One Man’s Junk Is Another Man’s Treasure: Why The City Council Should Pass Bill 47 And Stop Paying $2 Million A Year In Corporate Welfare

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Selling automotive scrap metal is now very profitable. Credit: zirconicusso

BY KEITH ROLLMANThere is a bill being debated at the City Council (Bill 47) that would essentially sunset the large tipping fee discount (80%) for large metal recyclers to dump their non-recyclable material in Oahu’s landfill. This was originally done to encourage fledgling recyclers during their start-up years, and to offset low prices in the metal market.


But, that arrangement was set up ten years ago, and everything has changed. Metal prices are now through the roof, companies like Schitzer Steel are hugely profitable; making between 50 and 100 million in Hawaii alone, and upward of $800 million over the past 5 years nationally. Yet they insist they still desperately need Honolulu’s $2 million a year subsidy. They don’t.

During the preliminary hearings at the City Council it became apparent that Schitzer doesn’t want to talk about just how profitable it really is. It refuses to divulge any financials on its Hawaii operations, citing obscure, and perhaps non-existent, SEC regulations. It therefore offers no proof of “need” for continuing to move $2 million a year from the taxpayers to its own profit margin.

Instead of coming clean and admitting that this is just outdated corporate welfare, Schnitzer Steel has hired professional persuaders to work the City Council. Highly paid lobbyists and lawyers are now going from office to office performing their Jedi Mind Tricks and reminding the politicians about their generous campaign contributions.

They’ve also dispatched their community PR person, pink-hard-hatted, ex-City Councilperson Rene Mansho to essentially threaten the large array of small non-profits who benefit from the Aloha Aina (recycling) program, that the program will be cut off if they don’t line up to defend Schnitzer Steel’s $2 million taxpayer bonus. According to their own testimony it costs Schnitzer about $150,000 a year to support the Aloha Aina program, and then they’re free to pocket the remainder as clear profit. The City & County could put out an RFP and double financial support for the Aloha Aina program, and still save the taxpayer’s over $1.7 million a year!

Schnitzer’s contention (actually stated at the hearing) that this money should be viewed as a “reward” for diverting the metal from the landfill is absurd. They make a huge profit selling that metal to foreign markets, and they would have many active competitors without the extra profit advantage. It would be like your local jeweler charging you a disposal fee for your unwanted gold. Oahu’s landfill is also being used to dump non-recyclable materials from all the junk cars Schnitzer processes from the Neighbor Islands, all at a highly discounted rate. They should not be rewarded for that.

Some have come right out and accused Schnitzer of glomming onto the Aloha Aina community recycling program as a cynical public relations smoke screen meant to inoculate their sweetheart subsidy. Schnitzer has paid out less than 10% of the $20 million or so that it has taken from the taxpayers.

Schnitzer’s is prepared to fight hard against passage of Bill 47 and the end to their generous taxpayers’ subsidy. They say this is all the work of their competitor’s. The truth, however, is that Schnitzer has few competitors, and would like to have none. They use their $2 million dollar gravy to underprice and thereby suppress the competition. If Schnitzer became the only metal recycler, they would have an ability to set the price paid for recyclable metals at whatever they want.

The City Council must pass Bill 47, and level the playing field. Not only can’t Honolulu’s taxpayers afford $2 million a year in corporate welfare to a profitable company; they also can’t afford a monopoly operation that will get further out of control. Recycling is a critical and necessary function on our Island, but it should not be monopolized by a single operator and their political allies. Call or email your Councilperson today and urge them to pass Bill 47.