January 8/15, 2018: Volume 33, Issue 15
By Ken Ryan
California is the sixth-largest economy in the world, having surpassed France in 2016 thanks to a robust state economy and strong U.S. dollar; it is now on the verge of eclipsing the United Kingdom for the No. 5 spot. So when Todd Wheeler, owner of Wheeler’s Flooring in Salinas, Calif., says he is afraid the new California recycling law is “going to kill the carpet industry in California,” it’s worth noting.
As a state, California has always been a leader in pushing green manufacturing. In 2010, California became the first jurisdiction in the world with a mandated carpet recycling program, creating a system financed by levying a consumer charge on every yard of carpet sold for a collection and recycling program.
The state’s regulators didn’t stop there. In April 2017, the California Department of Resources Recycling and Recovery (CalRecycle) issued a finding that the program had failed to achieve “continuous and meaningful improvement” in rates of recycling and diversion of post-consumer carpet as required. The program raised tens of millions of dollars from consumer fees, and the industry had set a state goal of 16% carpet recycling by 2016. Instead, the rate fell from 12% to 10% in 2015 before inching up to 11% in 2016. Now that AB 1158 was signed into law, the new recycling threshold is 24% by 2020; the legislation also prohibits the use of recycling fees collected from the public to be used for incineration, paying penalties or suing the state.
At stake here for mills and retailers is the risk of losing sizable carpet sales in a state with 40 million people. Legally, if no approved collection and recycling plan is in place for a particular carpet, then manufacturers, wholesalers and retailers would be forbidden from selling that product in the state. They could be subject to fines of $10,000 daily for violating the law.
Shaw and Mohawk are against the law. So, too, is the Carpet & Rug Institute (CRI) and the Carpet America Recovery Effort (CARE). Interface and Tarkett support it.
Many California-based retailers are against it as well, but they differ on just how badly this law could hurt carpet sales.
At present, California assesses a fee of $0.25 to the consumer on every yard of carpet sold. There is speculation the fee will rise to $1 to be used for collection and recycling. While costs can be passed on to the end user, Wheeler said the bottom line is retailers in California will not sell as much carpet as they have in the past. “I know I am not going to inventory much carpet—the stocking rolls are going to diminish.”
He’s not alone in that sentiment. Billy Ward, owner of Artistic Carpet One Floor & Home, Lancaster, Calif., said doing business in California “at best is difficult.” He elaborated, noting: “Regulations and licensing laws are difficult to comply with due to the fact many do not. I believe sustainability needs to be part of our industry, but it must have attainable goals.”
Ward emphasized that raising fees is not the answer. “The goals for AB 1158 are unrealistic and might not be attainable. If this is the case, will another price increase be in our future? If these funds are allocated in the right direction our sustainability goals may happen. As a state we need to find a way for the end user to benefit and not only manufacturing of new carpet or felt-like cushion but other products. The concept was to recycle nylon in the beginning, but with PET items coming into play the emphasis must be put into their waste and by-products.”
The law would be particularly painful for retailers like Anahe-im-based Sterling Carpet & Flooring, which has built its success around carpet. “We were always much more carpet than hard surface,” said Rich Mandel, who along with his son, Dan, runs the operation. “Only in the last few years did we become like everyone else, but still carpet is about 60% of our business. I would rather sell carpet than hard surface any day. It is less aggravation, it’s easier to install and replace down the line.”
Despite being a member of the influential National Floorcovering Alliance (NFA), Sterling Carpet & Flooring could not survive without selling carpet, Mandel said. However, he does not imagine such a draconian outcome. “At the end of the day the California consumer will pay for the extra fee. Carpet provides looks that are so unique, it’s a different fashion sense than hard surface; it’s not even about price anymore. Sometimes it causes a little more pain but they will pay the price.”
Still, Mandel is bothered by the potential increase in fees, as are many others in the carpet industry who argue that it is one thing to pay a nickel deposit for a bottle of water at Costco but paying $200 extra for 200 yards of carpet is upsetting—and potentially a deterrent to a sale.
Wheeler said a $1 recycling fee would be the upper threshold that dealers could charge their customers; anything more and he would simply inventory less soft goods. “We would do more commercial and hard surfaces, which is already taking over. It would increase the rug business even though we don’t sell a lot of rugs.”
Wheeler is now thinking he will have to do more business in LVT/WPC, laminate and wood to make up the lost business that carpet is likely to bring.
CARE digs in
CARE administers the California Carpet Stewardship Program, which is charged with meeting the requirements for carpet recycling set by the California law AB 2398 (the current statute) and managed by CalRecycle. Like others representing the carpet industry, CARE executive director Bob Peoples was against AB 1158. Now that the bill is law, he said CARE is working to redraft its plan to comply and would submit the new version per the California schedule.
As part of that effort, CARE hired Jacy Bolden as its first full-time director of the California Carpet Stewardship Program. Bolden has extensive experience in product stewardship, waste and environmental policy, and will be responsible for the management and administration of all aspects of the program to increase reuse, recycling and diversion of post-consumer carpet discards in California.
CARE isn’t fighting this alone. Joe Yarbrough, CRI president, said the law would add enormous cost and complexity. It will negatively impact consumer costs and have a detrimental effect on the carpet industry.
CRI has traveled to Washington to meet with lawmakers in hopes of influencing change. But the industry faces an uphill battle. Democrats hold a super-majority in both chambers of the California legislature, and AB 1158 received bipartisan support by the Senate and Assembly.