Oakland, with its 15.4 percent unemployment rate, has looked to jumpstart its economy through a colorful variety of endeavors — from taxing medical marijuana to pitching local wine exports to China.
But the product that is perhaps most promising for the city is a bit less glamorous: garbage.
Plastic, paper and metal waste flow to Oakland for export from across Northern California and Nevada, according to Michael Peltz, a sales manager at the East Bay office of the Houston-based garbage collector Waste Management.
Last year, scrap metal was the Port of Oakland’s biggest export by weight, but paper also pulled in hefty revenue. Oakland exported more than 1 million metric tons of waste paper, equal to the weight of more than 500,000 Buick Roadmaster sedans and bringing in $324 million. That makes paper the eighth-most valuable commodity shipped from the port. (Almonds and walnuts are the top moneymakers.)
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Much of the waste paper that leaves Oakland goes to China, which has a surging domestic market for paper and few natural resources to produce it, Peltz said. “Along with their overall income and consumption, their per-capita consumption of paper is growing,” he said.
That increased consumption has fueled dramatic growth in U.S. waste-paper exports to China — from about 200,000 metric tons in 1991 to 11.7 million in 2010, according to analysis of U.S. Department of Commerce figures by the Paper Stock Report, an industry publication.
In Oakland, the boom has translated into jobs and tax revenue. The Port of Oakland estimates waste-paper exports created about 866 jobs in 2010, not counting those created by private waste collectors like Waste Management and California Waste Solutions. Tax revenues tied to port activity totaled about $161.9 million for city and county governments in 2010.
Oakland Mayor Jean Quan has been championing the value of increasing exports from the port since she took office in January; she recently became the chairwoman of the International Relations Committee for the U.S. Conference of Mayors with the goal of furthering exports. In May, she and City Council President Larry Reid went on a trade mission to China with the goal of generating “investments by some of the import-export companies in the Port of Oakland,” Quan said in a video produced by the port about the trip.
Quan’s chief economic policy advisor, Drew Lisac, said the mayor “uses every opportunity to promote waste product trade between different markets,” including China, Vietnam and Korea.
Unlike many other products shipped from Oakland, waste materials create local jobs because they are processed near the port, according to Peter V. Hall, an Urban Studies professor who specializes in port cities at Simon Fraser University in British Columbia.
There’s “benefit to having that activity close to the port, because that’s where people tend to bring their empty containers,” Hall said.
See bales of waste paper being loaded onto a shipping container:
After waste paper is shipped to China, whatever doesn’t get made into newspapers, tissues and paper towels often comes back to the U.S. in the form of packaging for new products that China sends to American ports — like Oakland. Once here, Chinese products get swapped for bales of waste paper as part of a highly connected supply-and-demand loop.
That close relationship, while normally advantageous to the recycling industry, led to a price crash in 2009. Worldwide demand for new things, and thus for recycled packaging, went down. “There were literally thousands of tons of waste paper sitting around without a place to move,” Peltz said.
Ironically, the recession also contributed to a swift recovery in the price of waste paper. Consumers bought less, and in turn had less waste to recycle, constricting the supply of the material by 15 percent, according to Robert Reed, a spokesman for Recology, San Francisco’s waste collector. As a result, prices went up 28 percent from 2009 to 2010.
But such major price fluctuations are unusual, Peltz said. “Overall, you could say that the long-term trend is for prices to go up sort of gradually.”
And as China continues to grow, demand is expected to remain strong. The country is working to import wood and develop crops of fast-growing trees, but waste paper still remains an important source of fiber for paper, Peltz said.
If the paper comes from anywhere near the Bay Area, it will pass under the shadow of the iconic cargo cranes of the Port of Oakland.