May/June 2012
Recyclers of other commodities can see plastics’ potential: There’s ample supply, consistent demand, and they can start with equipment they already own. That’s all true, but strict quality demands and high transportation and storage costs can make recycling this commodity trickier than it seems.
By Theodore Fischer
Why recycle plastics? Like any other commodity, it comes down to the economics of supply and demand. On the supply side, the manufacturing process generates vast quantities of postindustrial scrap, while modern life generates huge quantities of postconsumer scrap containers, film, furniture, toys, and many other items. On the demand side, processors and end users just can’t seem to get enough of recycled material—so long as it’s clean and it’s the resin they need. By weight, plastic “has the highest value, after nonferrous metal,” among recyclable commodities, says consultant Patty Moore of Moore Recycling Associates (Sonoma, Calif.). “It’s a growing commodity.”
But be forewarned: Recycling plastics might not suit the faint of heart or capital. “It’s not for everyone,” says Jonathan Padnos of Louis Padnos Iron & Metal Co. (Holland, Mich.). “You have to have the appetite to not make money—or even to lose money—at the beginning, because there’s a very serious learning curve.”
Now’s the Time
Longtime industry observers tick off the reasons they’re bullish on the potential for recycling this commodity. First, they describe major shifts in U.S. manufacturing and sales. “Sales are down in ‘stuff’—cars, appliances, newspaper output,” says Jerry Powell, executive editor of Resource Recycling (Portland, Ore.), which publishes Plastics Recycling Update, a quarterly magazine and free e-newsletter, and produces an annual plastics recycling conference. Further, he says, the stuff that is being manufactured contains less, lighter, and sometimes more durable material. As part of that trend, plastics now replace many metals formerly used in manufacturing, such as in automobile bumpers, he points out. Also, as consumer products get smaller and last longer, “you don’t end up with as much scrap,” he says. “Scrapyards have all the scales and the personnel and equipment and trucks to do more recycling, but they don’t have ‘stuff.’” Given these trends, Powell predicts that recycling postindustrial and/or postconsumer plastics will be virtually tantamount to survival for recyclers. “To be blunt … metal and paper volumes have been flat, and this is a growth opportunity.”
Some recyclers that started out in metals, paper, and other commodities say they started handling plastics to better serve existing customers. “Big industrial accounts are trying to make a shift toward zero landfill, and it’s up to recyclers to try to help them in that effort,” Padnos says. His company has promised to accept any viable material its largest customers want processed. And that strategy is paying off: When Padnos entered the plastics market seven years ago, it processed hundreds of thousands of pounds a year, he says; “today, we do that in a day.” (To acknowledge its expanded horizons—into paper even before plastics—the 107-year-old family-owned business is changing its name from “Louis Padnos Iron & Metal Co.” to simply “PADNOS.”)
Starting Requirements
Recycling plastics might not require a significant up-front investment. Some recyclers will already have the recommended equipment, starting with a baler. Whatever balers a facility has “might not be optimal, but they would probably work,” Moore says. With the wide range of recyclable plastic materials, the best baler for the job will depend on what type of plastic you’ll most often be baling. “And as [recyclers] get more familiar and build their base of suppliers and buyers, they could expand” and purchase additional balers designed to handle plastics. Seven years ago, Texas Recycling/Surplus (Dallas) only needed to purchase downstroke balers to add plastics to its existing paper recycling business. “What we do is collect it, bale it, and sell it to folks that will do the end processing,” says Joel Litman, the company’s co-owner. “They’ll either grind it or melt it.”
Eventually, Texas Recycling/Surplus also acquired a handheld X-ray fluorescence analyzer to identify different types of plastics. “A lot of folks will just burn it and sniff it, but if you want to be more sophisticated and do it a little cleaner, then you should invest in equipment that identifies what type of plastic it is,” Litman says.
If they find sufficient customer demand, some recyclers acquire plastic shredders, grinders, or granulators to reduce the material to pieces about the size of a fingernail, Powell says, to increase the product’s density, making it easier to store and less expensive to ship. Grinders start in the $10,000 to $20,000 range for small units, with costs rising to $100,000 for large units, and they operate on standard industrial power supplies, he says.
In addition to adding balers, shredders, and grinders, plastics recyclers can invest in “the extremes of an eddy-current system” to extract nonferrous metals, “some color-sorting systems, and pelletizers,” says Mike Smith, vice president and chief financial officer of Mervis Industries (Danville, Ill.), which began recycling postindustrial plastics in 1990 and now processes 55 million to 60 million pounds a year of high-density polyethylene, polyethylene, polystyrene, engineering grades, and film. Color sorting can increase the material’s value, as can pelletizing, which melts, extrudes, and cuts film or flake into uniform pellets.
