EXCLUSIVE: There are major concerns that the collapse of the giant support services business Carillion will leave some SMEs in the waste sector struggling to recover.
Jenny Watts, chief executive of waste industry trade body UROC, told letsrecycle.com that she fears its demise may be the “make or break” for many small and medium sized businesses (SMEs).
Concerns have been raised over the fate of smaller waste businesses after the collapse of Carillion
However, larger national waste management companies seem unperturbed by the announcement with the Environmental Services Association (ESA) taking the opportunity to promote the role of the private sector.
ESA
In a statement today, Jacob Hayler, executive director at the Environmental Services Association (ESA), which primarily represents the larger waste firms, warned that the news should not distract from the fact that private contractors provide the “best deals” for councils.
And, he claimed the direct impacts of Carillion’s “unfortunate” collapse on the waste and recycling industry should be “minimal”.
Mr Hayler explained: “In the waste sector, contractors are able to exploit economies of scale and flexibly allocate their resources across their portfolios to provide the best deals for councils. Well-designed procurement processes put downward pressure on costs and incentivise innovation in service delivery to maximise value for local authorities. This is vital during these ongoing times of financial pressure on the local government sector.”
UROC
However, Jenny Watts said UROC – which represents the industry’s skip hire, waste transfer and materials recycling sector – is “gravely concerned” for independent waste operators who, she said, will inevitably be caught up in the collapse of Carillion.
And, she criticised the government’s decision to have continued to award large infrastructure projects to the company.
“It is often the case that big power house organisations, such as Carillion, dictate payment terms and small businesses have to simply accept them.”
Jenny Watts
UROC
“It is often the case that big power house organisations, such as Carillion, dictate payment terms and small businesses have to simply accept them,” said Mrs Watts. “For most this can be digested because they ‘know’ they will eventually get paid, so manage cash flow accordingly, but when a giant construction company is heading towards becoming insolvent, the law should protect against innocent businesses in the supply chain being irreversibly impacted.”
FSB
Speaking more generally about Carillion, the national chairman of the Federation of Small Businesses (FSB) said small business suppliers could be put in “jeopardy” if they are not paid what they are owed.
Mike Cherry, said: “Sadly these kind of poor payment practices are all too common among some big corporates. Perhaps if they weren’t it would be easier to spot the warning signs of a huge company in financial trouble.
“When the dust settles on this sorry saga, there is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses.”
Carillion
It is understood that Carillion holds contracts and subcontracts with a number of waste management firms for the disposal of commercial and construction waste.
The company had also been publicising its work with the waste sector as a move move towards a more circular economy system.
Speaking last May, Diane Crowe, group sustainability manager at Carillion, said: “We think about eliminating waste at the earliest stages through the design and planning of the project, working with suppliers and through our onsite operations.”
And, despite the company’s emphasis on reuse and waste reduction, she said: “Sometimes we do need to take materials off site and for example in London, we use waste management companies that make the most of the latest technology and can recycle or recover 100% of our waste.”
Powerday
One perspective came from Simon Little, sales and marketing director at Powerday. He confirmed that the company currently has ongoing projects with Carillion and has worked for it on the Battersea power station site.
“We’ve worked with Carillion since they started and the companies that came together to create Carillion, so we’re really saddened by the news,” Mr Little said. “We were encouraged when we saw Carillion winning contracts up until a few weeks ago and we like many others are waiting to see exactly what the future holds for ongoing work.”
Simon Little, sales and marketing director at Powerday said the company currently has ongoing projects with Carillion and has worked for it on the Battersea power station site
Mr Little predicts that the collapse of Carillion could pose difficulties to “hundreds” of small companies, even putting some out of business. He said: “It will affect companies, big and small across the country, and companies in our industry who have contracts and subcontracts will be affected.”
And, he said there is still a level of uncertainty on what the full extent will be for the sector, although he said there will be “a big cumulative impact on Carillion’s Waste Management Supply Chain”. This is because Carillion has operated with extended payment terms and the nature of the work it carries out.
Suez
One of ESA’s members, Suez UK (formerly SITA), has worked with Carillion in the past, and has been praised by Carillion for its role in helping increase recycling rates.
In 2014, Carillion reported SITA as its preferred supplier and said the companies were working “to increase recycling, and where this is not possible use waste to energy rather than landfill as a last resort”.
A spokesperson for Suez said it was “too early to comment on the issue affecting Carillion”.
Mick George
Another company with connections to the construction giant is Cambridgeshire-based Mick George Ltd.
Just last week letsrecycle.com reported that Mick George had won a further contract to supply skip and waste management services for the A14 Cambridge to Huntingdon improvement scheme (see letsrecycle.com story)
Mick George recently won a further contract to supply skip and waste management services for the A14
The £1.5 billion Highways England project is being delivered by the A14 Integrated Delivery Team – a contractor joint venture of Costain, Skanska, Balfour Beatty and Carillion.
When contacted by letsrecycle.com, a spokesperson for Mick George said the firm had no comment to make at this time.
GPT
Commercial waste firm GPT Waste, based in Runcorn, has undertaken work for a number of projects with Carillion.
According to its website, GPT has an ongoing contract with Carillion to manage waste collected from the M40 motorway.
GPT told letsrecycle.com it will not be making a comment as the company is continuing to support Carillion.
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Source: letsrecycle.com General
