At least two of the best-known names in plastics recycling are for sale. Do they know something we don't? Resource Plastics Inc. in Brantford, Ontario, announced Sept. 29 that it was on the block. The company, a pioneer in recycling PE films, claims to be in the black, but suffers from a historically high debt load.
Quantum Chemical Co. has been shopping its polyethylene recycling plant in Heath, Ohio, all summer, but has not found any takers. The plant has never made money, company officials said in May.
What sort of company would be interested in these operations? Probably not a large resin supplier. Quantum, the leading U.S. manufacturer of virgin PE, must know a thing or two about markets, customers and technology for recycled PE. But large resin suppliers, with their hefty corporate overhead, will have a tough time staying competitive with small entrepreneurial recyclers.
A more likely scenario would involve a significant user of post-consumer plastics purchasing one of the plants - a manufacturer of trash bags, detergent bottles or T-shirt sacks, for example.
Many processors in those markets have captive recycling operations, and others might want to investigate the advantages of controlling the cost, quality and volume of their recycled PE.
Also, keep an eye out for consolidation among PE recyclers. PET recycling already has coalesced into a handful of major players who leverage their size to manage supplies of their feedstock: post-consumer baled bottles.
Quantum and Resource Plastics apparently won't participate in this next phase in the growth of the plastics recycling industry. Are there any takers?
All eyes on Tenneco
Tenneco Inc. just placed a $1.27 billion bet on the future of plastics processing.
The Houston-based conglomerate plans to pay that hefty sum for Mobil Chemical Co.'s Plastics Division, maker of such well-known brands as Hefty and Baggies. The unit will fold into Tenneco's Packaging Corp. of America unit.
PCA will become a major player in a lot of niche markets where Mobil was an 800-pound gorilla, including trash bags, thermoformed meat trays, grocery bags and stretch film.
Mobil has been an innovator in many of its product lines, but the corporate restructuring by its parent firm has been a shadow on the division for more than a year. A lot of Mobil's smaller competitors, many of them independent, privately held firms, will keep an eye on PCA to see how it will handle the new businesses.
What should they expect? Tenneco obviously has high expectations for growth in the markets for disposable plastic foodservice and packaging products. PCA already has solid positions in paper and aluminum alternatives, so it will be interesting to see if the company takes advantage of its newfound customer synergies, or alternatively whether competition within PCA will cannibalize company profits.