instance. This has a really short life. It’s one use. You use it as a napkin, there is water on it, you throw it away. John Shegerian: Right. Joel Litman: So the mills don’t want to go through a lot of expense to cut down trees to pulp to make something like this. Something like your notepad, you may keep that piece of paper and put it in your file. It may stay for a long time so they’re going to use better quality material to make the paper out of it. Or a package. But it’s got to be strong. Cosmetic. We work a lot with cosmetic packaging manufacturers. You want that cosmetic box to look very nice and sophisticated so they’ll buy your $90 bottle of cologne or something. John Shegerian: Right. Joel Litman: And you don’t want something cheap to do that. John Shegerian: Sure, sure. Joel Litman: So there are a lot of dynamics that go into it. John Shegerian: Is making this tablet out of recycled paper cheaper for me as a manufacturer than virgin? Or where does that price break come? Joel Litman: In past times, it was cheaper to buy from virgin fiber, because you didn’t have the technology or you didn’t have to go through all the processes of cleaning the fiber. John Shegerian: Right. Joel Litman: Now, though, since the push is on to buy more recycled the price points are close. John Shegerian: How about that napkin you have in front of you. Quality difference if it’s made from recycled or virgin. Is there a huge quality differential? Joel Litman: It’s subtle, but it’s important. A lot of manufacturers won’t use recycled product to put on the shelves. Because if you’re a consumer of paper towels, you have a white paper towel, well you see a little black speck in it. That black speck might be a contaminant. Well, Mrs. Homeowner is not going to use that because it’s got a black speck. It doesn’t affect the integrity of the product but its perception. Well, you have a black speck or brown speck here at the convention. It doesn’t make a difference. John Shegerian: It doesn’t make a difference. Joel Litman: But it’s just a lot of perception. John Shegerian: Got you. For our audience who just joined us we’ve got Joel Litman. He is the President and CEO of Texas Recycling. He’s our special guest today here on the ISRI edition of Green Is Good. To learn more about Texas Recycling, go to www.texasrecycling.com. To learn more about ISRI, go to www.isri.org. Little bit about Texas Recycling now. Does the family spirit still exist there? How many family members work there and how many employees do you have? Joel Litman: We have approximately 60 employees. And my brother Craig and I, we’re the co-owners of it. My daughter Hillary, who is 33, she joined us about four years ago. So we still have the family spirit there. John Shegerian: It’s a family affair. Joel Litman: And we’re very much a family business. Meaning we’ve have, over the years, uncles and brothers and other family relatives from our employees join us. So you can have three brothers in it and so forth. So it’s still a family atmosphere. John Shegerian: As paper recycling goes, are you one of the larger paper recyclers in Texas? Medium size? The tonnage that you’re talking about sounds impressive. Where is that and where do you fit in to the ecosystem of paper recyclers in North America? Joel Litman: As far as volume-wise, really we’re a large boutique. There are certainly folks that collect a lot more tonnage than we do. We do really focus on quality and service and that is where we get our edge. Is that the customers that we deal with, especially the B-to-B and the printing business or distribution manufacturing, if they need something now we’ll get it to them now. And so that’s really been our strength. And we provide a quality product to our mills. You think paper mills may not need quality. They want – especially with what they’re making – they need consistent quality products. If they’re ordering white paper, they don’t want brown paper. They don’t want a pallet in it. They don’t want nails in it. They want paper. John Shegerian: You know, Joel, you and I grew up in a generation where paper was ubiquitous for our lifestyle. Hillary’s generation and my kids’ generation, they’re all emailing and texting each other. How does that whole email and Internet phenomena affect the paper recycling industry? Joel Litman: Well, you’re seeing less and less paper being produced. John Shegerian: Right. Joel Litman: Especially in the printing and writing paper and newsprint. On the other side of the coin, John, they’re ordering a lot from Amazon and online. John Shegerian: UPS boxes, Amazon, FedEx boxes. Joel Litman: They have to put it in a box. And in that box they’ll put literature. They’ll put brochures. So in that regard the packaging part of the business is expanding. John Shegerian: Interesting. And is your paper going into a UPS or FedEx box? Joel Litman: Yes. John Shegerian: So, typically, those are made out of recycled paper. Joel Litman: Correct. The corrugated is made – if you look at the middle what they call the ‘medium’ of the corrugated box or the ‘facing’ of it, that is made from recycled fiber as well. John Shegerian: Got you. You know, we love on this show to share with our audience solutions. Joel Litman: Correct. John Shegerian: What are some do’s and don’ts for our very sustainably minded audience members out there in the United States and around the world? What can you share as a paper recycling expert? Do’s and don’ts to get more people helping out in this new circular economy of paper recycling. Joel Litman: Well, if you’re sorting your paper at home you want to try and keep it sorted if you can. I know a lot of communities have a one-bin system where you put your paper and glass and metal and plastic into it. That’s OK. Not to disparage our friends in the glass industry. John Shegerian: Sure. Joel Litman: But glass recycling really damages the equipment once you get it mixed. So if you want to keep the glass out, that’s best. John Shegerian: That’s best – to keep it as liberated and as clean as