DS Smith set to close Southampton MRF

And, following a review of activities in the wake of the SCA deal, DS Smith Recycling has said it has closed two depots in London and that it has consultations underway over the future of depots in Plymouth, Exeter, Stoke-on-Trent and Portsmouth.

When SCA Recycling developed its 15 million 124,000 sq ft materials recycling facility at Totton to the west of Southampton in October 2009 it caused some surprise in the waste sector as the company had no direct local authority contracts in the region.

Capable of handling 200,000 tonnes of material a year, the plant is thought to have suffered from low volumes of material although activity was boosted by the handling of 60,000 tonnes of unsold newspapers and magazines.

SCA had to scour the UK for local authority material taking it in from Plymouth, Cardiff, Monmouth, Essex and the West Midlands. However due to the long-term contract between Veolia ES and Hampshire councils through Project Integra, none of the material entered the plant comes from the county – Veolia operates two MRFs in Hampshire under its Integra contract.

Ambition

Speaking in 2011, Simon Barnes, then business development director for SCA Recycling, said: It is our ambition to work with Hampshire councils going forward and to bring some material in here, but we have to prove that its a viable option for them.

DS Smith Recycling last year tried unsuccessfully to find a buyer for the MRF. But now, announcing its likely demise, the company said: Despite large investment from the former SCA business the facility has not realised the anticipated return. The value of the business, its performance and returns has been poor and this is unsustainable for the new business. Under current and anticipated market conditions, the business expects this position to be exacerbated and this view is supported by unsuccessful attempts to find a potential buyer.

Explaining that the company had tried to alleviate the losses at Southampton, DS Smith Recycling said it has been concentrating on changing the MRF operation to focus on securing and processing high quality material in order to increase the potential for sustainable profitability and deliver what the reprocessing industry requires. As a result, the company has reduced the MRF operation processing dry mixed recycling (DMR)to a single fixed shift, operating on average 48 hours per week.

Closure

The statement continued: However, for the following reasons, the company has now taken the decision to consult with employees on the closure of the Southampton site:

• DS Smith Recycling does not operate large scale MRFs in any other part of its business in the UK and continental Europe. The companys strategy in growing its wider facilities management business has been to secure long term supply partnerships with organisations that operate a diverse range of recycling and recovery facilities. Whilst DS Smith Recycling recognises the need for DMR services as part of a holistic recycling strategy, operational focus must remain on the physical processing of quality recycled fibre to allow it to support the Group strategy to become the leading supplier of recycled packaging for consumer goods. Focus on DMR will remain to utilise established reprocessors across the country rather than developing its own DMR processing offer.
• The paper recycling aspect of the Southampton facility can be profitable, but not whilst based at the current site due to the high standing costs of rent and rates. The work currently undertaken by the Southampton site for collection and processing of paper grades covers a large geographical area and can be serviced by other sites in the short term. Medium to long term, this gives rise to the opportunity of investing in a new larger dedicated source segregated recycling facility within the same geographical area.”

‘We are conscious that this period of consultation provides for an unsettling period for employees’

Peter McGuinness, chief executive, DS Smith Recycling

Consultation

DS Smith Recycling chief executive, Peter McGuinness, said: We are conscious that this period of consultation provides for an unsettling period for employees, especially at the Southampton facility and provision has been put in place to support staff at this difficult time.

“We are extremely grateful for the staffs dedication and ongoing commitment to delivering a high level of service to our customers.

Matt Prosser, European Commercial Director, DS Smith Recycling noted: We remain committed to providing our customers with an integrated recycling and waste management solution on a pan European level and despite the changes arising from the review our commitment to ensuring customer service excellence remains as strong as ever.

Review

The review of the recycling business has also meant that facilities in Basildon and Croydon have been closed with activity passed to the Charlton depot;and consultations are in progress at Stoke-on-Trent and Gosport (Portsmouth).

Consultations are also in progress in the West Country at Silverton (Exeter) and Plymouth, where the company said the opportunity to merge the two facilities into a super depot within the same area is being discussed.