Delta boosts its California recycling stake with acquisitions

Delta Plastics of the South LLC, which already has been ramping up to expand agricultural plastic recycling in California, is now acquiring a significant recycler in the state.

Stuttgart, Ark.-based Delta Plastics acquired Command Packaging LLC and its sister company, Encore Recycling LLC, in a move that gives it both recycling and new product manufacturing capacity.

"It was just a natural fit," Delta Plastics CEO Sean Whiteley of Delta Plastics said in a Feb. 9 interview. "We share the same core operating philosophies and visions around sustainable, closed-loop plastic manufacturing. Closed-loop green manufacturing is a passion for both organizations."

A key component of the deal is the Encore Recycling unit located in Salinas, Calif., which Delta says is "California's only manufacturer of high-quality post-consumer recycled polyethylene film-grade resin."

Encore Recycling relies on used agricultural plastics to serve as a feedstock for Command Packaging to then make new products, including plastic bags for the food service, grocery and retail markets.

Los Angeles-based Command Packaging's bags are thicker than the typical grocery store bags and designed for multiple uses.

"Demand for high-quality sustainable plastic packaging is increasing. It became obvious we needed a growth partner to accelerate our expansion and meet the growing demands of the markets we serve," CEO Pete Grande of Command Packaging and Encore Recycling said in a statement.

Grande talked about his plans for Command Packaging and Encore Recycling in 2013 when he was planning his new recycling venture. Grande explained the thicker plastic bags, at 2.25 mils, would be able to carry more weight and designed to be reused dozens and dozens of times. The thicker bags are a response to a California law that banned single-use bags.

Encore Recycling, like Delta Plastics, relies on used PE agricultural film for its feedstock.

The merger of the two operations means Delta Plastics can kick-start its efforts to expand ag film recycling in California. The company has been collecting agricultural film in the state for nearly two years and sending it back to Arkansas for reprocessing.

But during this time, the company ultimately decided it should establish additional West Coast operations to enable processing and manufacturing closer to collection to be more sustainable.

Delta Plastics had been in final negotiations with a few California locations for development of a new reprocessing site, but now will be able to use and expand Encore Recycling's location. Delta Plastics will install additional new equipment to wash and reprocess used film to go along with Encore's existing operations.

"It will be separate. It will be managed separately and it will be tracked separately," Whitely said of the two portions.

Delta Plastics said an earlier $3 million grant the company received from the California Department of Resources Recycling and Recovery to create a recycling operation is still in place.

The operations are expected to ultimately create at least 40 million pounds of clean resin each year from the Salinas location. "We're very excited about the combination of our businesses," Whiteley said.

Last year Delta Plastics indicated it was collecting about 4 million pounds of dirty plastic each month in California. That translates into about 2 million pounds of recyclable material due to the high level of dirt contamination.

Encore Recycling has 125,000 square feet under roof, enough room to greatly expand processing at that location over time, Whiteley said.

Encore Recycling's current production is used for "dozens of applications, such as new agricultural plastics, composite lumber, retail carry out bags, and even our own line of reusable bags," the company said.

Grande said his company also likes the idea of expanding Command Packaging's production to existing Delta facilities in Arkansas and Texas. Delta Plastics, just last year, acquired Rodeo Plastic Bag & Film Inc. of Mesquite, Texas. Rodeo makes industrial plastic sheeting and bags.

"Merging the two companies together creates impressive synergies for both companies," Grande said in his statement.

Whiteley said the new deal is a culmination of talks that actually go back more than three years.