WM is trying to turn a vast aboveground mine of commodities -- aluminum, plastic, paper, glass -- into profits through recycling. By Liz Moyer
PEMBROKE PINES, Fla. -- On the edge of the Florida Everglades, trash giant WM, the former Waste Management, just opened a $90 million facility that can process 60 tons of recyclable material an hour from four South Florida counties.
The new facility opened during a pivotal moment for the recycling industry. Public trust in recycling is low. Most Americans like the idea of recycling -- 87% thought it was important in a poll last year -- but confusion and perhaps a tinge of laziness means less than one-third of recyclable household material ever makes it into collection bins. Some 47 million tons of residential recyclable material is generated annually, with only 21% of that material being recycled, according to The Recycling Partnership, a nonprofit.
"We haven't done a great job as an industry at telling the story," Brent Bell, vice president of recycling at WM, tells Barron's.
Recycling has been a tough business, particularly in plastics. A flood of cheaper imported recycled plastic and cheap new plastic, plus a collapse in commodity prices, has forced the closure of 25% of U.S. plastics recycling processing capacity since early 2025.
For the company's WM Recycling unit, automation is viewed as the key to extracting more profit by slashing labor costs. Four years ago, amid soaring postpandemic inflation, WM decided to let 5,000 to 7,000 jobs companywide go unfilled after resignations and retirements. Its recycling-plant labor force then was volatile, with positions hard to fill and keep filled. It began shifting the remaining workers to skilled jobs running the higher-tech equipment as it leaned into automation, machine learning, and artificial intelligence.
WM, the largest waste disposal and recycling company in the U.S. and Canada, had access to a vast aboveground mine of valuable commodities -- aluminum, plastic, paper, glass -- and it could get a premium price for them if it improved how it extracted them.
WM's goal is to increase material recovery by 60%, to 25 million tons a year, by 2030. Since 2022, it has spent $1.4 billion on building and upgrading recycling infrastructure. Five new or upgraded recycling facilities like the one in Pembroke Pines will open this year, and an identical facility is slated to be operational in Tampa, Fla., next year.
Bell says the investments have enabled WM to reduce labor at the facilities by 30% while giving it the capacity to collect 2.8 million tons more material a year.
"These investments have performed really well," Chief Financial Officer David Reed said at a William Blair investment conference this month. "We're able to increase throughput, also improve the quality that's coming out the back end of that material and sell it at a premium."
Analysts point to results. In the first quarter, while commodities prices were down 27% from a year ago, WM's earnings before interest, taxes, depreciation, and amortization, or Ebitda, from the recycling operation rose 18% and material volume rose 9%.
Noah Kaye, an Oppenheimer senior analyst, has a Buy rating on the shares and a $264 price target, implying 21% upside from its current price of $217.54. He says that even if recycling rates continue to stay low for a long period, the infrastructure WM is building makes it efficient. "Automation is "putting intelligence and control into what is a pretty messy process," he says.
Even so, recycling may need help, says TD Cowen's James Schumm. "The investments make sense, but it seems like we need a regulatory push," says Schumm, who rates the stock a Buy.
Many rural areas have stopped curbside recycling collection because there isn't enough volume of material to justify the fuel and logistics expense of hauling it to a distant recycling facility. Meanwhile, in densely populated areas like south Florida, shrinking landfill availability is creating a literal trash crisis, and recycling is seen as one of the solutions.
"We are running out of landfill," Sunrise, Fla., Mayor Mike Ryan says. He heads the Broward County Solid Waste Authority, formed in 2023 to remake how the Sunshine State's second-most-populous county handles recycling. He has to convince voters in 31 cities in the county to go along with him, and August is the deadline. "What you're controlling is your economic destiny," he says.
Materials-recovery facilities like the one in Pembroke Pines -- a Broward County community -- are at the heart of how residential recycling programs work nationwide. Facility operators have contracts with local communities and companies to pick up their recycling, sort it, and sell it on the commodities market, sometimes sharing revenue with the local government or business.