possible, Joel Litman: Correct. John Shegerian: How about wetness? Does that affect [it]? Joel Litman: Yeah it does. Because what the mills do when they buy paper from you is they pay on weight. Well, if paper gets wet, it’s going to weigh more, so they don’t want to buy paper that’s wet because they are paying for moisture and for the dampness of the paper. John Shegerian: And that doesn’t help. Joel Litman: That doesn’t help. John Shegerian: So talk a little bit about the 30 years since you took a vacation and then made a career with your pops. What’s really happening? Is recycling awareness going up with your children – Hillary’s -generation? My children’s generation? And are they increasing recycling? Or is it staying flat? What do you feel the prospects are and what is it like the Dallas and Texas community? Joel Litman: I think that recycling certainly has increased. The awareness has increased from when I got into it back in the 80s. Recycling was – you were an environmentalist, a hippie. John Shegerian: Right. Hippie. Treehugger. Joel Litman: Right. But today everywhere you go, whether it be here at the convention, at the hotel, on the streets of Vancouver there are recycling bins and so forth that give people the opportunity to recycle. It has made it much more available to them. The challenge is, though, the quality is decreasing because folks are putting in there with their paper recycling they’re putting in their soda cans or their coke can or whatever. So it takes more work and expense to separate that material. John Shegerian: So, if you were meeting with city leaders in Dallas or other cities and they’re asking you how to promote better recycling – in every category but of course paper as well – your idea is separate bins, mark the bins well so that way each of the different recyclables get less contaminated. Joel Litman: That’s the goal. However, a lot of cities today they want convenience. It’s a lot of education. And cities today are just saying, “We want to put in one bin because it’s easier and more efficient to do it that way.” That doesn’t mean it’s better. It’s just easier to move the material out. But what happens is then the cities have all this material that’s mixed together and it costs more to do it. And we’re a supply/demand business. When the demand goes down and prices go down, it’s going to cost more to do it and they can’t move their material to markets cities wonder, “Well, why is this happening?” Because you don’t have the quality that the mills need to move your material. John Shegerian: How has the rise of China and other emerging economics helped or hurt your industry? Is there more demand because they want to buy your recycled paper? Or are you selling mostly domestically? Or is it just a wash? Joel Litman: No. China has been a big impact on the recycling industry. They are big consumers over there. They have the largest corrugated mills in the world over there. They produce packaging. There are a lot of manufacturers over there so they are making boxes. But again as the world economy changes, their manufacturing is going down so they don’t need as much. The U.S. has the best corrugated in the world so the Chinese, when they’re running well, they want all that U.S. corrugated. As much as they can get. John Shegerian: Right. Joel Litman: Meanwhile, the corrugated mills here don’t want to lose that corrugated to a competitor in China so they want to hang on to it as well. So that’s where you kind of get into – John Shegerian: Do you sell both ways? Domestic and foreign? Joel Litman: Strategically we have – in our market there are six corrugated mills within 200 miles of Dallas. John Shegerian: Wow. Joel Litman: And we don’t have a lot of space to hold that material. So when it comes in, we’ve got to move it out. John Shegerian: Got you. Joel Litman: Other folks on the West Coast, East Coast, they’ll take advantage of the ports being nearby and ship a lot more overseas to Asia. John Shegerian: Got you. Got you. Talk a little bit about – in our last couple minutes – the future trends of paper recycling and the future of Texas Recycling as a whole. What do you feel like? Do you feel hopeful about where we’re going as a paper recycling industry as a whole? And talk a little bit about Hillary and the next generation at Texas Recycling. Joel Litman: I think paper recycling overall is strong. It’s changing because, as I said before, the quality of the material coming in is decreasing, because all the low-hanging fruit is gone. Now it’s costing more to get the high-hanging fruit but also the quality is decreasing. So a lot of the paper mills are developing new technology to clean that fiber. As far as the history of Texas Recycling and the future of it we’re looking to get into other commodities. We have done paper for many years. We do post-industrial plastic. We dabble a little bit in electronics. And we were looking to get into metals as well. So being kind of more of a one-stop-shop for our customers. John Shegerian: For recycling. Joel Litman: Correct. John Shegerian: In all different types of commodities. Joel Litman: Correct. John Shegerian: Wow. That’s wonderful. Joel Litman: Yeah. It is. John Shegerian: So for the audience out there, this has been Joel Litman, President and CEO of Texas Recycling. To learn more about Texas Recycling, please go to www.texasrecycling.com. Of course this is the ISRI edition of Green Is Good, and to learn more about ISRI, please go to www.ISRI.org. We’re here in Vancouver at the beautiful downtown Vancouver convention center. Joel Litman, you have been very inspiring today. You are obviously a sustainability superstar. Thank you. You are truly living proof that Green Is Good. Joel Litman: And two more things real quick. One, buy recycled products. And two, always use a paper towel because the more paper towels you use – like this – the more demand there is for recycled fiber. John Shegerian: You heard it from Joel Litman. Until our next edition of Green Is Good. Thank you for being with us today.