Rogers-based Pioneer Products recently took bold steps to create a closed-loop business model which included more control of its plastics resin business from start to finish.
Pioneer, which sells a 45-gallon wheeled plastic trash can in more than 3,800 stores, purchased resin maker Sable Polymer in Flowery Branch, Ga., earlier this summer for an undisclosed sum.
For at least five years Pioneer has been supplying this sustainable trash can to Walmart, contracting out several pieces through the supply chain. But with its recent acquisition of Sable Polymer, Pioneer can control more of the business as well as expand with new products and applications. The sustainable focus of Pioneer is also in line with Walmart’s efforts to sell more earth-friendly products and require sustainable manufacturing processes.
Pioneer is one of four sustainable businesses owned by parent Ecoark Holdings (OTC: EARK) which raised $17.4 million with a public offering in July after its acquisition of Magnolia Solar, another one of its portfolio businesses. Former Wal-Mart executive Randy May is the CEO of Ecoark which continues to invest and grow its portfolio of companies.
Roshan Weerasinghe, chief operating officer for Pioneer, told Talk Business & Politics Pioneer sought to grow its share of an $8 billion plastics polymer business and the best way to do that as product supplier was to own more of the manufacturing process while working to create a closed loop from source to retail shelf with Pioneer having more touch points along the way.
Weerasinghe has a retail background and has been with Pioneer for about two years, prior to that he worked in operations, global sourcing and logistics for Wal-Mart. He said he loved retail but after 18 years he needed change.
THE RECYCLING PROCESS:
Pioneer sources plastic bakery icing buckets and other waste/returns at Walmart U.S. return centers, which is then sent to the Sable Polymer facility and put through a proprietary process to produce resin pellets. Pioneer then contracts with a plastic fabricator who makes the trash cans which Pioneer then sells back to Walmart. Weerasinghe said the fabricator does not wish to be named, but is a Wal-Mart approved U.S. manufacturing site.
Weerasinghe said the sorting and culling of source material is a difficult process because not all plastic is the same. He said some includes chemicals that render it unusable for some applications and creates another market of plastic wastes which are sold off. He said plastic water bottles and shopping bags are not the right kind of plastic and not used by Pioneer which focuses on hard plastic resin waste products as its source for making recycled pellets.
As Pioneer sells the trash cans back to Walmart U.S. the loop is then closed. Weerasinghe said having just one product at Walmart or in retail is not cost effective so the company expanded the R&D team in the Sable facility to look for niche products that could be made from the resin it creates and then sold back into retail. Weerasinghe said much of retail is moving online with Walmart and its other retail customers. That has left Pioneer looking for ways to expand its overall business beyond just the retail application. The acquisition of Sable Polymer has made that possible, he added.
BEYOND RETAIL SUPPLIER:
He said acquiring Sable allows the company to be aggressive with costs. Weerasinghe said recycled resin has virtually the same prices as virgin resin, even though it’s a sustainable product. So the company is exploring ways to improve margins and offer a non-commoditized resin product.
He said a new process and material source has allowed the company to develop a milky white resin pellet, in contrast to the black pellets that are most common. He refers to this market as the “natural” pellets and said because it’s white there are more color control possibilities for the end products than with the blackish pellets.
Pioneer is sourcing the natural pellet material from a contact lens case manufacturer in Puerto Rico. He said the plastic used has been densified and has very few chemicals – aka, sterile grade. Weerasinghe said Pioneer plans to shift about 1 million pounds of production per month into this natural grade. He said another 2 million pounds a month are made into the traditional black resin pellets.
“We want to be a leader who is pushing for this use of natural polymer because there are more applications for the white pellets,” he said.
The company is working with the automotive industry that is using the natural pellet in its industrial applications that require light testing. He said the move into natural pellets will also help the company diversify its business away from largely retail applications.
The Sable operation also can use a densification process that takes the hard plastic wastes and turns it into a popcorn-like substance that can be made into a plastic-like fabric widely used in the medical field. He said disposable medical gowns are made out of this type of material that has a plastic component.
Pioneer Products also has a brokerage arm that helps to rep other suppliers into Walmart and Sam’s Club. Weerasinghe said the company represented three new products for clients at Wal-Mart’s Open Call in July. He said two of the products were accepted in and are now going through the process of getting on the shelf which can take nearly a year. He declined to share the product names but did say they are in paint and food categories. The other product was not accepted in store, but was given the online option which the retailer made to nearly all of the Open Call products this year.
Weerasinghe said because Pioneer is a supplier the company knows its way around Wal-Mart from the supplier’s view and that’s been advantageous for its clients. He said the brokerage business is just another way Pioneer is diversifying its business, given that trash cans aren’t items people need to buy every week or month.
