Value Change

2015 Apr 13th

One man’s treasure is the whole world’s trash

A Green Cross delegation was recently invited to Thailand by a Swiss company specialized in business development to visit a unique operation that demonstrates the potential for economic development that actively improves sustainability. Green Cross wanted to evaluate the potential to deploy similar solutions in other places in partnership with SB3i SA, holder of the project – something the Thai government has shown a strong interest in supporting.

All these high-level results stem from a distinctly grassroots idea.

Dr. Somthai Wongcharoen started his waste recycling business in 1974, with 1,000 Thai Baht (30 US Dollars) and an old pickup truck in Phitsanulok, a city of 800,000 located 400km north of Bangkok.

Over the last four decades, Dr. Somthai has built his recycling business into a global empire. It now has over 700 branches in Thailand and around the world, including in Laos, Cambodia, Malaysia, Japan and even the United States. Wongpanit Group has become a major global player, and Dr. Somthai’s vision and charismatic personality have made him a leading international figure – in environmental stewardship, as a social entrepreneur, and as a savvy, uncompromising and innovative business leader.

“There is no waste on this planet, only misplaced resources,” said Dr. Somthai. “Recovering metals, plastics and other assets from landfills is much more efficient then mining the Earth for ores or oil. Re-using aluminium from scrap saves 95 per cent of the energy needed to mine aluminium in the first place. The leverage is extraordinary!”

Dr. Somthai has been disproving the myth, which many people still believe, that environmental stewardship is expensive and uncompetitive. The linear consumption model (extract, consume and dispose) is outdated. More circular models of consumption are needed, and Dr. Somthai provides the economic and social rationale for creating zero-waste economies by turning waste into profit. This message has come of age.

Waste management is a growing challenge in Thailand, and the problem is only becoming more daunting as the population grows and becomes more affluent. When waste was mostly organic, it was easy to manage. Today, plastics, metals and toxins accumulate in landfills, overwhelm expensive and polluting incinerators, and threaten to contaminate the water table.

Dr. Somthai’s business diverts waste from landfills and incinerators, creates local employment, and provides valuable commodities to industry at competitive prices. He is transforming a problem into an opportunity for the environment and for society.

In his flagship Phitsanulok plant (which has been ISO 14001 certified since 2001), Dr. Somthai employs 250 people and can process 500 tonnes of trash every day. He buys waste from industry, landfills and individuals through 50 collection points scattered across the city. The waste is weighed, the purchase price is determined based on the going rates, and payment is made immediately in cash.

Prices of metals, plastics and other commodities depend on global markets, which Dr. Somthai monitors continuously. He prominently displays the daily prices for key commodities at the entrance to his recycling centre.

But four decades in the trade have helped him hone his instinct for where the prices are heading. Akin to a professional commodities trader in London or Geneva, Dr. Somthai takes positions, stocking up when he expects prices to rise and liquidating when he sees prices heading south.

The recent drop in the price of oil had a negative impact on most products. This is why diversification is so important. Dr. Somthai’s capacity to recycle various kinds of waste helps spread his risks across a wide range of commodities. By adjusting his purchase price when markets are down, he can always offer competitive prices to his customers while maintaining sustainable margins.

Wongpanit’s success has been such that it has been able to gain leverage over manufacturers who fail to properly design their products. Many fast-moving consumer goods have labels that are glued – this makes them difficult (sometimes impossible) to remove. But responsible companies are taking notice, and Pepsi-Cola in Thailand has partnered with Wongpanit to re-design its bottles for easier recycling. They have also agreed to pay an extra Baht for each kilo of recycled plastic.

Dr. Somthai encourages other companies to follow Pepsi-Cola’s lead, and lobbies the authorities to establish standards for plastic products.

Recycling waste is a labour-intensive trade particularly well suited to developing countries with high unemployment and low wages. In Thailand, it provides a significant source of income to the poorest of the poor. It is estimated that, overall, up to two per cent of the population in the urban areas of Asia and Latin America depend on waste-picking for their livelihoods.

And this is not unskilled labour.

Waste-pickers are highly competent at identifying items with potential for recovery. Wongpanit then adds value by sorting, cleaning, processing and transporting the waste in volumes that make it commercially attractive to domestic or international markets.

There are, for example, hundreds of types of plastic. Each category must be identified and segregated by kind and colour. Impurities must be removed before processing (sorting, cleaning and chopping into flakes) so that the end product can be of value. Labels on bottles or caps of a different plastic must be removed. Plastics must also be sorted according to their density. Each worker specializes in a particular type of material, and turnover is problematic because training takes a long time and is expensive.

In addition to providing local jobs and protecting the environment, Dr. Somthai looks to support young people – the leaders of tomorrow. He provides training in schools and, once a week, buys waste from the students to provide them with income while demonstrating the economic value to be found in waste.

He also works with local monasteries that donate waste for processing to raise money that funds university scholarships for young people.

Delegations from around the world are regular fixtures at Wongpanit. On the morning that Green Cross staff – along with some other visitors from Switzerland – were there, a group from Japan was also present. Wangpanit already has two Japanese franchises, and these guests wanted to meet the man who had started this business two decades before the first Rio conference – at a time when few people took environmental matters seriously.

The Geneva delegation for the Swiss visit to Wongpanit was organized by Armand Jost, Honorary Consul to Thailand, and Mark Giannelli, who is writing a thesis on “Waste Management in Developing Countries” at the Universities of St-Gallen and Lausanne. Mr. Jost is founder and president of S3Bi, a Geneva-based enterprise focused on assisting professionals in their career transition, and Mr. Giannelli is his partner. His Excellency, Ambassador Chalermpol Thanchitt from the Royal Thai Embassy in Bern (Switzerland), accompanied the delegation. Dr. Gilles Bernard, Founder and CEO of Charity Consulting in Jumpol, Thailand, is planning to develop such a project to create employment in the North of the country.

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