A year on from making some tough decisions over the materials side of its business, Valpak will enter 2010 with fresh optimism and an eye to new market opportunities that will come with the move to a carbon economy and more producer responsibility.
At the same time, the not-for-profit producer responsibility business, is adopting a keen approach to the market and is not afraid to secure new packaging waste business, including from very large retailers who have previously been with other compliance schemes.
Most notable new Valpak recruits for its 2010 packaging work are more large retailers including Marks & Spencer, which is leaving the Biffpack compliance scheme and ASDA, which will join from the Veolia Environmental Services' Compliance Scheme. A further recruit is expected to be announced soon. With the newcomers, the marketshare of Valpak is estimated to be at about about 52% of the obligated tonnage under the UK's producer responsibility systems for packaging waste.
Duncan Simpson, director of marketing for Valpak, describes the organisation, which is a not-for-profit company, as “a decent-sized scheme fighting all the time to keep prices as competitive as possible.”
When factors moved against us on a small margin we derisked.
Duncan Simpson, director of marketing, Valpak
And, he emphasises that while sometimes on the T2E exchange packaging waste recovery notes might only be £3, each scheme has its own challenges, prices will be higher and targets and plans have to be met.
Mr Simpson claims that Valpak's operational plan has “not changed tremendously. We have seen a long period of evolution since we started as a producers scheme.”
Cardboard
But the reality is that the organisation has seen significant change on its materials side, getting cold feet when the materials markets crashed in November 2009 and having to jettison its substantial activities in the cardboard waste sector.
Many observers had felt during 2008 that Valpak was paying over the odds for waste cardboard which it wanted to control to ensure access to PRNs. The cardboard activities were terminated at the beginning of 2009 although the company remains active in the plastics and metals sector.
Job cuts did happen with the loss of the cardboard sector and a number of other posts have also gone.
Valpak Recycling handled about 400,000 tonnes of cardboard and its margins were at risk. Mr Simpson explains: “When factors moved against us on a small margin we derisked. We have since stuck to metals – steel and aluminium – and plastic which we know best. We have moved other materials which are a problem for our customers through third parties.”
Customer service
Mr Simpson concedes that there is pressure on operational costs because of the need to keep the materials PRN levy charged by Valpak competitive. However, he argues that Valpak needs to maintain a high level of staffing because it is essential for it to deliver its business aims and develop future opportunities. “If you survive only on cutting operational cost, yes you would have to cut staff. Our customers like staff who respond to them, do what they say they will do and deliver a service to them. Anything else would you turn you into a different beast. For our customers, dealing with packaging waste is not their core product – we have to be clever and that means being with the customer, on the end of the phone to give advice and, at the right time of the year, reading ahead, giving solutions and so helping to meet their needs.”
One area of expertise which has benefitted members and others is Valpak's virtual warehouse. “In terms of helping our customers fill in their forms we have a packaging warehouse with 300,000 weights,” reveals Mr Simpson. “This is a comprehensive packaging database which covers materials and recycled content and allows us to help retailers and brand names comply with packaging waste regulations and with their Courtauld Commitment reporting. It is a system that gives something constructive back to customers and also helps organisations in their work.”
2010 agenda
Several issues are on the agenda for 2010 when a consultation paper will be issued by the Department for Environment, Food and Rural Affairs covering future packaging waste targets and issues such as what happens to the PRN funds.
Mr Simpson says he believes there “is an issue to do with the visibility of the PRN. What level of support is there for the collectors. There is a feeling within the chain to let everyone see the flow of funding and we would like to see the system as it is slightly enhanced.”
Valpak also would like to see more information available about where where reprocessors spend the money they receive for PRNs and which material streams is it spent on.
“Then you would be able to see the proportion of cash going through the stream,” he says. “This is not going to change access to funds but over the years the direction of that money will change. The attention will be focused on glass, plastic, aluminium and steel and away from home collection. It may be that reprocessors have to say how much material is coming from the domestic waste stream.”
WEEE
While it was created as a packaging waste compliance scheme, Valpak has already expanded beyond its original remit. Much of its successful recent activities have centred on the waste electrical and electronic equipment (WEEE) sector where it has two significant roles. One is as a compliance scheme and the other is a separate function for WEEE with the administration of the retail-backed funding scheme to boost the collection of waste electrical equipment at civic amenity sites.
Mr Simpson says the WEEE work has been “a tremendous success story. Competition in the marketplace has shone through, costs have dropped significantly and now we need to watch how closely the management of schemes' operational plans is carried out.”
In terms of the distributor take-back scheme for local authority civic amenity sites, 98% of local authorities have signed up in the UK. Valpak has recently been appointed to run this side of the WEEE system again for three years with funding via the British Retail Consortium of £6,000 a year for each site plus £3,000 for extra works. And, Valpak believes that there will always be a requirement for upgrading sites and enhancing them.
From February when the consumer collection side of the batteries regulations come into force, Valpak will be working to collect batteries and expects collection costs to be about £600 per tonne compared to the £20,000-£30,000 per tonne cost that had been discussed in the past. “We have to take it seriously and build up our collections over a period of time,” says Mr Simpson.
He accepts that early targets may be met but argues that collection systems needed to be developed. Valpak retail members, such as ToysRUs, Sainsburys and B&Q, will be collecting batteries in house and monitoring how quickly battery bins fill up. Household kerbside collections work, he says, and also points to the successful collection of batteries from civic amenity sites by the organisation's collectors for WEEE.”
Consultancy
For the future, Valpak, notes Mr Simpson, is looking ahead to offer its environmental service skills for new areas, notably relating to carbon for which it may also deliver a producer responsibility service.
“We have a strong consultancy arm, Valpak Consulting, which came about from doing all the various pieces of work we have been involved in. Most of the team are based in Glasgow and are experts in several subjects including life cycle analysis. There are probably not many businesses out there that have the view of the marketplace we have, we know the packaging chain so well and have worked for WRAP and the government and others.”
As for work relating to carbon, Valpak is getting ready. Mr Simpson is convinced that there will be opportunities for the organisation because of its knowledge of products and skills in the marketplace for the whole packaging waste and WEEE systems.
“All our work,” he says, “helps us as a stepping stone to the carbon agenda. We have already produced a carbon calculator for business which allows calculations to be made over time in a hub way rather than as linear calculations.”
In effect, Valpak is already offering a pre compliance service for the Carbon Reduction Commitment, now the CRC Energy Efficiency Scheme, for its members.
“As is always the case”, comments Mr Simpson, “legislation corrals people and moves them in the same direction. A lot of planning needs to be done for this ahead of it coming into force next year. We are working on this now and a lot of planning needs to be done.”
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