Russ White 0:00
Well, it's always a pleasure to welcome Tom Emmerich back to MSU. Today Tom is the CEO of shoe pan and sons and the president of shoe pan recycling. Tom, welcome back.

Unknown Speaker 0:10
Thanks, Ross. It's great to see you in person for a change really is.

Russ White 0:13
And, Tom, thank you for your ongoing continuing support, not only of Spartan athletics of this program much appreciated,

Unknown Speaker 0:21
oh, hey, it's been a great partnership over the years. Not only are we at shoe panting Michigan State fans, our we're fans of what you do and what your radio station puts out to the greater public, you cover a lot of really important subjects and we are thrilled to be a part of that. Well, thank

Russ White 0:37
you, Tom again, and tell us a little bit about what shoe pan and sons and shoe pan recycling is? And does what would you like people to know about the company,

Unknown Speaker 0:45
shoe pan and sons is a is a locally owned local being Kalamazoo, Michigan, based company, the owners, Mark Chapin and his his family. Mark is the CEO. And he's been the company's been around for 53 years, and really evolved into an amazing organization. So we talked about Chapin and sons, we have five different business operating units. We started in the scrap, scrap business, just your regular industrial scrap. And we have aluminum, plastic and sales, distribution and manufacturing business. We have szczepan recycling, which is we mentioned that I'm the president of that, and that's our beverage container recycling business. We have a materials trading division, that does business internationally. And then we have electronics, scrap recycling we call asset management. So that's Xu Panasonic. And when we talk about Japan recycling, again, I mentioned it's the beverage side of the business where we handle a large percentage of all the pads containers in the state of Michigan.

Russ White 1:45
So what's sort of the state of the company and the industry? Where is recycling and Shu pan going?

Unknown Speaker 1:52
Well, that's a that's an interesting question. I think you could ask anybody in any industry the same thing? And they'll you'll get somewhat of a maybe similar answer, you're the pandemics probably been good for some companies and some organizations and some industries. And it's been really hard on others. And being a diversified organization, we have divisions that have done pretty well through it, and the future looks pretty bright. And then we have other areas, particular manufacturing and distribution is, is having a much harder time coming out of it. But all in all, I say our company is strong, our future's bright. Do we have challenges, of course. But I'm very, very excited. We In fact, we just issued initiated a strategic roadmap. That's kind of like a long term vision for where we're going to go as an organization. And it's it's really people centric, and and it's going to help us take our company to the next level.

Russ White 2:46
Well, can you talk a little bit more, you're still doing that planning. But what do you see ahead?

Unknown Speaker 2:51
Well, I think, I think, let's just say in general business, I think is going to continue to grow. I think the economy is stronger than most people thought it would be coming out of the out of the pandemic, we're all challenged with employee issues. And I think eventually that's going to work itself out. But it's a real real problem for for not just shoe pad but all businesses. I hope within six months to a year that kind of gets behind us. And then I think you'll really see the academy take off.

Russ White 3:21
And how is the state of recycling in Michigan, we've heard that we sort of lag other Midwestern states, but how are we doing recycling wise?

Unknown Speaker 3:29
Oh, my, you know, there's been a lot of efforts to try to increase what we do in Michigan. Do we lag other states? We absolutely do. I think that we're not talking that we have a 18% Municipal recycling rate. That's up a couple percentage points. But it still lags behind the Minnesota has and Wisconsin's and a couple other Midwestern states. And what I think is important to point out is that those states actually invest a lot of money in recycling. I think it's like, I don't have the exact numbers, but it's like 20 25 million in Wisconsin, 15 18 million and so on. I might be I might have those reversed. But they put money back into recycling Michigan doesn't doesn't do that. And I think we only spent a couple million dollars a year in Michigan, and that's relatively new. We have relied on the deposit laws, kind of like our marquee recycling program in Michigan, and it's been incredibly successful. And, and we should, there's no reason to look at changing that. But it really comes down to funding. How much money is the state willing to put back in and mandates from Michigan has really no mandates on banning certain things from landfills. So other states do the states that do have much higher recycling rates.

Russ White 4:39
And Tom, you recently testified to the Michigan legislature about some of these issues. How can they help How do you hope they help?

Unknown Speaker 4:48
Well, I testified for to two different bills House Bill 4443 and House Bill 4444. those bills are specifically designed or pretty My job introduced by the beverage community, where they are looking for a half cent per container, tax credit, income tax credit that would help them invest back into the deposit system, that distributors are responsible for the program, a lot of people don't understand that they've been fed since day one, they initiated the deposit, they're required to pick the containers up at retail, and properly recycle them. And that's where companies like shoe pan come in. they've they've hired us and others to help them with that process. So as costs have gone up over the years, and the streets money was taken away from distributors back in the early 90s, at the early to mid 90s. They haven't asked for a penny, you should say like say they haven't asked for a dime, but they haven't asked for a penny from the state to help help them with infrastructure costs. And it's just gotten to the point where, you know, our business is no different than anybody else's, you know, our costs are up well over 25% in the last five or six years, coming out of the pandemic, they're even more you know, we're paying, you know, much, much more for labor than we did pre pandemic, everybody's doing that. So they're just saying, hey, look, we haven't we know that sts money is available. But if we can't get our hands on that, then we should have some mechanism to allow us to keep investing in a very, very popular program that works really, really well. Now, the problem is, anytime these these pieces of legislation introduced, you get the folks that want to get rid of the deposit last are coming out and you get the folks that are benefiting from money from the state for recycling, they definitely don't want to see things like this happen. So it's very political. where things stand right now, what you might find interesting is that the two bills passed out of the out of the house, and they're in committee and the Senate. And there is discussions going on between legislators and the governor's office to see what can they come up with that makes sense so that she, her office will be accepting of where they're going. So we're close, I'm not sure if it's going to happen. I, I hope it does, because it's definitely the right thing to do. We're looking at a significant investment and our wikstrom operation that we built 16 years ago, and it's like your car, your car can only run so long, it needs to be repaired at some point or replaced. And that's where we're at. And if we don't, then the cost of maintenance is just going to go up our ability to service retailers and, and the consumer is going to go down and nobody's going to be happy with that.

