Study shows benefits from stimulus
According to the “Study of Equipment in the U.S. Scrap Recycling Industry,” released by the Institute of Scrap Recycling Industries (ISRI), the scrap recycling industry invested nearly $9 billion in recycling equipment in the U.S. between 2006 and 2011, with another $14.5 billion expected to be invested between 2012 and 2016. The report shows that the Recycling Investment Saves Energy (RISE) Act, included as a provision in the October 2008 federal stimulus package, had a significant impact on equipment purchasing decisions.
“The $90 billion scrap recycling industry is a valuable economic driver,” said Robin Wiener, ISRI president. “As the nation sought to rebound from the downturn in the economy, RISE allowed for the deployment of new and improved recycling equipment. It added billions of dollars into the economy when it was needed, improved efficiency, and expanded the recycling stream. We continue to see the economic benefits of RISE today and this will continue into the foreseeable future.”
According to a Congressional Budget Office estimate in 2008, RISE would have a minimum benefit to the industry of $162 million over 10 years. The ISRI study, conducted by SAI, shows a much greater impact: generating an additional $1.8 billion in spending from 2008 to 2011 (total of nearly $9 billion), with a potential of $3 billion more spent from 2012 to 2016 (total of nearly $15 billion). RISE allows purchasers of eligible equipment ordered and put to use after August 31, 2008, to depreciate 50 percent of the cost in the first year. Only machinery and equipment that is used exclusively to process materials and has a useful life of at least five years is eligible.
Other highlights of the study included:
- Scrap equipment export sales declined from $485 million in 2008 to $435 million in 2011;
- Equipment manufacturers predict strong growth in the exporting of scrap recycling equipment with a 7 percent Compound Annual Growth Rate in sales through 2015;
- U.S. recycling equipment manufacturers estimate 15 percent of total scrap equipment revenues are currently derived from export sales;
- Between 2006 and 2011, processing equipment accounted for 53 percent of total investments and sorting/handling equipment comprised the remaining 47 percent;
- The average investment was $200,000; and
- Trucks and trailers are the most likely potential investments with more than one-third of all companies surveyed predicting future need, followed by balers, shears, and portable shears.
To complete the study, SAI in coordination with ISRI developed an online survey that was completed by more than 190 scrap processing companies and 75 scrap equipment manufacturers and distributors.