Plastic flake supply doesn’t meet demand
by Irwin Rapoport

Peninsula Packaging, LLC uses the equivalent of 1.2 billion plastic bottles annually in its production of plastic packaging at its plants in Exeter, California and Raleigh, North Carolina.

The firm, based in Exeter, uses #1 plastic exclusively and is a major purchaser of flake on the west coast.

Nearly 50 percent of the material used to make plastic is flake and the company is seeking to increase that percentage.

“Why are we not 100 percent?” asked Ed Byrne, Peninsula’s general manager. “It is because the infrastructure doesn’t exist to clean bottles and get the feedstock to us. This year we will buy a little over 40 million pounds of recycled materials.”

Lower prices for plastic recyclables have not translated into an increased supply of flake for industry.

“There is still a limited availability,” said Byrne, who is disappointed that the washing capacity has not expanded to ensure that the increased amount of materials can be washed to remove labels and grime and be turned into flake for a guaranteed industrial demand. “Baled bottles sit around and are stacked up everywhere.”

Asked why the washing infrastructure has not expanded, Byrne gave his take on the situation in California.

“There are huge political forces that have prevented the building of more capacity,” he said. “There is money within the state to enhance recycling that comes from the bottle deposit system. Not all that money gets refunded and that money is supposed to be used for the enhancement of recycling.

“What has happened is that the Department of Conservation [DOC] has awarded a number of contracts to people to put in washing lines and then they don’t do it,” he added. “So for us who think about putting in a wash line on our own, there is just no way you can do that with the concern that you are going to compete with someone next year that is a state-funded facility. The good intentions of the DOC towards these grants have served the purpose of preventing additional wash lines in the state.”

Byrne estimates that a wash facility costs between $15 and $20 million to build, and as such, has tried to do his part to increase flake supply.

“We have invested money and loaned money to people who make flake,” he said.

But Byrne does appreciate California’s role in promoting the use of flake, especially the incentive program that pays manufacturers that produce flake and industrial users.

“It’s a tremendously successful program,” he said. “Other states do it, but California is the leader. The funds are full circle funds.”

Peninsula owns the largest privately-developed solar power generating station in California, producing more than 2 million kilowatt hours per year.

“Our original intent was to position ourselves so that we had a low cost power source over the long-haul,” said Byrne, who noted that solar also helps to reduce the effects of voltage drops that affect the California electrical grid.

Ninety percent of Peninsula’s products are manufactured in California. The North Carolina site was chosen for its proximity to customers. That plant uses 20 percent recycled flake. Byrne is hoping to increase that percentage soon.

He is also aware that, like carpet manufacturers and other users, his firm cannot get enough recycled #1 flake and would support a government required message asking consumers to recycle their plastic bottles and containers to increase the supply.

Asked who gets the limited supply of recycled flake first, Byrne replied, “whoever pays the most.”

In addition, he said, because the plastic used in the creation of plastic comes exclusively from petroleum, every bottle recycled into flake helps to reduce the amount of oil consumed in the States.

The firm also does what it can to reduce the weight of its product. “From an economic standpoint it just makes sense,” said Byrne.

The American Chemistry Council (ACC), in its 18th annual Post-Consumer Plastics Bottle Recycling Report, announced that plastic bottle recycling by consumers increased by 115 million pounds in 2007, an increase of 5.2 percent, to reach a record high of 2.3 billion pounds for the year. It was found that PET bottles collected increased by 124 million pounds; HDPE bottles collected decreased by 7.5 million pounds to 920.6 million pounds, reflecting decreases in bottle weight due to light weighting and the shift to using concentrated laundry products; and polypropylene bottle recycling totaled 17.6 million pounds.

The report also confirmed a continuing increase in the pounds of bottles collected for recycling each year since the industry survey began in 1990.

The recycling rate for plastic bottles rose slightly, but generally has remained constant, hovering at around 24 percent for the last several years.

“Plastics recycling continues to grow because people recognize that plastics are a valuable resource,” said Steve Russell, managing director for ACC’s Plastics Division.

Over the last year, ACC has partnered with the California Department of Parks and Recreation and the nonprofit Keep California Beautiful to place over 500 recycling bins at 19 locations along the California coast, and it recently expanded its partnership efforts by teaming up with the California Department of Transportation, which will start placing recycling bins at heavily-trafficked rest stops this year.

“These numbers show us that consumers are increasingly interested in recycling plastic bottles,” said Steve Alexander, executive director of Postconsumer Plastic Recyclers. “Valuable recycled plastic materials go on to become useful products, such as new bottles, carpeting, fleece jackets, and durable outdoor lumber.”

In terms of barriers to increased plastic bottle recycling, the ACC noted that too many consumers continue to be unaware of the significant usefulness, demand and value of recycled plastic HDPE and PET.

According to the ACC report, “Data and experience show that plastic bottle recycling can be increased through sustained local education campaigns. Municipalities also need to understand that they too can benefit from the high prices being paid for bales of bottles, including revenue sharing to fund educational programs and other costs of collection.

“Another barrier is lack of sufficient access to recycling collection opportunities for products used away from home,” added the report. “Consumer data continue to show that the public wants additional opportunities to be able to recycle at public venues, offices, recreational sites, schools and retail establishments. In 2007 the Association of Postconsumer Plastic Recyclers conducted workshops and webinars for municipal recycling coordinators to educate them on the existing markets for baled bottles, the strong demand for goods, quality considerations, and suggestions for householder education.”

The report also addressed the plastic bottle reclamation industry, pointing out that the number of HDPE reclaimers stayed stable in 2007 as compared to 2006 with 29 companies.

“The number of smaller companies may vary year-to-year as industrial scrap companies change their business plans and start-ups and acquisitions continue,” stated the report. “The largest companies, processing over 30 million pounds annually, processed 81 percent of the HDPE reclaimed. The amount of HDPE processed by US HDPE reclaimers rose by 19.8 million pounds to 761.5 million pounds.

“For HDPE bottle reclamation, capacity utilization, as defined, fell from 69 percent in 2005 to 66 percent in 2006 and rose back to 69 percent in 2007,” added the report, “as the calculated total washing capacity was adjusted downward slightly based on reports and the amount processed domestically rose. As in 2005 and 2006, the material supply in 2007 continued to be a major concern for both PET and HDPE reclaimers. The growth in domestic supply of baled bottles was insufficient to keep the US plastic reclaimers’ plants full. The HDPE bottle recycling industry continues, as it has since 1996, to be supply limited.”

So until more PET and HDPE finds its way into the reclamation system, companies like Peninsula may have a long time to wait before they are able to reach 100 percent recycled content in their products.