11 September 2018

‘Recyclers should learn from the logistics sector’

OPINION: A right turn for recycling.  It’s time we learnt from the logistics sector if we want a recycling industry that works for business and the environment, argues Anthony Sant of AO Recycling.

In business, most companies want to compete on a level playing field. We want to win business and gain a competitive advantage through the quality of our products and the services we provide to our customers. Gaining an unfair advantage against competitors, say by operating to different standards just isn’t good business and is rarely sustainable. Few businesses survive long-term with this business philosophy. It’s bad for consumers, for society and for overall confidence in the business world.

Sant

Anthony Sant, sales and marketing director of AO Recycling

It always makes sense, of course, to watch your operating costs and find ways to be more efficient – but there are limits on the ways you can do this.

‘Level playing field’

The truth is, the recycling industry across all areas in the UK right now is not operating on a level playing field and this is severely impacting on investment in the sector.

The playing field is not level between recyclers operating within the UK – and it’s also not level in terms of our ability to compete against companies based abroad. Why is it not level? To put it simply, not everyone is operating to the same standards and the environment is paying the ultimate price.

In my view, this is hampering the UK’s ability to deliver the investment needed in domestic WEEE recycling capacity. But it’s also standing in the way of the government’s objective of enhancing the UK’s environmental record – both in the form of its 25-year Environmental Plan and the laudable efforts of Environment Secretary Michael Gove to stand up for the environment by getting big business to do the right thing. By that I mean, the right thing for the planet, and not just the bottom line.

To put this right and level things up, I believe, we have to act at the micro (domestic) level and the macro (international) level.

Standards

Let’s take the UK situation first. Since we opened AO.com’s recycling facility in the summer of 2017 we set out to build and operate fridge and LDA recycling facilities in the UK to the latest high standards to achieve the required environmental pollutant recovery. We’ve taken a stand with the opening of our first plant in Telford in Shropshire, which processes almost one fifth of the UK’s discarded fridges – about 700,000 a year.

The truth is our plant could actually process more fridges if we wanted to, but that would involve cutting corners at the expense of the environment.  By doing so we wouldn’t be doing the right thing and we might even be breaking the law.

Under current UK regulations, we have to blend the fridges in our 80-tonne recycling machine for a specific amount of time to release the blowing agents trapped in the insulating foam. The result is better for the environment as more blowing agent is removed and captured from fridges. This results in higher costs for us because these pollutants have to be disposed of and it also reduces the value of the out-streams (plastics. metals) which we extract during the process.

So, we do the right thing: we comply with the spirit and letter of the law and operate to the latest high standards. We don’t know if all this is the same for everyone recycling fridges. So, are we operating on a level playing field where the only competitive advantage is gained by good service and a quality product?

Logistics

In other industries it isn’t like this. Take logistics for example. Here, all operators have roughly the same cost base (price of vehicles, driver and fuel costs etc.) so it’s hard to gain an advantage by making savings there. The legislation that they operate to is the same for all and they have to conform to on a number of fronts – driving hours, vehicles standards and speed limits etc. If they do not, the fines are huge and there are VOSA inspectors and police to enforce. As a result, we have a transport industry in the UK that we can be proud of. It does not succeed through operating contrary to legislative requirements and the bad operators don’t stay in business for long. So instead, logistics firms gain competitive advantage by offering their customers a better service and meeting their needs in a timely and efficient manner.

If logistics is a level playing field why can’t the recycling industry be? It’s both possible and essential from an environmental standpoint and in order to deliver the increase in recycling capacity we need.

Solving the problem at home is only part of the job. The same principle needs to be applied to the international market where the playing field is even more uneven.  Without addressing what happens outside the UK, the impact of domestic change will be limited.

Environment minister Therese Coffey visited AO Recycling’s plant in Telford earlier this year, she is pictured here with Anthony Sant

Internaational

Internationally, many of our domestic operators simply cannot compete with companies which operate to entirely different environmental rules and regulations and where levels of enforcement are so much weaker. Add to this their lower cost base – for everything from land to labour – and you can see why we end up in a situation with so much of our waste being exported abroad for recycling.

Some would say the most effective way would be to ban exports of waste altogether as this would be much easier to control. While this is the ideal, it simply would not be possible at this stage as we wouldn’t have the facilities in the UK to cope nor would it be economically viable.

Actions

More realistically if we want to change, and I think the government is genuine in its desire to do so, then there are things we can do to level out the playing field.  But first let’s rule out tariffs. Opting for a tariff system on exports as a method of enforcement would not encourage investment as businesses will fear the uncertainty of changes in future levels.

Change wouldn’t require new legislation though, just tougher enforcement. The government could, for example, simply refuse to grant export licenses for waste materials, unless they were going to countries which operate to the same environmental standards as the UK. And they could also block imports into countries which failed to properly enforce those standards. I’m afraid, at present, this would exclude many businesses operating in countries outside Europe and North America. But if the end result was a raising of the environmental bar in these countries that would ultimately be good for their societies.

If the government was to back this up with effective enforcement measures for the regulatory regime we already have in the UK we could, I believe, begin to level out the playing field. And this would give reputable businesses the confidence to invest for the long-term.

Ultimately, that wouldn’t just benefit those of us who already operate to high standards. It would go a long way to helping the government to achieve its environmental objectives. And that would be good for all of us – not just those of us playing on the recycling pitch.


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