A merger of two Midwest plastic recyclers has the united company eying the potential for even more growth the combined platform is expected to create.
The combination of Plastic Recycling Inc. of Indianapolis and St. Joseph Plastics of St. Joseph, Mo., creates a company with nine locations and the capacity to handle about 200 million pounds of recycled plastics each year.
Each company was founded in the 1980s and have been familiar with each other for decades.
"We have collaborated over the years back and forth and learned from each other as we went through the years," said Rob Starr, founder of St. Joseph Plastics. "We have been friendly competitors, let's say, for almost 30 years.
"Both of the original owners are, you know, let's not say getting older, let's say very experienced," Starr said. "We're just looking for ways to continue on with the dreams we originally started so we came up with the idea of merging the companies," Starr said.
Merging with PRI, he said, "just seemed like the right thing to do" as PRI founder and Chairman Alan Shaw now has his sons heavily involved in the business, including President Brandon Shaw.
Starr agreed with a characterization that the merger could be classified as an exit plan, of sorts, although continues to be president of St. Joseph Plastics. "You can also call it an entrance plan. We're trying to build a better company to serve the industry. We realize there's a lot of opportunities out there for recycled resins and we just looked at the talent that we had at both organizations and the capacity we have and feel we can build a better success story together," Starr said.
"We've known each other forever," Brandon Shaw said.
PRI is coming off major investments to install two new extrusion lines and a laboratory at a total cost of $10 million. St. Joseph Plastics is finishing up a $1.5 million project for a new compounding line.
The two sides had been talking for about two years before finalizing the merger in September, Shaw said. "We've been talking through different ways to do this. It's really picked up in the last six months, I'd say. ... The timing was right."
The two companies currently operate separately, for now. "Over time, we'll probably merge them into one. The problem is both brands have value. It's kind of to-be-determined how we'll run them," Shaw said.
The merger gives the combined company a better geographic reach and provides a larger foundation on which to expand the company in the future, both Starr and Shaw said.
It's no secret that the market has been unkind to plastics recyclers for more than a year, with depressed pricing squeezing margins.
But merging the two companies is positioning them for more success once conditions improve, Shaw said.
"We know what's coming. The market will correct over time. It is a cyclical market, and we are in a downturn right now. But with the 2025 goals that the brands have and the [recycled content] mandates coming, there's a serious lack of supply and a very high demand that the market is going to want. It was a forward-looking decision to be prepared for when that comes down," Shaw said.
"The last 16 months have not been great. But I think that's the time to look at how to prepare for the future and what's to come," Starr said. "We're excited about what's going to happen. You never know what plastic prices are going to do."
The combined company has about 300 employees and now includes three PRI locations in Indianapolis, two in Jefferson City, Tenn., and one in Cowpens, S.C. St. Joseph Plastics adds separate grinding and compounding locations in St. Joseph and a washing facility in Sedalia, Mo.
Part of the attraction for St. Joseph Plastics is teaming up with a larger organization with a similar culture. PRI, meanwhile, expects to be able to utilize St. Joseph's recent letter of no objection received from the U.S. Food and Drug administration that allows for the production of food-grade recycled polypropylene.
Having an expanded manufacturing footprint also will make the company more attractive to automotive suppliers, Shaw said, who seek larger suppliers with multiple locations. He would like the company to increasingly supply resins to higher applications, such as automotive, to help limit exposure to commodity markets.