Crumb Rubber—Changes and Challenges

Old problems and new markets are altering this fast-growing niche in tire recycling.

By Robert L. Reid

Last December, the Los Angeles Times reported that First Nation Recovery Inc. (Mecca, Calif.), the only U.S. tire recycling operation owned and operated by Native Americans, was fighting to survive—and might even shut down—due to difficult conditions in the crumb rubber market.

While First Nation’s plight was “new” news, the difficult market conditions were definitely “old” news to crumb rubber producers. As one tire recycler notes ruefully, “Crumb rubber companies going out of business isn’t a new phenomenon—this has gone on for the entire history of the crumb rubber industry.”

And indeed, at least one other California crumb rubber producer did shut its doors last year, while another seems to have folded as well. Reports of First Nation’s demise were premature, however. Rather than shutting down, the company is actually upgrading its facility—and its experience offers some insights into the challenges and changes in the North American crumb rubber business.

A Growing Market

First of all, it’s important to note that even the definition of crumb rubber is somewhat in flux. For example, the rubber industry’s trade group, the Rubber Manufacturers Association (RMA) (Washington, D.C.), prefers the term ground rubber. To RMA, this term encompasses material ranging in size from about 3/4 inch down to 400 mesh. (Mesh describes the number of holes per linear inch in the screen through which the rubber pieces must pass. Thus, the higher the mesh number, the smaller the pieces of ground rubber.)

For many others, the term crumb rubber covers roughly the same range of sizes, while some limit crumb to pieces of 10 mesh or finer, calling the larger pieces granulate or coarse rubber. RMA is also promoting the term coarse for larger ground-rubber chips. To simplify things, this article will use the term crumb to discuss the entire range of size-reduced rubber of 3/4 inch or smaller.

Overall, crumb rubber represents about 12 percent of total scrap tire utilization in the United States, according to RMA’s 2001 figures. Tire-derived fuel remains the largest market for scrap tires (at about 41 percent), followed by civil-engineering applications (just over 14 percent), and “unknown” uses (121/2 percent). But crumb rubber is growing fast, with U.S. production increasing from approximately 460 million pounds in 1998 to 660 million pounds in 2002, RMA notes. 

Ground-up whole tires accounted for some 410 million pounds of that 2002 total, while tire buffings—a byproduct of tire retreading—accounted for the rest, RMA says. Significantly, the buffings portion has stayed at the same level—250 million pounds—for at least a decade, while crumb rubber from whole tires doubled every two years through much of the 1990s. Whole-tire crumb rubber started the 1990s at essentially 0 pounds, then quickly rose to 30 million pounds in 1992, 60 million in 1994, 120 million in 1996, 240 million in 1998, then 400 million in 2001 before slowing its dramatic growth rate early in the new century, RMA says.

The leading applications for this whole-tire crumb rubber in 2001 were asphalt rubber for roadwork (220 million pounds), recreational/athletic surfaces or artificial turf (80 million pounds), molded or extruded products (50 million pounds), and tire manufacturing (50 million pounds), according to RMA data. 

When buffings from other estimates, including Canadian production, are added to RMA’s figures, molded and extruded products—used in automotive parts, for instance—edge ahead of asphalt rubber as the leading application. Under this accounting, the total crumb rubber market for North America approaches 1 billion pounds, according to the Recycling Research Institute’s 2002 Scrap Tire & Rubber Users Directory. 

Unfortunately, industry sources note, the growing production of crumb rubber has sometimes outpaced demand in certain regions of the United States and Canada, leading to excess capacity, downward pressure on prices, and hard times for producers—which brings us back to what’s been happening in California.

California Drama-ing

Some of the problems faced by California crumb rubber firms are, if not unique to the state, at least made more dramatic by the vagaries of doing business there. After all, though many states faced a budget crisis last year, California’s was arguably the most severe. Likewise, California is often cited as having some of the worst problems with high workers’ comp and energy costs—two factors named as problems by various rubber recyclers. 

Moreover, asphalt-rubber road projects, though a leading application overall, are concentrated in just a few states, with California usually the largest user. Thus, California attracted both a relatively large number of domestic crumb rubber operations and was seen as a good export destination for subsidized crumb rubber from Canada. The result was a glut of crumb rubber in the state. This glut cut prices dramatically—from roughly 15 to 17 cents a pound a few years ago to about 10 to 11 cents a pound last year, which was lower than the cost of production for some recyclers. 

Plus, California’s budget cuts made even more drastic reductions in the amount of crumb rubber used by the state’s transportation department—from the equivalent of nearly 2.7 million tires in 2000 to only about 500,000 in 2002, according to figures from the California Integrated Waste Management Board (CIWMB) (Sacramento). 

This combination of challenges in California threatened First Nation’s tire recycling operations and drove at least one firm, Atlos Rubber Co. (Los Angeles), out of business. Rumors also swirled around the possible demise of Bay Area Tire Recycling L.L.C. (San Leandro, Calif.), but repeated calls to the company went unanswered by presstime.

