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Shercom execs vent frustrations over tire processing in Sask.

Shercom President Shane Olson, COO Mike Richards raise concerns about how Saskatoon-based company was cut out of tire processing contract in Saskatchewan.
Shercom COO Mike Richards and President Shane Olson speak to reporters on the tire procurement situation and the “misinformation” that has circulated about their company.

REGINA - Executives with Shercom Industries were in Regina Tuesday looking to set the record straight over what has gone on with tire processing in the province of Saskatchewan.

In particular, President Shane Olson and Chief Operating Officer Mike Richards raised concerns about decisions made by Tire Stewardship of Saskatchewan and the role of the Ministry of Environment that eventually resulted in cutting out Saskatoon-based Shercom from the tire processing contract for Saskatchewan, with TSS instead awarding the southern RFP to the California-based company Crumb Rubber Manufacturers. 

The executives say those decisions led to closure of their processing facilities in Saskatoon and the elimination of 60 jobs. 

“A lot of what’s happening in the last three years is really an ambush,” said Olson, who pointed to “misinformation or false information” directed at their own company. “Look, we’re not trying to pick a fight or get drawn into this fight. We’re just responding to what the people of Saskatchewan are asking.”

Regarding the “misinformation,” Olson pointed to a “plethora” of it. In particular, he pushed back on the idea that a second processor for the province was necessary to improve value-added.

“When you see the history of tire recycling, really what Shercom has reached is the pinnacle of value-added of any tire recycling industry or program across Canada, across North America,” he said. Olson pointed to his company being able to harvest the raw material from the tires, and then take raw material and turn it into value added goods. 

“A huge lowering of the carbon footprint, a huge contribution to the economy,” he said.

“So when I hear stories like, oh, this US company is going to bring in higher value and comments about rubber-modified asphalt, none of that is true… tire recyclers don’t make asphalt, we just supply the raw material.”

Olson adds that “there’s no crumb rubber (is) being made at all in Saskatchewan at this point and I don’t expect there ever will be.”

He also questioned the idea of a two-processor model for Saskatchewan, pointing to the nine previous processors who had tried and failed as well as pointing to the economies of scale that are necessary for it.

“To bring that back into the fold and suggest well we go back to a two-processor model when all the other processors that entered the province of Saskatchewan went bankrupt, speaks to the fact that there’s not any room for two processors. Why bring in a processor that doesn’t actually do anything?”

Olson also took issue with comments that were made "saying Shercom doesn’t do enough value-added, but then in the second, the next breath... saying all the tires are being processed now in the province.”

“Shercom processed all the tires into value-added -- 100 per cent of what we received, into tire-derived aggregate, crumb rubber and molded goods. We’re seeing none of that now. So I don’t understand how on one hand they’re saying ‘Shercom didn’t do enough value added, now it’s 100 per cent processed,’ when in fact, no processing is happening.”

Olson also commented on why Shercom did not bid on the southern RFP contract in 2022  and he took reporters back in the timeline.

Olson said in 2016 they met directly with the Minister of Environment of the time and said: “We’re prepared to reinvest and it’s a multi million dollar plan and the economies are such that it will process all the tires in the problem. But frankly it’s not a safe environment to invest in… We need assurance of supply, a long term contract and a voice in the future of the industry.”

“And with that commitment from the Ministry of Environment, I will credit this current government for going to great lengths back in 2016 and ‘17 to change the regulations and the legislation that gave direct oversight. So with that, we built this plant with a 20-year payback period,” he said.

Shercom’s contract came up for renewal in 2020. At that time, they asked for an inflationary increase to the rates set by the government. “Nothing extraordinary,” he said.

It was also around that time that a new executive director was appointed at TSS, Stevyn Arnt. Arnt made what Olson described as his “one and only cameo appearance” at their plant in fall 2020.

“He came and then went back and said no, there’s going to be no increase… in fact the best we can do is a 30 percent decrease — and that’s crazy.”

Olson said they couldn’t do that. “Well, they said, they will find somebody who can, and that’s when they they started talking about a second processor.” 

TSS then issued the RFP. Right in the first page of the RFP, two paragraphs in, it “clearly excludes Shercom," Olson said of the language.

He said Shercom raised their concern directly with TSS, and the chair had assured them the RFP was for information purposes only. 

“Unbeknownst to us and unbeknownst to what they had said… they actually signed a contract to basically commandeer 40 per cent of the tires.” Shercom had been the largest tire collector in the province up to that time, but Olson said TSS took control of the tires and were "going to determine where to pick them up.”

Further to that, a year ago when “this really blew up,” said Olson, mediator Cam Swan was brought in and according to Olson “unfortunately that mediation never really happened.” 

Talks with TSS also went nowhere. “Again, in the negotiations, they never really changed their term of 30 per cent less than what we were getting,” Olson said of TSS. 

“The bottom line is, Shercom was excluded from the RFP. We raised legitimate concerns with the TSS and with the ministry, and they basically shoved it through and had this contract signed behind closed doors, and then started promoting it with this company bringing jobs and the centre of excellence, basically saying all of the things we were already doing.”

Olson also pointed to “propaganda” sent to tire retailers, telling them that “now that we’re doing value added, we need this and this and this. Like, what do you mean now, Shercom’s been doing it for decades. So there’s been a disconnect.”

Olson added that when he hears that more tires are being processed and that there is higher value-added, he said “no.” Saskatchewan, he said, is “back to the Stone Age doing no more than 25 years ago.”

Shercom concerns brought up during Question Period

During Question Period later on Tuesday, NDP Ethics and Democracy Critic Meara Conway fired questions at the government about the Shercom media scrum that morning, and in particular over Olson's comments about the  “assurances” made to Shercom in 2016 -- ones Conway said were later broken by the government. 

Environment Minister Christine Tell responded that TSS had conducted an “open and transparent RFP process” for southern Saskatchewan, and said the Ministry’s role was “one of oversight to make sure all commitments are fulfilled under the scrap tire recycling program.” Tell also reiterated the province was not involved in the RFP process: “that was done solely by TSS.”

Conway also roasted Tell over a letter to the province the previous day from Jason Aebig, CEO of the Saskatoon Chamber of Commerce, on how to improve transparency. According to the letter from Aebig, which was posted on the Chamber’s website, they called for the Environment Ministry to release the market feasibility study that was "at the heart of the issues and questions raised over the last year," and also to release the procurement review by Swan.

After Question Period, Minister Tell was asked about the market feasibility report and she said “it’s not for the government to share. So the contact making inquiries need to be done between whoever is asking for it and TSS. I do not have that report.” Tell also said the procurement review would not be released, as it was an internal document.

However, Minister Tell did say she would look at Aebig's letter and she expressed a willingness to make changes if needed. “If things need to change we’ll make those changes,” said Tell.

Some changes were already going to be implemented based on the report done by Cam Swan, she said. “So there’s already changes in the works, we just need to have a closer look at Jason’s letter," Tell said.

Tell later told reporters that government "should never shy away from making regulatory, statutory, legislative changes when they are necessary."