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BRO-TEX, INC.

BRO-TEX, INC. Ed Freeman Chief Financial Officer 800 Hampden Avenue St Paul, MN 55114 (651) 379-2494 efreeman@brotex.com. BRO-TEX, INC. Bro-Tex is a 90 year old, Minnesota based, family owned business involved in textile recycling since 1923.

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BRO-TEX, INC.

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  1. BRO-TEX, INC. Ed FreemanChief Financial Officer 800 Hampden Avenue St Paul, MN 55114(651) 379-2494 efreeman@brotex.com

  2. BRO-TEX, INC. • Bro-Tex is a 90 year old, Minnesota based, family owned business involved in textile recycling since 1923. • We have been recycling post-consumer carpet since 2006 and have processed over 34 million pounds of post-consumer carpet over the past 3 years….diverting 33% of this amount from the landfill. (Based on our process yields and waste factor) • Our by-products from this activity go back into engineered resins and the plastics industry in various forms for molding and extruded products. • Carpet Recycling creates jobs- We currently employee 32 people in our carpet recycling area….and for every 5 million pounds we add to our processing, it creates the need for 15 additional jobs.

  3. BRO-TEX, INC. • Bro-Tex is in favor of this proposed legislation for the following reasons: • If carpet recycling is to be successful and profitable, we must collect revenue to offset the cost for taking in the carpet for processing----rental trailers and hauling fees. • We need to recover the cost for the disposal of over 67% of the materials which become the waste factor during processing. • Although we have markets for the materials that we extract from the recycling of carpet, our cost for this waste stream represents $369,040.00. (9,226,023 lbs dumped or burned) • Bro-Tex is doing everything possible to reduce internal costs, improve manufacturing efficiencies, and maintain sales margins, but we are struggling to make this business profitable. • We are working towards possible uses for our waste in plastics-to-oil applications……still in development.

  4. Carpet Collected and Recycled 2009-Present • Total carpet collected  34,496,943 lb • PEL6 sales  2,957,697 lb • PEL66 sales  398,694 lb • PEL6TOLL  2,372,608 lb • 737 Ground PP  2,658,882 lb • 747 Ground PP  472,343 lb • Padding  2,495,641 lb • Total 11,355,865 lb of carpet diverted from landfills based on our processing yeilds>>33% usable material as a mix • Assuming 3 lb / square yard • 1,665,526 gallons of oil • 37,852,880,000 BTU’s • 30 jobs depend on us continuing this operation.

  5. Carpet Recycling and Impacts on the Environment • About 45% of carpet is recyclable nylon • There are more than 6.5 billion pounds of carpet going into landfills in North America every year • By diverting 1,000 square yards of carpet from landfills, it saves 440 gallons of oil, 10,000 BTU’s of energy, and diverts 4,500 lbs from a landfill • Carpet ranks second on the list of top recyclable products • Padding is recyclable • Recycling creates jobs

  6. The Business of Recycling • You must identify and have outlets for your recycled by-products before you begin collection or sourcing raw materials • Financing and “Deep Pockets” are necessary to secure and maintain ongoing waste-stream sources and inbound feedstock…..Once you start the flow of inbound materials, you risk losing these sources if you stop taking their waste-stream or have disruptions that cause the source too look for other outlets…. • Sales demand for your by-products will fluctuate based on market pricing for virgin resins…..Recycled materials are less desirable when virgin resin prices drop. Demand increases when resin prices rise. • Your ability to meet demand is driven by your ability to source and process materials. • Multiple customers and multiple markets are necessary to weather slower demand…..You need more than one customer in case their demand drops or resin prices affect the market • It is very difficult to balance the inbound waste stream with the outbound demand for by-products…..You will see periods of great fluctuation in demand which will affect cash flow as you build inventory but don’t generate revenue from sales

  7. Post Consumer Carpet Collection Network • Bro-Tex has 40+ drop sites around MN, NE, IA, and the WI area for carpet collection and over 135 partners • Carpet is sourced as far out as Texas and Arizona but is very freight sensitive • Source segregated collection: • Carpet retailers & Installers • Homeowners • Recycling centers & Transfer stations • Carpet Collection Brochure-Handout

