Plastics recycler Closed Loop Recycling in Dagenham faces closure on Wednesday with the loss of around 100 employees.
The new owner, which rebranded the company Euro Closed Loop Recycling (ECLR) when taking it over from administrators in May, says it is losing at least £300,000 a month.
But Chris Dow, who founded the original company and was retained as deputy chairman, said he is involved in talks to prevent closure.
“We are 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 engaging in our efforts to find a suitable solution in an urgent attempt to save the last 10 years’ investment and secure the future of Britain’s recycling.
“I am working with the current owners … to ensure a smooth transition and jobs are secured. We will then be working with the key stakeholders and the Government to secure a new deal for our industry.”
Dow’s comments follow a letter to ‘UK recycling industry stakeholders’ from shareholder Afzal Majid saying that ECLR is “facing considerable difficulties regarding the continuing viability of the business”.
The letter indicates that 32 staff were laid off with an additional 12 moved to shorter hours on 29 June, when the plant began operating a four-day week.
It goes on: “This, however, is not sustainable and it is therefore our intention to cease production and lay off an additional 60 staff on Wednesday 8 July 2015 unless a solution can be found.”
The reasons given in the letter for the failure are similar to those that bedevilled the original Closed Loop Recycling, and include the disparity between the cost of recycled HDPE and virgin resin. Traditional suppliers of reclaimed plastic are getting better prices abroad for their materials.
The owners say there is a “vast gap” in the commitment from the dairy supply chain, customers and governmental bodies.
To avoid permanent closure of the plant and “a significant number of employee redundancies”, they urge three steps:
- Parity with virgin resin pricing to agreed indexes
- A supportive supplier base with pricing in line with the Dairy Roadmap
- Support from all stakeholders to implement a sustainable model