Industry Framework Backgrounder

Background: Between January and March 2000, the Minerals and Metals Sector of Natural Resources Canada (NRCan) undertook a survey to identify participants in Canada's metals recycling industry. The survey invited respondents to indicate the nature of their involvement in the sector in terms of two sets of activities -- those generic to all areas of recycling and those specific to the recycling of scrap metal -- and the materials they handle. A limited amount of data was available from telephone directories and reports prepared by Statistics Canada, including the newly established North American Industry Classification System (NAICS) to create the initial list of companies to be contacted.

The NAICS is a six-digit code developed by Statistics Canada (SC), the U.S. Office of Management and Budget, and Mexico's Instituo Nacional de Estadistica Geografia e Informatica to facilitate statistical comparison across the three jurisdictions. The NAICS replaces the Standard Industry Classification (SIC) codes in place since 1980 and identifies industries by production process rather than by the goods or services they produce. More importantly, the NAICS requires firms to adopt a single code, intended to represent their "primary" activity. Because recycling is an activity that cuts across virtually all sectors and is frequently not the main focus of business activity, the NAICS was of limited value in identifying participants in the metals recycling industry.

Another possible source, the 1996 and 1997 Environmental Industry Business Sector Report, limits the collection of data to three broad areas: environmental goods ("waste collection, separation, handling and recycling equipment, soil vapour extraction equipment"); environmental services ("recycling [sorting, baling, cleaning"] and operation of recycling plants [materials recovery facilities])"; and environment-related construction ("hazardous waste management ... recycling").

Neither the coding provided by the NAICS or the Environmental Industry Business Sector Report present information at a sufficient level of disaggregation to be of use in developing a national, commodity-based recycling framework. These facts, combined with the confidential nature of detailed information stored in the Business Register, meant that existing, formal methods of identifying industries would be of limited value in establishing the metals directory.

Consequently, the metals survey relied primarily on information provided by government contacts, industry associations and recycling organizations in terms of their membership lists and existing sectoral or regional directories. Some 700 firms involved in the collection, processing, recovery and recycling of 26 different metal commodities responded, representing nearly one quarter of the more than 3000 commercial, institutional and government entities identified and located in every province and territory.
One of the related outcomes of the materials recycling industry study was the realization that, while there were similarities across the various directories and regional databases reviewed, none presented a complete or consistent picture of the industry as a whole.

This recycling industry framework was commissioned to address this finding. Its purpose was to develop a conceptual framework based on the views of commercial, institutional and government participants involved in recovery and recycling of the remaining major recyclables, i.e., chemicals and solvents, industrial minerals, paper, plastics, oil-based materials, rubber, textiles and wood.

Methodology: The first step was to conduct a literature and Internet search to identify existing sources of data on recycling entities and possible sources of information on participants in each of the other segments of Canada's recovery and recycling industry.

A key requirement in designing the structure of the "conceptual framework" for recycling was that it should reflect the way in which industry views its activities and the actual markets for recyclables. Many web sites offer extensive descriptions of the processes and technologies used in the recycling of specific products, as well as definitions of what comprises each of the subsectors they address.

The second step involved consultation with federal and provincial government contacts, industry and recycling organizations to determine how each industry views its activities and commodities and the availability of existing directories and databases.

Nearly 80 industry associations, recycling organizations and government officials were invited to provide comments on a preliminary list of categories of recyclables and related materials and products that could be used for possible future development of a national recycling directory. More specifically, they were asked to consider the following broad categories and related materials and products for their relevance and completeness:

1. Building/Construction/Demolition	6. Organics
2. Glass	7. Plastics
3. Chemicals/Solvents	8. Rubber
4. Household Hazardous Waste	9. Textiles
5. Oil	10. Wood

In addition, respondents were asked to:

a) indicate areas of overlap and/or duplication;

b) identify errors or omissions;

c) suggest ways to improve the grouping of the various sectors and their related subsectors;

d) suggest other possible sources of information; and

e) comment on the availability of membership lists, directories or databases that could help identify participants in the above-noted segments of Canada's recycling industry.