Russ White 7:35
Because it's part of the issue, Tom, that it's cheaper for municipalities to throw stuff into the landfill than to recycle it.

Unknown Speaker 7:41
It is expensive for curbside recycling. And you'll hear folks say that the aluminum being in the deposit system is revenue stream, that that takes away from those types of efforts. And that is true. But it's not. It's also not the golden goose or the golden egg or whatever you say. Because there's another huge compound but nobody ever wants to talk about and that's glass. Now we are handling over 300 million pounds of glass goes through the Michigan deposit system. And it's very clean. It's 100 100% recycled and it's left out of curbside streams when that stuff ends up in curbside. It contaminates everything. And it makes the curbside process much more difficult.

Russ White 8:24
So what specifically would those two bills you mentioned do that you support so

Unknown Speaker 8:28
for income tax credit to distributors that they can invest back into the infrastructure deposit system. That's the primary thing. The second bill is is designed to allow if it's a little complicated, but if the Steitz font is greater than I think $50 million, it allows the SEC, the the Treasury Department to pull money out of the SP it's fun to use for the general fund to give to provide the tax credit to distributors. So you need to three quarters vote if you touch anything to do with the possible loss. So that's that's why they have two different bills.

Russ White 9:07
And Tom, you mentioned most people do want to recycle, they support recycling. Can you talk about your for ease of recycling?

Unknown Speaker 9:16
Well, it's a little concept like my last name begins with an ease of academic management. Meeting years ago, I said that we got to come up with something collaborative, right. So like how to how and why is it makes sense to recycle. And so the four E's basically the first one is education, people have to know what's recyclable and where to go to do it. Second one is ease it has to be easy or convenient to do. The third one efficient, you have to have efficient logistics and operations so that you can properly handle the material. And last and maybe I don't know they are really more important than others. But this is pretty important. There has to be economically viable. So in other words, you have to have a lucrative semi lucrative market to sell the material if there's no end market for the material. You can't have sustained inability, you can't close the loop and you won't have an effective recycling program. There is another piece of legislation at the house senate level, I believe it passed out of the house a couple of weeks ago. that addresses fraud within the deposit system. It allows the state police, like I think it's a million dollars or $2 million for the next couple years to draw from the ustedes fine to help fight your containers coming from outstayed and other types of fraud that are going on. And we support that because anything that improves the integrity of the program we're all about.

Russ White 10:33
So Tom, as we wrap up, just summarize what you'd like us to keep in mind not only about shoe pan, the company, but recycling in general,

Unknown Speaker 10:42
Shu pan is a company, I guess what I what I kind of like to say is like we are very, very people friendly. I mentioned earlier that companies all over the country and all over the world are struggling getting employees and we're and we're no different. We think we're a very unique place to work, I would encourage folks to go to our website, www.szczepan.com. If you're interested in getting an A career, whether it's recycling or any of the five areas that we do business, we have plenty of job openings and plenty of opportunities throughout the state of Michigan, we'd love to love to talk with folks about that. And then the general state of recycling, I think I think the future's bright, I think it's exciting, I think, you know, there's going to continue to be pressure put on the packaging industry, especially in plastics for the plastics in the ocean and the waterways and, and but you hear that the packaging, the column brand owners are all saying the right things, and they really are trying to do the right thing to put more recycled content back into their bottles. And, and I think that effort is going to continue. So that's exciting. And I talked about mandates earlier, and they want I'll do it without mandates. And I prefer to do it without mandates. But you know, again, market conditions are going to drive that and commitment to us true sustainability efforts by the brand owners in the packaging companies. If they don't want to be mandated or legislated, then they need to do everything they can. And they are I mean, I'm encouraged by that for sure. So we keep a close eye on that. And I think the future of recycling, not just beverage container recycling. I think the future still bright mover will work hard with all our partners and Michigan State and others that that are interested in that effort, I will continue to work with them.

Russ White 12:20
And that's shoe pan.com SCH up an.com and my guest has been Tom Emmerich, the chief operating officer of shoe pan and sons and the president of shoe pan recycling and Tom again, thanks for all your work in recycling to you and Mark Chapin and the rest of the company and for your support for MSU

Unknown Speaker 12:40
thanks Russ. Again, great to see you in person.

Transcribed by https://otter.ai