Hosted by Victoria Meyer, The Chemical Show brings you the latest insights into the industry. You will hear from leading industry executives as they discuss their companies, business, markets, and leadership. www.thechemicalshow.com

Sustainability isn’t just a buzzword: it’s an integral part of modern business. Even the chemical industry has gotten into the act, tackling sustainability in many different ways. In this episode, Victoria Meyer teams up with Jon Timbers, Chief Sustainability Officer at Epsilyte to tackle the question of sustainable technology in the chemical industry.  Jon discusses what drives his passion for sustainable solutions and gives us a peek at current efforts in the space. Brimming with insights, this is an episode for the environment-minded chemical geek!

BUILDING SUSTAINABILITY INTO THE CHEMICAL INDUSTRY WITH JON TIMBERS

In the month of April 2022, we are focusing on sustainability. It seems to be a green month, so let’s do that. In fact, coming up on April 22nd, we are hosting a green and sustainable innovation panel, of which this episode’s guest is going to be part of that. You are going to want to check it out. Head on over to TheChemicalCommunity.com to sign up and register for the event.

I am talking with Jon Timbers, who is Chief Sustainability Officer for Epsilyte. Epsilyte is the second-largest producer of EPS in North America. Jon holds degrees in both Chemistry and Chemical Engineering from the University of Michigan. He is truly a great geek to have on. He has been in the chemical and petrochemical industry for many years. Over many years, he has been focusing on innovation and sustainability. Jon and I are going to have a good conversation about his experience with Epsilyte and more. Jon, welcome to the show.

Thanks for having me.

Tell us a bit more about you. What is your origin story? How did you get interested in the chemical industry and sustainability?

I wonder if there are people out there who knew from ten years old exactly what they wanted to do, and they became chemical engineers. I have not met one yet. There were two very separate paths that merged to get into this space. One was I liked sustainability. I was interested in, as a young child, recycling, and sustainable forestry. Separately, I enjoyed chemistry, which is strange, but then the two merged at some point in my career. It was a great fit for me. I will tell you a little story about how I got into sustainability because I like to give a shout-out to my fourth-grade teacher, Mr. Gilzow.

In third grade, I wanted to have Mr. Gilzow as a teacher, and he decided to make a career change and become Director of Special Programs. He did not have his own classroom. I was disappointed that I did not get Mr. Gilzow as a teacher coming into fourth grade. The first time he came into the class was his special programs lesson.

I was keen on what was going on with Mr. Gilzow. What he taught us was about recycling. This was 1984, and recycling was not a thing. He came and gave the class this lesson about how landfills were filling up and how this is a problem. We did a little project where you took a hinge and two pieces of a 2×4 and made a can crusher.

He told us about the recycling drop-off for newspapers at our local grocery store. This was my first experience with recycling. It was a local grocery store called Food Town, and they had a dumpster outback. This was a new concept for me in 1984. We were still getting newspapers. Everyone was still getting it every day. I got the Monroe Evening News in my house. We had to drive 11 miles to drop the newspaper off, but I was influenced by Mr. Gilzow’s lesson about, “The landfills are filling up, and this is not going to be sustainable.” There is this recycling thing.

We lived out in the country. I go home and tell my dad, “We need to start recycling our newspapers.” My dad, who was born in 1948, and his idea of driving 11 miles into town to drop off our newspapers was ridiculous. To this day, my dad would still call me that, “Tree hugger environmentalist who wanted to recycle the newspapers when he was in fourth grade.”

We came up with a compromise, which was, that we would not drive into town to recycle the newspapers, but we did go into town every Sunday to go to church. If you save up the newspapers all week long, when we go to church, we will make a stop by the Food Town parking lot and recycle the newspapers. That was how I got into recycling and being concerned about the impact on our planet of all the things that our economy is doing.

I remember my parents recycling newspapers, and the Boy Scouts used to pick them up. I grew up in the Chicago area, and there are always newspapers in the house because that is how people get their news. They would bundle them up, and the Boy Scouts would pick them up. That was interesting. Newspapers are the start for a lot of people in terms of where recycling began. How did you get into the chemical industry? I know you worked for Dow for quite a while. What brought you into that universe?

