How does a Decatur company maintain its business despite a weak U.S. economy? By selling to foreign markets.
That has been central to the success of Plastic Recyclers Southeast Inc., a 25-employee company headquartered in Decatur with a warehousing operation in Trinity. When recession-strapped U.S. customers stopped buying recycled plastics, the company sold to growing economies like China and India.
It’s a business model that works, even through a recession. With many companies struggling for survival, Plastic Recyclers — owned by Henry Bragg — is ready to expand.
The company thrives in part because of its foreign buyers, and in part because of local sellers. It buys scrap from many of the businesses on Alabama 20.
“We’re able to compete because we’re so close to these companies,” said operations manager Grant McKelvey.
The company’s ability to enter foreign markets attracted attention Friday, earning it one of eight Governor’s 2011 Trade Excellence Awards. Another Morgan County company, Valley Rubber of Falkville, was another winner.
Plastic Recyclers is part middle-man, part recycler and part warehouser.
Operating since 1991, it has a firm grasp on plastics. Unlike paper, the recycling of plastics is complex. Buyers of recycled plastics have specifications for what they can use, and sellers of waste have produced plastics that are not acceptable for all buyers.
Much of Plastic Recyclers’ success involves matching sellers to buyers. It buys products, such as plastic film, and matches it to buyers. Many of those buyers are overseas.
Sometimes the company is a pure middle-man, buying scrap from companies that otherwise would have to pay to put it in a landfill and selling it to another company that needs plastic with those specifications. Usually, it adds value to the product.
“We grind it, we bail it, we damage it,” McKelvey said.
Grinding and bailing reduce shipping costs, but damaging?
Damaging product involves protecting customers from competition.
McKelvey mentions two examples: waste from factories that make DVDs and waste from an optical-film factory. Both want the revenue from their waste, but neither want competitors to benefit from their efforts.
Plastic Recycling’s job is to make sure a competitor in China, India or the United States cannot use the waste to hurt the primary customer’s competitive interests.
“We take (plastic) film in,” McKelvey said. “If we just took that scrap in and sold it on the open market, it could compete against their finished film. We have to damage it. We have to deface film that we receive.”
The company receives film, but sends it out as plastic flakes.
“It’s still able to be recycled, and it does not end up in a landfill,” McKelvey said. “But we’ve damaged it in a fashion that it cannot, once it leaves here, be used in the same way it was originally used.”
The move by many major companies to “go green” is a driver for Plastic Recyclers’ success.
“Our niche is handling post-industrial,” McKelvey said. “They all want to go green; they all want to say they’re meeting recycling goals, but they don’t want to hire someone to do it. They have someone like us who will pay them for (the recyclable materials).”
McKelvey likes the business model that allows his small company to avoid the downturns in a domestic market.
“The reason we’re being honored is because we are operating in a global economy,” McKelvey said. “We’re operating in four or five different markets, not just the U.S. market. In 2008, when the recession hit, we could sell in markets like China and India that were still growing.”
Jim Page, vice president of Decatur-Morgan County Chamber of Commerce, said he was thrilled to hear about the awards to Plastic Recyclers and Valley Rubber.
“Especially when the domestic economy is in trouble, it’s good to see somebody successfully tap into an overseas market,” Page said. “It speaks volumes for Morgan County businesses when they’re recognized statewide for being at the top of their industries.”