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Turning trash into profits



 
 
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Old April 27th 07, 03:35 PM posted to rec.pets.dogs.health
buglady
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Posts: 863
Default Turning trash into profits

Perhaps time to repost this oldie but goody.
Wonder if he made a go of it? One can only hope Katrina took care of it.
Apparently he was still going that direction in 2001
http://www.window.state.tx.us/txinnovator/ti0004/

Turning trash into profits
By REBECCA MOWBRAY
Copyright 1999 Houston Chronicle
In an abandoned rice mill on the edge of Fifth Ward, Clyde Oatis hopes to
soon be
cooking up a nutritious porridge of spent hens, spoiled yogurt, spilled dog
food,
contaminated sauerkraut, unusable baby food, half-eaten hamburgers, and
even the
occasional cardboard box, which has 21 percent protein.
If his plan works out, Oatis will be the executive chef of a new breed of
fusion
cooking -- transforming food waste destined for landfills into animal feed
pellets
customized for different species of livestock and pets. In the process, US
Custom Feed
will be solving an environmental problem, creating jobs and developing a
concept easy
to reproduce in other low-income neighborhoods around the country.
As Oatis says, he's turning trash into profits.
Some 21.9 million tons of food waste is tossed into landfills each year, the
U.S.
Environmental Protection Agency says, occupying precious landfill space and
costing
companies thousands of dollars each year in "tipping" fees. Instead of
paying $7 to $9
per cubic yard at the landfills, Houston-area supermarkets, restaurants,
breweries and
farms will be able to deliver their scraps to Oatis and pay him a smaller
amount of
money to take them off their hands. In other words, the raw materials for
Oatis' business
are better than free.
Once the food is in US Custom Feed's custody, a machine will roast it to
kill any
bacteria, grind it into a powder and squeeze it into pellets. Plant
operators will test
the mixture to make sure it meets the nutritional needs of, say, llamas. If
not, they'll
blend in more grain, meat or vegetables, said Roger Hoestenbach Jr., a
Texas A&M Agricultural
Experiment Station director and chemist who is working with Oatis.
Oatis' service is a welcome option for the Houston Food Bank, which is stuck
with 1 million
pounds of unusable food donations each year. "This has always been a
logistical problem
for us," said director of marketing Warren Brice. "Dumping fees are high all
over the country
and getting higher." Oatis first seized upon the food waste problem years
ago when the dairy
processing plant where he was working in his native Chicago had to move to
rural Wisconsin
because of the butterfat waste it generated. Ever since he came up with the
idea for his
reprocessing business, he's been tortured by food waste.
"It's just sickening to see the amount of food we throw away. I can't sit in
a restaurant
anymore," Oatis shuddered.
Oatis' biggest problem in starting US Custom Feed has been raising capital,
a process he
hopes to complete by September so he can start renovating the rice mill.
Oatis already has
bought the rice mill and the patents for the food processing machine, but he
needs more money
to get the plant running. After exhausting his personal funds, Oatis has
managed to take
advantage of every community development program designed to help
entrepreneurs like him.
He rents discounted office space from the Palm Center, the city of Houston's
incubator, where
he has office support and access to the Small Business Administration's
One-Stop Capital Shop
and resource library. He received $100,000 in seed money from a local
community development
financial institution, Intrust USA. Now he's applying for $900,000 in loans
from the development
corporations run by the city and the county, $1 million in equity money
from the Enron Corp.'s
new venture capital program and $1.3 million in regular bank loans.
"I try to find projects that balance community interests with job creation
and excellent
profitability," said Intrust USA President James Mingey, who has been
working with Oatis for
two years. "People have been looking at ways to try to solve the
environmental problem of
landfills for a long time. To be able to do that and create a value-added
product is phenomenal."
Oatis' business plan is strong, Mingey said. The Texas A&M Agricultural
Experiment Station is
making sure he develops a sound product. He will be able to duplicate the
process in other cities
and, in addition to his core business, he will earn royalties from his
machine patent. Once US
Custom Feed is humming along, Oatis also could start other businesses,
roasting soy or coffee
beans with his machine.
Oatis tried to start his business a few years ago with a group of investors
from Dallas and
different technology, but he scrapped the deal after their plan whittled his
ownership stake
down to 14 percent.
Back at the drawing board, Oatis found a machine that combined grinding,
roasting and
pellet-making in one system. Koch Industries, a huge, privately held Kansas
company, had paid
more than $5 million for the rights to the Jet-Pro Waste Recovery System,
but sold it to Oatis
for $850,000 because the company couldn't integrate it into its operations.
"It's a steal," said
Oatis, who made one of the machine's inventors his partner to ensure that
US Custom Feed uses
Jet-Pro to its fullest capability.
For Oatis, starting US Custom Feed has been all about balancing a moral
mission to help build
his adopted city while building a profitable business. He located in Fifth
Ward because of its
proximity to the Port of Houston, because of the tax abatements that come
with being in a
federal Enhanced Enterprise Community area and because he wanted to have a
hand in the
neighborhood's revitalization.
Oatis has forgone opportunities for automation in order to hire more people.
He said he could
have opted for a can-smashing machine that would require only two people;
instead, he chose a
simpler machine that will allow him to employ six people as sorters. Oatis
vows to pay a living
wage to the 19 workers who will operate his plant.
"You've got to have some social responsibility," said Oatis, a former
college basketball
All-American who was drafted by the Rockets when the team was in San Diego.
"I think I should
do my part."
A fully streamlined plant could create 50 percent returns. Oatis said he
could live on
20 percent returns. The compromise appears to be 37 percent. "That's good
enough for the banks,
that's good enough for the venture capitalists and that's good enough for
me."




 




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