Services of local plastics recycler sought after: Butler-MacDonald builds foundation for growth

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The company that recycles high-resin plastic like the kind found in computers was attractive to other cities, but the two decades it spent developing a skilled work force and market here made cutting its roots difficult.

Instead of moving across state lines, Butler-MacDonald last month moved across Park 100. Though the 80,000-square-foot facility is only 1,000 square feet larger than its former home, the new configuration allowed for nearly $1 million worth of upgrades in machinery and infrastructure.

“We were looking at the whole picture,” said Scott Johnson, who owns the firm along with his wife, Sue.

The whole picture included surveying Butler-MacDonald’s clients, most of which are within 700 miles of Indianapolis. Given the demand for the type of recycling Butler-MacDonald handles, the market is likely to expand.

“We think Indianapolis is the best place for us to grow,” Johnson said. “It’s centrally located and has very good transportation infrastructure.”

Butler-MacDonald’s growth has topped 20 percent each of the last seven quarters, with year-over-year growth in 2004 at 51 percent, said Johnson, whose father, J.D., founded the company in the late 1970s. Johnson projects doubling sales growth within three years, though he declined to divulge company revenue.

Michael LeGault, editor of Torontobased Canadian Plastics, thinks Johnson’s growth goals are realistic. Superior technology and a skilled work force, LeGault said, make Butler-MacDonald one of the industry’s most sought after recyclers of parts found in computers and televisions.

“We’re not talking about recycling milk jugs and bleach bottles,” LeGault said. “The type of separation we’re talking about is really cutting-edge stuff. They’re doing the kind of stuff other recyclers wish they could do.”

Dealing with mixed metals, colorization, paper labels and other contaminants have given recyclers fits for years.

“When you’re talking about usable recycled goods, they often have to be better than 99-percent pure,” LeGault said. “And the purer they are, the more end uses they have.”

Butler-MacDonald is the only recycler of its type in the United States and one of only two in the world with its separation and recycling capabilities, industry sources said. Johnson won’t reveal his company’s clients, but said in addition to many Fortune 500 firms, Butler-MacDonald handles work for other recycling companies that can’t match the firm’s capabilities.

“We’ve become a recycler’s recycler,” Johnson said. “We built the business with a strong emphasis on quality and that has built demand.”

While many of Butler-MacDonald’s clients are a day’s drive from Indianapolis, demand is pushing the boundaries of the company’s sales footprint. Recently, Butler-MacDonald signed deals to work with clients in Mexico, Germany and Ireland.

Johnson intends also to diversify Butler-MacDonald’s customer base, strengthening its presence in the automotive, construction and home entertainment industries. Butler-MacDonald currently has 35 employees, but a third shift is possible soon.

The proliferation of electronics in the last two decades is driving the need for Butler-MacDonald’s services, said Julie Ann Stuart, an assistant professor in Purdue University’s School of Industrial Engineering.

“There’s been a lot more focus recently on recycling plastics from electronics,” said Stuart, who has studied Butler-Mac-Donald’s operation. “This is an emerging market and this company is emerging with it.”

Increasingly, Stuart said, governments are regulating disposal of computers and other electronics. The movement started in Europe, LeGault said, but is spreading to North America.

There’s an upside for recyclers. The resins in electronic equipment have far greater value than those in milk jugs and soda bottles.

“If these high-quality resins can be recycled in a pure form, their value approaches that of virgin plastics,” Stuart said. “That means there are markets more readily available.”

Butler-MacDonald recycles 23 million pounds of plastics annually and has the capacity to eclipse 30 million, but Johnson doesn’t take on jobs unless he has a buyer for the end product.

Butler-MacDonald charges a fee for its service and sometimes gets a cut of the recycled goods’ sale. Often, clients want the recycled materials back. Other times, Butler-MacDonald is responsible for finding another market.

“We don’t speculate. We don’t take things in hoping to someday make something good out of it,” Johnson said. “We either have a customer or a market.”

Northwest-side recycler Butler-MacDonald Inc. recently moved into new space at Park 100. Under Scott Johnson’s ownership, sales grew 51 percent last year.

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