California Recycler Eco2 Closes Riverbank Plant

Eco2 Plastics Inc. has shuttered its PET recycling plant in Riverbank, Calif., and appears to be running out of time to prove that its water-free recycling process for PET will work.

The financially troubled company laid off 47 of its 58 employees and began dismantling equipment at the plant Sept. 8. Formed in 2000, Eco2 has spent the past five years trying to perfect its process to make it commercially successful.

In papers filed with the Securities and Exchange Commission Sept. 8, the San Francisco-based company now says that it will regroup and hopes to build and open a new plant, most likely in northern California, in the next 6-9 months.

Peninsula Packaging Co. — Eco2’s largest customer, shareholder and investor and a manufacturer of PET thermoformed food packaging containers made with as much as 70 percent recycled content — is headquartered in the northern California town of Exeter in Tulare County. Peninsula accounts for roughly 60 percent of Eco2’s sales.

In its SEC filing, Eco2 conceded that it could have to switch to a conventional water-based process to survive, that it may need to cease operations, and that it needs at least $9 million to build and open another plant — $4 million of which must be raised, they said, “from equity or debt investors, including the company’s principal shareholders.”

Eco2 also said that it will purchase a commercial wash line for the plant and believes that it can adapt a line of that type to use its bio-solvent based cleaning process. But it also said the possibility exists that Eco2 may need to recycle PET conventionally to succeed.

“In the event that the company is unable to achieve expected results from the bio-solvent-based line in the new facility, the new facility should permit the company to switch successfully to a water-based process [as it will have] equipment that has been proven to operate efficiently in a water-based process,” said the company in its SEC filing.

Eco2 had hoped to begin commercial-scale production of recycled PET flake this past June, but the company said that it “had not been able to improve its processes” enough to do that.

The company has “not demonstrated, as yet, the ability to produce product in sufficient volumes, at consistently high quality and at sufficiently low cost for profitable and sustained operations,” despite improvements to drying technologies, improvements that optimized the performance of the bio-solvent and the installation of additional vapor recovery equipment to reduce to bio-solvent evaporation, said the company in its SEC filing.

“The company’s difficulty in achieving sufficient volumes of production has consumed significant capital, with $42 million in capital raised since 2006” alone in an effort to achieve commercial viability, said the company’s SEC filing.

Those realities led Eco2’s board to conclude that the Riverbank plant was “no longer suitable” if the company was to achieve “an efficient flow” to the recycling process, said the filing.

Still, Eco2 said it believes that the planned new facility, by incorporating a new wash line and all the process improvements made to date, “will operate successfully” and be able to produce 100,000 pounds of recycled PET flake daily. “But there can be no assurances” of that, it added.

“The company still has not perfected the overall processes required to produce recycled plastic flake in sufficient volumes, of sufficient quality, and at sufficiently low production cots to support sustained profitable operations,” said the company in its SEC filing. “If the company is not able to improve its processes to achieve such goal, the company will need to cease operations or potentially switch to a water-based process. The potential ability to switch to a water-based process reduces the risk associated with the investment in the new plant.”

Last November, Eco2 laid off 85 of its 120 workers and shut down its batch processing line in order to switch over to its next-generation, continuous-flow, water-free PET washing process. In springtime, it had slowly begun to recall some workers, but couldn’t lower the cost of its operations sufficiently. It had hoped to produce food-grade recycled PET at a rate of 40 million pounds annually.

In the first six months of 2009, Eco2 lost $10.8 million on $1.6 million in revenue, bringing its losses in the past 5½ years to nearly $115.5 million. Eco2 received investments in excess of $15 million from Trident Capital Management and Peninsula Packaging in 2008, and raised another $2 million in funding from existing investors this year.

As of June 30, the company had cash and cash equivalents of $243,000, compared to $1.6 million in cash and cash equivalents at the end of 2008.

Eco2’s water-free technology immerses shredded PET bottles in ethyl lactate, a biodegradable solvent made from beets and corn and then blasts the material with liquid carbon dioxide to remove the solvent. The solvent and liquid CO2 are reused.

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US Packaging Covered in False Green Claims

The US is awash with ‘green’ labels and logos with empty claims, an environmental marketing agency executive has told the US Congress.

Vice president of TerraChoice Scot Case put his argument on green labels to the SubCommittee on Commerce, Trade and Consumer Protection earlier this month.

The meeting followed shortly after TerraChoice’s publication of its Seven Sins of Greenwashing report, which reveals the extent of the use of green labels and the emerging greenwashing problem.

According to the report, more than 98% of the thousands of products that make environmental claims surveyed by TerraChoice commit at least one of the seven sins of greenwashing (read report below).

“Greenwashing ranges from blatant misrepresentation of environmental claims to telling only partial truths about a product’s environmental impacts,” Case told Congress.

“Manufacturers are making potentially misleading environmental claims about their products because they lack guidance about what claims are legitimate and what kind of evidence they need to support their claims,” he added.

Case recommended to Congress that an independent third-party be brought in to support the Federal Trade Commission (FTC) verify the accuracy of a label’s claims.

He proposed establishing an office within the Environmental Protection Agency (EPA) to launch a single, voluntary environmental leadership label, which would combine existing standards into one.

There are more than 300 environmental labels used worldwide, according to Ecolabelling.org, which can pose a problem for consumers explained Case.

“How is my mum in Charlotte, NC, supposed to keep track of all of the environmental labels to know which ones are meaningful and when?” he told Congress. “I have 16 years of experience with this issue and I regularly run into labels or claims that I have never seen before.”

