Fast growth and a digital approach to business could see Reconomy’s turnover reach £250 million this year. Steve Eminton headed to Telford to talk to the company’s chief executive, Paul Cox, about recent acquisitions and his plans for the future.
Reconomy’s acquisition of the environmental compliance business, Valpak at the end of 2018 certainly caused a stir within the packaging and waste sector.
The deal saw the well-established outsourcing business of Reconomy, which has its headquarters in Telford, snap up the leading operator in the UK’s growing producer responsibility sector.
Few observers had expected Reconomy to acquire Valpak, with instead a company involved in the packaging sector a more likely purchaser or partner. But, the fact that Valpak has matured as a business and that changes are on the horizon meant that a sale was on the cards, and so it came to the attention of the acquisition-hungry, outsourcing and data driven specialist business which is Reconomy.
The outsourcing business hadn’t been aware of all the work of Valpak until the opportunity to purchase the compliance organisation emerged last summer, as chief executive Paul Cox concedes. “I have to admit it wasn’t on our radar. It’s a sector which really appeared to be on the fringe of what we do and it was not an immediate part of the outsourcing world.”
But, Mr Cox says that his business could instantly see an opportunity with Valpak, especially as “the big thing for Valpak is that they are a well-established brand. They have a strong data-led approach to their activities, as well as a respected company approach which underpins service to their customers.
“This approach fits well with our strategy of growth, using data to drive services and offering high levels of service and customer care. We continuously monitor our NPS – customer experience – score and have a target to keep this above 65%, which we’re currently exceeding. Our Customer Centricity project then focuses the whole organisation on using this insight to improve the customer experience at all touchpoints.”
He is excited and optimistic about the benefits the deal will bring, particularly in terms of expanding Reconomy’s offering outside of its original market of housebuilding and construction.
Mr Cox declares: “With Valpak linked to our technology-driven focus we can continue to be innovators of our industry and bring our offering to new sectors. While Valpak will operate independently they can help add further data analysis capability to the group and our challenge in return is to bring excitement – to add our entrepreneurial background and growth.”
He also appears not to be overly concerned about changes to the packaging waste and producer responsibility systems which will start to bite in the early 2020s and will undoubtedly impact on Valpak’s work, for better or worse.
“The fact that big changes are on the horizon – do we worry about the current system ending? The fact is that with any changes to the system, they are well placed to develop and accommodate that and we will be developing the business over the next few years.”
While Valpak is the standout acquisition for Reconomy in 2018, the purchase is one of three made last year, following on from regular buys in previous years. In June Reconomy acquired Helistrat, a nationally-operating resource management consultancy based in Portsmouth, and also with offices in Glasgow. Helistrat has built a strong reputation within the retail sector and opens up that market to Reconomy – as well as now providing some synergy with Valpak.
Helistrat, says Mr Cox, gives Reconomy considerably more “insight and access” into what he terms the B&I – business and industrial – client base “which includes access to exciting brands across the retail, wholesale and manufacturing sectors. We talked with the CEO at Helistrat about working together and quickly saw we could expand the client base. The Helistrat acquisition brought a well-established brand to us with good professionalism and staff.”
B&I had been one of Reconomy’s four target areas but was relatively undeveloped in contrast to its other three main areas of work: housebuilding; construction; and infrastructure/utilities.
Mr Cox explains that Reconomy’s growth strategy includes usually purchasing two businesses a year, with three in 2018 being something of a surprise – at the start of the year it had also acquired waste broker Waste Check.
All this growth couldn’t have been achieved without financial support and Reconomy seems to have struck a chord with investors. Originally it was supported by Bregal Capital and then in 2017 one of the firm’s managing partners, Edmund Lazarus, established EMK Capital and Reconomy was subsequently acquired from Bregal by EMK.
This pattern of growth will continue, hopes Mr Cox. He says: “Our aspirations and growth targets are to double the size of the business in the next three years. We expect our turnover now to be in excess of £250 million this year – our target originally was £200 million by 2020.”
How does Reconomy handle this growth with the need to coordinate new businesses in a growing number of UK sites?
Mr Cox says that he is keen to maintain “the family approach which we have built in Reconomy over multiple decades.”
“We are keen to maintain the family approach which we have built in Reconomy over multiple decades.”Paul Cox, Chief Executive
He maintains though that this is possible with a strategy of hubs and spokes including Stratford (Valpak), Portsmouth (Helistrat) and King’s Lynn with one of its former purchases, Network Waste.
“Yes, it is always a challenge to maintain a family approach but we are trying to maintain this spirit within the business and our culture as we acquire more companies – it’s like adopting older children into the family.”
And, he sees advantages in having new company locations. “We have to remember that Shropshire is not a big place and it’s nice to have those other offices as we can draw on new pools of talent.”
He also sees strengthening the management team as being important. “We have gained valuable expertise with the acquisitions but we have also made senior appointments within Reconomy. We’ve widened the bandwidth at board level with Tony Munro coming in as marketing director and Jody Fullman as chief information officer.”
In terms of staff, the company is developing internships and is targeting increases in the amount of promotions being internalised.
Mr Cox references Jody Fullman as a “big hitter” in terms of data and information. “We are a leader by far in the sector and our recent acquisitions have strengthened this. It’s fair to say that digitalisation and technology is at the heart of what we do.”
Looking ahead, he cites developments on several fronts.
In terms of the market, “we can offer an unbiased view of what the client needs. We can develop and innovate our service provision to what the client needs. While we were at the forefront of driving industry change and using our skills in the housebuilding and construction industry with our service offering, we can continue to do this but also in new sectors.”
Another development for the business is its CSR work and messages on sustainability. This includes RSVP, the Reconomy Social Value Programme. Mr Cox explains: “We are launching a five-year strategy looking to increase social value through different initiatives, such as helping to develop social housing programmes. One project involves helping people transitioning from care to the world of work. There has also been previous work with offenders coming toward release at Foston Hall Prison.
Mr Cox is also planning for the CSR to involve supply partners and customers – many of whom also are keen to get involved in activities related to social value.
Running Reconomy is an expanding task, says Mr Cox, but one he enjoys with the support of EMK and a strong board and management teams across the group.
What seems certain is that the business will continue to develop its use of data, which as economies move more to digitalisation and even artificial intelligence, it is well placed to do.
The company consider that the ongoing digitalisation of Reconomy’s numerous systems and processes is setting a high benchmark which has the potential “to benefit and influence the entire waste industry” especially in light of the government’s desire to move towards the compulsory electronic tagging of waste.