Suppliers are caught in a squeeze and don't understand why they are not being paid if Coca-Cola Co. plans to resume production of recycled food-grade PET this summer at its joint venture plant in Spartanburg, S.C.
They also said some of Coca-Cola's mandates helped trigger the shutdown, and wonder what the outcome will be of the “restructuring” of the joint venture between Coca-Cola and United Resource Recovery Corp. LLC.
“What are you negotiating?” asked one recycling industry executive. “If they force URRC out of the picture, they are stuck with the largest bottle-to-bottle plant and would have to completely revamp the plant, or shut it down — and how do they explain that?”
For its part, Coke continues to assert it is committed to being part of the joint venture plant (called NURRC LLC), making it viable and incorporating recycled content into its PET bottles.
“We remain committed, as always, to our recycling and recycled-content efforts,” said Scott Vitters, general manager of the PlantBottle biopackaging platform at Coca-Cola.
One supplier said NURRC is two months past due on the payment of $25,000 for two truckloads of material he sent in January. “They're not telling me what's going on,” he said.
“No news is frustrating. When no one calls you back, it doesn't do a thing but fuel the fires of anger,” he said.
Another supplier who delivered 350 truckloads of material to NURRC said he is owed more than $1 million. “They need to ... let us know what the plans are. You have to be accountable with the people you're doing business with.”
But Vitters and an executive with URRC dispute the claims of those suppliers.
“NURRC has a schedule of payments that they are working down as part of the restructuring,” Vitters said.
Likewise, URRC President and CEO Carlos Gutierrez said, “All I can tell you at this time is that suppliers are being paid.” He suggested suppliers call him directly.
In a statement, Coke said: “We can't comment on the business dealings between NURRC and their suppliers, as the business is wholly operated by URRC.”
But other sources in the recycling industry said NURRC simply doesn't have any money because of a larger struggle between Coca-Cola and URRC over how to supply the plant with material.
Sources said URRC had told Coke for more than six months that it would make more economic sense to use PET bales from bottle-deposit states than to spend money to clean up less-expensive curbside bales.
“They kept telling Coke that that approach was not sustainable,” a recycler said. “But Coke continued to set a price ceiling on what [NURRC] could pay” for bales, effectively forcing NURRC to purchase curbside materials. “Now NURRC is stuck with all those invoices.”
Part of that clash in approach stems from the way Coke portrayed the Spartanburg plant from the onset, sources said.
“The problem is that from day one, Coca-Cola had said that they weren't going to use deposit bottles because they said they had found a new way to recycle curbside bottles,” said one recycler. “But their process didn't work. Now they say that it is just a small glitch.”
Recyclers are also angry over how Coca-Cola has handled the entire shutdown, including keeping the shutdown quiet until Plastics News broke the story April 18.
“They have literally thrown the entire recycling industry under the table by saying that they couldn't get a consistent quality of material,” said one source. “The reality is that there are a lot of PET recycling plants operating successfully by running deposit bottles.”
The recycling executive continued, “Besides, they and everyone else in the beverage industry have always tried to undercut and eviscerate the bottle-deposit system that would get them the material they need by always opposing bottle bills.”
For its part, Coke has said that any collection system needs to focus on all containers and not on a single package, such as PET water and soft drink bottles.
Coke still plans to resume operations at the plant after new equipment is installed, which Vitters said will be “shortly.”
“We are heavily invested in this plant” — upward of $50 million — “and want to see it work,” Vitters said.
URRC's Gutierrez is helping to develop equipment that provides a cleaner recycling stream and improves yields. But some wonder how much Gutierrez ultimately will want to share with Coke.
“Carlos is a very, very shrewd bargainer,” said one recycling executive. “I can't imagine he is going to let Coca-Cola run roughshod over his reputation.
“Maybe Coca-Cola never wanted it to succeed,” the executive said. “This would be the perfect foil for them. They could have purposely done this so that they could say they can't consistently get the quality they need,” to help them make the transition to their plant-based PET bottles.
But an executive close to the situation disagreed, saying Coca-Cola is committed to both approaches. “I do not see a problem with them using both techniques to improve their environmental image,” he said.