Saskatoon company Shercom shuts down tire processing operations after contract not renewed

A Saskatoon company that makes rubber products from recycled tires has had to shut down its tire processing operations. 

Shercom Industries Inc. has been negotiating a contract renewal with non-profit tire management and recycling program operator Tire Stewardship of Saskatchewan (TSS), but negotiations have fallen through.

Shercom is no longer accepting used Saskatchewan tires, and as of May 1 is also not processing tires. Its manufacturing operation is continuing in Saskatoon, but now it will be sourcing crumb rubber from processors outside of the province.

Shane Olson, founder and owner of Shercom, said the company employed 137 people in 2022. Now there are only 75 employees due to layoffs. 

During contract renewal negotiations at the end of 2020, Shercom told TSS it wanted three things: a voice in the future of the industry, assurance of tire supply and an increase in its tipping fee, which had not been increased since 2012. 

"It was a simple request that simply said, 'hey, we need an inflationary adjustment that is reflective of the CPI index for inflation.' And that was prior to this outrageous inflation we've had the last two years," Olson said.

Instead of an increase in the tipping fee, TSS offered Shercom a 30 per cent decrease, Olson said. 

"It was a shocking move. It made no sense to us and it felt like a bullying tactic. But it also felt a bit like extortion because of our significant investment," he said.

"Up until then we were able to take an environmental hazard and turn it into a renewable resource for the benefit of the community, the economy and of course the environment."

TSS has now signed a tire processing contract with U.S. company Crumb Rubber Manufacturers (CRM), which will begin operations at its facility in Moose Jaw in the coming weeks. 

On Tuesday, the Greater Saskatoon Chamber of Commerce sent a letter to Saskatchewan's Minister of Environment Dana Skoropad calling Shercom a "made-in-Saskatoon success story."

The ministry provides oversight for TSS. 

"Under the free market, Shercom Industries became the largest tire collector in the province, and the only tire processor. Shercom's success in tire collection was owed to its preferred service, its dealer loyalty program, its community sharing program, and its consumer-based zero-cost tire recycling program," said the chamber of commerce. 

Since Shercom will continue to manufacture molded goods like tiles, blocks and rubber pavement in Saskatoon, but will not have material on hand from processing tires, the company will have to buy crumb rubber from Alberta, B.C., and Manitoba. That will mean significant freight charges. Shercom said this may mean it will not stay in Saskatchewan in the future.