[an error occurred while processing this directive]
[an error occurred while processing this directive]

November 11, 2007

Maine Today.com

Does bottle redemption need to be saved?
By TUX TURKEL, Staff Writer

Redemption centers in Maine have been closing, and some owners say they need more compensation. But the bottling industry says there are just too many.

BIDDEFORD — It has been nearly 30 years since voters approved Maine's returnable container law, about as long as the Marcotte family has had the doors open at Biddeford Bottle & Can.

Cars arrived in a steady stream last week at the redemption center, their occupants lugging bags and boxes of bottles and cans.

In the warehouse, workers were sorting various sizes of soda, juice, beer, water and other beverage containers into 467 categories.

Alongside the building, a Coca-Cola distributor was loading his tractor-trailer with plastic bags of returnables.

All this activity could end next year.

John Marcotte, who bought the business from his parents, and his wife, Diana McKee, have listed the property for sale. The business is losing money; they've had to tap a home equity loan to keep it running.

"It's sad for me to watch something end that has worked for 30 years," McKee said.

The financial distress at Biddeford Bottle & Can is a sign of the times. No one keeps accurate count, but a survey done by McKee found that 193 of the 350 stand-alone redemption centers that were open in 2003 had closed by last spring.

The reason for the closings, and the impact, is in dispute.

Center owners say they need an additional 2 cents to collect and handle each container. They say they haven't gotten what amounts to a cost-of-living raise in 20 years, despite rising prices for materials, energy and labor.

But beverage distributors fought the raise in the last legislative session, and won. The problem isn't that the fee's too low, they said, but that Maine has too many redemption centers.

The debate took on another dimension last month, when the state launched a new effort to boost recycling.

Lawmakers in 1989 set a goal of 50 percent recycling of all waste. But Maine has never topped 41 percent, and the rate has actually fallen in recent years. The declining number of redemption centers contributes to the trend, supporters say — another charge that's in dispute.

One thing seems clear. Three decades after Mainers voted to clean up roadside litter by requiring a deposit on beverage containers, redemption centers are struggling to survive high operating costs, new technology and changing consumer behavior.

Eleven states have enacted so-called bottle bills. Maine's is one of the oldest, and has been expanded over time to cover a wide range of beverages. An estimated 80 percent or more are returned, the largest share at redemption centers.

The system works this way: Consumers pay a nickel deposit — 15 cents for wine and liquor — on each container. They get their money back when they return it. The redemption center bills the bottler 8 cents and, in general, gets 3 cents as a handling fee.

Redemption centers might not exist if every store that sold beverages took back the containers. But the law allows them to make arrangements with centers to handle their deposits. Some big retailers, such as Wal-Mart, rely on this system.

In recent years, though, redemption centers have been complaining that the handling fee doesn't cover their growing costs. They persuaded Sen. Nancy Sullivan, D-Biddeford, to sponsor a bill earlier this year that, among other things, would have given the centers another 2 cents.

Sullivan is sympathetic to the plight of center owners, and the rate at which the businesses appear to be closing. A broad network of viable centers also makes it convenient for people to return their bottles and cans, she said, and that boosts Maine's recycling rate.

Sullivan's proposal lost by a single vote. Effective lobbying by the bottlers helped kill the bill, she said.

Sullivan tried to introduce a follow-up bill in the upcoming short session of the Legislature. Its goal was to let the state — not bottlers — get the deposit money from uncollected containers, what the industry calls "the float." An estimate of what that's worth is being studied, but Sullivan figures the value in the millions of dollars. Legislative leadership didn't allow the bill in January's session.

Bottlers made a convincing case for freezing the handling fee.

Newell Augur, who represents the Maine Beverage Association, noted that Maine's fee already is higher than any bottle-bill state except Vermont. The problem in Maine, he said, is that there aren't enough containers to support 811 licensed redemption centers, the total when supermarkets and other retailers are included.

Vermont, he said, has only 80 centers. Massachusetts, with six times the population as Maine, gets by with 100 centers.

That logic doesn't convince Sullivan and redemption center owners. They say those states have recycling rates that are lower than Maine's, and one reason is the lack of convenient redemption centers.

But there's disagreement on that point. Augur's clients, mostly Coca-Cola and Pepsi distributors, collected 300 million bottles and cans last year. They are on track to do the same this year, Augur said.

"We have not seen any reduction in the rate of redemption," he said.

The decline of redemption centers raises another point of contention: The impact of machines that allow residents to recycle their own cans and bottles, and collect the deposit. These machines are popular in other states, and are becoming more common in Maine.

Nine Hannaford supermarkets in Maine, for instance, now feature Clynk redemption centers. Customers use special bags and bar code labels that keep track of their deposits. They maintain accounts and can get their money with redemption cards.

Other centers are switching to Tomra Systems, a Norwegian- made reverse vending machine. It sorts and collects empty containers, and provides a refund.

Automation certainly cuts down on labor, and many customers find the machines convenient to use. Others, however, like the personal touch.

At Biddeford Bottle & Can last week, Frank Diolio of Saco was dropping off a load of empties. Diolio is in the habit of coming by each week with all the bottles and cans he can collect from family. This visit netted him $2.20 in cash. He's aware of the machines, but said they're too complicated.

What would he do with his empties if the Biddeford center closes?

"I'd probably throw them away," he said.

Marcotte and McKee say many customers feel this way. Despite that, they experimented two years ago with a prototype machine in a renovated section of their warehouse. But the technology didn't process empties quickly enough, they decided, and it was too expensive to operate.

Their operation now is very old school. Workers receive and count the containers at a window, then hand them off to sorters in the cluttered warehouse. The work is not clean, for a culture increasingly used to sterile office and retail environments. The scent of soda and old beer hangs in the air.

These jobs start at minimum wage and can pay up to $10 an hour. The six employees include retirees, after-school help and workers with special needs.

Finding and keeping workers is one reason redemption centers say they need an increase in the handling fee.

Dale Miles owns Brighton Avenue Redemption Center in Portland, which is among the oldest and largest centers in the state. His four full-time workers make $10 an hour, but receive no benefits. If the handling fee were increased, he said, he could hire more workers and raise hourly wages to $12.

Miles said his business is profitable, but under pressure. He has decided that the only way to stay afloat is to increase the number of containers he handles. So he offers a 10 percent premium for customers who bring a load worth $50 or more.

In East Waterboro, Mike Allen said he can't afford to pay workers more than $8 an hour in the redemption center at J.D.'s Package Store. Some leave. Allen said the center is just breaking even financially. He depends on liquor and beverage sales in the store to survive.

"My redemption center is almost working like a loss leader to attract customers to my property," he said.

Despite this bleak picture, some new centers are opening.

But Steve Giguere, who oversees bottle bill compliance at the Maine Department of Agriculture, said many aren't successful.

Some entrepreneurs fail to consider the time it takes to receive the handling fee from the bottlers, after they give the customer their deposit money. They get into the business without enough operating capital, he said.

"We do get a lot of turnover," he said.

As to the central questions of whether there are too many redemption centers, or the handling fee is too low, Giguere said he's not sure.

But this debate is likely to end soon at Biddeford Bottle & Can. A real estate sign hangs out front and the 10,000-square-foot building, squarely in a busy commercial zone, is listed for sale for $600,000.

Diana McKee said the couple made a hard decision last year to borrow against their home to cover $16,000 in operating losses. They won't do that again.

"Even if we don't sell," she said, "we're still going to close."

Staff writer Tux Turkel can be contacted at 791-6462 or: tturkel@pressherald.com

http://business.mainetoday.com/story.php?id=146933&ac=PHbiz


[an error occurred while processing this directive]