81.5 F
Los Angeles
Saturday, Sep 24, 2022

Bag Company Command Packaging Got Early Jump on Recycled Plastic

While most plastic bag manufacturers in California and around the nation are pouring millions of dollars into defeating a ban on single-use plastic bags on the statewide November ballot, a Vernon plastic bag maker is banking on the measure’s passage.

Command Packaging has spent millions of dollars on technology that allows it to produce plastic bags that meet the strict requirements the law would set up, making it one of two companies statewide to have done so. And if voters approve Proposition 67 next month, the company stands ready to market its bags to grocery chains.

California voters in November will face two measures focused on a 2014 state law banning single-use carry-out plastic bags at grocery stores. Plastic bag manufacturers placed both

measures on the ballot.


Summary: Referendum contains the text of SB 270, a law signed in October 2014 by Gov. Jerry Brown that bans single-use carry-out plastic bags at grocery stores. “Yes” vote upholds the law; “no” kills the law. After failing to block passage of that law, plastic bag manufacturers gathered and submitted signatures to qualify the measure for the ballot, with the intention of campaigning against it.

What supporters say: In this case, supporters are the supporters of the original law, including environmental groups such as Californians Against Waste, the state’s major grocery chains, and billionaire environmentalist Tom Steyer. They say flimsy single-use plastic bags strangle or otherwise harm wildlife, litter communities, pollute the ocean, and raise cleanup costs.

What opponents say: Opponents of the measure are the ones who placed it on the ballot. They are chiefly the nation’s major plastic bag manufacturers, led by Hilex Poly Co. of Hartsville, S.C. They say the law is a de facto tax on consumers, forcing them to pay at least 10 cents for each permissible carry-out bag supplied by the store and that none of that money will go toward cleaning up the environment.

Fundraising (through Sept. 30):

Supporters: $1.76 million. Major donors: Albertson’s; Ralphs/Food 4 Less; California Grocers Association; Steyer

Opponents: $6.1 million (for both this measure and Proposition 65). Major donors: Hilex Poly; Superbag Corp.; Formosa Plastics Corp.; Advanced Polybag Inc.


Summary: Measure addresses the minimum 10-cent fee SB 270 requires grocery stores to collect for all carryout bags (paper bags, thicker ban-compliant plastic bags, and cloth bags) that they provide at checkout. SB 270 allows grocers to keep these fees, but this measure would require grocery operators to place the money in a state fund operated by the Wildlife Conservation Board for environmental mitigation projects. It was placed on the ballot by plastic bag manufacturers; the strategy is seen by some as an attempt to peel off grocery store support for the plastic bag ban.

What supporters say: Plastic bag makers and their allies say SB 270’s bag fee paid at checkout represents a tax on consumers that enriches the pockets of grocery store operators. Measure would redirect that money toward environmental programs.

What opponents say: Though they don’t officially oppose this measure, bag-ban proponents say it is a ploy by plastic bag manufacturers to divert voter attention from the real issue, Proposition 67. Manufacturers, opponents say, want to confuse voters enough so they are more likely to vote against Proposition 67.

Fundraising (Through Sept. 30):

Supporters: $6.1 million (for both this measure and Proposition 67). Major donors: Hilex Poly; Superbag; Formosa Plastics; Advanced Polybag.

Opponents: No official campaign committee specifically for this measure.

– Howard Fine

Sources: California Secretary of State; Ballotpedia.

Pete Grande, Command Packaging’s chief executive, said the decision to make ban-compliant plastic bags was made nearly five years ago, after Manhattan Beach became the first city in the region to ban single-use plastic bags and require any future plastic bags used in grocery stores to contain a certain amount of recycled plastic.

With the public becoming increasingly aware of the pollution and disposal problems caused by more than 10 billion single-use plastic bags each year in California, Grande and other top executives at Command Packaging figured bans on single-use plastic bags would gain momentum and could eventually spread statewide. The city of Los Angeles enacted its ban a couple of years after Manhattan Beach took its action.

“We looked at the landscape and decided environmental sustainability had to be an important part of the company,” said Grande, 58.

So far, the company’s instincts have proved correct. After Manhattan Beach in 2008, 122 local ordinances banning single-use plastic bans have been passed in California and dozens more have passed in cities in other states, according to Californians Against Waste, an environmental group that has been leading the bag-ban charge.

All of these bans, as well as the statewide ban on the ballot, target thin single-use plastic bags used at the checkout counters in grocery stores or other large retail outlets that sell groceries. The plastic bags used for produce are not included, nor are heavier plastic bags designed for multiple uses.

Command Packaging first switched to making so-called “heavy use” plastic bags that can be reused more than 100 times. Then it spent $15 million to build a plant in Salinas that takes plastic that has been used to cover agricultural crops and extract resin from it. That resin is then injected into the bags it makes at its Vernon facility.

