In a sign of shifting investment caused by China's new ban on imported plastic scrap, a Shanghai-based plastics company is setting up a factory in Alabama to process recyclables and then export clean material to Asia.
Roy Tech Environ Inc. is investing several million dollars in the new facility, in Grant, Ala., near Huntsville, and plans to start operations in the next three months, said CEO Lily Zhang, in a Feb. 15 statement.
"We are redirecting our business strategy," she said, adding that the company will keep its existing recycling plant in China but have "limited operations" there.
China's government on Jan. 1 imposed a strict ban on imports of many grades of recycled materials, including plastic, in what it said was a move to clean up its environment and limit imports of "foreign garbage."
But those new rules are also generally seen as allowing imports of recycled pellets or flake that can be used directly in manufacturing.
Given China's outsized role in global recycling trade — it accounted for about half of the world's imports of scrap plastics in 2015 — companies, Roy Tech among them, have been forced to adjust.
Zhang said her company will start with grinding and shredding operations in Alabama and follow that with repelletizing equipment. Previously it bought scrap plastic in the United States and sent it to China for reprocessing.
"We will send our regrinds to our business associates that are relocated around Southeastern Asian countries, and we will send our repros to our existing customers in China," she said. "As our capacities increase, we certainly look forward to supply to the potential customers here in USA."
Zhang said her company began seriously considering investment in the U.S. late in 2017. Matt Arnold, president of the Marshall County Economic Development Council said "it's been a quick project" since Roy Tech first approached MCEDC in December about the facility in Grant.
He said Roy Tech is investing $1.6 million for the building, an 80,000-square-foot structure previously occupied by metals manufacturer Kennametal, plus more for equipment.
Zhang said she and members of her family started the company about 20 years ago in China and have built the business supplying compounded pellets.
The company also has a factory in Osaka, Japan, which it said follows much the same business strategy as in Grant but is smaller than the U.S. plant will be.
In 2014, Zhang said she moved to Huntsville and opened a branch office, initially to buy plastic scrap to export.
Now, though, she said the company sees business opportunities in China's ban, and brought in a new partner, Jack Shu, last year to help with the expansion. Zhang said the company could in time move its headquarters to Grant.
Roy Tech plans to start with 20 employees and an initial annual capacity of 44 million pounds and targets employing 50 people within three years, she said.
She said the company chose the location for its proximity to the South's automobile industry, abundant raw materials and supportive local governments.
The company said it mainly handles materials like drums, totes, pallets and trays, and engineering plastics including polycarbonate, ABS and nylon.