RICHMOND, CALIF. (May 20, 9:30 a.m. EDT) — MBA Polymers Inc., a small company with ambitious plans, has survived adversity and is plunging ahead with its highly regarded recycling technology.
The Richmond firm has invested about $24 million for research and development, equipment and demonstrations since its founding in 1994.
Now MBA is faced with stress-inducing high energy rates, depressed resin prices and several matters of old business related to a fire and explosion nearly 19 months ago, which killed forklift operator Jeremiah Spritz, 26. He died of smoke inhalation.
The explosion hobbled MBA's durable-goods recycling operations.
But Mike Biddle, president and chief executive officer, remains optimistic and thinks the firm's concepts have a promising future.
“We are a source-driven company,” he said, adding that domestic sources currently are excellent and MBA is developing business in Japan, elsewhere in Asia and also in Europe.
“The fire slowed us down tremendously,” but MBA went through a fail-or-survive period and emerged stronger, said Richard McCombs, chief financial officer and chief operating officer. “We have improved the process and throughputs and applications with [original equipment manufacturers].”
The learning curve continues. It is “unrealistic to think you are going to have all the answers,” McCombs said during a joint telephone interview with Biddle.
The business interruption allowed MBA to improve efficiency. MBA upgraded material conveying mechanisms for more synchronous operation with the plant's three size-reduction processes.
“We had excess [grinding] capacity and could not feed it fast enough,” McCombs said. Debottlenecking created what he described as a threefold improvement in output.
Now MBA employs 39 on one shift, compared with the 99 that worked three shifts before the fire. Production volume remains the same.
Recovery milestones during 2001 included restoring electrical service in February, completing the roof in May and resuming production in July.
MBA's equipment has an annual capacity to recycle about 12 million pounds, but some production volume is lost during material qualification runs and research and development projects. All operations share time on the same equipment.
With steady production on more than one shift, annual MBA capacity with current equipment could exceed 25 million pounds, Biddle said.
MBA was quick to address community issues in the wake of the fire and has maintained its image as a company embarked on an environmentally important mission.
Some matters remain unfinished:
* A standard criminal review of the factory fatality by the special operations division of the Contra Costa County district attorney's office in Martinez, according to Lon Wixson, deputy district attorney. Such a review occurs in almost any industrial death, Wixson said.
* The state Occupational Safety and Health Administration's pending 11 serious citations and eight-item general citation, which were issued in April 2001 and appealed by MBA. These remain on hold for consideration after conclusion of the district attorney's probe. OSHA's bureau of investigations typically refers these matters to the district attorney.
* A broad-based, class-action suit on behalf of smoke-impacted neighbors and others is to be settled June 6, contingent on a Martinez court's approval. System vendor Blymyer Engineers Inc. of Alameda, Calif., and MBA Polymers are among the corporate and individual defendants.
Separately, Spritz's mother, Christine Clark, sued Blymyer for allegedly causing a wrongful death and, in January, reached a $925,000 settlement, according to records in an Oakland, Calif., court. The suit said MBA had retained Blymyer to design the recycling line where the fire occurred. The family chose not to blame or sue MBA.
In the third case, insurance company lawyers for MBA's landlord, a partnership known as 750 National Court Associates, sued Blymyer in the Martinez court. The class action was settled under confidential terms.
California's workers' compensation law precludes an employee from suing the person's employer. That led to Blymyer being the key defendant.
In 1994, Biddle and Trip Allen, now chief technology officer, formed MBA Polymers in Berkeley, Calif., to research recycling techniques. Friends and family, grants and research projects provided funding.
The firm moved to Richmond in 1996, started commercialization in early 2000 and expanded twice in its present leased quarters. The lease expires in March 2003.
“We are looking at options,” Biddle said. While California business and energy costs are problems, “we will always have a presence here,” possibly limited to research and development and pilot facilities.
Economic sense
The company will go where it makes economic sense, Biddle said. “We have lots of people who would like to have our operations near them. [It is] not a local sourcing thing.”
MBA is prepared for a move. The Denver-based mining and metals group of Bechtel Group Inc. has designed MBA's next plant for eventual siting in whatever geographic location is selected. “It's ready to go,” Biddle said.
A recent MBA influence, global contract manufacturer Flextronics International Ltd., made an equity investment in the recycler in August.
“We are helping MBA to market their product to Flextronics customers,” Jim Sacherman, Flextronics chief marketing officer, said by telephone from San Jose, Calif. “Also, we are working with them to get [an MBA] facility operating at one of our industrial parks.” The parks are located in Guadalajara, Mexico; Doumen, China; and Sarvar, Hungary.
Flextronics customers are asking for recycled content, and “Flextronics feels it wants to answer that request,” Sacherman said. “Part of that solution is through MBA Polymers.” Both Flextronics and MBA focus on business products.
MBA solicited its first round of outside funding beginning in October 1999, and is now embarked on its third round.
One-half of the initial funding came from more than 50 entrepreneurial investors, many with connections to a Silicon Valley investor group known as the Band of Angels. Private investment firm American Industrial Partners of San Francisco invested $3 million, providing the other half in 1999.
“We are still the largest investment made by the band and the smallest by the AIP,” Biddle said.
The impact of the October 2000 shutdown on commercial sources of pre-shredded material worried Biddle. “We had to win them back,” he said.
MBA succeeded with its largest customers — two in North America and one in Japan — and some smaller sources.
Meanwhile, weak resin pricing makes it tough to ramp up production, and high energy costs are hurting the company.
During the noon to 6 p.m. peak-demand period May 1, MBA was penalized $11,000 for using one kilowatt per hour beyond that day's earlier peak usage.
“The prices are outrageous” and make it “difficult to run an extrusion line,” McCombs said.
But Biddle believes “the stars are becoming aligned for this industry to take off.” Legislative and shareholder pressures are pushing durable goods firms like computer manufacturers to use recycled plastics.
For example, a resolution at Hewlett-Packard Co.'s recent annual meeting asked HP to bolster its computer take-back and recycling programs.
The resolution received support of 8 percent, or 92.5 million shares, of those shares voted April 26.
There is the push to keep plastics out of landfills or from going overseas and the pull to see recycled materials in products, Biddle said. “Automotive has been interested, and electronics is becoming interested.”
