The $430 billion global plastics industry has grown to become the largest manufacturing materials industry in the world on the back of cheap and abundant crude oil. Today, we know that this feedstock is becoming increasingly finite, increasingly risky to use and poses health risks that we are just becoming aware of.
Solegear manufactures proprietary bioplastics under the brand names Polysole and Traverse, and expects to sell directly to customers from manufacturing/distribution locations. This plan calls for the use of contract manufacturing partners and in-house manufacturing, a standard model used in the plastics industry. The CapEx required to install each in-house manufacturing facility is less than $800k, with potential annual revenues in the $6 million range, has a payback period of 8 months and increases gross margins by 15 points. These facilities are modular and can be installed in logistically advantageous locations.
Customers see value in working with the company's materials on several fronts: firstly, Solegear materials can provide superior strength and ease of processing. Secondly, Solegear materials are offered at comparable prices to petroleum-based plastics, and in some cases, will be cheaper on a per-pellet basis. Thirdly, customers are intended to save money by using 25% less energy to process Solegear materials. Lastly, Solegear materials are turnkey and don't require any re-tooling or special configurations at the customer's processing location - they are plug and play, the company claims.
The company intends to take a staged approach to building out commercial opportunities, first focusing on consumer durables including markets such as children's toys, durable food and cosmetics packaging and personal care products. Solegear is currently engaged in commercializing projects with mid to large sized customers in these markets, which would produce several million dollars' worth of revenues for the company.