Plastics Recycling Business Plan Plastics Recycling Business PlanHow much of our solid waste is plastic? The Environmental Protection Agency reports plastic made up 12% of the 254 million tons of waste generated in 2007. That’s more than 30 million tons of plastic in one year. Some reports state plastic materials can take hundreds of years to break down in a landfill. When you take part in our plastics recycling program, you join a network of Green-minded people and companies who recycle millions of tons of plastics across the United States annually.
And, for every 1 ton of plastic that’s recycled, reports estimate that 7 yards of landfill space is saved. By recycling, you can also help conserve the additional 80% of energy that’s typically used when making new plastic bottles, containers and other items instead of recycling. It’s easy to see why recycling plastic is so important.
Baled plastics, specifically plastic bottles, have a high scrap value per ton. In fact, the only other recyclable that’s more lucrative is aluminum cans.
Replay Plastics will create a PET (polyethylene terephthalate) cleaning and refining plant located in the western United States (all 16 major North American PET recycling plants are currently located in the eastern United States or Canada). Its initial capacity will be 46 million pounds, and it will utilize post-consumer bottle feed stock presently collected in California, Oregon and Washington States, which collect over 200 million pounds per year. The Company will be vertically integrated, and use almost all of its recycled material in its Packaging Division. Any surplus materials (clean flake) produced will be sold to outside companies. The extruded sheet may then be sold to manufacturers, who will thermoform it into high-visibility packaging or use it in other high value added manufacturing operations. The strapping will be sold to companies who ship large packages or pallets, such as the lumber milling industry
Currently there is no direct competition in the western United States for either of the two divisions of the Company. Any production in the trading area remains captive and not available to our target market.
The ability of the Company to obtain a source of post-consumer bottle stock is an integral component of the strategy to vertically integrate operations and manufacture products in demand by western consuming industries. Without the cleaning and refining division, it would be difficult to source sufficient RPET flake resin at costs that would allow the Company to be competitive.
There has been a strong demand (sellers’ market) for our products for several years. Traditional buying patterns in this industry are based on quality, price, reputation of manufacturer, freight costs, delivery times and proximity to markets. During such a sellers’ market, buying patterns are often more influenced by availability.
Replay Plastics is a manufacturing company dedicated to converting waste plastic materials into commercially viable products, utilizing environmentally friendly recycling and manufacturing methods. We intend to make enough profit to generate a significant return for our investors and to finance continued growth and continued development in quality products. We will also maintain a friendly, fair, and creative work environment, which respects diversity, new ideas and hard work
After a couple month start-up period to build the recycling and packaging facilities, buy equipment, and incorporate the business, Replay Plastics will begin a quick turnaround of product.
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Our Founders will put up a total of $1.5 million dollars. We will also have a group of VC investors that will put up the 2.7 million dollars. This will give replay plastics the 4.2 million that it needs to start.
How much of our solid waste is plastic? The Environmental Protection Agency reports plastic made up 12% of the 254 million tons of waste generated in 2007. That’s more than 30 million tons of plastic in one year. Some reports state plastic materials can take hundreds of years to break down in a landfill. When you take part in our plastics recycling program, you join a network of Green-minded people and companies who recycle millions of tons of plastics across the United States annually.
And, for every 1 ton of plastic that’s recycled, reports estimate that 7 yards of landfill space is saved. By recycling, you can also help conserve the additional 80% of energy that’s typically used when making new plastic bottles, containers and other items instead of recycling. It’s easy to see why recycling plastic is so important.
Baled plastics, specifically plastic bottles, have a high scrap value per ton. In fact, the only other recyclable that’s more lucrative is aluminum cans.
Replay Plastics will create a PET cleaning and refining plant located in the western United States (all 16 major North American PET recycling plants are currently located in the eastern United States or Canada). Its initial capacity will be 46 million pounds, and it will utilize post-consumer bottle feed stock presently collected in California, Oregon and Washington States, which collect over 200 million pounds per year. The Company will be vertically integrated, and use almost all of its recycled material in its Packaging Division. Any surplus materials (clean flake) produced will be sold to outside companies. The extruded sheet may then be sold to manufacturers, who will thermoform it into high-visibility packaging or use it in other high value added manufacturing operations. The strapping will be sold to companies who ship large packages or pallets, such as the lumber milling industry
Strong demand for recycled plastics is working in the industry’s favor. Major users of plastic packaging, apparently responding to consumer desires, have begun incorporating at least some recycled plastic content in their products as part of the growing interest in recycling. Recycled resin demand is on the rise as prices for the two major recycled resins, PET and HDPE, continue to hold value or appreciate against their virgin counterparts.
In volume, PET is currently the number one recycled resin. Supply of recycled PET is in excess of 800 million pounds per year. This figure is expected to grow, reaching over 1 billion pounds during the next few years. The plastics industry has developed new markets and applications for recycled resins from both post-consumer and post-industrial sources.
