Cereplast Inc.

Founded: 2001
Core Business: Makes biodegradable resins that are used for disposable plastic products
Employees in 2007: 32
Employees in 2006: 19
Goal: To boost production to become the industry leader in the manufacture of biodegradable and compostable plastic resins
Driving Force: Rising environmental concerns and oil costs that are making food packagers look for alternatives to petroleum and natural gas-based plastic resins

As plastic food containers increasingly come under fire because they don't decompose and they do use fossil fuels, one local company is taking advantage of this trend by mass producing a biodegradable plastic.

Hawthorne-based Cereplast Inc. makes resins the building blocks of all plastics out of renewable and biodegradable crop starches, instead of the traditional petroleum or natural gas resins. It sells the resins to various food packagers that are just beginning to incorporate them into their products.

Frederick Scheer, founder and chief executive of Cereplast, is happy to point out the environmental benefits of his resin, noting it can be composted, decomposes in landfills and marks a small step away from reliance on greenhouse gas-producing petroleum refining.

But he's counting on market forces to lift his small company, which recorded just $726,000 in 2006 sales, to the big time.

"Yes, our resin is fully biodegradable, but I believe more in the power of the market to drive this," Scheer said. "With the high cost of oil now, our product is actually cheaper to make now than many traditional resins, and that's what will drive the plastics industry toward it."

Scheer speaks from experience in trying to bring a biodegradable resin to market. The French native first stumbled into this niche while working as a turnaround specialist in the Los Angeles office of ING Groep NV, the huge Dutch financial and investment services concern.

In the early 1990s, Scheer was sent to help restructure Italian industrial giant Montedison S.p.A. and chanced across a Montedison unit that was trying to make a biodegradable plastic resin, with limited results. Scheer liked the concept well enough to gather some partners, leave ING and buy the unit. He then tried to jump start the venture in the U.S.

But the effort soon fizzled. With the technology available at that time, making a biodegradable resin proved expensive, especially during a time of cheap oil. "We were several dollars per pound, while the industry average was $1 per pound. We had to find a way to get the cost down below $1 per pound," Scheer said.


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