If evidence was needed of the waste management sector’s fragility, it is provided by the latest (October 2015) Index of Production (IoP) data published by the Office for National Statistics (ONS), says external affairs director at SUEZ and an RWM ambassador, Gev Edulijee.
The IoP reflects the movement of Gross Value Added (GVA) of our sector, which in turn is measured as turnover less the value of inputs such as materials, goods and services.
The sector has experienced mixed fortunes over the past decade, with output declining during the height of the economic crisis (early 2008 to mid-2009) but gradually trending upwards thereafter. But this picture hides an underlying instability.
Output increased in October 2013 relative to October 2012, decreased in the year to October 2014, but increased marginally in the year to October 2015. Month-on-month output over this period has shown a series of small slumps and recoveries, with close to zero growth from August to October 2015.
If the Government needed a wake-up call to help create a strong domestic market for the recycled materials and recovered energy our sector produces, the ONS report provides it
Explaining the decrease in output from July to August 2015, the ONS report for August states that “anecdotal evidence suggested the industry displayed a widespread weakness, with exports highlighted as a contributing factor”.
The first part of the statement relating to “a widespread weakness” certainly resonates with our sector – the imbalance between the supply-side and the general lack of markets for recycled materials (especially in the UK), the slump in global recyclate prices that has driven a number of UK businesses to the wall, and the pernicious effect of waste crime in destabilizing the businesses of legitimate operators.
The second part of the statement relating to exports, gives cause for concern. If, as the ONS suggests, our sector has been relying on exports of recyclate, RDF and SRF as its mainstay, the decrease from July reflects a decrease in the volume of exports, and/or a fall in the value of these exports, indicative of a fall in prices.
Either way, the data highlights the vulnerability of the UK’s waste management sector to global market forces largely outside of its control – the economic downturn in China for example, causing recyclate demand to fall along with recyclate prices. Yet the UK is a net importer of the raw materials used in manufacture and production, a vulnerability that could partially be cancelled out if our industrial strategy was more closely aligned with the secondary raw materials generated by our sector.
If the Government needed a wake-up call to help create a strong domestic market for the recycled materials and recovered energy our sector produces, the ONS report provides it.