Atlos, which produced crumb rubber from buffings, had been in operation since 1939 and had once been a significant player in the market. The firm had even held the original patents for a major asphalt-rubber process, now in the public domain, explains Robert Winters, Atlos’s former CEO. But various factors caused Atlos to collapse, he says, with the leading problem being subsidized Canadian firms “that can deliver crumb rubber to Los Angeles cheaper than we could make it.” Atlos took several steps in an effort to compete, Winters says, including seeking duties on the Canadian crumb rubber and securing a power subsidy from CIWMB to offset California’s high electricity rates. All of these efforts failed, forcing Atlos to close last fall.

Woe Canada?

The perceived impact of Canadian exports on California crumb rubber producers is cited in both the most recent report on scrap tire markets from RMA and a 2002 study conducted for CIWMB by California State University professor Robert Wassmer. Wassmer’s study found that Canadian subsidies in British Columbia—the chief exporting province to California—could reach as much as $114 (U.S.) per ton of crumb rubber based on the level of processing as well as the total amount of material from the tires that was ultimately recycled and sold, together with a “complex” transportation subsidy that averaged $39 a ton in 2001. 

A few years ago, at least three Canadian provinces “had a fair amount of excess capacity and used California as their escape valve,” notes Michael Blumenthal, RMA’s senior technical director. Though the amount of Canadian crumb rubber sent to California was never large, “even a little rubber in the market was going to upset the marketplace even further” given the state’s other problems, Blumenthal says. He adds, however, that Canadian producers stopped shipping to California more than a year and a half ago.

Western Rubber Products Ltd. (Delta, British Columbia) is one such Canadian firm that initially exported crumb rubber to California for rubber asphalt but has since left that market, says Mike Roberge, vice president of operations. Roberge disputes the idea of blaming Canada for California’s crumb rubber problems for several reasons, starting with the fact that California tire recyclers receive their tipping fees upfront, before they do anything with the scrap tires. Moreover, California provides grants to promote crumb rubber usage, which sounds like a government subsidy to Canadian ears.

In contrast, British Columbia pays its subsidy in place of a tipping fee—and the processor doesn’t get a penny of the subsidy until after the tires are actually processed and sold, Roberge says. “So you’d better be a real business and have customers, or you’re not going to last long [in Canada] because you’re not going to get any money,” he explains.

Roberge also outlined a host of problems in California’s marketplace—ranging from the well-known budget crunch to factors such as landfills that take tires at costs below the processors’ tipping fees, large U.S. firms that under-price their material to gain market share, and cement kilns that actually pay people to give them tires. Such problems will exist for California crumb rubber producers regardless of Canadian subsidies, he argues. “Western Rubber could never sell another pound of rubber into California, and it’s not going to change a thing,” Roberge asserts.

Though Western Rubber had hoped the California asphalt-rubber market would grow enough to be a good export outlet, the state’s various problems killed that idea. The company hasn’t shipped any material to California since July 2002 and has, in fact, abandoned the asphalt-rubber market entirely, shifting its crumb rubber production to areas such as playground cover, dairy mats, and other applications.

Leaving the Road

Ironically, Western Rubber’s decision to walk away from the asphalt-rubber market is similar to First Nation’s plans for resolving its own California crisis. It’s a move also being considered by a growing number of U.S. crumb rubber producers, though many of these firms simply plan to diversify into other crumb rubber markets rather than outright abandon asphalt rubber. One U.S. company that did drop asphalt rubber entirely is willing to return to that market under the right conditions, such as a nationwide standard for making and using the material.

For First Nation—run by the Cabazon Band of Mission Indians—the key to recovery involves finding year-round buyers of crumb rubber who can largely replace the seasonal market of asphalt rubber, explains Matt DeBasio, general manager. Though asphalt rubber currently represents about 80 percent of First Nation’s business, the company is investing roughly $750,000 to upgrade its equipment to broaden its customer base. These changes include new blending equipment to produce different mesh sizes, a new rotor to increase efficiency and production speed, as well as a steel separation system to turn tire wire—currently an expense item—into a small revenue stream, DeBasio says. 

Within a few years, he adds, First Nation hopes to change its market mix enough to make asphalt rubber just 20 percent of the business, with year-round applications—such as safety surfacing, soaker hoses, new tires, or other finished products—taking the lead. 

Diversification is a smart move for crumb rubber producers, one that’s becoming more popular even among the largest providers, notes Doug Carlson, executive director of the Rubber Pavements Association (Tempe, Ariz.). Historically, many crumb rubber producers relied exclusively on the asphalt-rubber market and “learned the hard way” how volatile the market can be, he says. 

In fact, with the overall asphalt-rubber market growing about 10 percent a year—despite the troubles in California—the idea of fewer firms devoting their production to state-funded roadway applications is healthy for the market, Carlson says. This way, the material can find its “true market value” rather than always having prices forced downward by excess supplies, he explains.

Not Just Playing Around

So where will crumb rubber go if not into roads?

One of the fastest-growing markets in recent years involves larger, coarser material used in playground surfaces, running tracks, and a new type of artificial turf, reports RMA. Molded or extruded plastic/rubber products—which use finer material in the range of 4 to 100 mesh—also have “significant market potential,” RMA says.