  8. C.A.R.E. Collection of Carpet by Region 2011

  9. C.A.R.E. Carpet Sorted by Type 2011

  10. C.A.R.E. End Use Markets for Post Consumer Carpet

  11. Potential Products and Markets for Recycled Consumer Carpet • Recycled carpet and pad could become: • New carpet • New carpet pad • Plastic resin pellets • Plastic drainage pipe • Acoustic matting • Oil absorbent material for water pollutants • Concrete filler • Road underlayment • Plastic lumber • Energy substitute for natural gas and coal

  12. Potential Products and Markets for Recycled Consumer Carpet

  13. Carpet Recycling Processes • Post-Consumer Carpet (PCC) is recycled in one of three ways. There are several processes by which the carpet fibers can be recovered and reused. • Bro-Tex collects and recycles over 12 million pounds of carpet annually. • Shearing: The process of shearing is to shave off the top 20% of the carpet face fiber separating it from the backing. • Grinding: The process of grinding is where the entire carpet is shredded into a fiber blend and most of the latex backing is removed. • Pelletizing: The process of pelletizing is to melt the carpet fibers into a molten resin and cut it into pellets for extrusion and molding.

  14. The By-Products of Carpet Recycling continued • Grinding creates a by-product called dust which is the residual latex/calcium carbonate from the carpet backing. This is a fine powder substance containing polypropylene fibers and the backing. • 50% of the carpet is lost during the grinding process as a waste factor. • The “dust” is a material that should be able to be used in concrete products or as a filler in construction and landscaping applications. • Bro-Tex generates approximately 1.5 million pounds of this material annually from our grinding process.

  15. The By-Products of Carpet Recycling • Shearing takes the top 20% of the face fiber from the surface of the carpet, and leaves 80% of the remaining material known as the “backing”. This item is the largest contributor to the waste factor in our processing. It accounts for over 6.5 million pounds of material per year that must be dumped until a use is defined. • We are working on waste to energy solutions for this material as a burnable fuel source. • Shearing also creates a residual shear-dust which is collected, baled, and sold for use in plastics molding and resin compounding.

  16. Process Yields and Waste Factors • Each process generates a waste factor that must be disposed of if we have no end use market • Carpet Recycling creates several by-products which are the residuals leftover from shearing or grinding the carpet. • Shearing generates an 80% waste factor which means the 675,509 lbs of Nylon carpet that is sheared each month, we dump 540,407 lbs in residual “backing” which could be a clean-burn fuel source for waste-to-energy! • Grinding the Polypropylene and Polyester carpet generates a 50% waste factor which means we dump 122,885 lbs of the 245,770 lbs collected and processed. *The residual “dust” could also have some applications in after-markets such as concrete products, landscaping, ground cover, or as a fuel source.

  17. The Business of Carpet Recycling is only profitable if we can find outlets for all waste by-products and the residual sheared carpet “backing” • As stated, the Shearing and Grinding processes generate over 650,000 lbs of waste each month in spite of our end uses for the carpet fibers. This translates to 16 truckloads per month of ongoing material suitable for an application to be defined • Carpet backing generates a BTU of 7500-8000 which is higher than Solid Waste (household garbage) at 5500 BTU. It burns clean and has no emissions issues. Coal burns at 10,000-12,000 BTU. The cost of coal is around .03/lb. or 65.00/ton • We generate over 6.5 million lbs of backing annually which can be used as a clean fuel source Waste to Energy Solutions

  18. Conclusions • Bro-Tex recycles over 12 million lbs of post-consumer carpet annually • Carpet recycling profitability is maximized if there are outlets for ALL residual by-products and waste items • In spite of recycling 12 million lbs of carpet per year, the waste factors as a result of processing, generate 8 million pounds of waste which must be dumped unless the residuals are converted to a product or burned as energy • Our 2 largest waste streams are the carpet backing from shearing (6.5 million annual pounds)……and the calcium carbonate dust from grinding (1.5 million annual pounds) • We need to work in partnership collectively to find waste-to-energy uses for these residuals or end use markets • We need to work together as a community to discuss and overcome the obstacles that are impairing this outcome so the “business of carpet recycling” can be sustained and further expanded!

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