Printer Friendly

Recycling risks.

A $1.67 Million 1991 Loss Didn't Daunt This Rogers Company

"If Melvyn Bell can make money in this business, anyone can," quips one Little Rock advertising executive about the founder and former chairman of Environmental Systems Co.

Indeed, a growing number of companies are involved with cleaning up and conserving the environment.

One of the latest is a 3-year-old company with operations in Rogers, Advanced Environmental Recycling Technologies Inc.

"We're very close to the exciting part," says AERT President Joe Brooks.

He's talking, at least in part, about making money.

AERT has plastic reclamation and composite lumber manufacturing facilities at Rogers and Junction, Texas.

The company began operations in December 1988, combining polyethylene from recycled plastic grocery bags, milk jugs and coated cartons with wood-fiber wastes. The result was composite building materials.

The scope of the company's work has expanded since then.

"No sooner than you get started, you have to expand," Brooks says. "We've been overwhelmed."

But Brooks knows it is important to stay focused. Before facilities are added, the company will work to maximize the potential of its two existing facilities. He thinks those facilities can handle annual sales of $12 million to $13 million.

AERT has yet to make a profit.

In 1991, the company lost $1.67 million. Projected 1992 sales are $8 million.

Brooks says start-up costs of $2.2 million didn't hinder the company as much as later operational obstacles. Changes brought about by the Tax Reform Act of 1986 and problems in the banking industry caused investors to avoid risky ventures.

"People finally have realized we've gone overboard," Brooks says. "In a lot of ways, they have taken away the American dream for the little guy."

AERT raised $5.4 million in venture capital when the company went public in November 1989. The company's underwriting structure is designed for three stages that should produce $25 million in capital.

"Since we've gone public, you could not have written a better script of the world around |us~," Brooks says.

Federal regulations protecting the spotted owl and other endangered species caused prices for some grades of lumber to increase by 80 percent. That made AERT's moisture-resistant building materials more attractive.

Brooks thinks an expected housing rebound will cause the price of lumber to go even higher.

The environmental movement also has gained momentum since AERT was formed.

Brooks says many of the recycling programs that began in recent years were creations of Madison Avenue public relations firms. The programs were based more on marketing potential than solid scientific research and development, he says.

Lucrative Loans

"One of our objectives is to be the Apple Computer |Inc.~ of the environmental industry," Brooks says.

Brooks projects the company will see a second-quarter profit of between $400,000 to $500,000. Although some analysts still have doubts, Brooks says AERT has the potential to produce annual revenues of $500 million in 10 years.

"People didn't give companies like Apple much credit when they started, either," Brooks says in response to those analysts' doubts.

There are plenty of businesses that already have confidence in AERT.

For instance, officials at Dow Chemical USA read about AERT in a plastics magazine, evaluated what the company is doing and decided to enter into a joint development contract for plastic film reclamation. The contract will allow AERT to further develop its recycling technology.

Dow loaned AERT $1 million to expand a plastic recycling facility and then gave the company a $100,000 advance for product sales.

AERT also is receiving plastic film wastes from Rubbermaid Inc. and the Mobil Corp., both of which have agreed to participate in AERT's recycling program.

A $400,000 loan from the Arkansas Industrial Development Commission will be used to expand the Rogers complex.

AERT has seven patents. Five are for the company's composite building materials program, which includes products under the trademarks Bioplaste and Moistureshield. The other two patents are for AERT's plastic film technologies.

AERT has given Dow, the world's largest producer of polyethylene, the chance to purchase finished materials from a new development line.

Doug Brooks, AERT's executive vice president, says the Dow loan and affiliation are significant in several ways.

"What is important here is not only the creation of new jobs, but also the furthering of innovative technologies that could play an important role in diverting plastic films from the nation's landfills," he says.

AERT had only a handful of customers when it began operations. A major client was Peachtree Windows and Doors of Norcross, Ga., which was impressed by the moisture-resistant composites.

Joe Brooks wants to keep his original customers, but he's also excited about new business opportunities such as a possible account with Tri-Lateral Sales Inc. of Springfield, Mo., a supplier to the glass division of Ford Motor Co. The project involves the development of crating material that would replace wooden containers the company uses to ship glass.

"We saw an economic need, and we saw a chance to build a better mousetrap," Joe Brooks says.

How does one know when a company is a success?

"When you start making money and can prove that you're not only technologically advanced but that you have the better mousetrap," Brooks answers.
COPYRIGHT 1992 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Corporate Conservation; Advanced Environmental Recycling Technologies Inc.
Author:Rengers, Carrie
Publication:Arkansas Business
Article Type:Company Profile
Date:Feb 17, 1992
Previous Article:One man's trash....
Next Article:The pollution solution.

Related Articles
One man's treasure: Rogers-based AERT is converting plastic bags into dollar bills.
Ignoring the environment is bad for business.
Steady improvement, plus breakthroughs.
Waste glorious waste.
Do not pass go.
Cutting consumption is greenest path.
CBRE sees the light and pledges to reduce mercury.
Emirates Airs New Environment Programme.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters