The recycling conundrum: It’s tough to put a price on perceived value

As the price of commodity resins drops, so does the actual value of recycled plastics

In the marketing game there are two primary values: Actual value and perceived value. Actual value is the price of products and services based on the costs of raw materials, labor, machine time and so forth. That value is fairly easy to determine. Perceived value isn’t quite so cut and dried because perception is always in the eye of the beholder.

That’s what we’re up against when it comes to recycling and recycled plastics. There is a value to recycling and recycled plastics, but it’s mostly perceived rather than actual because the value of recycling and recycled plastics is based on the perception that it’s “green” and, thus, good for the environment. Companies use recycled plastics in their molded products so that their customers—either other manufacturers or the consuming public—will perceive them to be environmentally friendly and their products to be of greater overall value than products that do not use recycled content.

QRSRecently, QRS Recycling of Georgia LLC filed for Chapter 11 bankruptcy primarily because of the lower commodity prices of PET resin. I’ve heard commentary on this a number of times over the past couple of months at various conferences I’ve attended. When the price of commodity resins gets almost as low as the price of recycled resins, the actual value of recycled material drops, while the perceived value may remain. That perceived value is the “green” value of using recycled resins.

QRS Recycling’s Georgia facility was a first-generation recycling operation, meaning it took in PET bottles, cleaned and baled them, then sent them to other recycling operations to turn them into flake and ultimately into regrind and pellets. In other words, the value of what QRS’s Georgia facility did was low. QRS’s other recycling facilities, which do value-added operations in St. Louis and Baltimore, remain open for business.

Recently I spoke with Randy Lewis, Director of Engineering for Zeon Technologies (Salisbury, NC), which recycles high-value engineering resins including thermosets. He’s a firm believer that everything can be recycled. “There’s no such thing as non-recyclable,” he told PlasticsToday. I had called him to ask his opinion on the push by some big consumer products companies to be responsible for reclaiming all the packaging of their products, as some groups are advocating.

“Do these companies like Mondelez and Kraft and P&G want to get into the recycling business?” he asked hypothetically. “What is the cost of recycling? What is the return on investment if these consumer giants get into recycling? Can they make it a separate business unit and make money? Or will it cost them more in energy, collecting, sorting and reprocessing, including removing the labels and adhesives, than it’s worth to them? Is the value of the end product an actual or perceived value? And is that perceived value worth the investment in something that they may not make money at but will make them look good in the eyes of consumers?”

Perceived value versus actual value is really the argument here, noted Lewis. “It boils down to perception, and all of these large consumer companies want to be perceived politically correctly as ‘green.’ Consumers, however, do not understand the science behind recycling. They see the big truck come by and they dump the commingled recyclables into the truck and drive away; out of sight, out of mind.”

But as one person in another discussion noted, “You’d be surprised just how much recycled materials end up in the local landfills.” Why? Because there’s not much money to be made in recycled plastic, especially with virgin prices so low. In other words, is there any actual value in those materials? And if it’s purely perceptual, is that enough to make it worth the costly processes involved in recycling? That has to be answered on a company-by-company basis.

Teresa Clark, Vice President of Product Development for Enso Plastics (Mesa, AZ), which develops and produces additives to promote biodegradability in plastics, commented on the Community of Plastics Professionals blog site, “At what point do we stop running blindly forward and re-evaluate? Is the answer more tax subsidies, or simply focusing on a sustainable recycling model?”

Clark is right in her questioning. Businesses must be profitable. We’ve already lost too much in tax dollars by subsidizing the green perception without looking at the actual benefits. And let’s face it: Without the actual value, Chapter 11 will become more commonplace among recyclers and biomaterials companies.

Both are tough businesses and we have to ask what will happen to the actual value of these materials if the perceived value goes away? All businesses have to make money, but if the perception falls away, is there any actual value left on which companies can turn a profit? How much are other manufacturers and consumers willing to pay for perception? Are recyclers and companies that develop biodegradable additives or bioplastic materials going to be able to make money in the long term? Will perception be enough?

Comments (0)

Please log in or to post comments.
  • Oldest First
  • Newest First
Loading Comments...