Columbus-based plastic pipe maker seeing benefits of recycling
Thank you Columbus Business First for recognizing our sustainability efforts in the community. Below's article was written by Dan Eaton, Staff Reporter for Columbus Business First, and published October 16, 2019.
The $1.3 billion Hilliard-based manufacturer of plastic pipes and water management products turned its attention toward recycled materials years ago. That move is now paying dividends in the business, the company says.
“We manage a precious resource – water,” CEO Scott Barbour said. “We do it cleanly, effectively. And we do that with highly recycled content.”
In addition to recycled scraps and waste from its own facilities, the company also buys refuse – plastic bottles, drums, other discarded plastic – from the likes of Rumpke, Waste Management and SWACO. The end result is that while around 10% of ADS pipes were made from recycled material a decade ago, now 65% of its products are.
That’s a figure that’s only going to grow.
ADS used more than 400 million pounds of recycled material in its products last year. That will rise to more than 550 million after the $1.08 billion summer acquisition of Connecticut-based Infiltrator Water Technologies.
Though the environmental reasons are important to the company, the business case is a good one as well. Barbour said the materials are less expensive, with savings of between 10% and 15%. There’s less volatility in pricing as well compared with the fresh resin that makes up the rest of the mix. So it’s a better-margin, more predictable product.
The Infiltrator acquisition also is going to grow revenue. The combined companies would have had $1.6 billion in sales in 2019. The deal is a key piece of ADS’ three-year strategic plan introduced last year. Though ADS is a billion-dollar, 5,000-employee business and growing, the industry is a hyper-local one. The company has 48 pipe-making facilities around the U.S., plus distribution yards in Houston, Miami and San Francisco.
Barbour said geographic differences mean different needs. Rain abatement in the northwest U.S. is different than the Midwest, for example. Beyond that, manufacturers face a broad patchwork of construction codes that can very by municipality, county and state.
Erik Schroder, plant manager of ADS’ London facility, also noted that because the company transports pipes, the bulk of its truck space is taken up by air. That makes it more inefficient the further the travel so it’s important to be operating near key markets. Because of this the competition tends to be regional more than national.
The London facility is fairly typical for ADS. It has three production lines and around 70 employees including 15 delivery drivers. It services Columbus, Cincinnati, Dayton, Kentucky and Indianapolis.
Primary customers are road, agriculture and commercial construction — drainage for farm fields, water retention and detention below parking lots, for example. About 10% of business is with contractors who buy through retailers like Lowes and Home Depot.
“It’s a good business, but it’s truck heavy,” he said.
ADS handles between 70% and 80% of it own distribution.
“We’re a manufacturing, logistics and transportation company,” Barbour said.
About 32% of the market is plastics, he said. Chief competition is reinforced concrete or steel. The pitch for plastic is that it’s lighter, easier to handle and has fewer joints, which reduces leaks.
Since the business is so geared toward construction, the big growth opportunities are in the busiest building states, or “the crescent,” as Barbour called it. Those are places like Florida, Texas, Arizona, California and Washington, D.C.
“We need to be good in those states,” he said.
California has been a tough state because of logistics and distribution issues. Texas is good for private business, but the public business is building. With the help of a new lobbyist the company is building its government connections in smaller cities like Amarillo in hopes of building up to larger deals in the state’s larger cities.
“That can be a nice growth engine for us,” he said.
Beyond that, strength in cities where construction is strong also is important, Barbour said, including places like Columbus, Indianapolis and Minneapolis.