Small Companies Being Squeezed Out of Recycling (31/01/2007)
An analysis of the waste disposal market, carried out by industry commentators Plimsoll Publishing, said that a “staggering” 97% of last year’s sales growth in the UK waste disposal services industry went to just 136 firms. The flipside of the coin, went on the report, is that many others are struggling to survive in an atmosphere of declining sales and increasing debt.
Plimsoll said the assessment confirms that constant rounds of consolidation are creating ‘super companies’ that are exerting an increasing control over the market. Most of the companies in question are large, with sales of over £10 million. But 29 have sales of less than that - an indication that it is not simply a case of smaller firms being squeezed out
The research includes an individual analysis of 850 companies in the waste disposal services sector and shows the impact these increasingly powerful companies are exercising in the market. David Pattison, senior research analyst, said: “Looked at separately, these 136 super companies are great news for the industry. Yet the reality is much more disturbing. These companies are forcing such intense competition that others are battling for survival.” He added: “Unless some of the worst performing companies start to come to terms with the financial implications of flat or declining sales, they will go bust or be forced to sell up. It really is a time of either joy or tears. The market hungry will use this analysis to seek out companies to approach and buy. For the others, desperate to sell, it’s a case of finding a buyer.”
Among the 714 other companies covered in the analysis: 349 firms are caught in the retreat, despite efforts to control their costs, reduce staff numbers or sell off some investment. So far this has had little impact on their ability to stay in the market. The Plimsoll report added that 94 of the worst affected companies saw sales decline by an average of 12% in one year. As a result, more that half of these lost money because extra costs could not be passed on into sales.
“In 2007, I see growth slowing in the coming 12 months although still above 5%, with the small group of market leaders again capturing the lion’s share and the others increasingly playing catch-up,” concluded Mr Pattison.