PET leads the recycled recovered resins as the most visible and valuable, and its use is increasing. Of the total 3.7 billion pounds of PET consumed in 1997, just 16% was from recycled sources. Of the more than 90 billion pounds of plastics produced annually in the United States, less than 5% is from recycled sources. Plastics, after aluminium, represent the second highest value material in the waste stream and have the highest projected growth rate.
Markets and uses for recycled plastics are rapidly expanding. Plastic containers are being collected at the curb for recycling in nearly 500 communities, representing more than 4 million households. U.S. demand for recycled plastic will continue to expand and new markets will develop as technologies permit the efficient segregation and reprocessing of high-purity resins. Improved quality of resins, environmental issues and higher prices for virgin resin will contribute to growth.
Packaging is expected to be the largest market segment for recycled plastics, with sheet and lumber following. Surveys indicate that Americans are increasingly willing to collect and separate discarded packages, foregoing a degree of convenience to make products more disposable, and even paying a premium for a recycled item.
Increasingly, communities are refusing to consider incineration until every effort is made first to recycle; public sentiment is strongly in favor of products that can be recycled or are made of recycled materials. In recent years, the household recycling rate of PET bottles has more than doubled to 30% of all PET soft drink bottles sold. In fact, PET’s recycling rate is the fastest growing among all beverage containers. The future of PET recycling is even brighter than it has been in the past. PET intrinsic scrap value is second only to aluminium among container materials. The plastics industry has launched a research and development program aimed at increasing PET recycling. According to the U.S. Environmental Protection Agency (EPA), plastic soft drink bottles account for approximately 2% of the solid waste discarded in America. The EPA has set a national goal to recycle 25% of the municipal solid waste stream and the industry is committed to achieving its share of that important goal.
The recycling industry intends to accelerate the rate of plastic recycling as part of its commitment to develop solutions to the solid waste problem. Industry analysts have projected that 50% of all PET containers will be recycled by the year 2007. More plastics will be recycled annually than any other recyclable material. Replay believes a significant answer to America’s waste problem lies in creating high value, recycled thermoformable sheet and other extruded products for the packaging market.
Although more than 200 million pounds of PET post-consumer materials are collected in the western United States each year, there is presently no local cleaning and refining facility converting the bottles into resins suitable for re-manufacturing. Originally, recycled PET (RPET) was used primarily in the carpet fiber industry, which is located along the eastern seaboard. The early development of the RPET industry was therefore focused in the eastern USA, with eastern states adopting the first bottle deposit laws that resulted in collection of post-consumer bottles that can be recycled. Recently, California, Oregon and Washington have adopted bottle deposit programs, and accumulation of recyclable materials in those states has begun. With all of the cleaning and recycling plants and the majority of consumers traditionally located in the eastern part of the country, development of consumers of recycled flake and down-line products, such as film and sheet, has been slow to develop in the West. A strong demand for post-consumer bottles from Asia has prevented the buildup of inventories and reduced the pressure for the collection industry to find or develop western markets.
There is currently no independent extrusion plant of recycled polyterephthalate (PET) sheet in the western United States or Canada that services the roll stock requirements of major custom and proprietary formers. With the development of the recycling industry for PET starting in the eastern part of the country, and the preponderance of consumers of sheet there as well, development of independent extrusion facilities using RPET has been slow to develop. It appears that in order to attract such companies, local sources of RPET would have to available. While there are customers in the West for the products, contracting a supply and shipping it from the East makes the venture unattractive.
Our founders recognize that an opportunity exists and propose a vertically integrated conversion facility that will employ state-of-the-art technologies to produce extruded sheet and high strength strapping from 100% recycled PET post-consumer bottle stock, cleaned and refined in our own facility.
4.1 Target Market Segment Strategy
The Company has chosen its target markets because recycled PET (RPET) is in high demand as flake resin by converters, as roll stock sheet used to produce high visibility packaging and as high strength strapping for the lumber industry. Sales are price-sensitive, so that proximity to markets and feed stock source provide a competitive edge. Replay Plastics identified an opportunity to take advantage of both circumstances in the western United States.
RPET Flake
Total market demand is reported as 1.2 billion pounds per year. Since only 800 million pounds are processed in the USA, consumers are forced to look at wide spec virgin PET (virgin resin that is outside of spec but still usable) which is normally sold at a discount to virgin prices, but still higher than recycled (RPET) pricing. Some manufacturers are also forced to import materials from Mexico, India and South America. Some converters are being forced to use more expensive virgin resin.
The current pricing for virgin resin is $0.65-0.73 per lb. and $0.42-.53 for RPET flake. The spread between the two has traditionally been maintained at approximately $0.20 per lb.
PET Film & Sheet
The total reported market of extruded film and sheet is 872 million pounds, of which identified industry usage of RPET is 160 million pounds.
The reported market demand (to replace virgin PS, PVC and PET) if RPET was available is estimated at 1 billion pounds.
Current pricing for RPET sheet is $0.70-0.79 per lb.
RPET Strapping
The total reported domestic plastic strapping market is 240 million pounds. Of this market, industry usage of virgin polypropylene is 132 million pounds and of PET is 108 million pounds.
