The best way to eliminate your competitor is to buy them out. Loraas did exactly that with their purchase of Saskatoon Curbside Recycling (SP Sept. 12/11) and Cosmo has been thrown under the bus by all concerned.
It will be interesting to see how many of Saskatoon Curbside's customers want to continue to pay Loraas $20.00 a month for a service that, according to the city, will soon by provided for less than $5.00 a month.
We now have recycled a competitive industry into a monopoly.
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How very Saskatchewan of us. I wonder how long until people become confused and think that Lorass is a Crown corp.
ReplyDeleteSaskatoon is about to be taken for a ride, won't be long until Lorass tells Council recycling will be more than the $4.24 and that we are likely looking at double that amount now.
Will be interesting to see what the final bill is to residences. It surely won't be $4.24 anymore.
Loraas already charges more than that so I hardly think there is any dishonesty.
ReplyDeleteAnd it isn't the end of Cosmopolitan- that is part of the hysteria built up around this issue by Cosmo. many businesses have to reinvent themselves or react to modern technology and market pressures. There is no reason that Cosmo can't do the same.
Cosmo isn't the same as other businesses in that it can reinvent itself. Simply dismissing it as such is part of the problem.
ReplyDeleteFunny how the left tends to rally for those disadvantaged it supports (see station 20), yet the second an organization of disadvantaged is in conflict with their agenda the old sentiment is thrown out the window.
Anon 8:16
ReplyDeleteDo you really think mentally challenged individuals can just change what they are doing on a snap of the fingers. Cosmos is not like any other business. The people behind Cosmos are looking out for the people that can't talk for themselves on issue like this. I would far prefer paying a bit more for Cosmos to do the job knowing who it helps. Loraas wants this contract and will do anything to get it. You might as well throw your wallet in the recycling bin.
This issue is, on a certain level, as devisive and polarized as school taxes,that is Catholic vs Public. Maybe as a taxpayer I should I should have a say where my $4.24 goes.My choice Cosmo or Loraas
ReplyDeleteLoraas has worked to eliminate any competition from them in the city. They have pandered to the City to have the RFP designed like they want it designed. They have ensured no smaller companies could come in and steal a quadrant or the bid. And finally they have bought out their last legitimate competitor for the contract.
ReplyDeleteEven the biggest proponents around (such as Sean Shaw, who it will be interesting to hear from about this) acknowledge that with a facility already built here, it is all but certain that Loraas would win the processing. How is this even a legitimate bid?
The City has sold us this program as $4.24 per month, if the price now shoots up to $8.00 a month we will know something stinks at City Hall and this was all rigged from the start.
I will be cancelling my subscription with Saskatoon Curbside, shame on them selling out Cosmo to make as much possible on the city contract.
I guess Saskatoon is getting their first lesson in the cold hard reality of the 'recycling business'.
The Star-Phoenix article seems to be structured poorly. All the events revolve around the fact that Cosmo let SCR out of their contract so that SCR could be sold to Loraas but that aspect isn't discussed until the 14th paragraph. Still there is enough in the article to make some educated guesses which shows that the owners of SCR should thank Cosmo with all their hearts for being so generous. The SCR guy didn't say anything about Cosmo, only Loraas. Maybe that's because of editing choices, but it looks like bad manners anyway.
ReplyDeleteOn to the guesses:
The price difference between SCR and Loraas was hurting SCR's business. Although after a strong start, Loraas' growth had stalled. It's also not very cost effective to get one customer on a street in a neighourhood. Costs are reduced by multiple pickups in close vacinity. The quickest way to add customers is to buy out an undercapitalized competitor. All Green now has twice as many customers it had before.
Why would Cosmo let SCR out of the contract? Because mandatory collection is coming and SCR was going to go bankrupt. There isn't anyone in the city who really thinks that they could have played with the big boys like Loraas, BFI or WM when it comes to bidding on the city contract.
