Composite building materials maker AERT will more than double plastics recycling capacity when its $13 million plant in Watts, Okla., starts operating 24/7 in the next few weeks.
The new plant will give Advanced Environmental Recycling Technologies Inc. the ability to produce in-house nearly all of the recycled polyethylene it needs for its composite decking. The firm also plans to add storage and other blending and reformulating equipment so it can sell recycled resins to other manufacturers.
The 70,000-square-foot Watts plant which has done mostly environmental testing and verification since its initial run in late February will give AERT more control over costs, said President Tim Morrison. Compared with AERT's plant in Lowell, Ark., the Watts plant will have lower costs for labor and electricity and higher yields from reprocessed scrap and the ability to use lower-priced, more highly contaminated plastic films. Morrison said the plant will provide a more consistent feedstock for AERT's decking.
The Watts plant will help us secure prices going forward, and it will be a hedge against rising oil prices, Morrison said. There could be a 20-30 percent savings in feedstock costs for us.
AERT closed a recycling plant at its Springdale, Ark., headquarters site in November, and its remaining plant, in Lowell, uses a labor-intensive hand-sorting process. The Watts plant uses a wet recycling process AERT would not identify the manufacturer that is more effective in taking out metal, oil and paper contaminants.
The Watts plant is much, much, more automated, Morrison said, and labor there will cost one-third to one-half of that at the Lowell site.
When the new plant reaches full capacity, it will employ 45.
The wet recycling process will increase the yields of the existing feedstock that we process and improve our access to other feedstocks those from material resource facilities and post-industrial and post-agricultural materials contaminated with oil and grease, he said.
In a Jan. 11 letter to shareholders, Chairman and CEO Joseph Brooks said the new plant will help to insulate and hedge AERT against rising petrochemical costs by utilizing lower-end mixed polyethylene plastics in combination with AERT plastic reformulation technologies.
He cited, as an example, the mixed plastic and paper waste by-product of paper recycling operations. This by-product has been recycled in large quantities by AERT for several years, which has included separating a portion of the [low density] PE plastic for use and landfilling the unusable material at a considerable expense, Brooks said. The Watts facility will recover all of the plastic, increasing our yield while also cleaning the paper to make it available for resale to other manufacturers.
AERT also expects to realize cost savings because the plant was designed to meet standards set by the U.S. Green Building Council for Leadership in Energy and Environmental Design, Morrison said. AERT is currently seeking LEED certification for the plant, Morrison said.
The Watts plant has been designed in a much more environmentally friendly way, he said, with lights that turn off when no one is in an area, waterless urinals and a system to collect rainwater so it can be reused. In addition, he said the building's design precluded a need for heating and air-conditioning systems. Trucks will be loaded for shipping in an enclosed area so we don't lose any materials, Morrison said.
The PE recycled at the plant during its first year of operation will result in a savings of more than 2.1 trillion Btu, or the equivalent of the gasoline consumed in more than 23,000 passenger vehicles, he said.
The plant can accommodate two more recycling lines, Morrison said. Obviously, as we develop the market for recycled resin, we will add lines, he said. A second line likely will not be needed for another year, he noted.
AERT expects to recoup its investment in the plant in three to four years or less, depending on volumes achieved and raw material prices, Morrison said. But he is optimistic about the development of the recycling market, as well as growth in decking.
We are seeing things going well in decking, Morrison said. Most people have taken their inventories to a minimum in 2009, and they are starting to rebuild them again. We are going to see a good year because of that, and because the consumer sentiment is much stronger. They are tired of waiting on the economy to fix up their homes.
AERT expects to reverse its financial losses of the past three years with the help of the Watts facility, and through internal restructuring, an expanded distribution network, lower raw material costs, increased resin sales and an improving economy.
In the first nine months of 2009, AERT narrowed its losses to $4.4 million compared with $11.1 million in the 2008 period. It did so even though sales were down 20.9 percent to $57.8 million, compared with $73.1 million in the first nine months of 2008. In full-year results for 2008, AERT reported a loss of $35.9 million on sales of $87.4 million; in 2007, it had a loss of $9.5 million on sales of $84.2 million.
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