State recycling laws send shockwaves out to discounters - battery recycling laws

Discount Store News, Jan 8, 1990 by Richard C. Halverson

State Recycling Laws Send Shockwaves Out to Discounters

Mounting concern about the environment is forcing many retailers to establish automotive battery recycling programs that will disrupt their usual way of doing business.

Many states and municipalities have passed laws that require retailers to establish recycling programs, either last year or by 1991, that will require added expenditures both of capital and administrative efforts.

Twelve states and one county have passed laws requiring retailers to recycle batteries--they must take in a junk battery for every new one they sell. And distributors must collect, paying a salvage value fee that averages $1.50.

In addition, at least six states and Kansas City, Mo., are considering recycling laws, and a New York congressman introduced a national battery recycling bill last summer. Florida and Maine, have levied taxes of $1 per car battery, with the money ear-marked for enforcing environmental laws.

Getting a jump prior to the Jan. 1, 1991, effective date of a new state law in North Carolina, Rose's Stores started last September a chainwide recycling program, charging customers a $3 core deposit in lieu of a trade-in.

"We felt it was just a matter of time before laws would require recycling," said George Wadsworth, assistant automotives buyer for the Henderson, N.C.-based discounter. "We wanted to stay ahead of the law."

The program is too new to gauge what percentage of batteries will be returned for recycling or whether junk batteries will produce the expected modest profit, said Wadsworth.

One of Rose's major competitors in the Southeast, Bentonville, Ark-based Wal-Mart, already is reaping a benefit from its efforts to urge vendors to supply goods and packaging that are less harmful to the environment. Its auto battery vendors now are switching to battery cases made of recycled black plastic, from clear battery cases that must be made of virgin plastic.

Each year, Wal-Mart vendors will use an estimated 11 million pounds of recycled battery-case plastic from 5.5 million junk batteries that otherwise might get buried in overburdened landfills, or worse, dumped where battery acid and lead could pollute ground water.

In the bargain, Wal-Mart is saving 15 cents a battery on its purchase cost, or about $825,000 for the estimated 5.5 million batteries that Wal-Mart and its Sam's Wholesale Clubs sell each year.

Yet, Wal-Mart recycles only about 13 percent of the batteries its sells. Sam's recycles only about 1 percent, which is typical of warehouse clubs. Those figures compare with an overall national recycling rate of at least 75 percent of the 61.7 million replacement batteries sold in 1988.

Chains such as Ward, Sears and K mart achieve recycling rates exceeding those of Wal-Mart and most discounters because they provide a financial incentive: a core deposit of $5 to $7 if customers fail to trade-in or bring back a junk battery.

K mart raised its core deposit to $5 last November to stay uniform with state laws establishing $5 deposits, a spokeswoman said. K mart expects its recycling rate to jump to 80 percent from 64 percent because of the increased deposit.

Reducing Battery Prices

K mart gets $2.50 per junk battery from its vendor, Exide, and applies that, after deducting handling costs, to reducing new battery prices.

But chains such as Wal-Mart, Bradlees, Target, Venture, Ames, Caldor, Hills and Jamesway charge no such deposits in lieu of trade-ins, so, for the most part they needn't deal with handling junk batteries, except for the 25 percent of Wal-Mart stores that install batteries.

Venture also records a low recycling rate, an estimated 10 percent, a battery supplier estimated.

Battery recycling programs could produce an operating profit, at today's lead prices that make each junk battery worth between $1.50 and $2.50 and direct handling costs of 75 cents to $1. But one automotives specialty chain that recycles several hundred thousand batteries a year said battery-acid damage to its truck fleet eats up that profit (see story, page 3).

Besides the actual costs of recycling, retailers also must deal with other administrative problems that stem from the wide variances in state recycling laws. The most stringent is that of Minnesota, home state of Target, which requires retailers to accept as many as five junk batteries from anyone looking to turn in an old battery--even if that person doesn't buy one.

In other variations, Maine requires retailers to charge customers a $10 deposit if they don't trade in a junk battery on the spot, refundable if they bring one back for recycling. Retailers get to deposit the money in their own accounts and keep it all if customers fail to bring back a junk battery in a set number of days.

Minnesota law requires a deposit of $5, with retailers allowed to keep 100 percent of any unredeemed deposits, while Rhode Island allows them to keep only 20 percent of unredeemed deposits of $5.

Worst of all from an administrative standpoint is Suffolk County, on New York's Long Island. The county legislature passed an ordinance that will require a $5 deposit as of July 1, 1990, on all battery sales, even if customers trade in a spent battery. It also sets a $1 minimum handling fee on what distributors must pay retailers for junk batteries. Customers would get their deposits back when their batteries wear out and they return to buy new ones, years hence. Moreover, all batteries sold in the county must bear a label stating it has a $5 deposit value and showing it was sold in Suffolk County.