Dozens of layoffs at Saskatoon company after losing contract to American firm

A Saskatoon company that makes rubber products from recycled tires says it had to lay off dozens of staff and shut down part of its operations on May 1.

Shercom Industries no longer accepts and recycles used tires after years of negotiations with the provincial non-profit that manages tire recycling fell through and it lost its exclusive contract.

Without the contract, Shercom says it had to shut down its processing plant and lay off more than 60 workers.

"It's a mixture of emotions. I mean, obviously there's frustration and anger. But there's also a sadness; a grieving," owner and founder Shane Olson said. "We've got people here that are 15, 20-year veterans, and of course, they become our friends."

Olson said the 137-person staff was reduced to 75 people last year as roughly 40 full-time, year-round employees were laid off, as well as more than 20 full-time seasonal workers.

The company will continue to manufacture a variety of rubber products at its 70-acre property north of Saskatoon, but it will now have to source its crumb rubber from outside of the province after losing the exclusive rights to recycle every tire in Saskatchewan since the province created the program in 1998.

Tire Stewardship of Saskatchewan (TSS), a non-profit organization overseen by the Ministry of Environment, awarded at least 40 per cent of tire recycling to American-based company Crumb Rubber Manufacturers, which is expected to open a plant in Moose Jaw by the end of the week.

"We're loved everywhere outside of Saskatchewan," Olson said. "To have a bureaucratic decision to take away 40% of our raw material, which effectively takes away 100% of our raw material — it begs a question as to why and for us, it's unexplainable."

Stevyn Arnt, CEO of the Tire Stewardship, said the organization wanted to break up recycling into two zones. It plans to issue a request for proposals for a second tire processing facility for the northern zones of the province later this week, and he says Shercom is welcome to submit a bid.

"I think what you're seeing play out is a company that is upset that they've lost their monopoly," Arnt said.

"What we're trying to do here is reduce the overall impact of greenhouse gas emissions, which is one of the items and objectives that's outlined in our PSP (product stewardship plan)."

Shercom told the non-profit it wanted an assurance of a tire supply and an increase in its tipping fee — the fee paid to Shercom for every shipment arriving to its complex, which had not been increased since 2012 despite a roughly 42 per cent increase in the environmental fee for every tire purchased in the province in that span.

Instead, Tire Stewardship offered a 30 per cent decrease and wanted to pay the fee when Shercom shipped out its various products made from the tires, rather than when it receives them.

"B.C. and Alberta pay out nearly twice as much for crumb rubber as we receive," Olson said.

"The key is that TSS went from administrative to operational and basically commandeered all our investment."

Aside from trying to reduce greenhouse gas emissions by no longer shipping every recycled tire in the province to Saskatoon, Arnt and TSS hope the new contract will keep the environmental fee low.

"We are actually very positive with where this program is going. And the ability for us to ensure we have a sustainable financial program for the program so we don't have to raise the environmental levy on new tires that are sold," Arnt said.

Arnt added another hiccup in negotiations, which Tire Stewardship extended nine times the past three years. Shercom refused to let Tire Stewardship bring in an independent consultant to perform a sustainability analysis on the processing rates in Saskatchewan.

Saskatoon mayor Charlie Clark defended Shercom at a business luncheon Tuesday, hoping the company stays in the city for years to come.

"We hope that some resolution can be found. It's always good to see local companies survive and thrive here. It's a real loss if they can't find a resolution," Clark said.

Olson said Shercom feels there aren’t enough tires in the province to necessitate a second processor, and while it will continue to make parking stops, roof blocks, rubber mulch and many other products. However, Olson couldn't say how much longer the company could remain in the province as it now sources all of its crumb rubber from other jurisdictions.

"It really comes down to a question of location. And eventually the location will make sense to be close to the material," Olson said. "There's just a lot of sadness. It feels like a slap in the face."