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PolyOne moves ahead with Asia strategy

Despite the economic slowdown, PolyOne Corp. is taking steps to push forward with its previously announced, two-pronged strategy of globalization and specialization by expanding in Asia and extending its portfolio of colorants, additives and various polymer materials.

Philippe Ximena, the firm’s Singapore-based general manager for engineered materials in Asia, and other company representatives provided a brief update May 19 at the Chinaplas show in Guangzhou.

Current market conditions have forced the Avon Lake, Ohio-based firm to make some adjustments, officials said.

A year ago at Chinaplas 2008 in Shanghai, PolyOne was heavily promoting its push into biopolymer compounds, some of which were being used by Springfield, Ill.-based Design Ideas Ltd. to make an Eco-Gen brand of bathroom accessories.

The recent slowdown in demand for relatively higher-priced biopolymers is prompting PolyOne to get creative.

It is developing blends of such materials with traditional resins like polypropylene, polyethylene and ABS, and working with brand owners to find end-use applications for these blends, said Jakey Low, Asia business development manager for color and engineered materials for PolyOne Shenzhen Co. Ltd. Low said PolyOne has not yet branded this line of products, which he said are made using the blending process generically known as biomass.

PolyOne is working directly with several original equipment manufacturers to integrate biomass blends into end products that include mobile phone handsets and USB modem housings. It also is helping brand owners to negotiate the diverse and often-changing laws related to meeting environmental marketing requirements, on a country-by-country basis.

Low said more details on PolyOne’s biomass products should be available at NPE2009, which will be held June 22-26 in Chicago.

PolyOne in April began initial production at a new color concentrates plant in India, according to Ximena, who recently relocated to Singapore from Europe to take up his current position.

The firm is finalizing the commissioning of production lines in India, but declined to provide further details. Its color concentrate products find use in various end markets, particularly packaging and wire and cable.

Ximena also noted that a PVC compounding plant in Dongguan, China, which PolyOne acquired in late 2006 and officially reopened a year ago, is busy serving new business in Asia. The plant is fully integrated with PolyOne, and the firm has begun lean manufacturing and Six Sigma programs at the South China facility.

Speaking of integration, Chinaplas 2009 represented the first time that PolyOne and its GLS Corp. thermoplastic elastomers subsidiary exhibited together at the same booth in China.

The strongest markets in Asia now for PolyOne’s engineered materials are electrical and electronics, automotive and health care, Ximena said. Demand in the construction market is softer, he said.

Ximena said industry in China is definitely starting to see the benefit of the Chinese government’s aggressive economic stimulus package. He added that he expects a similar uptick from Beijing’s stimulus plan for Chinese health care and hospitals, announced less than a month ago.

At Chinaplas, PolyOne highlighted its Kostrate Edge terpolymer, a BPA-free, Food and Drug Administration-compliant material that aims to replace polycarbonate, acrylic, styrene acrylonitrile and general-purpose polystyrene in certain applications. PolyOne is targeting end uses such as infant care cups, houseware items, drinkware and sports bottles, as well as appliance, point-of-purchase display, office furniture and personal-care applications.

The company also chose the Guangzhou show to introduce additions to its lineup of polymer additives. Its OnCap chain extender can increase viscosity by more than 15 percent for engineering thermoplastics that belong to a group of materials known as low intrinsic viscosity polycondensates.

The new OnCap UV absorber is designed to help protect plastic packaging from ultraviolet radiation. PolyOne says the additive also emits a blue tint to give products a clean, bright appearance. It is designed for PET bottles and other packaging.

Steven Chan, PolyOne’s Asia color sales and marketing director, claimed OnCap UV is the first such product available in Asia.

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Bemis buys S. America Plants

Bemis Co. Inc. has expanded its rigid packaging business in South America through two acquisitions.

Bemis bought three plants in Brazil and one in Argentina from Huhtamäki Oyj. They join Bemis’ nine plants in Brazil and one in Argentina.

The Neenah, Wis., firm paid about $43 million for the former Huhtamäki operations. They generated sales of about $85.8 million in 2008. The plants make extruded sheet, yogurt cups, drink cups, dairy tubs and similar packaging using thermoforming and injection molding. Main markets are dairy and food service. They employ a total of about 640.

“This business will complement our existing South American operations,” stated Bemis President and CEO Henry Theisen in a June 3 news release.

The deal boosts Bemis’ sales in South America by more than 10 percent, according to Melanie Miller, Bemis vice president and treasurer. Bemis makes dairy tubs, folding cartons and flexible packaging in South America and claims to be the biggest packaging firm on that continent, Miller said in a telephone interview.

Bemis subsidiary Dixie Toga SA and Dixie subsidiary American Plast SA bought the Brazilian and Argentinian businesses, respectively. Bemis acquired Dixie Toga of São Paulo, Brazil, in 2005, Miller said.

Huhtamäki said last fall it was conducting a strategic review of its rigid packaging operations around the globe in favor of its core businesses of flexible packaging and molded fiber packaging.

“This sale represents an excellent outcome to the review of our rigid plastic consumer goods business in South America and supports the strategy execution,” said Huhtamäki CEO Jukka Moisio in a news release.

“We will continue to review the remaining rigid plastic consumer goods operations in Europe and in Australia,” Moisio noted. “In South America, we will continue to operate our flexibles and rough molded fiber packaging units.”

The businesses sold were Huhtamäki Plásticos Rigidos Brasil Ltda. and Huhtamäki Argentina SA. The former’s plants are in Pinhais, Recife and Valinhos, Brazil, while the latter’s plant is in Garin, Argentina.

Bemis paid $32.3 million in cash on hand, $1.9 million in assumed debt, and a $8.8 million note payable to Huhtamäki due May 31, 2010.

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