One of Manitoba's two scrap tire processing firms has folded, and an executive of the remaining firm charges it's because of the province's unfair, restrictive tire stewardship laws.
"Our program has never worked from Day One," said Brandi Wermie, general manager of Reliable Tire Recycling in Winnipeg. "It's worked only on the backs of processors. We've tried to have meetings with the government, but no one's ever been willing to deal with it."
Winkler-based Tire Recycling Corp. officially went into receivership Oct. 3, after the provincial government refused to give the company a $1 million loan to keep it afloat. The firm had 36 employees.
TRC President Paul Courteau said Oct. 4 he was trying to have some last-ditch meetings with government officials to get enough capital to reopen the company. "A lot of people tell me they're sympathetic, but a lot of people in government couldn't care less," he said.
Wermie said Reliable, the larger of the two Manitoba tire recycling firms, has stayed afloat only because it found additional capital to keep going.
"The program lures you in, but it's not stable, so they have to cut payments because they can't afford to pay what they owe," he said.
In 1992, the Manitoba legislature passed the Waste Reduction and Prevention Act, which among other things mandated a fee of $3 on every new tire to be used on a licensed highway vehicle or trailer.
>From 1995 until March 31, 2007, the Manitoba Tire Stewardship Board oversaw the province's scrap tire program. Under it, a potential processor applied to the stewardship board for registration, and the board set a credit for the processor of up to $2.50 per 20-pound passenger tire equivalent, payable only on the auditable proof of sale of the product. The province generates about 835,000 scrap tires annually, according to industry data.
According to a report in the Winnipeg Free Press, however, the actual credit ended up being more like $1.80 to $2.25 per PTE. And, according to Wermie, that was far from the only problem. The program, he said, was run by people who knew nothing about the industry and who tried to force Reliable and TRC into making and selling products other than what the market demanded.
"The program managers wanted value-added end uses for the rubber," he said. "There's nothing wrong with that, but they wouldn't let us walk before we could run. People should be paid the same price for processing tires, no matter what they do."
Even worse, the program forced Reliable and TRC to process off-the-road tires, although the law made no provision for them to be paid anything for doing so. Because of an oversight in the WRAP Act, OTR tire users paid no recycling fee when buying new tires, which created an enormous shortfall in the tire stewardship fund. Only an $800,000 payment by the provincial government kept the entire program from going bankrupt, Wermie said.
Government officials knew about the problem, but refused to fix it by placing fees on OTR tires, according to Wermie.
"Our current government was elected on a campaign promise not to raise taxes," he said. Officials feared that farmers and other OTR tire users would interpret a recycling fee as a new tax, he said.
The biggest problem, according to Wermie, is that the provincial government maintains a stranglehold on all scrap tire abatement and recycling efforts in Manitoba. All Canadian provinces except Ontario, which has no scrap tire program, operate on the tire stewardship model, but other provinces have made their programs work by increasing fees or by varying the stewardship structure, he said.
"Manitoba is just trying to catch up with the rest of Canada," he said. "Entrepreneurs should make their own business decisions. We'd love to operate through the free market, but that's never going to happen."
Reauthorization of the WRAP Act in November 2006 created Tire Stewardship Manitoba, a successor organization to the Manitoba Tire Stewardship Board with Glenn Maidment, president of the Rubber Association of Canada, as chairman.
The new board has presented a business plan to the provincial government which, among other things, includes OTR tires in the fee structure and makes a conscious effort to raise more money for the tire stewardship program. Manitoba Tire Stewardship will not entirely take over the provincial tire program until the government approves the plan, according to the stewardship Web site.
"They want to increase the annual funding from $2.1 million to $5 million," Wermie said. "But it doesn't look as if they plan to raise the fees they pay us."
Maidment said Manitoba Tire Stewardship plans to sit down with processors as soon as possible to negotiate a fair and equitable rate structure. The board also will raise the retail fees, he said. "We did not announce an increase in processor credits because the board did not want to do so unilaterally," he said.
Manitoba's minister of conservation is in charge of approving the business plan, according to Maidment. "I am told the approval letter has been drafted, though I have not seen it as yet," he said.