It is not that I knew what this universe meant. I was in college, and I enjoyed my organic chemistry class, which not many people do. I was at the University of Michigan. I did not know the difference between Chemistry and Chemical Engineering. I went to my guidance counselor and said, “I am trying to figure out what to major in. Should it be Chemistry or Chemical Engineering?” He said, “You could do both.” In hindsight, I think that was some of the worst advice I have ever seen. It would have been a much more straightforward path to pick one or the other.

I could not decide, so I majored in and got a degree in Chemistry and Chemical Engineering. I was at the University of Michigan. I wanted to stay local, and Dow came to campus and did the recruiting thing. I ended up at Dow. I remember going through this mental process of, “I am interested in sustainability and recycling and treating the planet.”

I remember my first day at Dow Chemical in Midland, Michigan, and I made the decision in my head that I could do more from the inside than from the outside. “I am sitting here at one of the biggest chemical companies in the world. I can influence it better. I can optimize their furnace, improve their yields, reduce their waste, and make a bigger impact as an engineer working on the inside than as an environmentalist holding up a sign on the outside.” That was my approach to chemistry and sustainability.

Other folks that I have talked to on the show and elsewhere do make the point that, in many ways, the chemical industry inside the chemical industry is inherently sustainable. People want efficient processes. They want to use the chemicals, power, heat, steam, and whatever is generated at a manufacturing site. They want to use it efficiently and sustainably. Initially, it had to do with economics, but those economics created this circularity inside the chemical industry that has allowed for a lot of sustainability.

That is not always observed outside the chemical industry, which is a good transition to talking about Epsilyte. It has a strong sustainability message that consumers would not necessarily appreciate or understand. Why don’t you jump in and tell us more about Epsilyte, where it came from, and what you guys are doing?

The origin story of Epsilyte is interesting. Our President and CEO, Brad Crocker, had the idea. I give him credit for believing we could build a sustainable company centered on the styrene molecule. Brad is open to a challenge. As a chemist, I share that belief, and that is why I enjoy working with Brad and with Epsilyte. I believe that the styrene molecule is the most misunderstood molecule in the economy. It is a sustainable material. The challenge is to build a sustainability-focused company around the styrene molecule. The foundation for our company is we are going to be a legal, credible, ethical, and sustainable company. That is a challenge.

Brad worked with a private equity partner and made the acquisition of a facility in Peru, Illinois, in November 2020. We acquired Polysource, Inc., in Ohio in May of 2021, then StyroChem in Montreal in October of 2021. In the course of 11 months, we made those 3 acquisitions and built the company through those bolt-on acquisitions to become the second-largest producer of EPS in North America. The average consumer’s experience with EPS is through food service or a disposable application, but in Epsilyte nowadays, 67% of our products go into durable applications.

We have set the goal that by 2025, 80% of our products will go into durable applications. It is a bit of a misperception in the consumer base that EPS is single-use plastic and is not a disposable application, whereas relative to growth in EPS is in durable applications, like building installations, geophone, and safety helmets. That is the foundation for our company. We are building off of that chemistry of the styrene molecule and targeting durable applications for our products.

When we think about EPS, Expanded Polystyrene, most people associate it with foodservice products and Styrofoam, which I do not believe is your brand name. People have tried to generalize it to that. It has got a bad perception in the view that it is perhaps not recyclable and biodegrade and is bad for the environment. You have already shared that for you guys and perhaps across the industry that the majority of it goes into durable applications. What do you wish people knew? Even inside the chemical industry, there is a strong misperception of EPS.

Polystyrene is a unique molecule. It is a fully amorphous thermoplastic. Thermoplastic means you can melt it and form parts repeatedly over and over. Fully amorphous means it does not have a true melting point. It has a glass transition temperature. If you have ever been to one of those glassblowing festivals where they heat the glass up and blow bubbles, the glass does not have a melting point. It has a glass transition temperature. Polystyrene does not have a melting point. It has a glass transition temperature. You can blow a bubble with polystyrene.