There wouldn't be many potential buyers of SCR. The big companies have their own trucking fleets and wouldn't want SCR's trucks. I'd assume that Loraas was the only 'white knight' for the owners of SCR.
Although the head of SCR said that they didn't make this decision based on what city council may do, it's pretty evident that statement is a bit of facesaving.
Cosmo's choices probably were to keep SCR suppling Cosmo with paper until SCR went out of business or to let SCR out of the contract so that SCR could be sold to a company who is trying to put Cosmo out of the recycled paper business.
Cosmo should have received a payment from SCR to let them out of the contract in order for the deal to go through. If Cosmo got nothing from this deal, it means that it was probably a 'buy you for a buck and give you jobs' type of thing.
I don't know where this puts Cosmo going forward but as a taxpayer I'm NOT happy with the spending that will be taking place. The city says that they currently spend $300,000 to take paper to Cosmo from the depots. The city is very willing to spend 6 million to have Loraas pick up the same stuff along with a little plastic and tin from our houses. I'd rather save 5 and a half million dollars a year and just have anyone who wants the home pickup call Loraas and pay him the $8 themselves.
I saw a letter to the editor a while back that said this city is managing to pull off an amazing feat. It's hurting the city's poor by cutting services in the service review to save money and its hurting the disabled by spending millions of dollars with a big private company. That guy got it right. In a sane world the millions of dollars would be spent on the poor and disabled and the big company would have to earn its customers rather than have citizens forced to do business with that big company and forcing the citizens to pay for it out of their own pockets.
WE live in a Bizzaro world for sure.
The recycling supporters will stop at nothing until they have everyone in Saskatoon adding millions to Loraas' bottom line.
ReplyDeleteRecycling is good for environment? So good that environmental zealot Al Gore is cruising around the world in his private jet and staying at 5 star hotels all while managing to rake in millions daily to his personal accounts for spreading the gospel.
$4.24 is a pipe dream. The city has been told that by private industry and others countless times. In fact, the City has never demonstrated how they went from $7-11 to $4.24 over the past year. If you asked you’re Councillor and they couldn't even tell you. Not to mention the current terms of the RFP (assumption of risk, short length of contract) will make it very difficult for companies to even bid on the contract.
ReplyDeleteLet's get one thing straight here. There is no conspiracy by the City to ensure that Loraas gets awarded a city-wide curbside contract. Period.
I am really glad to see Cosmo let SCR out of their lifetime contract. Given Cosmo threw SCR under the bus at the June Council meeting (by saying they didn't have the capacity to compete for the city-wide contract nor did Cosmo want to do so with SCR) it was the right thing to do.
Finally, for all of those worried about Cosmo – are you ready and willing to pay 50-100% more for recycling in Saskatoon if it means Cosmo gets to be the sole paper processor?
Paper represents about 65% of the revenue generated from the processing and selling of recyclables. No company would be able/willing to give up that amount of revenue unless the City backfilled them with cold-hard cash.
Alternatively, Cosmo could expand to recycling plastics/metals, but would require a processing plant – are we as city or provincial tax payers ready to foot the bill to build those facilities like we have already done for their paper processing plant?
Assuming the City ever actually puts out a fair RFP (a big if at this point) - it will either be Loraas (a locally owned and operated company) or a large multi-national company (such as Waste Management) who will win the contract. If it is a large multi-national, it's likely they would subcontract Loraas to do the processing given they have the only plant up and running in the province.
Finally, SCR was charging $15.75 per month and dropped that price to about $11 in June - It has never been $20.
Sean,
ReplyDeleteI have friends who both have sons at Cosmo and I've kept up with the whole process so please show me a link to a council meeting or an article where Cosmo said that they didn't want to be in business with SCR. I believe that Cosmo said that they didn't want to take on the liablility of a collector. That's a lot different.
Also, SCR pushed really hard for the quadrant system. THEY didn't believe that they could do the whole city. I don't remember Cosmo ever dissing SCR.
Winnipeg has one company doing collection which the city of Winnipeg pays for and another company doing the processing which the city of Winnipeg pays for. The collector isn't paid more just because it's not doing the processing.