So far, the recycled plastic resin is used in about 10 percent of the bags Command Packaging makes. The company sells those bags to some grocery chains for use in cities that have already banned single-use plastic bags as well as other retail outlets and restaurants that want to make an environmental statement.

Executives of privately held Command Packaging would not disclose its major clients, revenue, or how many of these bags they make, citing competitive reasons.

But Grande said if the ballot measure passes, the plan is to expand very rapidly.

Referendum ploy

Proposition 67 is actually the text of a bill, SB 270, passed by the Legislature and signed by Gov. Jerry Brown two years ago.

In a last-ditch effort to stop the law, several major plastic bag manufacturers placed the bill text on the ballot as a referendum, with the intent to campaign against it. As of Sept. 30, these plastic bag makers had raised $6.1 million for an opposition campaign. Bag-ban proponents had raised nearly $1.8 million.

Of course, qualifying the referendum had an immediate benefit for the law’s opponents: The ban’s July 1, 2015, implementation date was pushed back.

Under SB 270, all major grocery stores and chains can only use heavy-duty plastic bags that are certified for reuse at least 125 times. More importantly, the plastic used in the bags must initially come from at least 20 percent “postconsumer” content, meaning plastic that has previously been used. That threshold ramps up to 40 percent after four years.

Command Packaging’s ban-compliant bags have concentrations of recycled resin from the Salinas plant well in excess of 20 percent of all the plastic used in the bags, Grande said.

According to Mark Murray, executive director of Californians Against Waste, a lead crafter of SB 270, Roplast Industries of Oroville is the only other plastic-bag maker in the state to begin producing bags with postconsumer recycled content.

The L.A. area’s other major plastic bag manufacturer, Crown Poly Inc. of Huntington Park, has moved toward heavy-duty reusable plastic bags, but it decided not to invest in technology to boost the recycled plastic content of its bags.

Executives with Crown Poly declined to comment.

So, for now, that leaves Command Packaging as the only regional player to make bags that contain some recycled plastic resin.

Hefty wager

Grande started his career at Dow Chemical Co. and was senior vice president at Hilex Poly Co., one of the largest plastic bag makers in the nation, before leaving to start Command Packaging in a warehouse industrial facility in Vernon in 1989. For the next 20 years, the company made single-use plastic carry bags for the retail industry, before introducing heavier-grade multiple-use bags in 2009. Today, the Vernon plant employs about 225 people; an additional 25 are employed at the Salinas resin recycling plant.

For a while, the company’s heavy upfront investment in the Salinas plant four years ago looked like it might not pay off.

The delay in implementing the state ban and uncertainty over whether the referendum would pass meant grocery chains were in no hurry to switch bag providers. What’s more, the collapse in oil prices resulted in a plunge in virgin plastic prices, meaning single-use plastic bags became much cheaper to produce. That, Grande said, forced the company to lower its price point for its recycled resin plastic bags to compete. The bags facing the ban sell to grocers for 2 cents each; bags allowable if the proposition passes sell for 7 cents to 10 cents each.

However, Grande said the delay in the law’s implementation did have one silver lining: It gave the company time to further penetrate other markets besides grocery stores, especially restaurants and nongrocery retail outlets such as clothing stores.

“That side of our business is now much more viable,” he said.

Now as the vote nears on Proposition 67, Command Packaging looks to take pole position among manufacturers of plastic bags that comply with the measure.

No polling has been released on this referendum measure to date; a Los Angeles Times/USC Dornsife poll from two years ago – after Brown signed SB 270 – found 59 percent support.

Lead vanishing?

But Command Packaging’s advantage might only be temporary. For starters, the measure appropriates $2 million to a state loan account to help manufacturers produce plastic bags that use recycled content. That could give potential rivals a way in.

Grande said he’s more concerned that eventually larger plastic bag manufacturers will catch on, convert their processes, and dominate the market. That’s one reason why he said penetrating other markets that don’t face mandates, such as nongrocery retail and restaurants, is so important.

Another potential concern is the extent of wiggle room plastic bag makers will have in certifying their claims of postconsumer reusable content. SB 270 states that companies must submit third-party verification of their content claims.

Keith Vorst, a researcher in the polymer and food protection consortium at Iowa State University who is working with Command Packaging on verification issues, said that some manufacturers might be tempted to include in their definition of recycled content plastic that is left on the manufacturing room floor, which is not considered postconsumer. And he believes the requirements surrounding third-party verification are not stringent enough.

“Command Packaging has taken a major risk in investing so much money in the technology to extract postconsumer resin,” Vorst said. “But other manufacturers may try to take short cuts and be able to charge less. So Command Packaging may be doing the right thing, but the money can seem to be wasted.”

Grande said the provisions built into the law are for the remedies for alleged cheating to be addressed through the legal system.

“If a bag supplier believes a competitor is selling noncompliant bags, they will file a complaint with the court,” he said. “The burden will be on the accused to demonstrate they are compliant.”

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

Featured Articles


Related Articles