“Cereplast is poised to do well as people want to shift away from using petroleum products more and more with rising environmental consciousness,” Mojo said.

Rough time

Plans to open a manufacturing facility in Seymour, Ind., south of Indianapolis, were announced in late 2007, but were delayed because of the recession. Scheer said it now makes more sense to shift production and 15 of 25 employees to Indiana for cost cutting. The remaining 10 will move from Hawthorne to El Segundo in coming weeks.

The company did about $5 million in sales last year, but that was down by 50 percent for some quarters because clients were delaying orders, Scheer said.

For example, Highland Park, Ill.-based Solo Cup was supposed to introduce a compostable cup made with Cereplast’s resin in a line called Bare in early 2009. But Solo postponed the line’s launch until November when market conditions improved.

“Our customers were just worried about having too much inventory and not enough demand, so that hurt us in the middle of the year especially,” Scheer said.

On the financial side, Cereplast in December closed a $2.23 million private placement to accredited and institutional investors. Scheer said he plans for the company to become profitable by third quarter 2010.

“We want to raise our profile and have more access to liquidity, and have seen cases recently where shareholder value appreciated significantly due to solid business developments coupled with the up-listing of a company’s shares,” Scheer said.

One solid business development could come from a more concentrated effort on European business in bio-plastics, which market research firm Frost & Sullivan said in a 2007 report has experienced exponential growth. Cereplast recently signed a distribution agreement for the European market.

Although bio-plastics only account for about 1 percent of the European plastics market, Mojo said that Europe is starting to catch up fast with the United States.

“It makes sense for Cereplast to ink the (distribution) deal because Europe seems pretty receptive to bio-plastics with the high cost of oil,” Mojo said.

Scheer said that the majority of his sales still go to companies in North America, such as Dorel Juvenile Inc., a Westmont, Quebec, company that has introduced a line of infant products made from Cereplast’s resin at large retailers in the United States under the brand Safety First-Nature Next. Products include infant toilets, booster seats, bathtubs and stools.

Dorel selected Cereplast after working with the company for a year to develop a resin that met its needs.

“This was the only bio-material that passed our rigorous testing standards,” said Dave Taylor, chief executive of Dorel Juvenile Group, the company’s U.S. division, based in Columbus, Ind.

Scheer anticipates more success stories now that he sees the first signs of recovery.

“Being in Los Angeles and tapping into the talent here has made us more successful despite the bad year behind,” Scheer said. “I’m looking forward to 2010.”


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