September/October 1992
At the third annual Plastic Roundtable, executives examined the two issues that will determine the plastic recycling industry's future: quality and markets.
BY ROBERT J. GARINO
Robert J. Garino is director of commodities for the Institute of Scrap Recycling Industries (Washington, D.C.).
When plastic recycling executives asked themselves "Where Are We in '92?"—the theme of Scrap Processing and Recycling's Plastic Roundtable, held in Chicago in June—they weren't thrilled with the answer.
The economic recession of the last two years has been a "disaster" for the U.S. plastic recycling industry, asserted Marty Forman, president of Poly-Anna Plastic Products Inc. ( Milwaukee ) and roundtable moderator. While overall postconsumer plastic recycling rates increased last year—reaching 14 percent compared with 9 percent in 1990, according to the Partnership for Plastics Progress (PPP) (Washington, D.C.)—"profits and margins have never been lower," he noted. The depressed market conditions have affected not only reclaimers of postconsumer plastic bottles and film, Forman observed, but also industrial plastic scrap recyclers and virgin resin producers.
This sober summary of the plastic industry was underscored in remarks by J. Roger Hirl, president of Occidental Chemical Corp. (Houston) and chairman of the PPP. Despite growth in the number of plastic recycling programs, Hirl said, "markets for most recycled materials are in their deepest recession in years." Roundtable attendees agreed, indicating that the plastic industry is only now looking toward economic recovery.
Against this bleak but candid backdrop, the four roundtable speakers focused on bringing recycled-plastic processors and consumers closer together by examining the issues of scrap contamination, processing costs, niche markets, and cost containment. Most contended that long-term opportunities exist for companies committed to quality and service. At the same time, they pointed out, relatively high processing costs and the lack of viable markets may force some industry participants to exit the field.
Quality Is the Key
Richard A. Fleming, president of P&E Consulting Inc. (Wilmington, Del.), reviewed scrap plastic specifications, focusing on "the principles that underlie bale quality" for postconsumer plastic containers. Contamination is the largest concern, he noted, particularly as it applies to bale composition, physical bale properties, and uniformity of the product. A contaminant, Fleming said, can be defined simply as "any material that is not specifically wanted by the purchaser," including other types of plastics, sand, oil, water, metal, wood, and other materials noted in guidelines developed by the Institute of Scrap Recycling Industries (Washington, D.C.).
After providing examples of allowable vs. unacceptable contaminants and describing the adverse effects of contaminants in the plastic-making process, Fleming acknowledged that scrap consumers all view quality differently, depending on the end products they produce. Nevertheless, he reminded scrap processors that plastic consumers are always seeking to reduce scrap impurities and increase uniformity—not only bale-to-bale, but also shipment-to-shipment.
Emphasizing this point was George Glenn, general manager of Wheaton Plastic Recycling Co. (Millville, N.J.), who noted that plastic consumers have made headway in overcoming contamination problems associated with bottle labels and sand, plastic scrap material continues to pose persistent quality challenges. In fact, he said, Wheaton Plastic Recycling used to accept mixed bales, but now "demands segregation by polymer," and must still reject some loads due to bale contamination.
To rectify contamination problems, Fleming advised scrap companies to implement internal quality-control procedures by inspecting and rating their bales, as well as tracking bale quality over time. Markets for recycled postconsumer plastics will grow only if plastic scrap processors and consumers commit to developing the highest-quality standards for their products, he asserted. Firms that don't strive for product improvement will lose their markets to those that do, Fleming warned.
Where Are the Markets?
Beyond quality concerns, the critical issue facing plastic scrap processors and recyclers is a lack of economically viable end-use markets, Glenn said. Plastic recycling companies are finding it virtually impossible to compete in today's marketplace due to limited markets and high processing costs, he asserted. To illustrate his point, Glenn provided cost calculations for recycling mixed-color high-density polyethylene (HDPE) containers. With cash costs of purchasing, granulating, washing, and pelletizing the containers ranging between 12 and 23 cents a pound, and recent selling prices "in the low teens," there's simply no margin left at the end of the day, he observed.
