AERT plant to process 'lower-grade' recycled plastics

BY LAURIE WHALEN

Posted on Sunday, May 17, 2009

WATTS, Okla. - Advanced Environmental Recycling Technologies Inc. says an $11.5 million factory here will allow it to use cheaper, less desirable raw materials to help it reduce costs on its recycled plastic products. AERT makes decking planks and accessories, exterior door components and housing trim using a mix of recycled plastic and wood fiber. A lot of plastic sold to AERT requires minimal cleaning but eventually "lower-grade" recycled plastics will be processed at Watts and resold to other manufacturers, company officials say.

The financially struggling company is banking that selling this processed plastic will create a valuable second revenue stream. AERT sees it as a way to become independent of the seasonal sales cycles associated with deck materials.

"We'd like to diversify ourselves so that we're not wholly dependent on how many boards get sold at a Lowe's store or at a professional deck distributor,'' Tim Morrison, AERT's president, said.

The Watts facility, now just a massive metal shell, will be in operation by September, Morrison said. The company already operates a processing plant in Northwest Arkansas at Lowell which opened in 2004.

Springdale-based AERT employs 500 and has struggled as home construction and remodeling slumps hurt demand for its product.

A first-quarter U.S. Securities and Exchange Commission filing again relayed a "going concern" opinion. Usually a red flag to investors, the accounting term questions whether the company is viable, according to The New York Times Dictionary of Money and Investing. AERT's annual report in March first referenced the opinion.

AERT also faces delisting on the Nasdaq exchange because of negative stockholder equity. The stock is also in violation of a $1-per-share minimum closing price regulation. AERT's stock has traded below $1 since December 2007.

With the price of plastic on the rebound from lows reported in October, now might be a good time to sell plastic. Morrison said the company intended to reap the benefits.

Not only is he convinced that AERT has the technology to allow it to happen, but he added that the process requires half the amount of workers compared with the company's Lowell plant.

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