"I figured we should go after universities and municipalities," says Robbins. "With landfills being close to capacity, government seemed a natural. The universities also seemed a good fit, given the environmental appeal of the product.
"I thought there might be a consumer market as well. I could see selling our picnic tables through hardware stores. And I knew there'd also be a commercial application -- things like pallets -- but I wasn't really going to chase that hard at first."
What happened? Commercial sales now account for virtually all of his revenues.
Why? Because the huge marketing advantage Robbins thought he had -- that he's using only recycled plastics -- produces nothing but yawns when he explains it to schools and government.
Yes, they quickly acknowledge, using recycled components is a good idea. Now, let's talk price.
The moment that happens, Robbins is on the defensive. His parking stops cost about $22.50, or about 50% more before installation, than those made out of concrete. His picnic tables are easily twice the price of their wood counterparts.
But, Robbins argues, those prices are misleading. You must look at the long-term costs of using plastic versus concrete or wood. "Somewhere around 5 to 10 years out, we actually become cheaper, and we get more so every year after that, because there are no maintenance costs."
That may be, but his product is still more expensive initially. Cost savings over a product's lifetime can be a very difficult idea for schools and especially municipalities -- which are used to awarding contracts to the lowest bidder -- to understand.
Robbins's marketing thrust isn't misguided. The biggest company in this tiny field is getting a very large part of its revenues from a municipality. But at $3.5 million in sales, Hammer's Plastic Recycling Corp., in Iowa Falls, Iowa, can afford to have a marketing staff. Hammer's people met continually with city of Chicago park department officials, for instance, to answer their questions, eventually working out a deal for landscape ties for playgrounds and plastic slats for park benches.
But Plastic Lumber Co. is woefully undercapitalized. There's no money for a marketing staff. In fact, there's not much of a staff at all. Robbins and Boersma had a falling out, so the entire company consists of Robbins, his administrative assistant, and the four plant workers who actually turn out his product.
If you're running the plant and front office, and also chasing every sales lead that comes in, you don't have a whole lot of time to spend educating some civil servant about the long-term advantages of plastic lumber. While there are growing signs that states and municipalities may be willing to exempt recycled products from the traditional bidding process, that hasn't happened yet.
Fortunately for Robbins, businesses get the concept right away. Some 80% of The Plastic Lumber Co.'s revenues come from a placement in a building-supply catalog.
But that's not the kind of sales mix Robbins was looking for. For one thing, he's now overly dependent on that one distributor, and for another, selling to businesses just about locks him into commodity status.
When Robbins was punching numbers into his Lotus spreadsheet, trying to forecast potential profit margins, he assumed he would average 20% pretax profits. In part, he'd do that by keeping his costs low -- while Robbins budgeted raw materials cost at 44% of sales, labor was expected to be just 9%. But he also expected he'd fetch a premium price for his products.
First off, he thought he'd get a bit more for shaping that recycled plastic into picnic tables and the like. "After all, every time you punch a hole or screw in a bolt, you're adding value, and people are willing to pay for that," he says. And given the unique nature of his goods, plus the lack of competition in the field -- financing for recycling companies has proven hard to come by -- Robbins figured people would be willing to pay a little extra for something that was environmentally on the side of the angels.
Well, some consumers might. And so might some universities. But businesses tend not to be that altruistic. "Purchasing agents are trained killers" is the way Robbins puts it. So far, pretax margins on the speed bumps and car stops he has sold to commercial accounts -- businesses tend not to buy Robbins's value-added products -- have been lower.
Bothersome as this is, at least Robbins knows there's a market for his paving products. With plastic lumber . . . well, let's quote the business plan: "The plastic lumber market can only be considered in its infancy."
To be honest, no one knows what kind of recycled plastic products -- if any -- the market wants, and that's an important point, because when it comes to recycling, there is plastic and then there is plastic.
Some companies, such as Wellman Inc., headquartered in Shrewsbury, N.J., have chosen to specialize. Wellman deals almost exclusively with polyethylene terephthalate, which is used to make soda bottles. Empty soda bottles are traditionally recycled into things like carpet fibers and the linings of parkas and sleeping bags.
The problem is that the equipment needed both to recycle polyethylene terephthalate and to convert it into usable products is expensive. The Plastic Lumber Co. avoids most of that cost by being less fussy about the plastics it uses. It either buys raw materials or cleaned and sorted scrap, which is then melted down and extruded.
However, since the resulting plastic is a blend -- a catsup bottle, for example, which might be part of the company's raw materials mix, is made up of five to seven different plastics -- it's impossible to predict the quality or strength of the resulting products.
That's why the company focuses on making simple products in which the specific properties of the plastic are not important.
Robbins started by selling mailbox posts and picnic tables because they are relatively easy to make. "We're not all that skilled as craftsmen," he says with a shrug. He'll be more than happy to add to the line -- within the limits of his plastic's quality, of course; making a plastic four-by-four to support a swing set would be out of the question, for example, because its strength would not be up to code. But first he needs the market to tell him what it wants.
Ironically, Robbins is finding himself with more time to listen than he expected. His products turned out to be very difficult to sell during cold weather. Nobody is going to go and put a speed bump on the ground when it is 20 below zero, and very few people go looking for picnic tables when they have to shovel their way out the front door. "I didn't realize the extent to which we would be affected by the weather," he says. "Next winter we will concentrate our marketing efforts on the southern part of the country, and on building inventory."
