Business Legs from Recycling Dregs

Fresh Squeeze
As you read this article, a kind flight attendant might offer you a glass of juice or some milk for your coffee. They can satisfy your thirst at 35,000 feet because of the high-tech packaging that keeps natural beverages protected and fresh. But the mix of plastic, paper and aluminum that seal the taste into your orange juice represent non-biodegradable waste that burdens landfills, costs money and puts the squeeze on the environment.

Natural Solution
As you take another sip, you might expect this article is about recycling used cartons, and perhaps making a business of it. But its not. That has already been done. Across Europe, the system for collecting and recycling used "Tetra Pak"ù cartons is well developed. Indeed, the carton that provided your drink has about a 20% of chance of making it to a recyclery, along with about 25 billion others every year. And those recyclers extract paper fiber from used packaging and remanufacture it into new packaging for consumer products such as boxes for breakfast cereal.

Residual Problem
Terrific"_for the paper portion of your drink carton. But what about the plastic and the aluminum? We don't see those in a cereal box. The reason is that the gooey muck left over from the paper part of the recycling process gets dumped into landfills. For a large recycler such as Stora Enso in Barcelona, that means 30,000 tonnes a year of sludge, costing about $1.5 million to "tip"ù into the earth. Messy on every dimension.

Residual Opportunity
Unless you are Hans Cool or Gijs Jansen. Where we see mess, they see money. Similar entrepreneurial inversions have previously fuelled this column, from Husk Power Systems using agricultural waste from rice production to provide electricity in remote Indian villages to Judi Henderson-Townsend building a business recycling mannequins. But Cool and Jansen gain credit for an advanced level by working to find a commercially viable use for the waste output from waste processing.

Novel Combinations
Their solution combines two elements Cool and Jansen had readily available; 1) plastic/aluminum soup in large quantities, and 2), an introduction from their MBA classmates to Carlos Ludlow-Palafox, a PhD in Chemical Engineering from Cambridge University working on pyrolysis, a process that gasifies plastic. With these ingredients, the team formed Alucha, a venture also of novel combination in name as it merges the word aluminum with the Spanish verb luchar, meaning to fight or struggle. The next step - managing the struggle by engaging as many more committed partners as possible.

Partner Soup
Cool and Jansen's first stop was a visit to Stora Enso in Barcelona. After hearing their idea of converting sludge into value, the manager of the recyclery showed the pair to dormant machine - a previous attempt at a system for processing plastic/aluminum waste. Could they use the space to try again with a new technology? Cool and Jansen met with the German aluminum processor Konzelmann. Would they be interested in the grade of aluminum Alucha could extract from packaging? And in Austria, the pair talked with General Electric Jenbacher, maker of generators that run on specialized gas. Might they be interested in working together to co-develop machinery that would burn the gas that results from extracting plastic waste from aluminum waste? As questions turned to yeses, the struggle turned into a business.

Clean Evidence
Since starting in 2004, Cool and Jansen, together with their partners, have faced technical, regulatory and operational struggle. But their efforts have yielded a functioning plant that today runs 5 shifts, 24 hours a day, 7 days a week. Their compensation comes in many forms, from 2011 revenues that should reach $2 million, to an award from the European Commission as one of the best LIFE environment projects of 2010, to the satisfaction of seeing trucks loaded with aluminum headed for production instead of sludge headed for landfill, and the knowledge that they provide Stora Enso 20% of its steam needs by burning the gas generated in their process. Future efforts may direct that gas directly to a special generator that produces electricity for the plant or even for sale on the grid. From the grunge of entrepreneurial struggle they show us the glamour of creating an entrepreneurial venture which creates profit today and cleaner environment tomorrow.

Stuart Read is professor of marketing, IMD, Lausanne, Switzerland. Robert Wiltbank is associate professor of strategic management, Willamette University, Oregon.

Publication: British Airways Business Life
Author(s):
Stuart Read

BABL Alucha