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A Return to Commercial Reality

Posted at March 31, 2015 | By : | Categories : Blog | 0 Comment

Winston Churchill said ‘Never  let a good crisis go to waste’ and whilst the recycling industry is currently filled with much wailing and gnashing of teeth we could possibly pause the hand wringing for a moment and pull something beneficial and useful from the present darkness.

Britain desperately needs a strong and healthy recycling infrastructure as our ability to consume, and throw away continues to prevail throughout the Western World. Better recycling is our best hope of not burying or being buried by our ever increasing waste.

Starved of meaningful profit for many years the recycling industry has not been able to re-invest in new technology let alone replace the basics such as worn-out trucks and balers. Rising maintenance costs will further erode profit and very shortly we will start to see the effects that this has on service levels. Reliability and service levels will become the most important issue as fewer businesses are left standing and able to compete effectively for work. Corporate malnutrition in our industry will damage our environment and our economy and serves nobody well. 

At the time of the last recycling crisis in the 1990s the industry was contemplating returning to a ‘Charge and Rebate’ business model whereby a charge was set for collecting and processing and then a rebate, if applicable, was paid to the customer dependant on the value of the material collected. It ensured the basic costs of providing the service were covered and the value of the proceeds (the profit) were shared. It was fair and transparent and it worked.

The arrival of waste brokers to the UK called for something simpler; with prevailing high prices at the time the demand for quoting just a net rebate was a less risky proposition than today and it has now become the market norm despite the risks attached from such a low price base and emaciated margins.

TGM have been at the forefront of championing the customers right to share in the net value of their recycling material and we do not advocate using the current market conditions to take advantage of customers. However we now believe the time is right for a wise evolution of the market before too many more recycling businesses are forced out of business.

We believe the Charge and Rebate model is logical and fair but maybe difficult for the broker sector to accommodate. Here concessions must be allowed for the collector to be able to minimise the risk of losses by being able to adjust rebates if loads collected fall short by grade, quality or weight. I have lost track of the number of so called ‘mill-sized’ bales we have collected at 350kgs and taped tied that no mill would accept. Or ‘full-loads (20t +) that have been 16 tonnes or even less.

TGM welcome each new enquiry as an opportunity to deliver a service in an industry which we still adore and to which we are committed. Going forward we must, as Veolia and Viridor have said before us (see link below), be allowed to return to ‘commercial reality’, price fairly for a healthy & sustainable future and welcome each enquiry as an opportunity to serve but also to see profit again.           

 

http://www.letsrecycle.com/news/latest-news/recycling-targets-warning-after-price-fall/

Simon Razzell        March 2015

 

 

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