The joint venture PET recycling plant that Coca-Cola Co. opened with great fanfare two years ago in Spartanburg, S.C., has stopped making food-grade recycled PET, but hopes to resume that process this summer.
Neither Coke nor United Resource Recovery Corp. LLC ever made any official announcement about the shutdown of those operations at their joint venture plant, NURRC LLC. Only after Plastics News broke the story April 18 that 50 factory workers were laid off in early March, and virtually the entire office staff was laid off two weeks ago, did Coke issue a statement to PN that operations had been curtailed.
In an email response, a Coca-Cola executive only said Coke is restructuring the Spartanburg joint venture, which was designed to be the largest bottle-to-bottle PET recycling plant globally. Vitters is general manager of the PlantBottle packaging platform for Coca-Cola.
In a separate statement sent specifically to Plastics News, the Atlanta-based company said, We cannot discuss the specifics of Coca-Cola's business dealing with NURRC. The joint venture, however, needs to be restructured in light of further business conditions.
Without providing additional detail, the statement said plans are in place to continue to operate the Spartanburg facility. Similarly, Vitters said, We intend to continue working with processing facilities throughout the U.S., including NURCC, to supply [recycled] PET to our system.
There was no immediate response from URRC to inquiries from Plastics News.
Sources also said NURRC is remiss in its payments to its brokers and materials-recovery facilities, and that at least one lawsuit has been filed by a supplier of PET bottles seeking payment. They also said several NURRC staff employees have been inquiring about job possibilities at other plastic recyclers.
In addition, John Burgess, president of Coca-Cola Recycling, has been placed on indefinite leave, sources said. But Vitters said that personnel action was not related to the Spartanburg recycling operation.
The Spartanburg plant had been ballyhooed as the shining star that would enable Coke to achieve its goal of incorporating 10 percent recycled content in its PET bottles by last year and 25 percent by 2015.
But Coke did not meet the former goal, and sources said only about 1 million pounds of recycled PET from the plant only a fraction of the plant's nameplate capacity of 56 million pounds actually wound up back in PET bottles.
I have heard for a long time that the plant could not meet the specifications for bottles, said one source.
Coca-Cola remains committed to our goals of sourcing 25 percent of our PET plastic from recycled and/or renewable material by 2015, and to recover 50 percent of the equivalent bottles and cans used by 2015, said the company in the statement it emailed to Plastics News.
The recycled and/or renewable materials phrase is significant, because Coke has been making a big push in recent months in renewable materials. The company has said it expects to convert all of its plastics packaging to PlantBottle materials PET made from sugar-cane ethanol by 2020.
Sources said the Spartanburg plant has undergone three engineering redesigns in an effort to make its process profitable.
The technology might have been the best several years ago, but it doesn't work as well as other technologies with the newer, lightweight bottles, one source said.
In its emailed statement to Plastics News, Coca-Cola's only comment relative to the technology at the plant was that new equipment is being installed.
We started this joint venture with URRC to test out technology that would increase access to valuable recycled content for use back into our bottles. That desire has not changed.
The plant never added the second line it had planned to bring on-line by the end of 2009 or early 2010, and it struggled to achieve its nameplate capacity of 56 million pounds 44 million pounds of clear material and 12 million pounds of green material.
Coke's initial investment in the plant was estimated to be between $45 million and $50 million.
One source said the majority of the plant's output ended up in lower-end fiber and strapping. The source said one Coke bottling plant had two silos' worth of output from the plant that was unusable for bottles.
In the long run, it has to work in the marketplace, said one source. Its failure is kind of a black eye for Coke.
The NURRC plant's status is a short-term boost to other recyclers, as more material will be available in a tight market to PET recyclers such as Clear Path Recycling, Custom Polymers PET, Wellman, Pure Tech Plastics, Phoenix Technologies, Carbonlite Industries and others.
That is good news, for those companies, the source said. It also helped PET bale prices which had been rising stabilize in March.
PET reclamation in the U.S. was expected to reach 1.88 billion pounds sometime in 2011 before the plant curtailed operations. That's more than double the 847 million-pound PET reclamation capacity at the end of 2008. And tight supplies had already forced the cancellation of three capacity expansions this year, including a second 120 million-pound-per-year line planned by Clear Path.
Sources said the NURRC plant closing was triggered by a request in February for $15 million from Coke to fund the next phase of expansion. NURRC wanted to add a second recycling line to increase production.
When Coke declined to make that investment, that left NURRC without money to continue operations, sources said.
URRC, which owns the joint venture plant, is looking for investors, sources said. However, other sources speculated that Coke may buy the plant at a greatly reduced price.
According to one source, Coca-Cola Recycling employees were told in an internal memo that Coca-Cola Recycling was going to take over NURRC.
Everything about this plant from Coke has been totally green-wash nonsense from top to bottom from day one, said one source.
Coca-Cola still has PET recycling plants in Mexico, France, Austria, Switzerland and the Philippines.