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Roger Wittenberg, Co-Founder, Trex Company, Winchester, Va. Reducing the plastic in landfills--and making money--one backyard deck at a time.
By Carlye Adler

(FORTUNE Small Business) – Roger Wittenberg doesn't consider himself an environmentalist, yet he's spent most of his career taking used products and recycling them into something new. His first company converted scrap metal into parts for knitting machinery. After that came a venture in which he bought bakery leftovers to make poultry feed for companies like Perdue and Polly Farms. That, in turn, inspired a bread-crumb business: Each day Wittenberg pulverized 20 tractor-loads of unwanted bread loaves into bread crumbs, which he sold to Progresso and 4-C. It was a problem that stemmed from that business--how to dispose of all the bread bags--that led to Trex, an alternative-decking product and Wittenberg's most profitable solution yet.

An organic chemist by trade, Wittenberg perfected a way to combine shredded plastic bags with sawdust to create something that looks like wood but lasts longer. The material isn't intended to be used structurally (you can't, for example, have a Trex house), but it's ideal for other purposes, particularly decking and walkways. Homeowners like Trex because it requires almost no maintenance. It doesn't need to be sealed, and it won't rot, split, splinter, or attract termites. The boards are initially more expensive than wood decking--more than double the cost of pine and about the same as high-end decking materials such as cedar--but since there's little upkeep (wood decks require an estimated $150 a year), the total cost works out to less over the lifetime of the deck. "The premium is saved in four to five years," says David D. Weaver, an analyst at Legg Mason Wood Walker in Baltimore. That advantage has already landed Trex contracts for walkways at some of the country's major attractions, including Mount Rushmore, Disney World, and the Florida Everglades. All of which explains how the Winchester, Va., company, which is publicly traded on the New York Stock Exchange (ticker symbol: TWP), managed to ring up $167 million in sales last year and $16.8 million in net income.

Here's how the process works: The company collects about 1.3 billion plastic bags a year--it estimates that that's about half of all available recycled grocery bags in the country--plus other kinds of plastic wrap. The bags don't need to be cleaned or separated, although the company did experience a few early glitches when it took in a big batch of the same hue. The blue bags reclaimed from one national retailer, for example, resulted in aquamarine decking, which, needless to say, wasn't a hot seller. (Trex has since discovered ways to control the final color; the boards currently come in five.)

For sawdust, the other component, Trex takes in 200 million to 300 million pounds of wood scraps from furniture and cabinetmakers every year. Significantly, no trees are cut down. The reclaimed sawdust and plastic bags are mixed together and heated to about 300 degrees, and the resulting substance, similar in consistency to day-old chewing gum, is pressed through a die, resulting in a single long plank that is then cut into boards of manageable length. "It's like making a great big strand of spaghetti," says Wittenberg. A board two inches by six inches and 16 feet long requires 2,250 plastic bags.

When Wittenberg first invented the stuff in the late 1980s, he called it Rivenite. He sold the technology to Mobil Oil in 1992 and was hired by the company. At the time Mobil had the country's largest plastics operation, and as the owner of Hefty, it was also the biggest maker of disposable plastic products. Looking to clean up its image, Mobil started a recycling task force and began shopping around for projects. At first, Mobil's management team wasn't sure how to use Rivenite. The company tried noise barriers, stop-sign posts, and picnic tables before finally settling on residential and commercial decking, a $2 billion market.

But after the ExxonMobil merger, the company got rid of the plastics division, and in 1996 four former Mobil executives, including Wittenberg, bought Trex through a leveraged buyout. Today it's the leader in the alternative-deck industry. In the three years ending December 2002, sales of wood decking increased 3%, while nonwood decking rose 50%. Legg Mason analyst Weaver expects the wood alternatives to capture 25% of the overall market over the next ten years.

One reason for the increase is a new regulation by the Environmental Protection Agency. Last year the EPA announced that it would ban wood with something called chromate copper arsenate (an allegedly cancer-causing, arsenic-laden pesticide used in 85% of all pressure-treated lumber). The ban doesn't take effect until 2004, but Trex has already profited. In the past 18 months the stock has nearly tripled--from the low teens to $41 at presstime. William Gibson, a senior analyst at Banc of America Securities, says he expects Trex sales to grow about 30% this year, to $200 million, and he says it has the potential to be a billion-dollar business. "Wood polymer decks are better than wood," says Gibson, "and Trex is the low-cost producer."

Meanwhile, Wittenberg is planning to expand beyond decks to outdoor gazebos, furniture, fences, and storage facilities. Of course, the more products Trex makes, the fewer plastic bags that end up in landfills. While Wittenberg says that that's a reward of the business, it wasn't his initial intention. "It's simple," he says. "Recycling is the best way I know to make money."