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35 years in the industry copy

A Reflection on 35 Years in the Waste Industry

04/03/2021

Director of the UK’s leading network of independent waste operators, National Resource Consortium (NRC), Paul Jackson, offers his reflections on 35 years in the waste industry. 

Starting 2021 in our third national lockdown, I’m sure no one could have predicted how the past year would have panned out from the start. Considering the Government’s latest guidance, it’s likely that the current restrictions will take us beyond the 12-month term.

For many people, this year has been a time of reflection as we’ve grappled with new ways of working, technology, working from home, mass customer shutdowns, staff self-isolations and rigid lockdown restrictions. For me, 2021 marks my 35th year in the industry; when I reflect on my time in the industry, evolving to face new challenges has been a constant.

In the past three and a half decades, we’ve experienced:

  • 3 recessions;
  • a global financial crisis;
  • global environmental shifts from Kyoto and the Paris Agreements;
  • a raft of system-changing legislation including the Environmental Protection Act and The Waste Regulations;
  • a global pandemic with national, personal and commercial lockdowns and;
  • Brexit.

In light of all these setbacks, British industry and particularly the waste and recycling sector has always adapted to systemic change. We apply a very entrepreneurial mindset to forge and adapt to these changes when we need to. For example, in Covid-19 lockdown 1, when most of our Members lost over 50% of their business overnight, they rapidly adapted to the customers’ new demands and once the lockdown was over, the industry had completely mobilised a new national waste collection service. In just a few weeks we were back to normal service levels, demonstrating the local capability of the sector. Now as the ramifications of Brexit start to unfold, we’re presented with another opportunity for our sector.

Back in 1986, the largest waste management company had a turnover of considerably less than £100m per annum. The disposal cost of a tonne of waste was less than £10 of which 90% went to landfill, and the cost to lift one 1100 litre wheeled bin was less than £4.

Today the equivalent is stark. The largest waste management company in the UK has an annual turnover nearing £2bn per annum. The disposal cost of a tonne of waste now ranges from £60 to over £100 per tonne, and any waste ending up in landfill receives a £95 tax charge. This tax is the single biggest influence in the UK’s drive away from landfill and the adoption of recycling for the commercial sector. The average wheelie bin now costs around £15 to lift.

Yet, some things have remained consistent:

  1. Waste is still a local business
    Strip away the national infrastructures and you find a series of local operations delivering services to local customers. Local disposal is still the best logistical and commercial option for any market area.
  2. The smallest customers are the most profitable
    Look after the smaller customers as they are the most loyal. The largest customers have stringent policies which require them to test the market more frequently, meaning they are subsidised by the smaller customers.
  3. Prices go up annually, without fail
    With landfill tax rising every April – alongside other cost increases and inflation – service prices will always increase to absorb this.
  1. There are hidden costs in contracts
    The industry discounts its services to win new customers. It then uses punitive contracts to apply above cost price increases to ultimately achieve strong profit margins.
  2. Route density is king
    Good route planning and targeted customer acquisition will make or break a local operation. Operating boundary restrictions are vital to maintaining a cost-effective, competitive and efficient service with high customer service levels.

During my 35 years in the industry, I have worked for the largest players in several different countries. In developed and undeveloped countries, these consistencies have remained the same.

I now work with a group of local, privately-owned, independent players in the market, and the difference is staggering and highly inspirational. The speed of decision making and implementation, the “can do” approach, the entrepreneurial mindset, and the total focus on the customer are demonstrated every day. It’s clear to see why these businesses are so attractive to the larger players for acquisition.

The issue with consolidation in our sector is that we lose the driving forces behind these companies and, with them, the single biggest challenge that the larger corporate players face in the market. Without their leadership, these businesses, once absorbed, become a shell of their previous presence. However, despite being part of and observing 35 years of “consolidation”, the waste collection market is still fragmented with each and every acquisition followed be new entrants into the market within weeks – making sure that customers are offered a range of options from the large and very capable market “leaders” to the nimble and responsive local players. Market leadership is best observed through a local lens too – the true market leaders are often the local, independent players, who operate locally with a full set of collection and treatment options to fully compete in the market.

As an industry, I feel that we have never been as strong as we have through lockdown 1. Despite the key drivers of waste management businesses being route density (route volume at the right price with secure contracts), lockdown 1 challenged this the most. Well over 50% of customers ceased to trade and demanded service suspensions leaving operators with incomplete routes, too many trucks and drivers, and firm disposal obligations to meet – regardless that most customers are bound into contracts that could have been enforced to continue providing the contractual services. This perfect storm meant that operators had assets they were paying for not being worked and therefore profit just vanished. Regardless, to their credit, every operator in the market accepted the suspensions, re-worked their route logistics, took advantage of the generous government support packages and minimised the impact to their businesses to survive. At this point, I am not aware of a single waste collector that has gone out of business.

Looking forward, I guess we have to trust that the vaccine will work, the British public will stick to the rules and the Government will continue to offer all businesses support where needed to bridge this, hopefully, final period of restrictions.

After 35 years of new challenges and seismic changes, I can only say it’s been a great experience to work in this sector. I have met and worked alongside some incredibly talented people in every type of role in a what is a never-stagnant landscape. Above all, waste is a people business – despite clever technology, massive infrastructure and enhanced systems– the industry is still about drivers attending sites and delivering a reliable, consistent and safe service.

Yes, there are areas which need to be improved such as more transparent contracting and pricing; big is not always best, any poor service should not be tolerated or accepted, and total compliance can be the only acceptable standard. Yet despite 2020 probably being its most challenging time, our industry worked with its customers to help and support them rather than challenge them in their time of need and managed to maintain delivery of a first-class service. I hope that this continues throughout 2021 and that we can maintain our momentum for improving recycling levels.

At this time of ongoing consolidation in the market, a new Brexit period ahead and a move to a greener economy, there has never been a period of greater opportunity across the industry and bright signs for the future in this remarkable industry.