Bioplastics manufacturer Trellis Earth Products Inc. plans to build a $10-million manufacturing facility on its Wilsonville site in the first quarter of 2012 as the company aims to lower its prices and better compete with oil-based products. The green-leaning company manufactures – in China at the moment – biodegradeable bags, including trash liners and doggie bags, takeout containers and cutlery.
Trellis Earth sells $500,000 in products each month to approximately 500 customers on the West Coast as well as in New York and Connecticut, including 65 food distributors. All of the Fred Meyers in a three-state region use their cutlery. QFC, Cash & Carry and Trader Joes are also customers.
Trellis Earth is raising money to move two thirds of its manufacturing from China to its 33,000-square-foot facility at 9125 S.W. Ridder Road in Wilsonville. Bag manufacturing will remain oversees. The transition is expected to reduce the price point of their other bioplastic products, bringing costs level with oil-based, standard plastic competitors for cutlery and takeout containers, in particular.
“This is the number one product we will make here in Oregon and we are absolutely going to be positioning that to cost parity with plastic products,” said Bill Collins, founder and CEO of five-year-old Trellis Earth. “If someone can convert to your products and not pay anymore than they pay for traditional plastic products, we say they have gone green for free.”
Moving consumers to their green utensils, bags and containers is Trellis Earth’s ultimate goal and the level-off of price has the greatest chance to achieve it. Plastic resins currently cost $2,000 per metric ton. Trellis Earth replaces 70 percent of the plastics in its products with cornstarch using patented technology. The cornstarch costs $400 per metric ton. Though their products currently cost less than half the price of oil alternatives to manufacture, Trellis is currently losing the cost advantage by manufacturing in China, paying duty and transportation costs.
“When we are making the products in the U.S., we will be able to lower prices by 15 percent and still have a U.S.-made product,” Collins said. The price advantage has garnered support from the investment community. Brett Conrad’s Los Angeles-based Blue Earth Fund invested $500,000 in Trellis Earth. “Trellis is exactly the kind of company we like to put in our crosshairs,” Conrad said. Blue Earth has invested in wind and solar energy manufacturing and the bioresin company Cereplast.
Conrad said Trellis Earth has seized on important trends like reducing petroleum use, pollution and carbon footprints with its products and has a direct relationship with the consumer, putting it in a unique position to build its brand around containers, trash bags, cutlery and utensils in a way that no other company can. He believes Trellis Earth, if correctly positioned, could long be associated with green living by consumers nationally.
“What gets me excited is people want to go green, but they’re not necessarily interested in paying a big premium for it. In this case they don’t have to,” Conrad said. He said Trellis Earth has other advantages: the company is building a solid staff and supply chain, is prepared to deliver bigger orders, and has the research and development capacity to continue to expand products and market share.
Collins, one of three of Trellis Earth’s founding executives, has been focused on growing the company. After the startup made a splash in 2007, the recession made for slower growth than first predicted. But the market for bioplastics has since broadened, with greater consumer acceptance and with interest from restaurant and retail buyers, including Costco, that are demonstrating their environmental stewardship. Retailers may also turn to Trellis Earth for help in complying with plastic bag bans such as the one passed this summer in Portland.
Trellis remains focused on reducing the oil content of its bioplastics and recently patented its cutlery and takeout containers, according to Collins.
“By the end of next year, 50 percent of our products will have no petroleum in them whatsoever. We’re two thirds of the way there already. But there are some developments that are going to enable us to finish that trend next year,” said Collins.
Trellis also announced several key hires and board appointments to aid the transition to a public company last week. Collins said its Wilsonville staff is now 20 strong. He plans to hire another 40 workers after the completion of the manufacturing facility in early 2012 – 30 in manufacturing and 10 in the sales and marketing departments.
Source: Trellis Earth, press release, 2011-09-02.