|Focus Summer 2007|
The world is turning ‘green’, with frequent media attention to environmentally-conscious business practices and the impact of non-recyclables. The plastics processing industry, however, is seeing another form of ‘green’ as a result of materials recycling – currency. Whether scrap materials are sold to a recycler or processed in-house for reuse, or recycled material is purchased for use as base material, plastics processors are seeing scrap as an asset and cutting internal costs as a result.
Plastics recycling is a multi-million dollar industry that is seeing changes as its customers’ industries change. Plastics Business magazine consulted with plastics recycling veterans Terrence Bradshaw, Butler MacDonald, and Dennis Boyer and Rick Smith, Alternative Plastics, to discover the trends, technologies, and challenges that are affecting the industry.
1) How has the recycling industry changed in the last five to ten years?
“In the early days, you could back a truck up to a plant and they were happy to give their scrap to you. The hardest thing was selling people on re-using. Now it’s a competitive business.” – Dennis Boyer
Over the last five to ten years, the demand for recycling services has increased, with recyclers paying high dollar for scrap materials. Recycled materials are a useful commodity, cutting costs for recyclers who no longer need to use 100 percent virgin material in their products. In fact, where a decade ago processors were reluctant to use recycled materials, there are now manufacturers that have built their business and designed products specifically to use recycled scrap. As a result of the increased demand, recyclers can no longer ‘cherry pick’ the scrap that is easily recyclable and then reject the scrap that would require additional processing.
Other changes over the past decade include the consolidation of some of the bigger players in the industry, and the need for large-scale, advanced solutions as environmental regulations are strengthened. These changes, rather than weakening the recycling industry, are strengthening the abilities and offerings of those that have adjusted to the shifting landscape.
2) What trends do you see for the future that will impact plastics recyclers?
“High raw material costs for the foreseeable future, global competition, and landfill avoidance issues will motivate creative plastics processors to partner with able, advanced plastic recyclers.” – Terrence Bradshaw
The high cost for virgin material is leading plastics processors to join the recycling wave, but some are looking to keep the process in-house, rather than partnering with outside recyclers. Large producers of scrap, particularly in the automotive industry, are learning to use more of their own scrap internally, as well as purchasing equipment that will allow them to do more of the recycling in-house. This means that recyclers are getting less of the high end recyclable material from these companies, reducing the amount of high quality recycled material for sale. As a result, more applications are being developed for lower-end recycled materials (i.e. construction uses).
Not all recycling can be done internally, however. It’s been estimated that there are more than 1,400 different types of plastics and many of those can’t be mixed. There also is a cost barrier to purchasing the equipment for in-house recycling that, when added to the additional labor costs, can make partnering with an outside firm an attractive option. Experienced recyclers can test materials for contamination, melt indexes, density, clarity, and impact strength – tests that may be cost-prohibitive for a company that chooses to recycle in-house.
Emerging regulations also will have a significant impact on the industry. Current laws require that no more than 15 percent recycled material can be used in medical applications. As ‘green’ initiatives gain a foothold in the U.S. (Europe already has started to introduce green mandates for production requirements), additional regulations for recycled plastics can be expected, requiring adjustments by plastics recyclers and plastics processors alike.
3) Has new technology had an impact in plastics recycling?
“Evolutionary development has been more the case than revolutionary breakthrough with respect to recycling technology. The real excitement is in the application of technology in unique ways, enabling customized solutions not previously thought possible.” – Terrence Bradshaw
Processing lower end scrap requires more equipment, sorting, and processing for the recycler. Product must be sorted by color and material size, among many other factors. Metal, wood, cardboard, and paper must all be extracted from the scrap to get usable material. The plastics recycling industry has responded by ‘borrowing’ technology from other industries and applying it to the recycling process. Up until recently, there hadn’t been an off-the-shelf product to deal with impurities in the material.
4) Is the flow of plastics processing to overseas markets affecting the recycling industry?
“More consumer products are being sent overseas, but for actual manufacturing, I don’t think it’s impacting as much as is indicated, or as much as your gut would tell you.” – Rick Smith
The globalization of plastics processing has had an effect on the plastics recycling business, but both of the companies consulted for this article agree that it’s hard to quantify. Recyclers closely tied to certain industries, such as automotive, have had challenges as those industries have made significant changes, and obviously the recycling industry has been impacted by the number of smaller molders that have gone out of business as a result of overseas competition. However, the consensus is that opportunities are still available and that the overall amount of plastic being processed in this country hasn’t gone down, but instead has shifted as the larger companies have realized that having parts manufactured overseas doesn’t fit with their ‘just in time’ needs.
Interestingly, the processing of smaller plastic parts isn’t the only thing being outsourced to China these days. Some recyclers are sending containers to China each month – up to 10-15 percent of its annual sales for Alternative Plastics – for recycling. The scrap sent overseas is often the lowest grade, which requires intensive labor and processing before it is suitable to reuse.
5) Are there other barriers to recycling/using recycled materials? How can those barriers be addressed?
“Transportation is a cost barrier.” – Dennis Boyer
Plastics recycling is not exempt from the pinch felt by those who are required to transport material. Whether moving scrap across the city, state, or country, transportation costs are driving up prices and driving down profit. Recyclers are opening additional plants to keep scrap closer to home and contain freight and fuel charges. The alternative is to give up accounts that are not located close to the recycling facility.
Another barrier to cost-effective recycling of plastics is the addition of coatings, fire retardants, and other additives to products such as consumer electronics. Any additive requires more effort, and more equipment, in the recycling process, although this challenge is being effectively addressed by a few advanced recyclers.
Plastics Business magazine would like to thank Rick Smith, president of Alternative Plastics; Dennis Boyer, vice president of Alternative Plastics; and Terrence Bradshaw, vice president for Butler MacDonald for their assistance with this article.
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