Cereplast lease almost doubles space

The firm also announced that Alcoa Inc. is using Cereplast's biodegradable resins in thermoforming sheet made at plants in Pennsylvania and Minnesota. The food and nonfood sheet products are making their commercial debut this month, Chief Executive Officer Frederic Scheer said Jan. 4 by telephone.

Scheer said the new space will be used for production and logistics. The company now can produce 50 million pounds of material annually on three commercial-scale lines and one lab-scale line. Two of the larger lines and the lab line have been installed since August.

Cereplast acquired the extra room — almost double what it had been using — by leasing space in an adjacent building. The setup provides the firm with shipping docks that can handle as many as eight delivery trucks at once.

“We're very pleased and very satisfied with the progress that we've made,” Scheer said. “Fifty million pounds [of capacity] means a lot of logistics.”

He described the bioresin sheet now being made by Alcoa as “a big accomplishment for us that verifies interest in our product, in general.”

Eight of Cereplast's resins start with corn-based polylactide resin supplied by NatureWorks LLC of Minnetonka, Minn. The other four Cereplast materials are starch-based. Two more starch-based materials will be introduced early this year, Scheer said. All the firm's products are biodegradable and can be composted.

Scheer added that his firm also expects to announce the location of a production site outside California by June. In the long term, Scheer said, most of Cereplast's production will be housed at the new site, although its headquarters, as well as research and development, will remain in California.

“California is a very expensive state for manufacturing,” he said. “And being outside of California would put us closer to our customers and closer to our raw material, which is starch.”

Scheer declined to identify states that Cereplast is scouting, but he said possibilities include sites in the Midwest.

In August, Cereplast announced that Glen Allen, Va.-based packaging firm MeadWestvaco Corp. is using Cereplast material in extrusion-coated paperboard. MeadWestvaco is supplying the paperboard to Solo Cup Co. of Highland Park, Ill., to be used in cups that can hold liquids as hot as 220° F. Cereplast stock went public in November. Its per-share price rose to near $1.50 in May but was around 50 cents in late trading Jan. 4.

The firm had expected to post sales of $1 million in 2006, but sales through the third quarter were a little less than $500,000. Nonetheless, Scheer said he is satisfied with the sales numbers.

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