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Partnership builds a business in waste

You may know the name Kier because it is a major construction company known for building and civil engineering. But it also has a waste management division, known as Kier Street Services, that is growing rapidly. In May it acquired Pure Recycling for an upfront £2m, with a further £5.1m possible which is contingent on other factors.

I meet Kier Street Services managing director John Jackson (above right) and Pure Recycling director Nik Spencer (above left) at Kier’s head office in Sandy, Bedfordshire, to find out more about its plans and why a construction business has a waste division.

“Kier wanted to develop in the support service industry and originally bought Bexley Trading Services, which was a part of Bexley council,” says Jackson. “This incorporated various functions including waste and grounds maintenance. It was there really that the grounds maintenance and waste business was born. That was subsequently split off into Kier Street Services, the business that I represent today.”

Since then, the company has grown to take on more local authority clients and now has around 600 staff in the street services division, with contracts including Bromley and Islington councils in London, Northamptonshire County Council, Corby Borough Council and more. Not all of its contracts are simply waste contracts, however, and some involve street cleaning and highways maintenance too.

Jackson says: “At the moment, we have got several waste collection and grounds maintenance and street service contracts. We have several ways that we work in terms of collection. I suppose it is fair to say that, wherever possible, we always meet our clients’ needs in terms of how we actually collect materials.”

With its acquisition of Pure Recycling, Kier is taking the next step in its growth.“It is a really exciting opportunity for us. We saw changes in the market and although we were strong in the collection-only market, we realised that local authorities wanted a wider offering than just the collection,” says Jackson. “So, as a strategic move, we decided that we needed to get recycling ability and review our whole strategy in the waste market. It was following that strategy that we decided to look at opportunities and came across Pure.

“We had been working in partnership with it for several years and found its culture and management extremely strong. We entered into discussions to take forward a possible acquisition, which is why we have managed to achieve what we have.”

Spencer adds that it was also an exciting opportunity for Pure to develop the business further. “We’ve been working with Kier for a while on bids,” he says. “But to be able to take the business forward using the foundations that we have built, such as our recycling facility in Warwick, and to be able to build other facilities in the UK is a fantastic opportunity for us.”

The transaction included buying a new materials recycling facility (MRF) that is being built in Warwick. Jackson explains why in particular Kier wanted this MRF: “For some time now we’ve believed that the right solution for clients is an integrated offering. It is there where we can offer greater cost savings to clients and is why we decided to acquire Pure. [It allows us] to give solutions to our clients to look at the market and address that. We have also seen that the technology developments within MRFs today are far greater than they were in the recent past, and therefore the quality of the materials that this state-of-the-art plant is able to produce has given us this fantastic offering.”

Spencer adds: “Geographically, the MRF is brilliantly located. It is right in the heart of England, just off the M40 at Warwick. In terms of getting the material into the plant, which is important, and getting material out of the plant and reducing the amount of miles that the recyclables are travelling, the geographics are absolutely essential. When we looked at where we were going to build this plant in the UK, we worked out where other MRFs were and then went about getting the planning permission to build this plant in the middle of the UK.”

Construction is due to be finished in October, with the plant and machinery arriving in November, and completion due in March 2011.

Jackson says: “With the acquisition of Pure and Nik’s management team, that gives us a real strength in the Midlands to be able to process material through a MRF. That isn’t to say that we rule out other options in terms of kerbside collection if that’s what suits a particular client.”

Kier’s strategy is to look to win integrated contracts and it still sees potential in the local authority market.

“We want to try and procure integrated contracts that not only have waste and recycling, but also other elements where we have strong skills in Kier in grounds maintenance, street cleansing and highways,” says Jackson. “It is those contracts where we believe we can offer significant cost savings to clients where we think we are strongest.

“That isn’t to say we would not take on the big boys [large waste management companies], but we see a niche area where perhaps they are more interested in pure waste contracts. We see a more diverse range of services that we would want to offer to our clients.Predominantly, we see that our focus in the future will be in local authority contracts. Although that’s a tough environment, with all the cost savings local authorities have got to make at the moment, but our integrated approach can give significant cost savings.”

In terms of the wider group, Kier has also been involved in constructing a number of waste facilities, including the MBT plant and waste facilities at Frog Island and Jenkins Lane in east London for Shanks Waste Solutions. Jackson believes this shows the company’s variety of services.
See the video of this interview at www.mrw.co.uk

JOHN JACKSON AND NIK SPENCER CVs

Having had a career with major firms in the construction, civil engineering and highways industries, John joined Kier Street Services around a year ago.
The best thing to happen in my career was…
“The background to my career has been in construction, and while there my preconceptions of the waste industry were wrong. I’ve been amazed at how fascinating the waste industry is and I really enjoy working in it.”
The worst thing to happen in my career was…
“I was contracts manager for building a reef off the Norfolk coast. It was a nightmare because it involved dangerous conditions in the sea, and we had to move heaven and earth to get it right. Although in the end it was completed on time, unfortunately in the process someone fell into the sea and was killed, and that was a horrific thing to see happen.”

Nik founded the WCR hire business before selling the vehicles and setting up Pure Recycling.
The best thing to happen in my career was…
“Building both WCR and Pure from nothing into businesses that I have sold has given me a real sense of achievement.”
The worst thing to happen in my career was…
“When the financial markets collapsed and we were trying to deliver a £10m facility, I kept getting phone calls from previously supportive financiers to say they could no longer commit. That was a challenge that we managed to come through.”

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