Commercializing the U.S. Scrap Tire Industry
Over the years scrap tire markets have evolved. A processing infrastructure that is intricate, capable and, at times fragile, has been built. Scrap tires move around the country every day through the smallest villages, the mega cities and in sprawling urban neighborhoods.
This network that is the scrap tire industry is collection, transportation, processing, sales of end products, equipment, parts and labor. Everything and everyone that touches the tire has a cost associated. So how do we talk about the size of the scrap tire industry in number of dollars annually?
Scrap Tire News asked a small group of industry stakeholders who together represent 145 years experience in the scrap tire industry. Our informal but informed survey points to an industry valued at more than $1.4 billion dollars annually.
Using numbers from the 2013 Scrap Tire & Rubber Users Directory the tire market is about 308 million tires. The replacement market represents about 265 million of that quantity when you consider passenger, light truck, medium truck and heavy duty truck tires. Replacement market tires are generally the tires that enter the scrap tire stream.
When the consumer leaves a tire with the dealer or installer, the dealer charges the customer a fee for that service. It is not uncommon today for that fee to be in the $3.00 per tire range. This fee alone represents $795 million in annual revenue.
The scrap tire is then collected from the generator by a tire transporter or the scrap is delivered to a processor. In either case there is a collection/tipping fee involved. If that collection fee averages $1.00 per tire, which is quite accurate for passenger and light truck, the revenue generated from that fee is another $265 million.
The used tire market is about 12 percent of the scrap tires generated. Twelve percent of 265 million tires is about 32 million used tires. If we value used tires at an average price of $6.50 per used tire, the used tire market is about $192 million.
The average price for TDF is $25 per ton putting the revenue from TDF at $38 million dollars. Ground rubber has an average price of $250 per ton generating revenue of $137.5 million dollars per year. For civil engineering, the average price is about $20 per ton. This leads to a civil engineering revenue of $5 million dollars.
A summary of the revenue stream for collection fees/processing fees and market sales delivers the following commercial value:
The equipment side of the business, which includes processing equipment sales, maintenance, and parts is very difficult to capture but knowledgeable equipment and processing stakeholders estimate a $50 million dollar value for processing machinery while wear parts, based on current capacities, indicate $15 million for tdf processing and $22 million for ground rubber processing.
In addition, most scrap tire collectors are in the transportation business in terms of equipment (tractors/trailers, box vans and storage containers. This has a significant expenditure associated with it and helps support the transportation equipment industry.
While only a snapshot, it’s clear that the U.S. scrap tire industry exceeds a Billion Dollars in commercial value.
© Scrap Tire News, May 2013