As bioresin demand grows, Cereplast Inc. is preparing to launch production in Seymour, Ind.
The Hawthorne, Calif.-based firm has installed compounding and materials-handling equipment for the new plant's first line and plans to ramp up capacity to 50 million pounds per year.
The equipment includes an Entek twin-screw extruder with ``some very specific tailoring for its use in hybrid resin production,'' said Randy Woelfel, Cereplast president and chief operating officer.
Cereplast has a 10-year lease on a 3-year-old, 105,000-square-foot building in Seymour on 12½ acres. To date, the company has committed $2.6 million to the plant for production equipment and power upgrades.
The site will employ about 15 by early 2009. General Manager Mark Barton, who is also Cereplast's senior manufacturing vice president, is one of five people currently focused on the Seymour project. Up to 63 acres are available to Cereplast in Seymour. If expanded to its full potential, the site could support a plant with annual capacity of 500 million pounds, according to the company.
While its California site is limited, Cereplast plans long-term to keep Hawthorne as its headquarters for product and application developments and pilot runs. The Hawthorne plant has an annual rated capacity of 45 million pounds.
``We will make strong progress toward that level during 2009,'' Woelfel said by telephone.
Currently Cereplast employs a total of 50 people. For the six months ended June 30, it reported a loss of $7 million on sales of $1.9 million. In 2007, it reported a loss of $11.7 million on full-year sales of $2.3 million.
Cereplast uses industrial starches from four bio-based materials — corn and tapioca being the biggest. Resin suppliers include NatureWorks LLC and its Ingeo polylactic acid, BASF AG's Ecoflex polyester, Metabolix Inc.'s Mirel line and DuPont Co.'s propanediol-based Sorona resin.
``NatureWorks is our supplier-partner, but we describe ourselves as feedstock agnostic,'' Woelfel said. ``We have looked at materials from other biopolymer suppliers.''
Downstream, Cereplast formulates specialty resins in a market where it competes with Biotec GmbH & Co. KG of Emmerich, Germany; Novamont SpA of Novara, Italy; and Plantic Technologies Ltd. of Altona, Australia.
Cereplast sells to, or is co-developing material with, WNA Inc. of Covington, Ky.; Genpak LLC of Glens Falls, N.Y.; Pittsburgh-based Alcoa Inc.'s packaging and consumer business segment; Primex Plastics Corp. unit Pace Industries Inc. in Reedsburg, Wis.; Groupe Danone unit Dannon Co. Inc. of White Plains, N.Y.; and Oxnard, Calif.-based CSI/ Cosmolab.
Under a new two-year contract, Cereplast will supply a total of 2 million pounds of Compostables-brand resin to Canguru Embalagens SA of Pelotas, Brazil, and a Brazil-based subsidiary of an undisclosed global agribusiness and food firm.
As an early-stage company in an early-stage industry, Cereplast is developing an evolving family of materials, Woelfel said.
Frederic Scheer founded the business in 2001 as Biocorp North America Inc. In 2005, the name was changed to Cereplast, and an orientation toward making bioplastic resins began. Scheer is Cereplast chairman and chief executive officer and, as of Dec. 31, owned 43 percent of the firm's issued shares. The stock trades over the counter.
Woelfel was named president and COO on March 18, and joined the board April 3.
Some critics have questioned whether food prices are rising as a result of growing demand for biopolymers. Woelfel commented on corn availability:
``Unfortunately, the whole interplay between a number of phenomena earlier this year got crystallized down to food vs. fuel,'' he said.
``No one pointed out that rice and wheat prices had spiked too. What's happened there?''
Woelfel said that an ``enormous supply of agricultural derivatives has nothing to do with the fuel market,'' and cited the use of industrial starch for paper production.
``We are so tiny'' in using agribusiness production, he said, that bioplastics consumption is ``a nonissue.''
Cereplast received incentives for developing in Seymour, including as much as $665,000 in tax credits from Indiana economic incentive programs, and up to $60,000 to train employees.
The company also was granted $400,000 from state and local authorities to extend a rail spur.