You put any faith in the city's pricing and then you go about throwing around absurb numbers. If the actural cost is around $8 and not the city's lie of $4.24 then you are saying that it will cost us $16 (100% more) to have Cosmo involved.
Please support that statement. Also your numbers are low for the value of the paper in jurisdictions with refundable deposits, those materials tend not to go through the curbside system. The whole idea of this curbside is to get the value of the paper that has been going to Cosmo and divert it to a big company otherwise the city could have just asked for bids for collection.
I'm old enough to remember what happened last time the city had Loraas pick up paper for them, maybe you should ask about that little bit of history.
If anyone got "thrown under the bus" it was SCR by Cosmo - research the issue!
ReplyDelete"Let's get one thing straight here. There is no conspiracy by the City to ensure that Loraas gets awarded a city-wide curbside contract. Period."
ReplyDeleteThat's becoming awfully hard to believe considering the RFP is being designed with input from Loraas at meetings, Loraas is speaking at Council meetings, and now Loraas has eliminated virtually all competition for the contract.
It certainly appears as if Loraas won't come in at $4.24 and now we are hearing that the City will choose someone who comes in above..... hmm I wonder who that will be. Loraas could bid anywhere from $4.24 to $12 and get this contract, there will be no incentive competitively bid anymore.
The more this goes on the more the City of Saskatoon is putting the decision to tax payers to choose between:
ReplyDeletecurbside recycling or Cosmo/depot system
I'd rather see the partnership with Cosmo continue and the depot system expanded then I would see Cosmo eliminated and Loraas get a fat city wide contract to fill their bank account.
Regardless of the actions of either side, the decision will eventually be framed as putting Cosmo out of business or not. Probably not a fight that Loraas/City want to fight.
I sincerely hope this goes to a referendum next civic election, let's really see how many residents want the curbside system at the expense of the city's long partnership with Cosmo.
There are more companies circling the city than just Loraas, which shouldn't be unexpected given we are the last large municipality in Canada without a system in place.
ReplyDeleteLet's support Cosmo, but not at the expense of an economically efficient curbside recycling system and not using dollars that are budgeted for waste management.
We can't remain in the 1980s forever for the sake of one organization.
"Let's support Cosmo, but not at the expense of an economically efficient curbside recycling system and not using dollars that are budgeted for waste management."
ReplyDelete_________________________________
If there is a concern for economic efficiency why are we letting the same people design the system who:
-couldn't maintain the road maintenance system due to mismanagement
-have yet to figure out an efficient and economic snow removal system
-can't figure out a transit system that works for the city
-has an expensive and efficient current waste collection system as is
-can't properly repair water treatment centre in efficient or economic manner (even more troubling have been collecting capital project money on bills for couple years now, and for which they have spent that money on other projects. Essentially meaning capital project fund is broke and money being collected under false pretense).
Ya, so we should have tremendous confidence that the current Council and Administration is going to finally knock one out of the park on this one. You have to get one right eventually, don't you?
An economically efficient system designed by the current Council/Admin..........lol
So if we as citizens get strapped with paying increased taxation through a mandatory fee for recycling there will only be one option to show our disapproval and it won't be voting out this council it will be with our pocket books. Because all I have heard is that the "clean paper" product is the true value in this bid, make a commitment to Cosmos to use only them as your paper recycling company. I for one would even sign up to commit all my tonnage to them. If we start a consumer revolt before the first year is done the system will fail, as there wouldn't be enough of a profit in it for any company to bid at the proposed $4.25/house hold. Council can make me pay but they can't make me drop my paper in the bin. So I say lets "SCRAP" (Support Cosmos Recycling All Paper) this RFP.
ReplyDeleteI can assure you that nothing of value will be going to whoever wins the bid to put Cosmo out of business. I would rather burn the paper in my backyard than send it to a greedy corporation.
ReplyDeleteThe bottom line is people in business have made much larger concessions. Cutting Cosmo out of the equation is done for one thing only, cold hard cash.
