CARE Unveils Ambitious Action Plan to Support California Carpet Recyclers Affected by COVID-19 Pandemic
Industry Facing Unprecedented Challenges; Immediate Help Needed
UPDATES:
Update 4: December 2021
CARE’s Sustainable Plan Committee has updated the Plan:
- The early subsidy payment options will be continued through March 2022
- The additional 2 cents/pound temporary subsidy for collections will be continued through March 2022.
- The enhanced temporary Tier 1 and Tier 2 subsidies enacted in March will be continued through March 2022.
Update 3: December 2020
CARE’s Sustainable Plan Committee has updated the Plan:
- The early subsidy payment options currently set to expire will be continued through March 2021
- The additional 2 cents/pound temporary subsidy for collections will be continued through March 2021.
- The enhanced temporary Tier 1 and Tier 2 subsidies enacted in March will be continued through March 2021.
CARE continues to evaluate the pandemic impacts and review the Covid Action Plan on an on-going basis.The COVID-19 impact on both sales of new flooring as well as the carpet recycling community has been significant. According to direct feedback from a stakeholder, CARE’s COVID Action Plan “made a dramatic difference for all of us in the carpet recycling community. The industry stood on the precipice of imploding. The immediate and measured proactive initiatives undertaken by CARE… were not mere handouts, but tactical financial assistance measures that served to ensure market stability.”
COVID Action Plan Update Sent to CalRecycle, December 15, 2020
Update 2: September 2020
CARE’s Sustainable Plan Committee has taken the following additional steps to extend and support the carpet recycling industry during the pandemic:
- The early subsidy payment options currently set to expire will be continued through the end of 2020.
- The additional 2 cent/lb. subsidy for collections currently set to expire will be continued through the end of 2020.
- A subcommittee of the Sustainable Plan Committee has been formed to look at new ways to enable growing collections. CARE Executive Director Bob Peoples notes about the subcommittee’s work: “We know this will be bigger challenge and cost more, but is important as the program continues to expand. We hope to have many new ideas ready for implementation by year-end as we continue to monitor market dynamics.
Update 1: August 2020
Since the pandemic was first recognized, CARE has acted swiftly and decisively to take actions in support of recycling businesses and to ensure continued success of the program. CARE has continued to track developments associated with the pandemic and its impact on the carpet recycling community as well as the larger economy. Several factors have resulted in significant drops in the price of both virgin and post-industrial polymers, which are the primary competition for PCC materials.
In an effort to maintain competitiveness against these declines, CARE has instituted additional short-term, special COVID-19 related adjustments to some of the subsidies paid to recyclers for particular materials.
Effective Q3 and Q4 2020:
- Nylon 6 Tier 2 will increase by 15 cents/lb.
- Nylon 66 Tier 2 will increase by 3 cents/lb.
- PET Tier 1 will increase by 5 cents/lb.
- PP Tier 1 will increase by 5 cents/lb.
These actions were informed by CARE’s economic models and were updated according to the latest market intelligence and projections. The special COVID-19 subsidy increments are in effect for Q3 & Q4 only and are anticipated to return to the prior programmed levels in January 2021. The COVID-19 subsidy boost is not part of the regular base subsides listed in the approved Plan and thus not guaranteed.
The complete list of current subsidies can be found here.
First Announcement: March 2020
Carpet America Recovery Effort (CARE) is taking a series of emergency actions to support and assist the California carpet recycling industry, as effects of the pandemic threaten the industry’s survival. Ten actions have been approved by CARE’s oversight committee and reviewed with CalRecycle. Actions (listed below) include a one-time payment to recyclers, a temporary 90-day increased subsidy payment, accelerated payment schedule and relaxed reporting and proposed loan payment requirements. See the letter to CalRecycle outlining the action plan here.
CARE Executive Director Bob Peoples notes, “Cash flow considerations for the recycling community were our primary concern in forming this action plan. The current crisis, precipitated by the COVID-19 pandemic and the plunge in oil prices, has seriously interrupted the supply chain for new carpet sales and the flow of post-consumer carpet (PCC) materials into new products. Additionally, the automotive sector, a major user of post-consumer nylon carpet material, has been shut down. The depth and duration of the impact to our industry is currently unknown and cannot yet be quantified.”
The following six actions will be taken by CARE within the authority provided to it via statute and CARE’s approved Five-Year Plan. CARE will:
- Issue a one-time payment to each qualified recycler, calculated as the average monthly subsidy received over last 12 months. CARE estimates the one-time payment will total approximately $1.13 million. This payment will not affect the cash reserve.
- Pay 80% of earned subsidies after initial reporting by recyclers (as opposed to the usual 40 to 45 days). The situation will be reassessed after 90 days.
- Monitor retail sales and PCC availability to aid recyclers in planning for dramatically reduced raw material flows.
- Institute an additional temporary $0.02/lb. subsidy for PCC collection for 90 days, effective April 1 (total $0.04/lb.) This adjustment will be in place for 90 days, through the end of June. CARE is not increasing the current approved Plan-based Collector Sorter Entrepreneur subsidy; it is providing a temporary collection incentive to address rapidly changing market conditions.
- Coordinate and communicate with other Product Stewardship groups to identify the best ways to tackle shared challenges.
- Suspend routine audits for 90 days. This applies to all recipients of California subsidy payments and does not suspend the requirement to comply with Agreed Upon Procedures (AUP). The AUP suspension does not apply to mills. CARE will revisit the status in 90 days to determine if a further delay is warranted.
In addition, CARE has requested that CalRecycle take the following actions:
- Designate Recycling as Essential Infrastructure and Essential Businesses.
- Suspend all Recycling Market Development Zone (RMDZ) loan payments(P&I) for 6 months. RMDZ loans are a major debt service requirement for many recyclers, including carpet. This would help with cash flow during the crisis.
- Support action to request that utilities not cut off service to any commercial enterprise for 90 days.
- Work with Governor Newsom’s staff to stop any commercial enterprise eviction actions for 90 days.
All qualified California subsidy recipients are eligible for these actions. The industry recycled more than 58 million pounds of post-consumer carpet in 2019.
CARE will be monitoring the situation carefully and considering if additional actions need to be taken.
See the letter to CalRecycle outlining the action plan here.
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