It is generally accepted in the industry that less expensive strapping made from RPET could not only take over the polypropylene strapping market, but convert as much of the much larger and more expensive steel strapping market as RPET strapping was available.
Current pricing for RPET strapping is $0.90 -1.08 per lb.
The primary market can be broken down as follows.
Consumers of PET in:
Consumers of HDPE in:
All information is based on industry research,and data provided by the American Plastics Council.
Currently in the western United States, there is no direct competition for cleaning and refining post-consumer or post-industrial PET. Nor is there any non-captive extrusion of roll stock sheet.
The extruded sheet required by thermoformers is currently supplied by:
In a news release dated September 10, 2004, Itec Environmental Group, Inc. announced their intention to open a PET and High Density Polyethelene (HDPE) recycling operation in Riverbank, CA (east of San Francisco). The news release states that the Company’s new and yet unproven technology lets it work with bottle streams that others have to reject as too dirty. This Company is familiar to our Management, and is not considered a significant factor in any of our markets.
Replay Plastics’ competitive edge rests with its proximity to its target markets, as well as the industry knowledge, reputation and contacts of its senior management. Their many years of direct experience have led them to identify this unique opportunity and put together the technology and sources to take advantage of it. Their reputation in the specific market segment will result in the achievement of long-term commitments for our production. The biggest competitive edge is we have consumers who have promised to buy all the product that we produce.
Keys to Success:
1.4 Potential Risks
Unavailable or scarce raw material feed stock for production
Technology employed may be unreliable or unproven
There may not be a market for the Company’s products
The location may not be near enough to markets
The Company may not be able to attract top management
Company may not meet environmental standards
The Company may not be able to sell all of its production capability
The Company has chosen to focus on the production of plastic packaging materials from recycled post-consumer beverage bottles. Because of the industry experience and expertise of the management, we have identified a significant available market in the western United States. All of our initial marketing strategy will be to secure contracts in that segment, and after reaching full planned capacity, look to grow in concert with that segment and related markets. We see little need at present for further market research and development, and will focus on continually updating our production technology in an effort to remain in the forefront of our chosen marketplace.
Because of the unique extensive experience and reputation of our Management in the Company’s chosen industry segment, we are able to identify all of the potential customers for each of the products we will produce in our facility. While most of the production of flake is ultimately intended to be used internally, we are confident that any developed surplus will be sold immediately.
All of the production of the initial facility is committed for, and should there be any capacity not consumed by these commitments, once again we are confident that the contacts of our senior management will allow for the rapid sale of any such capacity.
If the Company grows faster than its prime customer base, additional capacity may be developed. Mr. Braddock’s many years of sales and sales development will be utilized to identify additional customers and/or sales agents currently servicing the Company’s target markets.
To market the products, the Company will use a number of sales agents/brokers well known to the founders from business transactions over more than 10 years. All of these seasoned veterans have a customer base of their own, having developed successful relationships with their clientele over the years. Their customer base is currently demanding product so they can expand upon their current base. Of course, they will expand that to new customers when product is available from Replay. Those agents are located in:
As stated, Ben Braddock, himself, is a strong marketing individual. Over his 30 years of experience in the packaging and converting industry he has developed relationships with a number of clients that are buyers of packaging materials. He has consulted to many and has been personally responsible for sourcing raw materials and converted sheet for customers in this industry.
Custom formers, extruders, laminators, and end user markets will be called upon by Ben and the sales agent team to promote and generate demand from those that buy and use RPET packaging materials.
The Company will capitalize on the opportunities in the recycled resin and packaging markets through two main divisions: a Recycling Division and a Packaging Division.
Recycling Division
Using a patented process, the Company will create a PET cleaning and refining plant located in the western United States; we have chosen this region because all 16 major North American PET recycling plants are currently located in the eastern United States or Canada, despite western states’ favorable recycling attitudes among consumers. Its initial annual capacity will be 46 million pounds and it will utilize bottle feed stock from California, Oregon and Washington States, which collect over 200,000,000 pounds per year. The Company will become totally vertically integrated, and use all or almost all of its recycled material in its Packaging Division. Any surplus material produced will be sold to outside companies.
Packaging Division
We will create a plant (actual facilities to be shared with the Recycling Division) to manufacture extruded plastic roll stock sheet or high-strength strapping, employing state-of-the-art technology developed to utilize recycled PET resin.
The extruded sheet will be primarily sold to thermoformers who will convert it into high visibility packaging, as well as laminators and fabricators. The strapping will be sold to commercial users for use as package or pallet strapping.
Sam McGuire, a key member of our Management team, is one of the original innovators of cleaning and refining technology for post-consumer PET, and we will be utilizing his patented process in our recycling facility. Sam has worked in the establishment and operation of facilities employing similar technologies over the last several years.
On the manufacturing side, Management has been an integral part of the advancement of industry practices over the last twenty years or so, and includes in their knowledge base most, if not all, of the state-of-the-art available equipment and manufacturing techniques.