In designing the draft framework, no attempt was made, in developing the initial groupings of materials, to remove duplication or impose any order, other than alphabetical, in their presentation. Rather, the list was a composite of the items included on different lists, in some cases created for very specific purposes or to reach particular markets.

The objective was to establish groupings that reflect the range of recycling activities that take place while ensuring sufficient differentiation to capture discrete subsectors of the industry.

As the study proceeded, additional sites and directories were identified and their approach to listing recyclable commodities was incorporated into the original set. In several instances, such as paper and plastics, respondents urged NRCan to adopt a breakdown which is in use and familiar to industry.

SUMMARY OF COMMENTS AND RECOMMENDATIONS

In addition to detailed comments on the materials and products that comprise the market for recyclables in each broad industry category, a number of comments and/or recommendations were made by individual respondents that address the framework, the methodology or proposed next steps. These overarching observations provide a broad context within which to assess issues to be addressed and future work in this area.

Distinguishing Between Recyclables and Their Source: The initial framework, developed for the purpose of consultation, was a composite of headings used in a variety of existing directories and contained a number of obvious ambiguities and areas of overlap.

For example, over the course of the consultation and ongoing review of Internet sites, it became apparent that significant confusion arose from the fact that several directories identified the source of secondary raw materials as well as the commodity. "Household Hazardous Waste" was included as part of the proposed framework, along with many of the recyclables derived from the residential waste stream, such as automotive oil, glass containers, organic material, paper, plastics and used paints. Similarly, the list included materials generated by industrial activity, including "Construction and Building Debris," as well as separate listings for wood, used paint/paint cans, wallboard and various aggregates. The current industry framework no longer refers to these or other waste streams.

The Need for Definitions: Some of the headings used in the proposed and final framework are intended to group a number of materials and products together. In some cases, the reference to "Other" remains as a "catch all" category. Several respondents affirmed the need to ensure that definitions are available for all of the headings and terms used in future consultation. This will be particularly important if the decision is taken to proceed with development of a comprehensive national recycling directory.

Integration of Existing Sources of Information: A number of comments were made with respect to earlier initiatives at the sector or provincial level that sought to characterize the recycling industry. It was suggested that additional research to review these reports should be undertaken. In addition, most of the public and private sector experts consulted recommended that efforts be made to ensure that all relevant electronic and other forms of directories, at the sector or provincial level, should be integrated into the design of any centralized directory or database. To facilitate searching of the directory and related sites, it was also suggested that all links should be accompanied by a brief note outlining what information is to be found on each of the many excellent web sites.

One of the examples of related work which NRCan was encouraged to consider was work being conducted by Corporations Supporting Recycling (CSR) to establish Generally Accepted Accounting Principles (GAAP) in how the costs and efficiencies associated with recycling are calculated by municipalities across Canada.

Additional Considerations: In reviewing the results of the research and consultation, there are a number of considerations and caveats to bear in mind.

First, the framework presents the various categories or subsectors of the recycling industry, and related materials/products, in alphabetical order, and does not reflect their relative impact in economic, environmental or social terms.

Secondly, the current framework focuses only on the nonmetal sectors. Several respondents noted that, to avoid confusion and ensure internal consistency, future consultations should incorporate the existing framework for metals into that proposed for the remaining sectors.

Thirdly, responses to the request for comments varied by sector and region. Several associations provided lengthy responses, describing the nature of recycling as it relates to their sector or directed the request to individuals with specific expertise in the field. In other areas (organics and textiles), there was no response, leading to some uncertainty regarding the proposed classification. In these cases, the list is based on the limited information available on Recycler's World and other web sites and will need to be confirmed, either through the relevant industry associations or by direct consultation with companies directly engaged in the sector.

This last comment is applicable to all areas of the final proposal for a conceptual framework. While the current structure is based on the advice of one or more experts in most of the areas reviewed, the timing of the survey, which took place over the summer, was such that many "experts" who might otherwise have responded were not able to do so. Furthermore, as with the metals study, the usefulness of the structure reflected in this report will require additional review and confirmation from a much wider group of public and private sector contacts than has been consulted to date.

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