Amcor PET Packaging is closing its pioneering recycling facility in Novi, Mich., a possible sign of deep trouble for PET recyclers in North America.
The bottle blow molder already has shut down the wash line at the 48,000-square-foot plant, and will close the extrusion line in four to six weeks, said Floyd Flexon, global vice president for environmental affairs with Amcor PET, based in Manchester, Mich. The shutdown will idle 48 workers, he said.
Rising prices and tight supplies of recycled PET bottles forced the move, Flexon said. Chinese buyers have bid up prices dramatically, making it difficult to compete.
``Unless you have state-of-the-art equipment and significant volume, [recycling] doesn't make as much sense,'' Flexon said. ``The kind of economics we have with Asian exports in the PET bottle market makes it difficult to go forward in an aggressive way.''
According to Waste News, a sister publication of Plastics News, the price that recyclers pay for baled PET bottles in the Midwest has risen from about 7 cents per pound in March 2003 to 17 cents per pound today.
The Novi plant reprocessed about 30 million pounds of PET annually, Flexon said.
The plant had supplied Amcor PET with clean material to use in new bottles. Now the company will buy recycled PET from Clean Tech Inc. of Dundee, Mich., a recycler owned by rival bottle producer Plastipak Packaging Inc. of Plymouth, Mich. Amcor PET also will buy reprocessed PET from other sources, Flexon said.
Clean Tech is considering buying some assets in Novi, but has not decided which equipment to purchase, Flexon said June 17. Clean Tech President Tom Busard did not return a telephone call seeking comment.
The Novi plant closing portends further problems for PET bottle producers, said Robin Cotchan, executive director of the Association of Postconsumer Plastic Recyclers in Arlington, Va. With supplies dwindling and Asian producers buying more PET from curbside sources, recyclers are having to bid higher for post-consumer baled bottles.
That makes recycling less cost-effective, Cotchan said.
``The companies are in real trouble because they can't get enough material to supply high-end markets. Amcor is just the first one going out,'' Cotchan said. ``Quite possibly, there'll be many more to go under in the next six months.''
Flexon estimated that close to 15 U.S.-based companies process recycled PET.
The Novi plant has a long history in bottle recycling, opening in 1990 as part of Johnson Controls Inc.'s Plastic Container Division. That facility was sold in 1996 to Schmalbach-Lubeca AG/Continental Can Europe. Amcor Ltd. of Melbourne, Australia, bought Schmalbach's plastic operations, including the Novi plant, in 2002.
The facility was one of the first to develop bottle-to-bottle recycling technology, a breakthrough that cut recycling costs dramatically by not having to break down a bottle chemically to its raw materials or use the materials only in multilayer bottles, Flexon said. JCI received a nonobjection letter from the Food and Drug Administration in 1994.
However, with older equipment and PET in shorter supply, Schmalbach considered closing the plant five years ago, Flexon said. The facility is landlocked, with no room for expansion, and needed a sizable investment in equipment, he said.
``Really, it's amazing that the plant stayed open this long,'' Flexon said. ``If not for Coca-Cola [Co.] and PepsiCo [Inc.], we wouldn't have kept it this long.''
The soft drink giants have a goal of producing bottles in North America with 10 percent recycled content by 2005. Recycling groups have estimated that the directive could increase demand for recycled PET by 200 million pounds.
Europe has provided more fertile ground for recycling. Amcor has a PET recycling facility in Beaune, France, that it expanded in 2003. That facility, spurred forward by stricter environmental legislation in Europe, can reprocess some 600 million bottles annually.
In another European move, Plastipak plans to open a PET recycling facility in Kechnec, Slovakia, late this year that will be run by its Clean Tech recycling subsidiary.