Higher Value

Recycling plastic has been nearly a lifelong journey for Dr. Steve Wong, who identified and sorted plastic scrap for his father as a child and now owns a plastic scrap company with a global footprint.

Wong is currently the managing director of Hong Kong-based Fukutomi Company Limited, which collects and processes plastic scrap from suppliers all over the world, setting up plants and offices wherever supplier and customer needs dictate.

The multinational presence of Fukutomi might, on the one hand, seem a long way from the sorting of scrap on a Hong Kong loading dock that Wong did as a child. However, it also marks the continuation of a career that has long moved on a global trajectory.

Wordly View
When Wong was three years old, his family moved to Hong Kong from China. “When we arrived in Hong Kong in 1960 we had nothing,” he says.

His father began working as a plastics salesman in the 1960s. “He started collecting scrap back then and started a small factory,” recalls Wong. “We imported offcuts of plastic bags and also scrap from Gulf Oil in Texas. It was a family business—we didn’t hire anybody—so there was no soccer for me. I always had to help.”

When Wong set out for boarding school in the United Kingdom in the 1970s, he knew not only that he wanted to use the education to “enlarge my vision and knowledge,” but he also wanted to take the opportunity to help the family business by “learning about other materials around the world.”

He thus visited potential plastic scrap suppliers while attending boarding school in the UK, all at the same time that he was studying as well as working in a restaurant to pay his way through school.

Wong eventually accepted a position with an import-export company in the UK that traded in things such as soy sauce, toys, electronics and plastic watches.

His familiarity with plastic scrap allowed him to add that sector to the company’s roster. “My first container I bought in the U.K. was soft PVC (polyvinyl chloride) scrap. It was material from which they made checkbook covers,” recalls Wong. “I brought a container from Leicester, West Midlands, and shipped it to Hong Kong in 1984.”

At that time, says Wong, plastic recycling was considered a low-value enterprise. “In those days people who were in the business didn’t necessarily have a lot of education or a lot of money,” he says. “You didn’t need as much to buy and ship plastic scrap internationally, maybe only $300 per tonne. However, you did need contacts in both places.”

Subsequently, Wong has specialized in building and maintaining relationships in parts of the world where plastic scrap is generated (often Europe and North America) as well as in parts of the world where it is consumed (most often China).

Wong says his journey from his first brokered shipment in 1984 until today included some “false starts” and investments in processing that did not always pan out, especially in the period before 2000.

“Earlier on, I often found it was easier to make money in trading than in processing,” says Wong. “In my mind I always wanted to integrate the business, but sometimes it did not work out. You need the right equipment and the right people,” he notes.

Beginning in 2000 and operating under the name Fukutomi Company Limited, Wong says customers “really started asking us how we could help recycle some of these materials. We built a really good factory in Shantou, China. It is a plant that lets us turn scrap into reprocessed materials and finally into finished products that we can then market through our own network.”

The Shantou plant has been a key to Fukutomi’s emergence as the integrated trading and recycling company that Wong had long envisioned.

A Workable Model
The commodities boom of the 21st century has caused a lot to change since Wong’s earlier days in the plastic recycling sector, including the value of the materials involved.

The increase in plastic scrap’s value has been one of the reasons why Fukutomi has been successful in turning old brokerage relationships into the types of integrated processing relationships that Wong had been trying to establish since the 1980s.

The global trading nature of Fukutomi’s business has allowed it to likewise establish a global processing network. “We now have 18 different factories and offices around the world,” says Wong. Locations where Fukutomi has set up shop include Cincinnati and Los Angeles in the United States as well as China, Australia, South Africa, the United Kingdom, Germany and other nations in Europe. Some of Fukutomi’s processing operations are wholly owned, notes Wong, while others are joint ventures.

The types of recycling Fukutomi engages in are wide-ranging both in terms of processes and materials handled. In the U.S., the company has established a niche recycling polyactic acid (PLA) bio-based plastic scrap. “We started collecting it soon after the first PLA factory was built,” says Wong. “We make pellets, do extrusion and do our own thermoforming,” he continues, noting that Fukutomi makes flower pots, golf tees and other products from PLA production scrap.

PLA is just one of more than 40 resin types that Fukutomi processes and markets, with PET (polyethylene terephthalate) and ABS (acrylonitrile-butadiene-styrene) being among its larger-volume resins.

Depending on where a Fukutomi processing site is located and which customers it is serving, the company might be involved in pelletizing, granulating, compounding, injection moulding or the creation of finished products. “We also have our own laboratory in Shantou,” notes Wong.

The company’s PET or ABS pellets may ultimately find a home in new computer cases. “A lot of recycled resin is used in this way nowadays,” says Wong. “If OEMs can use recycled-content product, they will. They like to label it that way—this is becoming as important in China as it has been in other parts of the world.”

