Plastics Recycler Opens in Puerto Rico

Entrepreneur aims to show recycling's feasibility.

Nicholas Apostol hands visitors to his unusual factory equally unusual souvenirs — stylish white T-shirts made from recycled plastic soda bottles.

But the manufacturing executive doesn’t produce T-shirts, at least not yet. He does, however, plan to churn out railroad ties, park benches, highway guardrails and even pig pens manufactured from recycled plastic containers.

Apostol is the founder and president of Environmental Plastics of Puerto Rico Inc., Cidra, Puerto Rico, whose plant was inaugurated in September 1994 by Puerto Rico’s pro-business governor, Pedro Rossello.

"This project speaks for itself. It is not a work of government, but a private initiative," said the governor, amidst an appreciative crowd of manufacturing executives, local politicians and schoolchildren clutching plastic soda bottles. "Puerto Rico needs more facilities like this one, in which government is the facilitator and the private sector takes the initiative."

SEARCH FOR HOME. In March 1993, the Apostol established Environmental Plastics at an industrial park in Toa Baja, along Puerto Rico’s north coast. But the company was evicted from its original site last January after the owner decided to rent out his property to an apparel company.

"Our whole objective was to set up a pilot project, mostly to show people that plastic recycling really works," says Apostol. "Then we got closed down and had no place to go."

After eight months in limbo, Environmental Plastics was reborn in the mountain town of Cidra, right off Highway 1. Its new home is the 26,000-square-foot building which formerly housed Pepsico’s 7-Up syrup concentrate plant. Apostol acquired that property from Pepsico in a $1.2 million lease-to-buy agreement.

In return for establishing in Cidra, the company will enjoy 20 years of exemption from Puerto Rico taxes, as well as federal tax benefits under Section 936 of the U.S. Internal Revenue Code.

The new facility, which should employ 150 people when fully operational by year’s end, represents about $10 million in investment.

"Ten million dollars is not significant when compared to what we need to improve the quality of our lives," Apostol says. "All the garbage we throw out during out lifetime still exists, in landfills. That’s why we created this company. The principle function of this plant is to recycle all of this into useful consumer products."

Environmental Plastics isn’t yet sure where the $10 million will come from. Apostol has already applied for a $1.5 million loan through Puerto Rico’s Economic Development Bank, and expects to raise another $3 million through an initial public offering by New York’s Harriman Group, which specializes in projects of this size and would allow locals to invest. The Puerto Rican government’s Solid Waste Authority has also committed $300,000 to the project.

Apostol says he is also talking to bigger investment bankers "so we don’t have to do this in little spurts and pieces," and to green funds which invest only in environmentally sound ventures.

"In the absence of having any clear signals from the government of Puerto Rico on how they intend to finance waste management in general, we’re having to go off-island to bring financing in," he says. "This is the crux of the problem."

In fact, the company was originally established in Miami because, says Apostol, " we couldn’t get any support in Puerto Rico." At that time, the island was preparing for gubernatorial elections and few people in the previous administration of Gov. Rafael Hernandez Colon were focused on environmental concerns.

Apostol says he’s had a better reception from Gov. Rossello, whose New Progressive Party advocates U.S. statehood for Puerto Rico.

If the plan succeeds, workers at the Cidra factory will turn out plastic wood products such as highway guardrails and park benches, which are normally made from wood but can also be made from plastic. Unlike wood, plastic doesn’t rot over time and can’t be eaten by insects.

Apostol says he already has a contract to provide 250,000 pallets to the Belgian government, with delivery on the $5.5 million order to start soon.

And the executive is about to sign a $750,000 deal with the neighboring Dominican Republic, whose state-owned sugar enterprise Compania Estatal de Azucar needs 1.5 million railroad ties to replace its deteriorating wooden ones.

After investing $176,000 of his own money in the project, Apostol says "the single biggest obstacle we have is capital. The equipment is so expensive."

FEEDSTOCK. Apostol certainly won’t have any problem finding raw material for his products. Until very recently, Puerto Ricans were generating 800 tons of plastics a day, which was mainly landfilled.

But since a severe drought sparked emergency water rationing in mid-1994 in parts of Puerto Rico, the amount of plastic streaming into island landfills has jumped to 1,400 tons a day. That’s because people are buying bottled water in one-gallon plastic containers and using disposable forks, knives, cups and plates.

As a U.S. Commonwealth, Puerto Rico enjoys a per-capita income of $6,500 — low for the United States but among the highest in the Caribbean.

The island’s 3.7 million inhabitants are very consumer-oriented, and import most of their consumer goods from the U.S. mainland.

Yet environmental consciousness is low, and visitors are often shocked at the garbage strewn along Puerto Rican highways.

Plastic already accounts for 43 percent by volume of all waste generated in Puerto Rico — an island which is already losing an acre of land a day to landfills.

"The numbers are absolutely horrifying," says Apostol. "The problem is so huge, that the solution to the problem has to be equally huge."

To start the process rolling in the absence of mandatory recycling laws, Apostol will pay island residents 2 cents a pound for PET, which is the kind of plastic from which 1.5-liter and 2-liter soda containers are made.

He doesn’t plan on paying for other types of plastic, because he’s sure he’ll have a steady supply.

The Cidra plant is only the first step in making Puerto Ricans aware of the urgency of recycling, according to Daniel Pagan, executive director of the Puerto Rico Solid Waste Authority.

Pagan says the Environmental Plastics facility is the first in Puerto Rico that aims to manufacture useful items out of plastic waste. -- Larry Luxner.

The author is Caribbean editor of U.S./Latin Trade.