The proponents of the system have put a price on the value of Cosmo, as Sean noted many are unwilling to pay 50% or 100% more for recycling (talk about scare tactics, that is a joke). So if it cost the same people would have no problem with Cosmo being involved, but for an extra $4.00/mo the recycling advocates are saying Cosmo isn't worth that.
I love how the 'environmental agenda' will plow through anyone who stands in their way of making a buck of being 'green'.
Research the issue, anon 11:31 says when he throws around the theory that SCR was the one 'thrown under the bus.' Where is YOUR evidence for this statement!
ReplyDeleteThe fact is that SCR got out of a contract without paying a penalty or buying their way out. Cosmo's actions allowed SCR to be purchased by Loraas which is in competition with Cosmo for paper. The head guys in SCR wound up with jobs at Loraas.
What did Cosmo get as a tangible benefit of this? They acted ethically and then get a drive-by flaming on a civic blog. SCR was lucky they were partners with Cosmo and not a cut-throat large business. Most businesses would have held them to the contract or held them up for ransom.
I notice that Sean and anon have no evidence for their 'SCR got thrown under the bus meme.' It could be two groups making the best of a situation where the city is meddling in the market to the benefit of the biggest capitalized companies.
The SCR guys saw an iceberg coming and found a lifeboat, and Cosmo untied them so they could jump in that lifeboat. Now Cosmo's in dangerous waters alone.
All I know is that the city better get bids at $4.24 (or less) or a lot of taxpayers in this city will be asking tough questions and wanting heads to roll at city administration.
Aaron Loraas told city council that $4.24 was too low and it needed to be around $8. The SCR guys told council that $4.24 was doable and now they are out of business. Want to guess who is right?
And Sean, the person who put together this plan is a former city manager who left to act as a consultant to Loraas, according to David Hutton at the SP, and still has strong ties to the people who used to be managed by that person. Who needs a conspiracy when a 'consultation' will do?
Yes Cosmo is completely innocent in all of this. Definitely not an organization trying to maintain it's monopoly on paper processing at any cost. Definitely not a organization who couldn't turn a profit on paper processing despite the city financing their operation to the tune of hundreds of thousands a year, giving them their building for a buck, and paying their property taxes. Definitely not a company who bullied SCR into a ironclad contract when they started up.
ReplyDeleteYeah, lets keep throwing tax dollars down that hole while we raise taxes to make up for the loss.
Amazing that Anon 10:26 is talking about throwing taxes dollars at Cosmo and the specter of raised taxes all the while defending raising taxes for a curbside.
ReplyDeleteIt would appear as if the question is where we want our newly raised tax dollars thrown, at the recycling corporations or at Cosmo
If anon 10:26 actually watched the city council meetings he would know that:
ReplyDeleteCities with mandatory curbside pay all collection and processing costs which tend to reach into the millions of dollars per year.
The city of Saskatoon doesn't pay for processing costs with Cosmo, just collection costs.
Collection costs are costs to the municipality not a subsidy of the processor. That is true everywhere. The collection costs of Edmonton's system are not considered a subsidy of Waste Management even though WM runs the processing plant. Only in Saskatoon do people who hate Cosmo suggest that the collection costs are a subsidy.
There is not enough money in recycling paper to pay all collection costs and processing costs and create a true profit. That is why the taxpayer pays more out of pocket when you increase recycling along with an existing waste disposal system.
These are FACTS that are not in dispute. Not opinions. Sean is always blogging that recycling costs less than garbage but then he can't explain why we can't use the savings from the waste disposal system to pay for the recycling system. Bottom line - you pay more because it costs more.
Also anon 10:26, if you had been paying attention along the way, you'd know that Cosmo sold a 2 million dollar building to the city for $200,000 and then the city leases it back to them at a buck a year. I don't know how that arrangement was worked out at the beginning but if you want to sell me your house for 10% of its current value, I'll gladly rent it out to you as cheaply. You'll be making out like a bandit!
