Most manufacturers know exactly what they pay for their raw plastic material. The price per pound is tracked, negotiated, and watched closely. However, when that same material becomes scrap, many facilities stop tracking its value.
At A&A Regenerative Plastics, we often speak with potential partners who view their plastic waste simply as a disposal line item. In reality, that scrap is a floating asset, and the cost of managing it poorly is far higher than most realize. Here is how to calculate the true cost of the plastic waste leaving your loading dock.
The Cost of Physical Space
Warehouse space is not free. Whether you own or lease the building, every square foot has a cost. This includes mortgage or rent, taxes, and utilities.
If you have 40 gaylords of scrap plastic sitting in a corner waiting for a hauler, or a compactor taking up prime dock space, you are paying for that real estate. Ask yourself: Could that space be used for storing finished goods that generate revenue? Often, the answer is yes. By consistently removing scrap, you effectively gain square footage without moving walls.
The Cost of Internal Labor and Handling
This is the cost that is most frequently overlooked. It is rarely calculated because it is spread across different departments.
Consider the path of scrap in a typical facility. The machine operator pulls the scrap and throws it in a bin. That is Labor Cost 1. The material handler drives a forklift to the machine, picks the bin, and brings it to a central collection area. That is Labor Cost 2. Another worker spends time emptying the bins into a larger Gaylord, compactor, or bunker. That is Labor Cost 3. Eventually, someone must clean up the dust and debris that accumulates around the collection point. That is Labor Cost 4.
When you multiply these minutes by an hourly wage, including benefits, the handling cost can often exceed the disposal fee you are trying to minimize.
The Cost of Transportation
If you pay a waste hauler to take your plastic to a landfill or an incinerator, you are paying for the diesel fuel and truck time to haul an asset away.
Alternatively, if you work with A&A Regenerative Plastics, that truck is hauling a raw material. The direction of cash flow changes. Instead of writing a check to a hauler, you are turning that truckload of material into a credit or revenue share.
The Cost of the Material Itself
Consider the raw material cost of the scrap. You originally bought that plastic to make a product. If it is now scrap, you have already paid for it. That is a sunk cost.
If you can reclaim value from it by having A&A Regenerative Plastics repurpose it into new pellets, you recoup a portion of that initial investment. If you throw it away, that investment is gone forever, and you pay again to get rid of it.
The Bottom Line Calculation
To get a rough estimate of your true cost, add these four numbers together.
First, calculate your space cost by multiplying the waste storage square footage by the cost per square foot. Second, determine your labor cost by multiplying the total man-hours spent handling waste per week by the hourly rate plus benefits. Third, look at your disposal and transport costs as shown on your current monthly hauling invoice. Fourth, calculate your material loss by multiplying the pounds of scrap by the resin’s original purchase price.
When you look at the total, you often find that freeing up space and reducing disposal costs are not just environmental slogans. They are significant financial levers. At A&A Regenerative Plastics, our goal is to pull that lever with you.
