Where The Customers Are

April 22, 2005
MBA Polymers locates plastics recycling plant in Guangzhou.

Richmond, Calif.-based MBA Polymers Inc. is not in China because of the vast Asian nation's famed supply of relatively cheap labor. "It's all about the size of the marketplace in southern China," stresses Richard McCombs, president and CFO of MBA Polymers, a privately held plastics recycling firm founded in 1994. "It just makes a lot of sense, from a marketing point of view, to be located where a lot of our customers are."

Initial target customers, indicates Michael Biddle, MBA Polymers' founder and CEO, are the appliance, automotive, consumer electronics and IT equipment industries. "The consumption of plastics is so huge that we anticipate that most of [our output of recycled material] will be consumed domestically," says Biddle.

With Guangzhou Iron & Steel Enterprises Holdings Ltd., its state-owned joint-venture partner, MBA Polymers is building a 6,000-square-meter plastics recycling facility on a 20,000-square-meter site in Guangzhou, a major manufacturing area northwest of Hong Kong. It expects equipment to be installed by June of this year and the plant to be commissioned in July. The plant, which will have a feed capacity of 40,000 tons, when fully ramped up is expected to operate in three shifts 24 hours a day and five days a week and employ 60 to 80 people. About half the plant's output of recycled plastics will be in the form of flakes, the other half in pellets. The total employee count will depend on "how much we decide to involve some manual labor," explains McCombs.

Although many of the Guangzhou plant's customers will be in China, a large percentage of its shredded material feedstock will be imported from Japan, Europe and the U.S. "We are going to install a shredder, but we are not going to do that immediately," says McCombs. "We anticipate having more than an ample supply of shredded plastic. And that's really where our success is -- in our ability to take a shredded plastic and separate it as opposed to a whole part or bigger piece."

MBA Polymer's relationship with Guangzhou Iron and Steel Enterprises, one of the People's Republic's largest steel companies, was established unusually quickly by Chinese business standards. Introduced by an intermediary in July 2003, MBA Polymers had a signed letter of intent within three months. "The relationship was a good one from the very beginning," relates McCombs. "They showed [an] understanding of our business and appreciation of what we had to offer quicker and faster than some of the other companies we were talking to. . . . And so for them to be able to move as quickly as they did told us that they were really interested in our project." MBA Polymers holds a 55% interest in the joint venture; its partner has 45%.

Biddle believes the Chinese government "is so supportive of us" not only because his is an environmentally green company, but also because its processes consume far less water and energy than would a comparably-sized chemical plant turning out virgin plastics.

MBA Polymers figures that more than 5 million metric tons of shredded residue from appliances, automobiles, office equipment and computers are discarded across the globe each year and could be recycled using its process technology. Its Richmond, Calif., headquarters is a demonstration and research operation of 45,000 square feet and 21 employees.

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