Improving Operative Profitability of Plastic Recycling Units

Abstract

The thesis conducted as part of the Master’s Degree Program at Metropolia University of Applied Sciences aims to address the operative challenges faced by Borealis Plastic Recycling Units (Mechanical Recycling) that lead to low profit margins thereby hindering the overall contribution, as an industry, towards circular economy. Though most plastic recycling firms, sailing the same boat, are equally facing the margin pressures, the thesis outcomes highlight potential actions in order to enhance profitability of plastic recycling firms across Europe. The objective of the research project is to analyze the cost structures, identify inefficiencies in recycling operations, feedstock challenges and propose solutions to achieve sustainable EBITDA margins that result in positive bottom line support alignment to Borealis Strategy 2030. The study utilized applied action research, progressing through three data collection stages: current state analysis, solution co-creation and validation in six gate stages. With business challenge at hand, research was planned followed by literature review resulting in conceptual framework for cost analysis. The data collection for each of the stage utilized mixed methods, including quantitative analysis and qualitative research, semi-structured interviews, and collaborative solution building exercises. The analysis revealed high fixed costs, feedstock variability and low plant reliability as key operating factors leading to low profitability. The solution outcome revealed 19 recommendations with some of them identified as higher priority such as adopting vertical integration by collaborating with feedstock suppliers, valorizing waste, negotiating low-cost electricity supply contracts, AI-driven sorting. These solutions aim to enhance Borealis’s recycling profitability margins and offer next step solutions roadmap for broader industry, thus, overall contributing to sustainability goals.