A thermoplastic that you can blow a bubble with is a unique material. That is what makes polystyrene unique on the molecular level from a chemistry standpoint. How we leverage, that is we can make materials that are 98% air. In EPS applications, you are insulating buildings, installing foundations for roads and bridges, and shipping vaccines with a material that is 98% air. This is why EPS almost always wins. If you look at two materials from a life cycle analysis assessment of the overall environmental footprint of material A versus EPS, EPS will almost always win because it is 98% air. Sometimes that EPS puts air to work in our economy.

It is less expensive to transport from a weight perspective and also provides all the insulating properties, which is where it primarily gets used. Is that the point of it?

Right, and you are using less material. You are using less fossil fuels and less transportation energy. One of my favorite statistics is that over 50 years, a house insulated with EPS will save 36 times more energy than it took to produce, ship, and install that EPS insulation. It is that efficiency. A lot of times, historically, we have found this molecule that is extremely efficient. We have used it for single-use applications because it is the cheapest way to make a cup.

As the world has shifted and focused more on sustainability, we have said, “If we have an extremely efficient material, is the best use of it for making a disposable cup or is the best use to make a vaccine cooler or to insulate a house?” The EPS industry has been shifting over the last number of years from those applications leveraging its efficiency to make cheap products to applications using its efficiency to make a low carbon footprint product.

When I look at your messaging, a lot of it is about the sufficiency and the value that it brings in using it as installation, etc. When you guys look at your customers, who are you targeting with your products, and who are you targeting with your messaging? Sometimes it is hard. There is a lot of resistance built up across individuals about what EPS means. Those individuals exist either inside or outside the industry you might be targeting. Who are you guys targeting when you think about your customers and messaging?

We are trying to create messaging that can move through the value chain. One of the interesting lessons I have learned working in polymers and sustainability is if you are a polymer producer, you are far upstream in the value chain. You are selling to a molder who is selling to a brand owner who is going to be selling to the consumer. If you want to create messages that go through that value chain with your material, you have to put a little bit of emphasis on telling an intriguing story and making content that is engaging.

What we want to do is create content that our customer would take and pass to his customer, and their customer would pass to the consumer. That is the hard part of being in the sustainability and chemical industry, where upstream, you want to get that science lesson passed down through the chain. That is a little difficult.

You are bolting on companies that are developing industrial products and producing the EPS itself. What is your profile as you look at that?

We have looked at our acquisitions both from a financial and technical perspective. After our initial acquisition of the Peru, Illinois facility, that facility was already over 70% in durable applications. When we looked at their markets, we said, “They are largely going into installation building and construction applications.” When we looked at Polysource, that is an extrusion technology. That is, from a technology platform, we are excited about an innovation and sustainability standpoint.

Suspension reactor technology is notoriously sensitive to things like contamination. It is not a great technology for recycling, but extrusion technology is much more robust to contamination and recycling. We looked at the extrusion technology at Polysource, and we felt like it has a great foundation for recycling. One of our goals is to be recycling 4 million pounds a year by 2025 at that facility.

Do you have the ability to recycle as well as produce?

Yes. When we looked at the StyroChem acquisition, they had done a lot of innovation in the biodegradable space. Only post-closing that acquisition did I get an education on all the work they did and have done a lot of good science on enzymatic biodegradation processes. We focused on this technology as an end-of-life solution for our products.

I like to take the opportunity to educate people. There are oxo-degradable technologies that unfortunately gave biodegradable plastics a bad name because they break down and disintegrate into small pieces and it created some negative perceptions of biodegradable plastics and even some legislation around anti-supportive legislation biodegradable technology.

Our biodegradable technology was developed by our StyroChem partners. It is an enzymatic process where we are turning the plastic into food, and bugs are eating it instead of just breaking apart. That was from a sustainability standpoint. The value of that acquisition was in their biodegradable technology and all the work they had done on that, all the IP they had developed.

It is not just acquiring volume. You guys have been strategically acquiring different technologies to support your sustainability vision for the business.

