The Textiles Recycling Association (TRA) has warned that more of its members’ businesses could collapse before Christmas.
The TRA says it is the worst year for member failures for at least a decade – and is warnng more could be to come.
A medium-sized merchant in the Midlands entered administration recently, becoming the third member casualty of the year, taking job losses to about 100.
Textiles recyclers are struggling with high used clothing prices, which they say have been inflated by a rash of companies entering the market without understanding it.
TRA national liaison manager Alan Wheeler told MRW: “The normal rules of supply and demand don’t seem to apply at the moment. Because the prices for recycled textiles are high in Africa and Eastern Europe, they are attracting people who perhaps don’t see the full picture.
“Many people see the high value and jump into the industry without looking at the realities.”
Wheeler said some newcomers were paying inflated prices for used clothes without realising the cost of transporting and sorting them.
“Companies come in quickly and go quickly when they realise they are not making any money,” he said.
This constant churn leaves long-term recyclers struggling to keep supply at a sustainable cost.
“My impression is people are operating on very tight margins,” said Wheeler. “Some have been very slow at paying membership fees and I’ve had calls saying they can’t afford to pay in one go.”
David Walker, industry correspondent for MRW, said: “Contracts are generally fiercely fought over among competitors. Waste dealers naturally do not want to lose a regular lucrative supply and are prepared to be driven in the competitive market.
“I have noticed many almost stand up fights among dealers over supplies of arisings”.
Suppliers have been urged to stick with long-term partnerships to safeguard the industry they rely on.
Phil Geller, director at membership group Recyclatex, said: “A lot of companies have been chasing business just to keep material flowing through their doors and this has pushed prices up to an unsustainable level.
“It is very important in these uncertain times that charities and local authorities partner with good solid businesses who understand the industry and have weathered the highs and lows of the economic cycle.”