“You can get into plastics on a relatively low budget, but be prepared to expand down the road because it can get capital-intensive and space-intensive,” Smith warns. Space becomes an issue because of recycled plastics’ bulk. “There are lots of different types of plastics, and when you’re selling full truckload quantities, you need additional warehouse space—more than what you would imagine—on the front end,” he explains. It might take as many as 20 Gaylord containers of scrap plastics to fill a single container with regrind, which “requires a lot of warehouse space to make it worthwhile.”
On the bright side, recyclers probably won’t need to hire personnel with specialized skills to handle plastics. “The forklift [operator] can go move bales of paper and then move a couple of bales of plastics—there’s no difference,” Powell says. “You already have the office staff, personnel who know how to pick up things and push things and move things, so it’s just another material.”
The Demand Picture
Scrap recyclers might wonder whether they’ll find sufficient demand for processed plastic scrap. Market participants say there’s no shortage of hungry buyers. “There’s a huge secondary market for PET [polyethylene terephthalate] and all other plastics—and there always has been,” says David Cornell, technical director of the Association of Postconsumer Plastic Recyclers (Washington, D.C.). The market does have occasional hiccups—“for about six months every 10 years there’s a surplus of raw material,” he says—but “the rest of the time we’re raw-material short.”
PADNOS fills orders from a wide spectrum of domestic and foreign customers at different stages of the supply chain. “We’re selling to compounders, who take our regrind and make a compounded pellet that competes against [pellets produced by] the big virgin resin manufacturers,” says Randy Knibbe, superintendent of the company’s plastics division. “We’re selling directly to injection molders, who take our product directly into a new part or a new application, and we’re selling to sheet extruders and thermoformers. We’re selling overseas to India and China, and we’re looking at opportunities in Vietnam, Malaysia, Mexico, and Brazil. Once you can make weight and fit [your plastics] into an overseas container, the whole world is your sandbox.”
Other potential buyers come in a variety of shapes, sizes, and specs. KW Plastics Recycling (Troy, Ala.), which got its start by recycling the polypropylene from automotive battery casings, says it’s now the world’s largest producer of custom-engineered co-polymer resins from recycled PP and HDPE. It’s always ready to buy both natural (uncolored) and pigmented HDPE as well as regrind PP. St. Joseph Plastics (St. Joseph, Mo.) is a 20-year-old company that buys a wide variety of postindustrial plastic resins: HDPE, low-density polyethylene, PP, high-impact polystyrene, acrylonitrile butadiene styrene, ABS/polycarbonate, nylon, and dust. Coll Materials purchases a range of postconsumer plastics. This four-year-old company based in Zanesville, Ohio, with branches in Allentown, Pa., and Waco, Texas, seeks mixed-color HDPE (both loose plastic and bales), natural HDPE bales, and clear or mixed-color PET bales.
“It’s like gold,” says John Aspland, owner of Adirondack Plastics & Recycling (Argyle, N.Y.) and Valley Plastics & Paper Recycling (McAllen, Texas), of scrap plastics. “You’re always looking for more.” Aspland’s companies are unusual in that they started in the early 1990s as postconsumer plastics recyclers and only later began recycling other materials to accommodate customer requests. In the early days, with postconsumer plastics, “pricing was volatile—it would swing every day—so we quickly got out of that,” Aspland says. Now the company handles postindustrial plastics from industrial manufacturers of plastic parts. The supply of such plastics has tightened in recent years, he says, because many manufacturers now recycle their own to improve their sustainability—and to save money. “They’re processing it in house and feeding it right into the virgin material,” he says. “It cuts their cost down tremendously.”
Recycled plastic film also is in great demand from companies such as Petoskey Plastics in Hartford City, Ind. “We buy primarily postconsumer low-density and linear low-density film—material such as stretch film, pallet wrap, garment bags, [and] mattress covers,” says David Price, division manager of recycled products. With a capacity “north of 30 million pounds a year,” Petoskey is always looking for more raw material, which it turns into multilayered engineered-film products such as automotive seat covers, trash bags, and can liners for commercial and retail applications. “We’re getting enough, but it does take work and effort [for us] to procure that material,” he says. He’s willing to compete on price for the right material, he adds. Petoskey is working to increase its supply on several fronts. It purchases material from brokers, it operates closed-loop, turnkey recycling programs for commercial warehouses and distribution centers, and it even offers balers to potential large-volume suppliers. “We go in and say, ‘If you want to divert all your film out of the landfill and reduce your waste disposal costs, we’ll provide a baler at no cost or additional expense, manage all transportation, and pay you for the plastic,’” Price says.
