Closed Loop Recycling, the UK’s largest recycler of plastic milk bottles, is on the brink of closure, according to a letter sent to industry stakeholders from current owners Euro Closed Loop, which last week laid off 32 staff and reduced the operating hours of its plant to four days a week.
The letter from shareholder, Afzal Majid, to industry stakeholders, explains that the company is currently losing at least £300,000 a month and that it intends to lay off a further 60 members of staff and cease production as of tomorrow (8 July) unless “a solution can be found.”
Euro Closed Loop Recycling (ECLR) says it is facing “considerable difficulties” regarding the continuing viability of the business for number of reasons, including: being unable to secure parity with virgin resin prices therefore disadvantaging ECLR and the recycling industry; waste plastics supplier base states that it is more advantageous to sell material collected in the UK to overseas buyers at prices which the business cannot sustain; the current EPRN system encourages this.
CEO, Chris Dow – “We’re in discussions with all parts of the supply chain and we are looking forward to bringing all customers and suppliers on board. Veolia, Viridor, Nampak, Dairy UK, Tesco, Sainsbury’s and M&S are all backing the bid, which is an urgent attempt to save the last 10 years of crucial investment and secure the future of Britain’s recycling”
According to the letter: “There is a vast gap in the co-ordinated commitment by the dairy supply chain, customers and governmental bodies to fix what is structurally wrong in this sector.
“The dairy supply chain established a world leading model for sustainability in the dairy industry and the shutdown of ECLR will have implications for many businesses and undermine the confidence of investors in the UK recycling sector.
“To avoid permanent closure of the plant, which ultimately would result in a significant number of employee redundancies, the following cooperation is urgently required:
- “Parity with virgin resin pricing to agreed indexes.
- “A waste supplier base that is supportive with pricing in line with the Dairy Roadmap.
- “Support from all stakeholders to implement a sustainable cost plus model.”
In March this year Closed Loop Recycling warned that without financial support from the industry or government, going into administration is “inevitable”, after the slump in global oil prices have forced clients to cut back on the amount of recycled plastic they purchase.
Closed Loop Recycling produces more than 80% of recycled plastic used in milk bottles in the UK. Prices that can be achieved for recycled material has fallen nearly 40% in the past nine months, due to a drop in global oil prices.
The company has been working with WRAP to find a solution.
CEO, Chris Dow, released statement yesterday, saying: “We’re in discussions with all parts of the supply chain and we are looking forward to bringing all customers and suppliers on board. Veolia, Viridor, Nampak, Dairy UK, Tesco, Sainsbury’s and M&S are all backing the bid, which is an urgent attempt to save the last 10 years of crucial investment and secure the future of Britain’s recycling.
“I am working with the current owners of Euro Closed Loop to ensure a smooth transition and jobs secured. We will then be working with the key stakeholders and government to secure a new deal for our industry.”