OPINION: ‘The state of our industry… why we are where we are’, by John S Glover of Bywaters.
Where are we as I write this?
Because of the unknown certainties in the current world everything may change on a month to month and longer basis. The world is currently very unpredictable.
The actions of Government lead to known and unknown results. What is good for one company is bad for another.
Over the course of time good results in one area will be offset by a bad result in another. The only thing that counts is the overall organisational result.
Outsiders may say that organisations should just concentrate on profitable areas, but those areas can become loss making overnight and all organisations have ongoing contractual requirements to consider.
Typically constituents of business uncertainty today include:
1. Business sentiment in general and in particular. If a business dip occurs organisations look to cut overheads and expenditure. There are unpredictable short and long term cycles of this.
2. Foreign exchange. A very substantial amount of UK business is subject to Foreign Exchange risk which can be good, bad or indifferent. The UK exports commodities worldwide in addition to sales within the UK. Worldwide commodities are totally priced in $’s US, except for shipments to Europe which will normally be in Euros. If the £ goes down in value against the USD or Euro in a constant market we will, on average, receive more £ Sterling, but also vice versa!
3. Commodity prices themselves – These go up and down like a yo yo and we are “takers” for UK, Europe and world prices at any point in time. The prices can reduce to nil and also become negative for certain materials. In the worst cases the UK routinely has to dispose of recycled material to energy from waste or (in the worst case) to landfill, at a high cost. As at October 2018 there are big problems in exporting to China and a very large value collapse is underway as I write because China has not issued import permits from 1 January 2019.
4. JIT- In today’s world the UK is a “JIT” (Just in time) operator and in UK facilities what comes in each week must also go out. It is never viable to stockpile or warehouse low or no value commodities when there is no immediate market.
5. Fire and Health & Safety risk. The industry has had many major fires in the recent times, largely due to a very long and very hot summer. Fires are an increasing risk during very hot weather and batteries and capacitors unlawfully disposed of within recycling and general collections have become a daily cause of fire. We have to rectify damage caused as soon as possible to maintain our commitments to the wider world. At Bywaters we are constantly updating all our fire and health and safety procedures.
6. Risk – We are all required to do more for less and this leads to the intensification of operations. As with the roads and the railways increased intensification produce efficiencies but as 100% capacity is approached, and exceeded, if anything goes wrong the effects can be very large and, where fire is involved, may put a facility out of use for months or longer. Many large and small facilities in the UK have fallen by the wayside for economic reasons and this indicates the continuously tough market we are in. If those plants had been profitable they would still be here today. The industry has been suffering a lack of real confidence and real support by Government for the last ten years.
That is why we are where we are.
John S Glover, Managing Director, Bywaters