By Michael Lauzon
CORRESPONDENT
Published: July 12, 2013 2:25 pm ET

A U.S. bioplastics company is moving production from China to a site near Rochester, N.Y., next year.
Trellis Earth Products Inc. will invest $8.3 million to set up production of starch-filled polypropylene and downstream products in a former 80,000-square- foot Eastman Kodak facility in Gates, N.Y.
Trellis Chief Operating Officer Craig Mittelstaedt said in a telephone interview that costs of producing in China have risen dramatically, convincing the firm to move production to the United States.
Trellis sources its patented bioplastic products from two companies in Shanghai. When the firm was founded, in 2006, it calculated production in China was less costly than making products in North America.
“In 2006 to 2010 prices in China began to rise, the cost of trans-Pacific transportation was rising and transportation within the United States rose dramatically,” Mittelstaedt said.
“We looked again at our business plan and U.S. manufacturing looked good,” he said.
Trellis looked at several states to partly fund its new U.S. operation and New York state “was highly motivated and looking for green, high-technology companies. We fit the bill,” Mittelstaedt recalled.
The search and negotiations with New York took about a year before Trellis settled on the former Eastman Kodak plant. A plant in the eastern U.S. is close to the market concentration for bioplastics and to resin sources in Texas and starch sources in the Midwest, he said.
Rochester needs new jobs and so the city was keen on landing a new company. The facility Trellis will lease had once been a plastics plant and has much of the infrastructure and plant equipment already in place. As well, Rochester has a skilled workforce that could get up to speed at Trellis quickly, he said.
Trellis will start with compounding, sheet production and injection molding in Rochester, followed by thermoforming late next year. Film will continue to be sourced from China but Trellis eventually plans to extrude it in Rochester.
Trellis will be vertically integrated in Rochester from compounding to processing, to make products for packaging and other markets.
Trellis, with headquarters in Portland, Ore., eventually will move its head office to Rochester but will maintain a distribution center on the West Coast to serve substantial markets there.
As the bioplastic market has evolved, customers have been urging price parity with plastics derived from fossil fuels, which puts cost pressure on Trellis, Mittelstaedt said. Some customers, such as institutions, also prefer made-in-the-USA sourcing.
Trellis planned to launch an initial public offering in 2010 on Nasdaq but market conditions deteriorated and the firm withdrew its plan last year. The company is privately held and Mittelstaedt is a minority investor.
New York’s Empire State Development agency will provide $1.5 million in tax credits and a $500,000 capital grant based on jobs creation and contributions to the local economy. Trellis has committed to creating 189 jobs by June 2018.
Monroe County agreed to $500,000 in low-interest financing, up to $300,000 in an interest subsidy, $50,000 for training, and possible rebates on equipment purchases.
“This move demonstrates all of what New York has to offer for businesses to succeed, including a talented workforce, state and local support, top locations and access to major markets,” New York Gov. Andrew Cuomo said in a news release.