Advanced Environmental Recycling Technologies Inc. will invest $18 million to construct a production facility for its composite decking and railing.
The Springdale, Ark.-based firm announced the plans during the International Builders' Show, held Feb. 8-11 in Atlanta. The 120,000-square-foot facility, scheduled to start production in 2003, will be the firm's second in Springdale. AERT operates a third facility in Junction, Texas.
AERT received a $16.5 million infusion from the state of Arkansas to kick-start the expansion on 20 acres adjacent to its current property. The firm scored a success by forming a partnership with Lowe's Home Improvement Warehouse, AERT President Joe Brooks said.
The Wilkesboro, N.C.-based do-it-yourself store will dedicate 24 feet of shelf space in 750 Lowe's stores to AERT's ChoiceDek recycled product, said David Steed, Lowe's merchandising senior vice president. AERT produces its decking and railing systems from polyethylene and wood chips.
``We think we can really take the message to the consumer,'' Steed said Feb. 9 at the show. ``We studied a lot of different people. Our biggest challenge is to keep up with demand.''
Brooks said AERT is completing upgrades to its Springdale facility as well as building the new plant.
``We're shooting to have it all done by early 2003,'' Brooks said. ``The Texas facility is being upgraded as we speak, where it will increase production by 25 percent to 30 percent by May.''
The new plant will be equipped with four extruders.
The firm operates seven extruders between the other two facilities. Brooks did not disclose how much machinery will be added to the Texas plant or existing Springdale location, but did say that the AERT extrusion technology is based on a 10-inch model producing 9,000 pounds per hour.
The entire project will allow the company to double consumption of recycled materials and extrusion capacity, Brooks said. The company is getting a boost from the current boom in consumer demand for maintenance-free products. Its ChoiceDek product is marketed to retail centers by Weyerhaeuser Co. of Tacoma, Wash.
``You hear all this gloom and doom out there,'' he said. ``We've been doing this for several years. We build what the consumer wants and it works. There are no callbacks. They like the product and it's consistent.''
Prior to its deal with Lowe's, the firm was contractor-oriented, Brooks said, but found that strategy was catching on with consumers too slowly. Lowe's is investing $6 million to reset stores, Steed said, responding to consumer demand for maintenance-free products.
According to its Dec. 31 filing with the Securities and Exchange Commission, AERT's fourth quarter sales were up 25 percent for fourth quarter 2001 to just over $8 million compared to the same period in 2000. Full-year sales increased 20 percent overall to $34 million.