Part of my job with a bit of pressure is, “Jon, make the sustainability proposition of the Polysource acquisition materialize. Let’s see us recycle more material. Make the sustainability acquisition of StyroChem materialize.” That is something we are doing. We are focusing on growing our volumes that 80% is all in durable applications. The other 20% in disposable applications will all contain our biodegradable technology.

I know we talked about sustainability reporting. You guys published this sustainability report. Are your customers seeking more sustainable EPS? Are they seeking those solutions and those answers from you? Do you find that they are seeking alternatives? How does that play out when you work with your customers?

It’s a little bit of both here, more sustainable EPS versus alternatives. From our perspective, we think the value for EPS is created when we are used in the most valuable application, the application that means the unique properties of EPS. We can put our efficient product into durable applications, life-sustaining applications, vaccine shipments, and helmets where we feel like, “There is a differentiated value for EPS.” If customers have a material that is better, cheaper, or even more sustainable, we are supportive of people moving to the most sustainable material. Our view is if everyone follows the science and picks the best material for the application, our growth trajectory will be sustainable and profitable.

We do not try to keep everyone in EPS. For disposable applications, for example, we are strategically deemphasizing disposable applications. We understand that there is a movement toward reusables and more widely recycled materials. We are okay with that. There is still a profitable market for EPS and durable applications. As far as more sustainable: the people who need EPS for their applications, whether installation, packaging or perishable shipments, still want more sustainable EPS. They ask us for that.

As a polymer supplier, you are often in chains. There is a converter or molder that is your customer, and then on the other side of that converter or molder, there is a brand owner. It is often the brand owner that is sending the request back to the molder who sends the request back to the present supplier. That is part of my learning, working in sustainability in the upstream business. The request for sustainability is coming two layers down. It is a game of telephone where those messages get passed up, and the message gets passed down. The demand for more sustainable EPS is coming from our customers.

This is true when we look at sustainability and circularity overall. It does seem that the demand is coming from the brand owners because they are closest to the consumers. They have made promises to the consumers and their stakeholders and shareholders that they will hit certain targets around circularity and sustainability. Everybody crafts it a slightly different way.

What I also think is interesting is you guys have started up all your acquisitions since the start of the pandemic. I know you have about vaccine coolers which we know have been critical to getting the COVID vaccines out. Some of them have been very temperature sensitive. What has been unique? What are some of the unique things that have occurred that are different from what you would expect given the challenges of the pandemic and supply chain?

A lot has been a challenge. There is the workforce safety challenge. That has, strangely, been the easiest one because from the top, our CEO has said safety is number one. There is no gray area. We do not need to talk about it anymore. You are going to wear your mask and stay home if you are sick. There has been no question about keeping our workforce safe, although it has been a little different. From a “running the business” perspective, the supply chain changes have been unforeseen. They keep surprising you. You keep getting new information that you did not see coming from.

From my perspective, working in sustainability and trying to build sustainable communications and doing things like the sustainability report, when I came into Epsilyte, we do all those things for our customers because that is the person, we are trying to get them to buy products and we are a sustainable and growing company, all the things you do to sell your company. You are typically directed toward your customer. In 2022, we have to sell our company to our suppliers.

The supply is tight as logistics constraints are constraining supply. Our suppliers are saying, “Who are you? Are you a sustainability-focused company? Are you focused on recycling and end-of-life solutions for your product? Are you doing a sustainability report?” That has been interesting to me how we, in 2022, mostly because of supply chain challenges and logistics challenges brought on by COVID, need to sell our sustainability work to our suppliers. They are going, “You are a good partner. You are a company we want to work with. We will supply you.”

Why do you think that is so important to your suppliers?

They are like the rest of the industry. It is just a matter of where we sit in the supply chain of your suppliers versus your customers. We are all in the same space. They are looking to grow their focus on sustainability and make their company more sustainable. What is interesting is we talked about Ecoveda, for example. There are these systems for your customers to audit you as a supplier. Are you a sustainable supplier? I could imagine if logistics stay the way they are in 2022, where your supplier may have audit programs to say, “Are you a sustainability-focused customer? That is who we want to do business with.”

