Claiming it was just not sufficiently profitable, Union Carbide Corp. will close its high density polyethylene recycling plant in Piscataway, N.J., Oct. 1. ``We remain very proud of the initiative, creativity and technical innovation of our process, such as color separation, and the ability to make Food and Drug Administration-compliant products,'' Kevin Lynch, vice president and general manager of Unipol Polymer Group, said in a July 17 press release. Unipol is the Carbide polyethylene business that operated the plant.
``However, we are discontinuing our operations due to less-than-acceptable earnings potential,'' Lynch said.
The plant, which opened in 1991, had capacity to recycle 50 million pounds of HDPE per year, and produced recycled HDPE resin for a variety of applications, including household-industrial chemical and personal-care packaging. In 1995, Carbide received a letter of nonobjection from the FDA for use of its recycled resins in multilayer food containers. It was one of the few recycled HDPE resins approved for such use.
Lou Agnello, marketing communications director for Carbide, said the shutdown did not reflect conditions in the market for recycled HDPE in general.
``Demand continues to grow [for recycled HDPE], although not as quickly as it once did, and the supplies of feedstock are adequate,'' Agnello said by telephone. ``There are some out there that are doing alright. It is just that this operation was not performing up to our expectations.''
About 50 workers will be layed off, and Agnello said the company will offer outplacement services to those not reassigned elsewhere in the Carbide system. The machinery at the facility will be dismantled and sold, as will the building itself, he said.
The closing is an example of how the commodity plastics community apparently perceives that the ``bloom is off the rose'' for finding new reasons to promote recycling, according to one East Coast recycling authority.
Many of the large North American recycling operations were organized quickly in the early 1990s to dilute or forestall any effort at the state level to legislate ``manufacturer's responsibility'' of the type that was legislated in Germany.
The only U.S. state law that has come close to that ideal is the now-defunct 1993 ``advance de-posit fee'' law in Florida, which, before it was spiked in 1995 by the state's legislature, added two pennies to a consumer's cost of a rigid plastic container. That fee was intended to fund recycling directly, but collapsed when its early supporters found the funds were used for a variety of other purposes in the state's general fund. In 1994, the fee only collected half the $110 million its supporters claimed it would.
Carbide's move leaves Phillips Petroleum Co. as the only major virgin HDPE producer in North America with significant in-house recycling capabilities. Phillips Plastics Recycling Co. operates a 50 million-pound-per-year recycling plant in Tulsa, Okla.
``It's a tough business,'' Bill Bridendorf, manager of the Tulsa plant, said in a telephone interview. ``Demand for the product is definitely growing, but margins are small. Carbide's announcement leaves us as the only major producer still recycling.''
Last year, Quantum Chemical Co. shut down its Heath, Ohio, recycling plant and put it up for sale.
Late last year Envirothene Inc., a large Chino, Calif., HDPE recycler, sold its assets to Ecosource Corp. of Los Angeles. Officials of Envirothene linked its difficulties to a drastic drop in prices for recycled HDPE that occurred late in 1995.
Arthur Ferguson, president of KW Plastics, a major HDPE recycler in Troy, Ala., agreed with Agnello's view about the recycling market.
``Business has been alright,'' he said. ``There is no doubt that the falling prices have had an adverse effect on the margins that some recyclers have, but the market is continuing to grow.
``We have seen an upturn in prices for our products in recent weeks,'' he said. ``But frankly, we have gone to our suppliers and worked very hard to make sure that they understand that raising the price of their feedstock to high levels, such as the near virgin levels we saw, only cuts the margins processors like ourselves have with which to work.
``The end-users also are affected, and we have worked with them to keep everyone as competitive as possible. As a big resin maker, Union Carbide may have just gotten to the point where that was not possible.''
``In itself, it's just another indication of the situation that the recycling industry is in,'' said Bruce Fortin, vice president for business development for Enviro-Plastics Corp. of Auburn, Mass.
The Union Carbide operation, which opened ``about the same time as ours did,'' operated at a high overhead and featured no manufactured products made with its processed HDPE.
``The only way someone in our position can survive is to have low overhead and a vertical product [to] sell,'' Fortin said.
In EnviroPlastics' case, the vertical product is fencing, which can serve as a replacement for chain-link fence.
Fortin's company uses about 1.5 million pounds of baled HDPE a month in its operation.
Fortin, an active member of the Association of Post-Consumer Plastics Recyclers of Shrewsbury, N.J., said recyclers ``have no ability to control the price of the product'' because the ``price of recycled resin is dictated by that of wide-spec virgin.''