Steps to Starting a Tire-Shredding Business
For waste management authorities and landfills, worn-out tires are one of the most problematic and substantial sources of waste. But tire recycling offers several profitable business opportunities since rubber can be reused in different ways.
A Growing Opportunity
For too long, old tires were stockpiled. In 1990, only 11% of old tires were recycled into end-use markets. With the growth of tire-recycling programs, however, by 2017, end-use markets consumed 81.4% of scrap tire generation.
If you're thinking about what outlets are available for processed tires, the U.S. Tire Manufacturers Association (USTMA) has identified the top end-use markets for scrap tire rubber as follows:
- Tire-derived fuel (TDF): TDF generates more heat than a similar weight of coal. As such, TDF provides an attractive and cleaner alternative to coal for use in cement kilns, pulp and paper mills, and electric utility boilers. In 2017, the TDF market consumed 106 million scrap tires, over 43% of the annual U.S. scrap tire generation.
- Ground rubber applications: Ground rubber is produced by grinding scrap tires into small pieces of varying sizes. Popular applications include rubber mats, landscaping mulch, rubber products and mats, and rubber-modified asphalt. Ground rubber made use of 62 million scrap tires in 2017, over 25% of scrap tire generation.
- Civil engineering: Shredded tires are becoming more popular as a substitute for sand or clay in road and landfill construction, landfill cover, septic tank fields, and many construction jobs. Civil engineering applications made use of 19 million tires in 2017, around 7.9% of the total.
- Other markets: Other scrap tire opportunities include powering electric arc furnaces, professionally engineered tire bales, and products punched, stamped, or pressed from scrap tires. These activities account for about another 7.4% of production.
With so many outlets for shredded tires, this may represent an exciting business opportunity for you. If so, here are some key steps to follow in launching your business.
1. Find Sources and Markets for Your Output
As a first step in exploring the opportunity to start a tire-shredding business, you need to identify local opportunities to source old tires and sell your processed scrap to customers. It pays to "follow the old tires" in order to understand what happens to them. Are they being regularly picked up? Where do they go? Check out the ongoing scrap tire businesses in your area. If you see tire accumulations, are there unfulfilled needs for old tire removal or customers interested in purchasing the processed material?
2. Identify Potential Site Locations
The optimal site location depends on several variables. Some of them are predicated on minimizing freight costs related to bringing in scrap tires and shipping out processed material. And while tire source and markets are of critical importance, you must consider other business location factors, such as zoning and permits, environmental considerations, adequate space for storage, unloading and loading, as well as road access.
3. Prepare a Complete Business Plan
An incomplete business plan can lead to problems after starting your business. Try finding similar businesses or talking to entrepreneurs or tire-recycling equipment vendors. Know what it takes to start a shredding business and plan well from the start. You may be able to find tire-recycling business plans online for free or available for purchase. Depending on the desired size of your business, you will have to buy dumpers, conveyors and other material-handling equipment. Prepare for a minimum investment in equipment of at least $100,000.
If you don't have any experience in the industry, it may be a good idea to seek work in the tire-recycling industry first. You could also start by creating a smaller, related business, such as an old tire hauling service.
4. Start Shopping for Tire-Shredding Solutions
Once you have a complete business plan, including a financial strategy, you're ready to set up shop. You'll likely need to rent a property and acquire the machinery necessary for a tire-recycling business. Since you already researched equipment prices while preparing your business plan, you should have some confidence as you go about acquiring machinery.
5. Hire Employees and Launch Your Business
When you have bought and installed your equipment, you can begin operating your business. Hire an adequate number of employees to collect, transport, clean, and shred old, worn-out tires and for conversion into a saleable material.
These are the rudimentary steps necessary to embark on opening a tire-recycling business. Keep in mind that the shredding or grinding of material translates to other recycling opportunities, such as asphalt shingle recycling. Of course, there are numerous challenges and financial risks involved in any entrepreneurial venture of this nature, so careful planning is important. To explore the opportunity in more detail during your business plan development, consider attending the Scrap Tire Research and Education Foundation's Scrap to Profit Conference or subscribing to industry publications, such as the Scrap Tire News.
U.S. Tire Manufacturers Association. "Scrap Tire Markets," Accessed on Oct. 23, 2019.