Following the lead of other major resin companies, Phillips Petroleum Co. plans to close Phillips Plastics Recycling Co. in Tulsa, Okla., within the week.
``The plastics recycling markets didn't take off as we expected them to, and we don't see them getting better any time soon,'' Phillips spokesman Rob Phillips said in a telephone interview.
``We don't have any plans right now'' to recycle in the future, he said. ``We don't see the market conditions as such that we'd change our minds.''
The 67,000-square-foot, leased facility had the capacity to recycle about 40 million pounds per year, or about 300 million high density polyethylene bottles. In the last several years the plant operated at about 70 percent of capacity, Phillips said.
The company notified employees Sept. 22 of the impending closure. A small staff will be kept to oversee the shut down. The plant's three lines, consisting of washing, grinding and repelletizing equipment, will be dismantled and sold. Bartlesville, Okla.-based Phillips is offering its 30 employees severance packages and outplacement services.
``In the early '90s there was quite a lot of interest in recycling,'' as consumers, legislators and regulators called for more recycling, he said. ``As one of the largest producers of HDPE, we thought it was a good idea to get involved in the effort.''
But recycling didn't take off as the company expected.
In fact, the market did not work out for other plastics suppliers either.
Quantum Chemical Co., Mobil Chemical Co., Union Carbide Corp. and Occidental Chemical Corp. also entered the recycling arena in 1992 with Phillips. Those companies all dropped out of recycling two years ago.
``The negative is that we absolutely want to have involvement [from Phillips] in the recycling industry,'' said Parham Yedidsion, co-owner and president of Ecoplast Corp. ``When Phillips gets out of recycling, what's that say about it?
``The positive is that an existing recycler or a newcomer can pick up the slack,'' he added. ``The material being recycled is what's important, so long as the pounds get picked up.''
KW Plastics Recycling Division hopes to pick up the lion's share.
The Troy, Ala.-based company is the largest North American plastics recycler, with sales of $112.7 million, according to Plastics News' 1998 ranking.
``They've been a great competitor with a good-quality product and I hate to see them go,'' said Arthur Ferguson, KW general manager.
KW has capacity to pick up Phillip's market share, he said.
But they're going to have some competition. Catenation Inc. of Green Bay, Wis., just completed a new, 50,000-square-foot plant with annual capacity of 70 million pounds of post-consumer HDPE and PET.
``Our products are very similar to theirs and we have the ability to absorb all their business,'' said Cantenation President Randy Tess. ``I'm looking to fill the void Phillips will be leaving.
``I'm really disappointed to see them exit the industry,'' he added. ``They are a very credible virgin manufacturer and I'm concerned what this says to the general recycling world. To take them out [of recycling] hits home as far as how economically credible we are as recyclers.''
Phillips recycled HDPE milk jugs, juice containers and detergent bottles into pellets used to make new bottles, drainage pipe, trash bins and other products.
Yedidsion speculated that recycling was not a good fit for Phillips, whose priorities lie in resin manufacturing.
Ferguson added, ``Their people decided there was more money in virgin resin and to put their money where they get the most interest. It's strictly an economic thing. If I had money to put somewhere where I got 10 percent interest and another where I got 20 percent interest, don't you think I'd be going to the 20 percent?''
Phillips reported recycling sales of $11 million last year, placing the firm 29th in Plastics News' ranking.
``It's a shame to see their involvement gone,'' Yedidsion added. ``Hopefully, they'll continue to support the industry.''