Dive Brief:

• Evergreen Recycling, a PET bottle recycling plant in California, will lay off 57 employees as it moves to close a portion of its facility in Riverside.
• Evergreen, which describes itself as one of the largest North American producers of food-grade rPET, said in a statement that “economic factors” influenced its decision to close its sort and wash department. It will stop purchasing PET bales, but will continue its operations to convert recycled PET flake into resin.
• A WARN notice to the California Employment Development Department indicated that layoffs could start around March 24. Some recyclers in the region said they were given enough notice about the closure to start selling their recycled PET bottles to other reclaimers in the region.

Dive Insight:

Evergreen’s partial closure will have a notable influence on the regional capacity for processing PET bottles. 

Some industry observers expect higher volumes of the material to be exported to Mexico, which could impact business for the remaining reclaimers in California and affect prices for rPET. There are now five reclaimers in California that will still purchase PET bales, said Sally Houghton, executive director of the PET Recycling Corporation of California.

Evergreen, backed by private equity firm The Sterling Group, acquired the Riverside plant from CarbonLite Holdings in 2021 after that company filed for Chapter 11 bankruptcy. Soon after, Evergreen invested in robotic sorting equipment at the facility, a move meant to increase PET bottle volume and quality for recycling.  

Evergreen also has recycled PET plants in Ohio, New York and Nova Scotia, and the PE firm in 2022 announced it would invest $200 million in upgrades and improvements across those locations.  Evergreen previously estimated that it processes more than 2 billion postconsumer PET bottles a year across all of its plants, according to its website.

Evergreen did not respond to requests for comment. The company told Plastics News in a statement that the layoffs at the Riverside plant were “not taken lightly” and were a “strategic decision” meant to make the plant more efficient. The Riverside plant will continue its existing resin production operations “while identifying new ways to advance environmental responsibility and circular economy initiatives.” 

PRCC purchases PET bottles for resale to reclaimers, including Evergreen. Houghton said PRCC so far is still able to sell PET bales elsewhere in the state, though she said PRCC sold “quite a considerable amount” of its material to Evergreen. “In the long term, the demand is still there for bales. But this will obviously reduce the capacity for these bottles,” she said. 

Mexico “is quite hungry for bales” and has positioned itself as a key player in the regional rPET market in recent years, Houghton said. “Mexico has expanded its capacity in the last 18 months, and it will continue to do so. My opinion is that Mexico will become the hub for processing rPET” in the region, she said.

At the same time, she expects that other California reclaimers will also step up their purchasing of PET bales. This “period of adjustment” could mean bale prices drop, she said.

Uncertainty from recently announced tariffs could also influence bale price and availability in regional markets in the coming months. The Trump administration has agreed to pause a planned 25% tariff on goods from Mexico until March 4. However, if tariffs are eventually enacted, U.S. converters close to the border could possibly feel the effects, said Emily Friedman, recycled plastics senior market editor at ICIS. It’s too soon to say how that might affect price, she said.

News of Evergreen’s partial closure drew criticism from environmental groups who say California has seen several plastic recycling facilities change hands in recent years, even as the state passes more laws related to boosting recycling efforts. 

“This company closing is proof that we can’t solve the single-use plastic pollution problem with plastic recycling,” said Susan Keefe, Beyond Plastics’ Southern California director.

She pointed out that the state has a bottle bill meant to incentivize PET bottle collection, along with rules requiring beverage containers under the bottle bill to contain at least 25% recycled content. “Even with all [these laws,] we still have companies that are laying people off.,” she said. “If we don't have PET bottle recyclers in our state that are able to handle this volume, how are we going to get to that 25% rate?”