Crumb rubber equipment makers have noticed the same trends. Wendt Corp. (Tonawanda, N.Y.) sells heavy raspers and granulators that make material for playground cover and sports surfacing as well as fine (but not ultra fine) molded product applications, notes Tom Wendt Jr., sales manager. It’s a niche that’s been growing steadily for much of the past decade, he says, with the company selling roughly one heavy rasper a year back in the mid-1990s, about six a year by 2001, and some eight or nine last year, he reports. Moreover, at least half of the customers for these products are purchasing their second or even third machine, Wendt says, which suggests that the processors’ business is increasing enough to require additional equipment.

For Granutech-Saturn Systems Corp. (Grand Prairie, Texas), the growth spurt is coming in equipment that makes material in a 60-to-80-mesh size, especially for molded automotive parts such as wheel liners or firewalls that mix rubber and plastic, notes Damon Dedo, director of sales.

Dedo adds that he’s been working with automobile companies to develop such products, which offer the possibility of more year-round markets for tire recyclers. “I’m not sure if it’s a trend,” he concludes, “but people are definitely looking at more [automotive] applications.”

Charles Astafan, general manager of Columbus McKinnon Corp. (Sarasota, Fla.), sees growing interest from crumb rubber processors in producing zero waste from whole tires. When the tire is first shredded, he explains, the rubber, steel wire, and fiber are all commingled. When that material is separated into three clean streams, “the big challenge is over—now it’s just sizing the rubber to whatever the market requires.”

On the processor side, Bob Davis, CEO of GreenMan Technologies Inc. (Lynnfield, Mass.), can certainly attest to a changing direction in crumb rubber markets. 

GreenMan, which handles tires from 22 states and operates processing facilities in six of them, tried the asphalt-rubber business in the late 1990s but ultimately abandoned it for technical and bureaucratic reasons, including the fact that standards for asphalt rubber differ from state to state, Davis notes. GreenMan initially lost interest in crumb rubber entirely, focusing on tire-derived fuel applications instead. As the market for athletic and recreational surfaces began to take off early in the new century, however, the company decided to take another look—and liked what it saw.

When GreenMan reentered the crumb rubber business in 2002, those applications represented only about 8 percent of its total revenues, Davis says. But crumb rubber for sports surfacing and playgrounds is growing fast—beginning 2004 at about 30 percent of GreenMan’s revenue and likely to end the year at 40 percent, he notes, concluding, “We feel it’s a very solid market that has sustainability and growth.” 

TIRES Inc. (Winston-Salem, N.C.) also experimented with and then abandoned asphalt rubber in the 1990s, says Dave Forrester, CEO. Instead, TIRES focuses on finding new, industrial-based markets for molded products as well as athletic-surface applications—which have now become “a substantial part of our business,” he notes. 

In particular, molded products that blend plastic with crumb rubber in a 30-to-80-mesh range have great potential, he adds, though manufacturers are skeptical about whether the crumb rubber industry can reliably produce the necessary quality. 

It will take time to convince manufacturers and grow these applications—perhaps as long as 10 years—but eventually, Forrester says, “I think those markets could be huge.”

Patience and Optimism

Jana Nairn of Golden By-Products Inc. (Ballico, Calif.) also stresses that tire recyclers need to be patient. “Markets don’t develop by themselves over-night,” she says. “It takes time, hard work, and quality recyclers/manufacturers with staying power to survive.” Nairn remains optimistic even about asphalt rubber’s future in California, pointing to recent legislation in the state that offers local governments an incentive to use asphalt rubber, as well as statements by California’s transportation department expressing a desire to use crumb rubber when and where it’s cost-effective.

Other recyclers note that the California legislature is considering a bill that would establish the state’s first mandate for using a specific amount of asphalt rubber in all future roadwork—presumably, once the state gets its budget house in order.

For Dave Quarterson, senior director of Liberty Tire Services L.L.C. (Pittsburgh), the key to crumb rubber success, ironically enough, involves offering products and services other than crumb rubber. Too many processors concentrate only on making crumb rubber, he says. Instead, crumb material should be just one part of a comprehensive tire recycling effort that ranges from collecting tires to supplying all the scrap tire markets, including tire-derived fuel and various civil-engineering applications.

Another problem is that many well-known tire companies use little or no recycled rubber in their new tires or other rubber products, ostensibly because they can’t find quality material, Quarterson says. Processors could build new plants to provide tire companies with recycled rubber that meets their specifications, Quarterson notes, so long as the processors get long-term contracts to amortize their multimillion-dollar investment. 

Usually, however, tire companies “refuse to give you anything other than a 12-month purchase order,” he explains. “And they’ll only give you the purchase order after you’ve built the plant and gone into production—so it becomes very risky to try and do this.”

Despite such challenges, Quarterson seems optimistic about crumb rubber’s potential. “Where’s the whole thing going to be five or 10 years from now?” he ponders. “I don’t have a clue—but I can say we’re probably going to be amazed.”  •

Robert L. Reid is managing editor of Scrap.