Shercom cuts 79 more jobs as U.S. company continues monopoly over Sask. tire recycling

A former tire recycling company in Saskatoon is announcing additional layoffs months after a dispute with the provincial government.

Shercom Industries said it will lay off 79 employees in its manufacturing division on Dec. 2.

"These decisions are weighed heavily and it's something we've talked about now for the last ten months," Shercom CEO Shane Olson said. "We have some staff with 10, 15 and 20-year tenures. It is a far different direction than our previous 30 years."

Olson said the company had a workforce of roughly 140 people during its peak in 2022. After December's layoffs, the company will be down to a "skeleton" staff with roughly 20 people remaining with the company.

The staffing hits first began last spring when the company was locked in a dispute with the provincial government and the Tire Stewardship of Saskatchewan (TSS), a non-profit organization overseen by the Ministry of Environment, over Shercom’s ability to process recycled tires in Saskatchewan.

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At the time, the tire stewardship awarded rights to recycle tires in Saskatchewan to California-based Crumb Rubber Manufacturers (CRM), which essentially forced Shercom to shut down its processing plant and lay off more than 60 workers. 

Olson said the plant was built in 2016 for millions of dollars, and the impending layoffs are a direct result of the decision to reward CRM with exclusive rights.

"It is a singular action that has impacted the business model," Olson said. "We're faced with those realities."

In 2023, following years of negotiations with Shercom, TSS awarded at least 40 per cent of tire recycling to CRM, which opened a plant in Moose Jaw, as TSS intended to split tire recycling into a northern and a southern zone.

"I think what you're seeing play out is a company that is upset that they've lost their monopoly," TSS CEO Stevyn Arnt said in May of 2023.

After losing the ability to process tires and create parking stops, roof blocks, rubber mulch and many other products, Olson said the company has resorted to trucking in its crumb rubber.

"Over the last 18 months, Shercom has had to import 28 million pounds of crumb rubber. That's 700 semi loads," he said.

Saskatoon Chamber of Commerce CEO Jason Aebig heard of the layoffs Wednesday and said everything he feared would happen played out exactly as imagined.

"For all of this, Saskatchewan will still have one processor, but this time it'll be a company from outside our borders, with less capacity to deliver than the one we had," Aebig said.

"All of these decisions have been made by the leadership of Tire Stewardship Saskatchewan, and the responsibility for these job losses lies at their feet."

Aebig hopes whoever forms government after Monday's election will revert processing rights back to Shercom.

"Our sincere hope is that there is now a political will and enough time to be able to reverse course and fix this mess," he said.

Over the last 18 months, Aebig has called many aspects of this process into question. Then-Premier Scott Moe and former Minister of Environment Dana Skoropad ordered a review of the process last year.

Aebig and Olson say anyone could have applied to get a license and open a plant, but there was no business case for a second plant because there aren't enough tires to make a second plant profitable. Aebig says a once "free market" was altered.

"But now we're in a situation where if the original goal was to create competition and have more than one processor in the province, what we've ended up doing is sandbagging the processor we had," he said.

Olson said he is angry and frustrated about how the situation played out, but he vows the company will survive.

"This this is a grave injustice not only to me and my family, but all of our staff, but all of the people of Saskatchewan," Olson said.