If you don't like the city waving property taxes for Cosmo, you don't like the deal made with Station 20 West, Sask Abilities, the churches, the public school system, the separate school system, the waivers for developers.
There are councillors who have done a great disservice to Saskatoon by starting the crap that anon 10:26 picks up and throws around.
Darren Hill says that the city hasn't seen a profit on recycled paper from Cosmo and yet he's willing to spend millions of tax dollars with Loraas and the city definitely won't make a profit on that deal.
Two standards, an impossible one for a non-profit and a conveniently lucrative one for Loraas.
I had started to write a comment here, but it quickly turned into an essay. So I have posted it on my blog instead:
ReplyDeletehttp://www.blog.seanshaw.ca/?p=1269
Shhhhhhhh Sean and the recycling bullies don't want facts getting in the way of their sales pitch for mandatory curbside recycling.
ReplyDeleteThere is a lot of money to be made by converting Saskatoon.
The cost to the city to collect paper for Cosmo is a moot point. The city would have to pick up the paper in any event. Over the last 30 years Cosmo has saved the city money by keeping the collected paper out of the ladfill.
ReplyDeleteby the same token then... the cost of collecting recyclables in a curbside system would be a moot point, as the city would have had to pick that up regardless...
ReplyDeleteSean,
ReplyDeleteIf I understand the premise correctly, part of the 'savings' from curbside recycling is the delay in having to build another landfill. Delayed costs, not saved costs. So in essence and costs with associate with the landfill are a red herring argument. That is unless the City was already diverting funds to a future landfill and has opted to now switch up that funding to subsidize the recycling program.
You can't simply say we're delaying funding for a landfill so we should factor those costs into the savings. That makes no sense. If we are factoring in costs saved then we need to see where that money is coming from. It is not enough to say, "well we probably would have had to start saving $XXX/year for a new landfill, but we can delay that so let's count that money as savings."
Lastly, I really take issue with a couple assertions you make. In your post you state the following two lines:
"Circumstances have changed, the citizens of Saskatoon have clearly said that the status-quo is no longer acceptable. " (with regard to setting up curbside)
and
"At what point will the recycling debate finally move away from a debate about Cosmo and move towards the much needed debate of how the City can ensure that it gets the most realistic, the most cost efficient, the most beneficial, and the most reliable curbside recycling system possible?" (regarding moving on)
So if the clear message from residents seems to be that we want a mandatory curbside recycling system (I still don't have any idea where the citizens clearly stated the majority wants a mandatory curbside program- and please don't offer the biased survey results from online), then why isn't the message that residents want to see the long-term partner Cosmo also included?
I would argue that the uproar over Cosmo outweighs the uproar over mandatory curbside. If you want to take the position that the people have spoken and we want mandatory curbside, how on earth can you not also take the position that the people have spoken too and we want Cosmo to maintain their role in the City.
It is this dismissive attitude which raises the hackles of many. The recycling advocates saying the people have spoken and want this, but then ignore the people when they speak and demand something that goes against their plan.
If we want to listen to the people, FIND A WAY TO INCLUDE COSMO IN ANY NEW PLAN (even if presenting so costs mroe money). There are many long-term Saskatoon residents who value the relationship with Cosmo, and I'm not sure if you are from Saskatoon or not (and if you aren't perhaps you don't fully understand this relationship) but maintaining this relationship is important to many people in the city. Cosmo has done wonder for local friends, family members, and associates of many residents. Your dismissive attitude towards Cosmo, see quote:
"his isn’t the first time this has happened to a non-profit or a private business and it won’t be the last. In order to continue both have to adapt and change to the new circumstances or face the consequences."
...suggests you don't understand this relationship. You think the Station 20 people rallied for the cause (a cause which I am sure you supported), that same spirit exists for the Cosmo people. Simply put, many people won't say, Cosmo can adapt on it's own and without the City relationship or it can die off like any business.
I just enjoy how you advocate the word of the citizens, unless it contradicts your position.
