Out of the Ashes

April 1, 1999

6 Min Read
Out of the Ashes

Heidi Ridgley

Turmoil in the U.S. recycled plastics market may have smaller companies wondering where they'll be when the price free fall ends. Will they splatter at the bottom or endure the journey?

Paul Sullivan, president of Consumer Plastics Recycling (CPR), Denver, thought he knew the secret to staying afloat when markets turned ugly. With "diversify" as his mantra, he sought to ride out price dips by experimenting with and marketing as many plastic resins as possible, while also profiting from the sale of highdensity polyethylene (HDPE) and polyethylene terephthalate (PET) bottles.

But when HDPE and PET prices plummeted and his major buyers of polyethylene (PE) bottles dropped out of the market, Sullivan's business took a major hit. In November last year, Phillips Petroleum, Bartlesville, Okla., told Sullivan its recycling subsidiary was closing.

"They just bagged it without warning," Sullivan says of his buyer. "They just called and said 'we're shut.'" Phillips was the last large virgin plastic manufacturer that also had recycling operations. With a capacity to recycle 300 million plastic bottles per year, its abrupt closing sparked a ripple effect in the plastics recycling industry, leaving plastics recyclers like Sullivan with undirected inventory and capacity.

About the same time as the Phillips blow, Polymer Resource Institute stopped buying CPR's injection-grade butter tubs and yogurt containers.

This may have been the final nail in the coffin for Sullivan's recycling operation. But like a phoenix, he is rising from the ashes. As he closes his recycling operation, he is opening his new business - manufacturing plastic gutter splash boxes, carstops and lumber from the recycled materials he used to sell.

Answering Opportunity's Knock Sullivan opened CPR in 1994 after hearing that the plastic recyclers for the Colorado-based King Sooper grocery store chain no longer wanted to process its material. The grocery chain's recycling program collects aluminum cans, glass, old newspapers, HDPE and PET bottles, PE bags, polystyrene egg cartons and polystyrene meat trays at more than 70 stores.

"But the reality was that people put every type of plastic in there, giving us an interesting petri dish to work with," Sullivan says.

With strong ethical reasons to recycle, Sullivan found it difficult to toss the harder-to-recycle plastics aside. He worked for 12 years with various community-based recycling operations in the Midwest and then as general manager of EcoCycle, a recycling facility in Boulder, Colo.

Sullivan formed a plan to profit from the PET and HDPE plastics, while developing technology and end markets for his steady supply of other plastic resins.

"But I soon learned all the complexities of plastics recycling," he says. "You'd better make the numbers work or you're finished."

With prices strong and climbing for HDPE and PET in 1994, Sullivan felt confident enough to spend time and money pulling out vitamin bottles and butter and yogurt containers, which he'd grind and supply to plastic lumber manufacturers. Toys, 5-gallon buckets and nursery pots also were ground for lumber.

"We just pulled all the materials we could sell, and then sorted and grinded the rest," he says. "If we did not pull it out to experiment with, it would all end up in the garbage anyway."

Less marketable plastics went to extrusion and injection-molders to create sellable products. While only a few products resulted, mostly in the landscaping and automotive industries, Sullivan found enough buyers, which encouraged him to seek out plastic sources in addition to King Sooper.

Sullivan requested dairy and vitamin companies to send their rejected dairy tubs and bottles to him instead of to the landfill. In its most profitable year in 1997, CPR took in 5,000 to 6,000 pounds of butter tubs and yogurt containers each month. During the same period, CPR received an additional 40,000 pounds of grocery, newspaper, sandwich and bread bags; 40,000 pounds of stretch film; 100,000 pounds of PE bottles and 60,000 to 70,000 pounds of PET. Vitamin bottle counts were as high as 20,000 pounds a month.

"We accepted all of that for years, supplying it to manufacturers of lumber, landscape timber and car stops," he says. "The bottom line is that you could do something with all of it then, and at times, prices for plastic were high enough to make the whole thing affordable."

The Saving Grace When recycled plastics markets took a turn for the worse in 1998, Sullivan was forced to close his recycling operations and reinvent himself. Now this maverick is opening a new enterprise, switching roles from recycler to manufacturer.

"This time we're going to approach it from the other end," he says. "I'm going to try to set up a manufacturing operation and then find the plastic I need, rather than just having a sorting facility."

From the beginning Sullivan wanted to expand into manufacturing. Recently, he bought an extruder through a grant from the Colorado Office of Energy and Conservation's Recycling Development Incubator program, Denver. The program's goal is to help recyclers develop end-markets for secondary materials.

Instead of manufacturing gutter splash boxes, car shields and lumber as a portion of his business, manufacturing is Sullivan's sole focus.

"I have the space and the equipment to do it," he says, adding that he also has potential markets in mind. He has pared down his staff and plans to sell some of his equipment - the conveyor, sorting equipment and some plastic balers. The grinders and extruder will stay.

There still is at least one unanswered question: How much revenue will Sullivan be able to produce in his new venture? Right now, it's really experimental, he says.

In Retrospect Although his eyes look toward the future, Sullivan can't help but analyze the reasons behind his failed operation.

"There's just no economic incentive to recycle," he says, noting that the price to landfill material in Colorado is minimal, generally a third of what it costs east of the Mississippi. Plastics are inexpensive to manufacture, prices are down and "the most effective way to make money is to squish the material down, put it in a hole in the ground and run over it with a bulldozer," he says.

Sullivan points out that his facility was an anomaly, and that material recovery facilities that accept a variety of materials will be better equipped for survival, even though most also are pinched from low plastics and recycled fiber prices.

Things don't seem to be improving either. Rumors began circulating late last year that recyclers facing falling old corrugated cardboard prices were pondering at what point they would landfill the material instead of processing it. And overproduction, a lack of exports and virgin resin dumping in the United States following Asia's economic woes still may plague plastics prices.

Some processors and end-users, however, are anticipating a slight price uptick for HDPE in late spring, when the pipe industry begins its seasonal buying.

But for some, like CPR, a market rebound didn't happen soon enough.

"I made a living recycling, raising a family and never missing a meal," Sullivan says. "It's hard for me to imagine doing anything else."

Stay in the Know - Subscribe to Our Newsletters
Join a network of more than 90,000 waste and recycling industry professionals. Get the latest news and insights straight to your inbox. Free.

You May Also Like