Cereplast exits bioplastic manufacturing

Instead of manufacturing its own bioplastic, Cereplast said it will follow the semiconductor industry’s business model and rely on contract manufacturing to reduce costs.

TheCalifornia-based bioplastic producer said that it is exiting themanufacturing business and instead will contract with large compoundersto produce its bio-based resins because of a worldwide excess ofplastics compounding capacity. Cereplast will instead focus on productdevelopment and customer service.

“Withincreasing worldwide demand for bio-plastics driven by a movementtoward sustainable solutions, we now realize that relying on our ownmanufacturing facilities will actually limit our growth. Buildingmanufacturing capacity is extremely capital and management intensiveand best left to those who make it their specialty.”

Cereplastcurrently has production facilities at its headquarters in Hawthorne,California and a yet-to-be opened facility in Seymour, Indiana. Thecompany said it is currently trying to reduce its in-housemanufacturing capacity and its manufacturing-related workforce.

Ido wonder if Cereplast will only concentrate on domestic plasticcompounders or will it go outside the US where materials and labor arecheaper? It seems that US plastic compounders are at disadvantageespecially when it comes to plastic bags as imports are flooding infrom Vietnam, Taiwan and Indonesia.

According to the US International Trade Commission (ITC),the plastic bags from these countries are being sold in the US at lessthan fair value. Government subsidy programs also greatly benefitsplastic bags producers in Vietnam making it possible for them to exportcheaper plastic bags, said ITC.

[Photo from CNET Networks]

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