Daniel J. Kemna, manager of recycling for Waste Management of North America Inc. (Oak Brook, Ill.), provided another look at the financial imbalances of recycling postconsumer plastics, comparing Waste Management's costs of collecting the material with the quantity of material recovered. While plastics account for 30 percent of the firm's total net collection costs per ton, the material only makes up 3 percent of all the materials it collects. In contrast, scrap paper accounts for 37 percent of Waste Management's collection costs, but represented two-thirds of its recovered material.
Looking at the larger market picture, Glenn noted that one part of the problem is that the plastic industry lacks a coordinated approach to expanding plastic recycling. Furthermore, asserted Kemna, recycling legislation being instituted in the United States is addressing only the collection of recyclables. Compared with collection, market development is receiving less attention from public officials, which means that legislators aren't considering how to "pull recyclables through the loop," he said. This problem will become more and more critical as the number of recycling initiatives increases in the future, Kemna observed.
To confront this challenge, the public, scrap recyclers, manufacturers, and government need to work together to complete the recycling chain, he said. Consumers must demand recycled-content products, he noted, while scrap recyclers must strive to improve collection and sorting processes. Manufacturers must establish product specifications to create viable outlets for reclaimed material, Kemna suggested. And, finally, government must balance recycling mandates with procurement policies, recycling tax credits, and other incentives for recycled-product manufacturers.
Selling Value
The roundtable also featured Daniel L. Eberhardt, president of MRC Polymers Inc. (Chicago), who looked at plastic recycling from a compounder's perspective. His firm opted to focus on the recovery of engineering resins such as polycarbonates and polyesters derived from industrial generators—as opposed to residential commodity-grade resins—because "the margin potential was there," he said.
To succeed in plastic recycling, processors must strive to meet strict customer requirements, Eberhardt said, stating that "manufacturers expect consistency" and "do not have to give up standards" because they use reclaimed material. He noted that MRC Polymers "sells value" to its consumers in that its reclaimed material sells for less than comparable virgin resins. Many attendees noted that this has definitely not been the case for mixed-color HDPE containers.
In closing, Eberhardt stressed that plastic scrap recyclers can meet rigid quality demands, echoing Fleming's remarks that processors should aim for the highest quality and consistency in preparing plastic scrap for recycling.
The Polystyrene Perspective
Polystyrene—the plastic behind clamshell food containers, packaging peanuts, take-out salad holders, foam cups, and other products—doesn't have the recycling track record of HDPE and polyethylene terephthalate ... at least not yet. While polystyrene recycling was virtually ignored before 1990, more than 20 million pounds of the plastic may reportedly be recycled this year—most of it by the National Polystyrene Recycling Co. (NPRC) (Lincolnshire, Ill.).
To learn about this specialized plastic recycling market, approximately 43 roundtable attendees took a tour of the NPRC's Chicago-area plant. The group—led by Ralph Holmes, plant manager; Art Satten, source development; and Jodi Olin, regional recycling coordinator—followed streams of postconsumer and postindustrial scrap polystyrene through the plant, which can process 13 million pounds per year in two shifts.
In the plant's operations, incoming bales are broken apart and material is conveyed to processing machines that flake, wash, and pelletize it. The clean, specification-quality pellets are then sold to manufacturers of such diverse products as egg cartons and insulation board.
The facility, owned by NPRC and operated by Eaglebrook Plastics Inc. (Chicago), is one of four NPRC plants. The others are located in Bridgeport, N.J.; Corona, Calif.; and Hayward, Calif.
The NPRC is a $16 million enterprise jointly funded by Amoco Chemical Co., ARCO Chemical Co., Chevron Chemical Co., Dow Chemical Co., Fina Oil and Chemical Co., Huntsman Chemical Co., Mobil Chemical Co., and Polystar Inc.
Specifications for scrap polystyrene are available from the NPRC, 25 Tri-State International, Lincolnshire , IL 60069 ; 708/945-1991; 708/945-2147 (fax). —R.J.G.•
At the third annual Plastic Roundtable, executives examined the two issues that will determine the plastic recycling industry's future: quality and markets.