Along with the increased value of plastic, the sustainability movement is another key driver that has helped Fukutomi’s processing operations gain a foothold with customers and joint venture partners around the world.

The competition among corporations to have an impressive sustainability scorecard has helped Fukutomi establish processing partnerships with manufacturers of consumer electronics, plastic packaging producers and other companies that wish to establish closed loops or at least avoid the landfill.

In China, Wong sees aspects of government policy that likewise point to an increased desire to see plastic scrap recycled rather than sent to a landfill. “China really wants to have a green economy and a closed loop—scrap to material to product—especially for waste generated locally,” he states. “There is a big emphasis on the green economy and sustainability and reducing the amount that is landfilled.”

Wong continues, “Of China’s 60 million tonnes of solid waste in 2012, according to the China Plastics Scrap Association, 95% has been recovered. This would then account for one-third of the country’s raw material needs.”

While China has adopted some policies that provide encouragement to Fukutomi’s business model, the enacting of Operation Green Fence has unfortunately caused difficulties for the company in 2013.

Partly Cloudy Skies
As does any business owner, Wong can recount the up-and-down cycles of business throughout Fukutomi’s history. “One of our best years during the first half was 2008, but then we suffered like everyone else in the second half of 2008,” he recalls.

Throughout the past 12 years, Fukutomi often has had ready access to the factory scrap of its customers. “Some customers, though, have been going on the Internet more and auctioning scrap for the highest price. Nowadays, customers do not necessarily belong to us exclusively,” says Wong.

The increased competition is a challenge for Fukutomi, but one that can be offset by the long-term relationships the company enjoys. “This is our 29th year in business,” notes Wong, adding, “80% of our material comes from people we have been working with for more than 20 years.”

Wong says honesty and direct communication regarding scrap descriptions and quality assessments are critical to maintaining Fukutomi’s reputation. “It is important that we are honest in terms of quality descriptions,” he comments regarding the complicated world of plastic scrap. “When we are properly describing to the best of our knowledge what we are selling, customers value that.”

A complication that has been stressful for Fukutomi in 2013 is Operation Green Fence, the cooperative effort by several Chinese government agencies to scrutinize inbound scrap shipments and prohibit certain materials.

“There was a lot of confusion in the beginning and it was very intense in the first few weeks especially,” says Wong of the February 2013 introduction of Operation Green Fence.

Since then the company has continued to contend with how to deal with certain types of scrap it used to be able to import into its Shantou plants or to other parts of China. “Now for computer scrap, if there is metal in a plastic shipment, you cannot import it,” he comments. “It’s a shame, because you can always recycle the metal, so I don’t think it’s really an environmental issue.”

Wong says Fukutomi has even had difficulties importing engineering resins used by computer makers that have a shiny silver look to them, as well as with compact discs. “Nonwovens are another victim,” says Wong, who says the company has not been able to import bulk bags and fleece into China throughout 2013.

At Fukutomi’s Hong Kong plant on a September morning, scrapped polypropylene (PP) fleeces are among the items being processed, extruded and packaged for later shipment into China.

Wong’s son Uwe Wong, who manages the Hong Kong plant, says the facility has been operating six days per week in the second half of 2013. On a busy day, there some 4 short tons of pellets and up to 10 short tons of flake can be produced by Fukutomi’s shredders, extruders and pelletizers.

The Hong Kong plant is an example of Fukutomi’s guiding philosophy of having diverse operations in different parts of the world and at a scale small enough that the company can avoid debt. “I believe in diversity in operations, the accumulation of skills and avoiding debt as core principles,” says Wong.

One way the company has avoided debt is by designing and building its own processing machinery, which it also markets to other companies through its Fuku Sunghoon China Machinery Manufacturing Co. Ltd. subsidiary. Fuku Sunghoon makes compactors, cutting machines, shape-molding machines and EPS (expanded polystyrene) recycling machinery. “The machinery division is receiving good orders,” says Wong. “People want to process as much as possible.”

In terms of scale, the processing and research facility in Shantou on 100,000 square metres of land is Fukutomi’s largest plant, though Wong is currently investigating whether Fukutomi should operate a plant in one of China’s specialized resource recycling parks.

Further integrating Fukutomi’s trading and processing operations remains a priority for Wong in the near future. “The demand for pellets and compounds is quite promising,” he comments. “I like to make my living from this company, but it’s also my passion,” says Wong, who adds that he likes the plastic recycling industry as much now as he did 30 years ago. “I like my job, and I like to work, even on Saturdays and Sundays. To me, every day is a holiday.”

The author is editor of Recycling Today Global Edition and can be contacted at btaylor@gie.net.