Advanced Environmental Recycling Technologies Inc. is joining the cluster of wood-plastic composite extruders who are parlaying their deck manufacturing expertise into a new line of fence product.
Springdale, Ark.-based AERT will launch its composite fence officially at the International Builders' Show in Orlando in February.
Meanwhile, company officials again are readying a third extrusion facility for commercial production after some initial equipment failure delayed the plant's opening until December.
AERT will use its existing lines and facilities to extrude the new fence board, said Bob Thayer, the company's chief financial officer, in a Nov. 16 telephone interview.
``We could run the fencing on any of our lines,'' he said. ``We try to make all of our lines capable of running all of our products, and with very few exceptions, that is the case.''
AERT officials expect the fencing line to provide new growth channels for the company.
``We're very excited about this program,'' Thayer said. ``We're going to roll it out slowly, and in very select markets, and see how it's received.''
The company has invested about $16 million in automation and machinery upgrades in 2006, said AERT Chief Executive Officer Joe Brooks, in the company's third-quarter conference call Nov. 15.
The composite deck and railing extruder's newest plant is its second in Springdale. It's about 70,000 square feet, Thayer said. AERT's third extrusion plant is in Junction, Texas. The company also operates recycling facilities in Lowell, Ark., and Alexandria, La.
AERT manufactures ChoiceDek composite decking for Tacoma, Wash.-based Weyerhaeuser Co. ChoiceDek is sold in Lowe's retail stores. Additionally, AERT makes composite building products under its own brand, MoistureShield. Thayer said the new fence line is likely to be a MoistureShield product as well. The firm also makes window and door components, and exterior trim and fascia from wood-plastic composites.
A relationship with Bentonville, Ark.-based Wal-Mart Stores Inc. provides AERT with a steady stream of discarded packaging material and post-consumer shopping bags. AERT uses virtually 100 percent recycled material - both polyethylene and wood - in its products, using virgin resin only if not enough recycled material is available to meet demand.
In the conference call, Brooks told investors that AERT will venture into other sources for recycled materials in an effort to reduce costs.
That means, Thayer said, that the company will turn to more post-consumer materials as PE market prices calls for it.
``There's a price point at which it's economical to spend more capital to use less-pristine sources of plastic,'' he said. ``Over the long term, we're going to go under the assumption that [PE] prices will rise, and we need to position ourselves to dig deeper into the waste stream.''
AERT reported sales of $20.8 million for the third quarter, a 10 percent decline from the third quarter of 2005. The loss was $305,595.
Brooks cited market conditions and the delayed launch of its third extrusion plant as the primary reasons.
Sales through the first three quarters of 2006 were $76.6 million, a nearly 20 percent increase over the first three quarters last year.