FCR Inc. purchased Resource Recycling Inc., a post-consumer and post-industrial plastic recycler, Sept. 2 as part of its trek toward vertical integration.
Terms were not disclosed.
RRI runs three North Carolina plants: its Reidsville headquarters and plants in Rockingham and Hamlet. These will operate as FCR Plastics, a wholly owned subsidiary of FCR. With a total of 150,000 square feet and 75 employees, the plants have a processing capacity of 50 million pounds per year, 80 percent of which is post-consumer plastic.
FCR claims to be the nation's largest independent operator of materials recovery facilities, owning 11 plants in the eastern United States. The Charlotte, N.C., company collects plastic, newspaper, aluminum, steel and glass. In a commodity-driven marketplace, earnings tend to be volatile, said Paul Garrett, FCR chief executive officer.
``We needed to find a way to stabilize earnings and to grow outside of being a MRF operator,'' he added. ``We decided to vertically integrate from our pool of raw materials.''
After acquiring a cellulose insulation company to take care of the paper collection, the firm decided to take the first, small step in vertically integrating its plastic materials, Garrett said. RRI had purchased FCR's baled plastic on a limited basis, then ground, washed and repelletized it. The firm then sold the pellets to blow molders and injection molders in the packaging, lawn and garden and bottling markets.
``Resource Recycling's biggest business problem was its inability to get consistent supplies of baled high density polyethylene bottles,'' Garrett added. ``This will be a good marriage. They have a good customer base to sell pellets to. We have incoming quality; their outgoing product is strong. We just have to work on production — increasing quality and consistency.''
FCR plans to process about 60 million pounds of plastic in 1998 through its MRFs and will use that material as feedstock for RRI's facilities. In addition, FCR expects to integrate many of its MRFs into the post-industrial business. RRI's post-industrial operations are well below capacity, Garrett added.
``Our initial focus [on post-industrial plastic] will be on growing the business and volume reduction from the scrap market to other users who process it,'' he said. ``A substantial volume will not be pelletized, although we'll do some.''
FCR plans to bolster operation management and retain most of the employees. Additionally, FCR will add a fourth extrusion line.
``Our plans now are to digest [the acquisition] and get our feet on the ground in the recycling marketplace,'' Garrett said. ``We will continue our vertical integration pattern. Ultimately we plan to acquire a company or companies to utilize the pellets we make.''