CLEVELAND (Feb. 7, 1:15 p.m. ET) — Some folks start a business on a credit card, but T.R. Mitchell says he started his with gift cards — millions of them.
The co-founder of New Wave Plastics in Cleveland established his company in 2007 by recycling the cards after they'd been used by customers of Starbucks and other retailers and service companies. He said he liked the business model because the initial challenge was not to make sales, but to find raw materials.
Gift cards, hotel room keys, credit cards and other cards must be made of a particular kind of printable plastic, and more companies have sought to use recycled plastic in recent years. As a result, every bit of old plastic card stock that Mitchell finds can be sold to the plastic companies that resell it to the printers and their end users.
“Our orders are set for the year,” Mitchell said, noting that his challenge now is to find as much of the plastic as possible to fill them. “In the recycled plastics world, you have limited supply.”
That business has been a springboard for Mitchell's company, which he started in Medina. Last year, it outgrew its initial 20,000-square-foot Medina plant and, in early 2011, it moved to new, larger digs in Cleveland, where it took over about 120,000 square feet of manufacturing space on Walworth Avenue.
Today, however, recycling cards has
become only a fraction of New Wave's business, even though it recycled more than 4 million of the cards last year. It also has branched out into recycling all sorts of other plastics, Mitchell said.
“At one point, (card recycling) was about 98 percent of our business. Now, it's about 5 percent,” Mitchell said.
Among the other types of plastic New Wave recycles are those used by injection molders such as Thogus Products in Avon Lake, Ohio.
The presence of a reliable vendor such as New Wave that will pick up all its scrap enables Thogus to get at least some cash from what otherwise would be trash, said Thogus spokeswoman Dana Foster.
“They're a great resource to us as a manufacturer,” Foster said. “They take all our scrap and pick it up on time.”
Now, New Wave's challenge is to expand and use its new space efficiently. To do so, Mitchell said, he'll likely spend about $1 million this year on new equipment to grind up, process and repelletize the plastic he recycles. He'd have done it in 2010 or 2011, he said, but credit was harder to come by.
The company has room to grow, both physically and financially, Mitchell said.
It's only using about 65,000 square feet of its current building and has another 55,000 square feet it can occupy as soon as it has the equipment and raw materials to fill it. It's also expanding elsewhere. Last October, it opened a recycling center in Florida.
But the company still is committed to growing in the city of Cleveland, Mitchell said, and it's involved in local endeavors such as the Manufacturing Mart that opened in the Galleria downtown in 2010.
Manufacturing Mart President Mary Kay Denning has been working with Mitchell to help him get more raw materials by working with other manufacturers on sustainability issues that include managing their waste stream. Mitchell said those connections already have brought in about $500,000 of plastics he otherwise would not have secured.
Denning said New Wave not only is helping other manufacturers to be more green, but also is profiting in the process.