"by the same token then... the cost of collecting recyclables in a curbside system would be a moot point, as the city would have had to pick that up regardless..."
ReplyDelete-----------------
Incorrect, the City currently uses a depot system for the paper collection a much more inexpensive system than a mandatory doorstep curbside program for every resident.
Once again the recycling crowd trying to cloud the debate with mis-facts.
The is NO statistically sound evidence that the a majority of citizens want to jetison the depot system and Cosmo for a new much more expensive curbside system.
ReplyDeleteThe city was supposed to do a follow up telephone survey after the recycling consultations in the fall of 2010. After they got such a backlash from the public at the meetings, they dropped the plan to hold promised public meeting to announce their findings and they also dropped the planned follow-up telephone survey that was intended to see how public opinion may have evolved from the media coverage of the consulations.
The city is pinning its desire for a mandatory curbside system on a telephone survey held before the consultations and a deeply flawed (and THEY KNOW IT) internet survey.
The city made sure not to have a survey that they knew wouldn't give them the answer they wanted. That's why they'll never put out a survey with the following two options:
1) Curbside at 6 million a year run by a large for profit company
2) Expanded depot at 1 million a year with processing by Cosmo.
Good for Loraas, Good for SCR for putting a sound business deal together.
ReplyDeleteIf City Council had not jerked around for so long the RFP would have been issued and a contract in place by now.
If there is any "blame" it should be aimed at City Council.
Yup Anon 9:36.... there would be a contract out and Cosmo would be kicked to the curb.
ReplyDeleteRecycling in Saskatoon..... at any cost.
(that would make a great slogan for the recycling advocates)
depots don't work. expanding them won't solve the problem.
ReplyDeleteDepots work for SARCAN. Also you can check online for a quote by a City Manager Jeff Jorgensen at a city council meeting where he said that the depot system was the, "most economical recycling program you could find," and "our program cost per tonne is one of the most effective in the country right now, no question about it."
ReplyDeleteThat type of analysis never made it into any of the city's materials on recycling.
Our whole society is made up of people using depots. Home delivery or pick up is by far the exception. We no longer have house calls from doctors, we go to a depot called a doctor's office or a hospital. We go to depots called 'stores' for any supplies we need. If we want home delivery, we usually pay for it extra or a company provides it as part of the service they give which is reflected in the price of the product.
Heck, even the Post Office no longer does door to door service in new areas, you go to a neighbourhood depot to pick up your mail.
Depots are the most cost effective method of collecting recyclable materials. For those of you who know how to calculate marginal costs, the change to curbside will have a marginal cost of more than a thousand dollars per tonne.
Anon 10:20,
ReplyDeleteThe problem with depots is that not enough people recycle. Sean Shaw's numbers state that 80% of people will recycle with mandatory curbside, while significantly less will recycle with depots.
If we care at all about the environment then we will pay the extra to ensure more compliance.
Since we are already paying more than people expect (curbside instead of depot) we owe it to people to keep the costs to a minimum, hence the problem with keeping Sarcan on board for the curbside system.
The reality is the majority of citizens are more concerned with the environment than Cosmo. WE NEED CURBSIDE IN SASKATOON, do you realize that we are only major Canadian city without it?
Sean Shaw is using an 80% number that was provided by the city that administration RAN AWAY FROM under direct questioning from a councillor. The 80% became a 'goal' to be reached sometime in the future as administration could give no timeline as to when they expected it to be reached.
ReplyDelete80% is also much higher than any large prairie city that we might use as a comparable.
I love your reasoning as to costs. It's so much more expensive to have curbside that we have to make sure to shaft the disabled in order to keep costs down.
On Sean's blog and here at the Mistress I've asked Sean to show me an example of a city with curbside whose waste disposal costs went down and he's never been able to come up with one.
We don't NEED a curbside program which contaminates one third of the paper it collects which is what happens in the utopia of Toronto. We don't need to spend millions on recycling while we are not able to properly fund our city streets.