Some 400 of these materials-recovery facilities dot the U.S., mostly on the East and West Coasts. WM has 97 of them in North America, and is upgrading or adding 39 new ones, some in new markets. Republic Services has 93, and three Polymer Centers designed specifically for plastics recycling. Casella has about 20, and has been acquiring and building more.
WM's first such automated facility opened in Chicago in 2020. Before that, the work was largely done by hand, which is what made it difficult to hire and retain. Since then, WM and CP Group, the San Diego company that designs the equipment and processes used in these facilities, learned a few things: They identified places on the conveyor systems that could be widened, for example, or ways to reorder how different materials are sorted. Robotic arms are used in some locations but not all -- not in Pembroke Pines. WM considers optical sorters as more efficient and accurate for high-volume recycling sorting.
From the automation, WM has projected an additional $290 million a year in Ebitda starting this year. That's an incremental 4% boost on overall 2025 Ebitda of $7.58 billion. Recycling is about 10% to 15% of WM's overall business but is seen as a strategic growth area.
The Florida facility's footprint is roughly two football fields and soars several stories tall, housing two miles of conveyor belts that transport this mix -- the plastic containers, cardboard, glass, and metal cans and containers tossed away by households and businesses -- through a series of sorting machines. Once separated, the materials are made into bales of 1,000 to 2,200 pounds each and sold to paper companies, metal can makers, bottlers, and construction-material makers to become either new packaging or a different product entirely. At full capacity, it will process 275,000 tons of material a year, enough to save 1.7 million trees and 981 million gallons of water. Barron's took a tour, and the following is what it saw.
To be sure, the recycling business has gone through some tough times. WM had a short-lived operation outside of Houston called Natura designed to recycle plastic film that can't be handled in a typical recycling facility. It halted operations in the fall, citing adverse market conditions.
Republic slowed plans to build a fourth Polymer Center also because of the economics. There simply wasn't enough demand for domestic recycled plastic because new plastic and even imported recycled plastic were cheaper for packaged goods companies to buy.
But since the Iran war broke out, plastics prices have shot higher, along with the price of the petroleum used to make the materials. That makes domestic recycled products somewhat more attractive. Tara Hemmer, WM's chief sustainability officer, who was recently promoted to chief operating officer, told analysts last month that the Iran war could help the recycled commodities market. But the company isn't betting on a significant improvement yet.
New state laws could boost domestic recycling. Five states now mandate that standard consumer product packaging meet certain targets for being made with recycled content. Seven states, beginning in Oregon , Colorado, and California, have new extended producer responsibility laws that will force packaged goods makers to bear the financial burden for the packaging choices they make and fund the recycling infrastructure to address it. Other states are considering similar laws, though in places like New York, legislatures have struggled to get a bill across the finish line.
Infrastructure is going to require big investment. The Environmental Protection Agency estimates $36 billion to $43 billion will be needed to improve recycling curbside collection, drop-off, and processing infrastructure by 2030. The first Trump administration set a nonbinding goal of increasing the recycling rate to 50% from its current 32% by 2030. That goal is still in place. But many consumer packaged goods companies have eased off self-imposed recycled content pledges or pushed their timelines out another decade, citing costs and lack of recycling infrastructure.
The 2022 Infrastructure Investment and Jobs Act set aside $275 million for recycling infrastructure grants through 2026. The agency got another $17 million in subsequent years to implement the program, with the money going mostly to local and county governments to build and upgrade publicly owned facilities that process a variety of materials.
Congress is working on two newer developments. The House advanced a version of a bill that has already cleared the Senate, seeking to improve recycling data collection and define recycling at a national level. Anthony Tusino, Recycling Partnership's senior director of public policy and government affairs, says the bills "strengthen our ability to collect, sort, process, and recycle valuable materials, keeping them out of our environment and in our economy where they belong."
The bill was backed by a variety of industry groups, plus consumer product makers including PepsiCo, General Mills, Kraft Heinz, and Primo Brands.
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