It is a flip versus what we typically think about in terms of shifting where the power is in the value chain, but also what the drivers are across the value chain have turned a bit.

I have also had a handful of experiences where, as the Chief Sustainability Officer, either HR who is working on hiring will say, “We are using your sustainability report to help us in the recruiting process.” I never saw that coming. I had an example where we were hiring a plant manager at our Peru, Illinois facility. The hiring team said, “Jon, can you come out and meet with him? He wants to know what Epsilyte’s sustainability vision is as part of the process.”

That is big because that is not what you expect. This is a whole new world in terms of what is driving both customers and employees. As Chief Sustainability Officer, I am sure you did not expect to be involved in plant manager hiring, but that is cool that has come there.

I also did a good job because Mark started. Our new plant base for our Peru, Illinois facility is very sustainability-focused.

Which is great and the mission your company is hoping for. I know you are putting together some ambitious goals. You mentioned one of your targets was around 80% of your product going into durable goods. Are there any other targets that you can share?

Our sustainability initiatives are in two buckets. There are processes that are internal apps that put out an annual sustainability report. Transparency is one of the pillars of sustainability. If you are going to build a sustainable company, you have to be transparent about things like your safety performance, environmental performance, and programs around diversity inclusion and community outreach. We are implementing sustainability-focused processes. It is our goal to be carbon neutral in 2023. It is a very ambitious goal.

The more people who give me that surprised look, the more I start sweating about, “This is going to be a tough one.” We are on track to be carbon neutral in 2023. Those are sustainable processes that we are focused on. We have our sustainable product focus, which 80% of our products go into durable applications by 2025. The other 20% going into disposable applications use our biodegradable technology.

Ever-increasing recycled content is built on that technology foundation at the extrusion technology. The fourth one that we don’t talk about much is innovating for higher-value installation materials. Our view is that energy conservation is a key to carbon neutrality. Our materials insulate buildings and insulate shipments and will save energy and help the world be carbon neutral in the future.

The makes a lot of sense to me because I have talked to a few folks outside of the show about the energy transformation and this shift to green sustainable energy. What often is not talked about is the reduction of energy consumption. It is hard to imagine an effective energy transition without also consciously working on using less energy and being more energy efficient. That needs to be part of the overall sustainability objectives that would go to.

If we were going to build a more sustainable world in the future, it would be thousands of companies, each doing their little part to make a more sustainable future. If I work for a company that makes insulation materials, it is incumbent on me to make better insulation materials. If I am in a service sector or finance sector where I do not make material but employ a lot of people, it is incumbent on me to focus on human capital and diversity and inclusion in those areas of sustainability.

If you are an energy company, you focus on cleaner energy production. This macro trend of sustainability is going to be successful through not Jon Timbers working at Epsilyte but the thousands of chief sustainability officers that are out there across all different sectors and all different industries making their company more sustainable.

Jon, what is next for Epsilyte? Are you looking for more acquisitions? What are we going to be seeing coming from Epsilyte here in the near future?

We are always looking to grow. Those opportunities are out there. We are focused on that recycling process at the Ohio facility. We would like that facility to become a certified recycling center where we have a lot of flexibility in what we can bring in and systems to control the quality of the product. It is in its infancy, but we want to build that into a recycling center.

This is going to sound a little strange, but we are looking forward to the logistics system normalizing because we need some imports of EPS into North America. Our view is without some imports, the market might be incentivized to replace EPS with other materials because it is in short supply. We need some imports to come in. In 2022, we are focused on converting all our disposable applications to biodegradable and educating our customers in the market about biodegradable technology.

It sounds like you guys have a great agenda. You have been starting strong as a young company by buttoning up some older businesses and new technologies. That is excellent. Jon, thank you for joining us on the show. I appreciate you being here.

Thank you for having me. It has been great. I appreciate the invite. Thank you.

Thank you, everyone, for reading. Keep reading, liking, sharing, and following the show. We will see you next time.

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