Three years after its formation, RW Plastics SA de CV of Toluca, Mexico, claims to have become the country's biggest recycler of post-consumer and post-industrial low density polyethylene.
According to Managing Director Bernardo Lew Gerson, the company supplies 40-60 percent of the national market's requirements for those resins. It also exports to Central and South America, and Europe as well.
RW is also a major producer of resins made from all types of recycled polypropylene and high density PE, purchasing raw material from Mexico's farmers and landfill sites.
The company's customers typically make trash bags and irrigation tubing for the likes of banana growers, cotton farmers and viticulturists.
Lew Gerson, 39, and his partners, Jose Manuel Fernandez, and brothers Emilio and Gabriel Sidauy, expect the company's growth to come more from recycled PP resins than from PE.
``We are focusing our business on growth in PP and our ambition is to get into the automotive industry,'' said Lew Gerson. ``We hope to be supplying Tier-2 and Tier-3 suppliers within a year.''
RW, which employs 150 directly and dozens more indirectly at landfill sites, is also open to the possibility of forming joint ventures with companies in the United States, Lew Gerson said.
Since its inception, the company has invested $15.6 million in German-made machinery and equipment. RW can wash and repelletize as much as 58 million pounds of recycled material per year.
Initially the four partners had problems with the equipment they bought in Germany because, according to operations director Sergio Beutelspacher, the raw material the company purchases is not separated.
``The machinery we bought works well with separated rubbish but there is no rubbish separation here in Mexico,'' he said. ``We had to make adjustments.''
As a result, since November, production has increased from 1.2 million pounds to 2.1 million pounds per month, and Beutelspacher expects that figure to reach 3.6 million pounds soon.
``There is no other factory like this in Mexico or in Central and South America,'' he added. ``Possibly there's something similar in Brazil, but I don't think so.''
According to Lew Gerson, 90 percent of the so-called recycling sector in Mexico comprises companies that collect the trash and export it to China for recycling.
``It is also an extremely fragmented industry, with many small suppliers,'' he said.
Lew Gerson and Beutelspacher said RW's competitive advantages include year-round supply volume, quality consistency and resins so clear that pigmentation can be added as required.
``Almost everyone who recycles low density PE sells it in dark colors,'' said Beutelspacher. ``Ours is so clean that we can it in sell light colors.''
RW Plastics was formed in a merger between packaging film producer ABA SA de CV and Plastic Recycling Systems SA de CV.
Initially, RW purchased much of its raw material in the United States, especially the Carolinas and California, but found importing expensive.
Fernandez had the idea of buying the used plastic, including agricultural film, from the Mexican farming sector and recycling it. ``The farmers were burying it or burning it,'' he said, pointing out that the sector uses 17 million pounds of plastic per month in one form or another.
``We are the first ones in Mexico taking this material and recycling it,'' he said. ``Most of what we buy comes from agricultural landfills.''
However, whereas Mexico's clement weather gives RW a competitive advantage in terms of consistency of raw material supplies, the company is at a disadvantage when it comes to price, according to Fernandez and Lew Gerson.
In Spain, they said, the government pays recyclers the equivalent of $7,000 for every ton recycled, or about 31 cents a pound.
``Not only do we have to pay for the material we recycle, but we don't have a subsidy. So Spanish recyclers have a great advantage over us,'' Fernandez said.
Asked whether he is optimistic about the future, he replied: ``We are in the present and we are concentrating on the present. But obviously we know that recycling is becoming more and more important by the day.''
When asked whether RW expects to make new investments in the business soon, Lew Gerson responded: ``In this business you never stop investing. We are doing very well and are anxious to expand.''