Trump tariffs and federal cuts end planned $300M Pa. plastics plant and its 300 jobs

A company’s plans to build a $300 million plastics recycling plant in Erie have fallen victim to Trump administration spending cuts and tariffs.

International Recycling Group, Inc.’s plant would have created 300 jobs and produced about 100,000 tons of recycled plastic material annually, but the company announced its cancellation on Thursday, reported the Erie Times-News.

IRG has not received a $182 million federal loan promised under the Biden administration and recent tariffs imposed by President Donald Trump have negatively affected building costs, according to the Times-News.

IRG CEO Mitch Hecht told the newspaper he was “personally devastated” at the decision after spending 18 years working on the project. He also noted the “challenges” IRG faced from stalled federal spending under billionaire Elon Musk’s Department of Government Efficiency and Trump’s tariffs.

“Among these challenges are a hold of unspecified duration placed on funding commitments issued by the U.S. Department of Energy’s Loan Programs Office,” Hecht said.

IRG’s website has been inaccessible and the company did not respond to a voicemail message from PennLive left Friday at its Erie office.

“Additional challenges include recently announced tariffs on materials and on equipment from Europe not made in the U.S., resulting in expectations of substantially higher project development costs than anticipated,” he continued, “as well as difficulties in securing long-term purchase agreements for recycles materials from plastics manufacturers and consumer project groups, many of whom are cutting back on sustainability pledges.”

Erie Mayor Joe Schember said in a statement to PennLive that the canceled plant was a “lost opportunity” for his city.

“Our team had been working hard for several years to advance this project.,” he said. “This represents a lost opportunity to both bring jobs to the city and begin to address some of the long-term issues with plastics pollution.”

Brandon Mendoza, the CEO of the Erie Regional Chamber and Growth Partnership, issued a statement in which he said the group was “frustrated by the financial pressure building due to economic uncertainty at the federal level, which IRG cited as the reason to cancel plans for its Erie plastics recycling plant project.”

Mendoza said IRG’s plans had “significant support” from state and local governments and the public and private sectors, and its cancellation is a “significant loss” for Erie.

“As always, we remain committed to advocating for sustainable investment and working to attract new business opportunities, but the opportunity cost to develop such an enormous project with all pieces aligned to end like this is a disappointing outcome,” he said.

According to the chamber’s statement, IRG received $5 million in state Redevelopment Capitol Assistance Program funding and the chamber would be speaking to Gov. Josh Shapiro’s office about keeping that money in Erie for other projects.

Shapiro has been highly critical of the Trump administration’s approach to slashing federal spending and the president’s tariffs.

On Friday, the governor again criticized the Trump administration for its economic policies that he says are already hurting Pennsylvanians, businesses and farmers.

Shapiro shared an article on X/Twitter about IRG’s decision and another one about the parent company of a Lancaster farming equipment manufacturer.

“I don’t know why the President is insisting on raising prices for families and driving business away from our country — but I do know I won’t stop doing everything in my power to make Pennsylvania a great place to invest, grow a business, and raise a family,” Shapiro wrote.

While many people lamented the loss of the IRG plant, not everyone was upset. PennEnvironment Zero Waste Advocate Faran Savitz said the project’s demise was “great news” for Erie and Lake Erie.

A PennEnvironment statement said the IRG plant would have taken plastic waste and turned it into materials to burn at steel factories in Indiana, producing more pollution.

“Recycling is a great tool for addressing our waste crisis, but so-called ‘chemical recycling’ is not truly recycling,” Savitz said. “Neither is burning plastic waste to make steel. While IRG’s proposal appealed to people unfamiliar with this dirty process, in reality, it would just create another facility encouraging our societal addiction to plastic and leading to more burning of fossil fuels.”

This is the second time in a year that plans for a large plastics-related plant in Pennsylvania have been dropped.

A year ago, PennLive reported that Encina Development Group announced it was no longer going to build a $1.1 billion facility in Northumberland County to convert plastics into feedstock for other products.

Also, the Pittsburgh Post-Gazette reported last month, based on a Wall Street Journal article, that Shell was considering selling off its chemical assets in the United States and Europe, including its $15 billion petrochemical plant in Beaver County that started operations in 2022.

That plant has been the subject of $10 million in fines for violating the state’s environmental rules, the Post-Gazette reported.