Cautionary Notes
A low barrier to entry, a growing supply, and ample demand—plastics recycling sounds like a sure thing. Of course, if it were that easy and that lucrative, everyone would be doing it. Instead, recyclers give a variety of solid business reasons for entering this market with caution.
One major problem is contamination. “Plastics is much [less forgiving] than ferrous and nonferrous metals,” says Mervis Industries’ Mike Smith. “In metals, you can have a little bit of contamination and still have a salable product. But many times in plastics, if you have a little contamination, you’ve not just downgraded it by a few pennies, you’ve perhaps ruined the entire truckload.” The contamination can be from different resins, plastics of the same resin made in a different manufacturing process, or from nonplastic materials—even bits of paper. “What we’ve learned is to make sure we keep [plastic scrap] separate from any paper and other products that could contaminate it because the quality specs are very, very tight,” Litman says. Further, he makes sure the bales he sells contain exactly the kind of plastic his customers want to buy. “If the mills want Plastic A, they want only Plastic A—that’s what their equipment and processing is geared for, and it’s what their customers want. If you have any Plastic B in your Plastic A, they will reject it, send it back, and tell you, ‘You better get it clean, or we’re not buying it from you.’”
Fastidious separation of recycled plastics is essential and will remain essential for the foreseeable future, APR’s Cornell says. “The notion of taking mixed plastic and making something useful out of it has been one of those Holy Grail things folks have looked at forever and a day,” he says. A process or additive “that makes everything interchangeable with everything else has yet to be found.” One issue, he explains, is that resins melt at vastly different temperatures. If you try to process them together, “you’ll either not melt some of it or overheat the other fractions.” (That said, John Aspland says he plans to install technology to convert scrap plastics—even contaminated plastics—into synthetic crude oil.)
On the collection side, recyclers face the high bulk/low weight issue, which can make unprocessed plastics more expensive to transport than other recyclable commodities. And, as mentioned earlier, that bulk requires the collection of a large volume of unprocessed material to generate a salable volume of processed material. “Plastics has a volume reduction that averages about four or five to one, depending on the substance. Loose water bottles are probably 10 to one,” PADNOS’ Knibbe says. “You can take in 10 van trailers of product to make one 40,000-pound load of finished product going out.”
As with other recyclable commodities, a thorough understanding of your material and its value is essential. “You can actually lower the value of certain material by processing it,” Patty Moore points out. “For example, you might think that grinding is always a good idea, but it isn’t … because, depending on the material, it [can be] easier to pull out contaminants before they’re ground than afterward. You have to know the supply, and know your buyer and what they want, before you would do something like grinding.”
Litman agrees there’s a steep learning curve. “You have to be patient; we’ve found that [plastic] is more technical than paper or metal because sometimes you see a piece of plastic that you think is one thing, and by the time you analyze it, it turns out to be something completely different.” He also gives this advice: “Know who you’re selling to because there are a lot of folks in the business who will take advantage of your naïveté.”
And, last but not least, is the bane of any commodity market—volatility. Speakers at the ReMA convention’s plastics spotlight session in April pointed out that prices of natural gas, crude oil, and chemicals such as ethylene, propylene, and benzene all affect plastic prices, and those prices can move several times each day.
Getting Started
Recyclers who want to test the waters of plastics recycling can avail themselves of several resources. ISRI’s Plastics Recycling Council brings together plastics recyclers to network, define material specifications, and shape ReMA policy and programming for this audience. The association also has a LinkedIn group for members interested in plastics; go to www.linkedin.com and search for “ISRI Plastics Commodities Group.” (For more information on these and other ReMA resources for plastics recyclers, contact Jonathan Levy, 202/662-8530 or jonathanlevy@isri.org.) Resource Recycling’s magazine, e-newsletter, and conference are other sources of industry news and information. The American Chemistry Council’s Plastics Division (Washington, D.C.) maintains a recycled plastics market database (www.plasticsmarkets.org) and a website with best practices and case studies (www.recycleyourplastics.org). Other associations focus on postconsumer plastics (APR) or PET containers (the National Association for PET Container Resources in Sonoma, Calif.).
Above and beyond those resources, those who have entered this market say there’s no substitute for hands-on experience. “Visit and work in a plastics recycling operation owned by someone similar to you but geographically far away,” Powell says. “A lot of plastics recyclers wouldn’t open their plants to somebody who competes with them, but when some guy in Denver arranges to see how a fellow industry member in Tampa operates, there’s no competition—those two are never going to compete for anything. Go look at [the material], go touch it, go study.” (For a list of firms that might be amenable to such a visit, contact Powell at jerry@resource-recycling.com.)
Theodore Fischer is a Silver Spring, Md.-based writer.