Dengue fever outbreak gives boost to recycler
By Katherine Nichols
Advertiser Staff Writer
The cleanup efforts advocated by the state in the wake of dengue fever in Hawai'i have helped the lone tire-recycling company on O'ahu enjoy a temporary economic boon.
Richard Ambo • The Honolulu Advertiser
In turn, Unitek Solvent Services is helping the environment at a time when recycling in Hawai'i has plateaued amid high shipping costs and plummeting product values.
Unitek employee Jerry Faagai loads old tires onto a shredder. The company is enjoying an economic boom that also helps Hawai'i's environment. Unitek recycles tires to be reused as a fuel source or in such playground areas as soccer fields.
"I don't know where the tires are coming from," said Blane Yamagata, president and chief executive of Unitek and its parent company, Environmental Recycling Technologies. "But we haven't been able to keep up."
Volume increased by 50 percent during the cleanup, which lasted approximately eight weeks. Yamagata said that only last week did he finally notice a return to normal volume.
In an effort to reduce standing water that attracts mosquitoes, Hawai'i residents were told to clean their back yards to prevent the spread of dengue fever. For many, this meant getting rid of old tires.
Most of those old tires went to Unitek, where — after a worker mechanically de-rims them — they are loaded one at a time by hand onto a conveyor belt powered by a 400-horsepower motor that churns with a clatter muffling all verbal communication.
From there, the tires travel a short distance to a primary shredder. This "evil" machine, as Yamagata calls it, can rip 100-pound tires into six-inch pieces. Those pieces are then moved to a secondary shredder and whittled to two inches. A granulator then reduces them to 1/2-inch crumbs and a large magnet pulls out the steel wires that had been inside.
The company — with machinery on O'ahu, Kaua'i and Maui, and in Hilo and Kona on the Big Island — operates 24 hours a day, six days a week, shredding about 800,000 tires a year, resulting in what Yamagata calls a small profit margin.
The rubber chips Yamagata's operation creates are sent to AES Hawai'i, a $383 million coal-fired electric generation facility that is the largest supplier of electricity to Hawaiian Electric Co. The plant, which is near Unitek in Campbell Industrial Park, uses shredded tires to supplement coal as a fuel source.
Businesses generally drop off tires at Unitek for a negotiated fee — always cheaper than shipping the tires to the Mainland. In September, Unitek reached a deal to take all of Costco's tires. It also has the contract with the city to receive tires from cleanups.
Ban boosts recycling
Richard Ambo • The Honolulu Advertiser
Used tires have been banned from city dumps since 1994 — one way in which the city nurtured recycling businesses. Industrial Technology was the first to attempt the tire recycling business, but filed for bankruptcy in 1997. Unitek purchased all of the company's assets, including the equipment, for $500,000. Yamagata promptly spent $100,000 on repairs.
Blane Yamagata, president and chief executive officer of Unitek, has spent the past four years improving his company's product. The rubber chips produced from old tires are used for several purposes.
"Ever since, we have been improving the quality of our product," said Yamagata, who graduated from Wai'anae High School and earned an engineering degree from the University of Hawai'i. He currently owns $1.8 million worth of equipment and employs 50 people throughout the Islands.
"Someone once told me that when you're in the tire recycling business, you're in the maintenance business," said Yamagata, who said he spends $300,000 a year just on maintenance. His employees include a part-time welder and a full-time mechanic, electrician and operator for daily maintenance.
Competitor steps in
Despite the complications of the business, Unitek will soon have some competition. Island Recycling has purchased shredding equipment and is accepting tires "because there's only one other company doing it," said Jim Nutter, president of Island Recycling.
In addition to its new tire shredding business, Island Recycling processes paper, glass, palettes and non-ferrous metals.
Although Nutter hopes one day to be able to use the material he produces from the shredded tires for rubberized asphalt in Hawai'i, his immediate plans are to ship all of his product to an end user.
His motivations for the new venture were several: "Our commodities change value so much that in order for us to be viable in the marketplace we have to broaden our horizons," said Nutter. "And tire recycling fits into the scheme of what we do."
Yamagata said he doesn't believe the competition will have much affect on his business. "We have our customer base," he said. "And we do have a working relationship with AES to burn the rubber. But the problem with recycling in Hawai'i is not so much collection, it's finding an end user."
There are other stumbling blocks as well. Although the trend of recycling has risen in the past 10 years — largely due to efforts from the city to provide financial incentives or take actions like banning tires and green waste from dumps — recently it may have hit a plateau, according to Suzanne Jones, recycling coordinator for the city and county.
Volume hits plateau
As of last year, O'ahu was recycling about 500,000 tons of material annually; up from the 100,000 tons it recycled in 1988, the year before aggressive city efforts to restrict certain materials, collect others, implement programs and educate businesses.
But Jones said recycling has hovered in the 500,000-ton range now for the past four years. And because volume has reached a plateau, the network of recyclers is suffering. Before the dengue cleanup, Yamagata reported a 5 percent to 10 percent decrease in his business after Sept. 11.
"(Recycling businesses) might be even more sensitive to an economic downturn only because their profit margins are so slim to begin with," said Jones. "I don't think any business on this island is going to be safe.
"I need more companies like AES who say, 'Let's see if we can substitute this for that virgin material we used to use.' We need to see growth in that aspect of the industry," Jones said. "It takes some creative thinking, and there's some risk and some boldness on the part of these entrepreneurs."
Nutter, who has guided Island Recycling since 1984, added, "The world's economy is suffering at this point. All of the recyclable materials we ship are used as building blocks for new industry." And right now, values are low.
Shipping costs high
Another costly snag, he noted, is that all materials not used in Hawai'i must be shipped overseas to end users. The problem is that Hawai'i companies are in direct competition with those on the West Coast. And no matter that it's half the distance, it's more expensive to ship to the Philippines from Hawai'i than it is from the West Coast.
Nutter said it costs $400 to ship a container from the West Coast; it costs him $1,100. And he ships 110 containers per month.
To try to cope with the challenges, recyclers diversify. Unitek also recycles anti-freeze, petroleum, degreasing solvents and oily waste water.
By 2002 or 2003, Yamagata said he hopes to start tire "pyrolysis," a process that extracts petroleum product from tires. It would then be put into Unitek's refinery to produce a No. 2 diesel — cheaper than virgin diesel and used in boilers and construction equipment, as well as in ships.
Upon request, Unitek also produces smaller rubber chips for playground use — for example, to help develop the Waipi'o soccer fields, 5,000 cubic yards of shredded, crumbed tires were used with an equal amount of compost.
