Two more textile recycling companies have ceased trading in the last month, while one has been taken over following going into administration.
Leicester-based Ragtex UK, which graded, sorted and exported clothing from the UK has gone into liquidation, but Ragtex Collections UK in Nottingham continues trading.
Meanwhile, Kent-based textiles recycler Retrograde has been taken over by Envirotex Recycling after going into administration.
Ragtex UK and Retrograde were both members of the Textiles Recycling Association (TRA).
Collectively the businesses employed around 100 people and provided textile collection services for retailers, charities and local authorities.
Wolverhampton Textiles, which provided textile cleaning products, has also ceased trading.
MRW understands from industry insiders that Retrograde, which dealt mostly with the charity sector, owed considerable amounts to their buying contracts, a number of whom are high street charities.
Charity Sue Ryder’s retail recycling lead Katy Faulkner said: “We had been working closely with Retrograde through this difficult period in their trading hoping to find a long term solution and return to our previously high quality service. We are disappointed that the company has been put into administration leaving us and other charities with outstanding debt; we wait to hear from the administrator.”
She added: “We have moved our business to Envirotex Recycling and are pleased that the service to our shops has continued efficiently.”
David Elliott, joint administrator from Moore Stephens, said: “Re-Grade Exports Limited t/a Retrograde was placed into administration on 18 July 2013 due to historic trading debts. David Elliott and Simon Paterson of Moore Stephens LLP were appointed as joint administrators.”
Sue Ryder: “We have moved our business to Envirotex Recycling and are pleased that the service to our shops has continued efficiently”
He added: “The business and assets were purchased by Envirotex Recycling Limited on the same day and as a result, the jobs of all staff employed by the company have been saved. The purchaser has also made the decision to move to new premises on the same trading estate.”
Meanwhile, industry insiders also said that Ragtex UK in Leicester lost the contracts for a number of textile banks recently.
The news comes after six other textile recyclers, who were TRA members, shut their doors in the last year. This marked an extremely difficult period for the industry to which overpricing, poorer quality materials, thefts from door-to-door collections and unstable foreign markets have all contributed.
Industry insiders have also cited a deterioration in the length and scope of contracts in the industry as a major hindrance.
President of the TRA, Ross Barry, told MRW that textile recyclers are losing contracts at very short notice and struggling to cope with the cost of redundancy periods for their staff.
He added that some recyclers aren’t diverse enough with their sales and rely too heavily on one customer. This can expose the company if that customer is affected. Small to medium sized companies are at greatest risk due to this.
Martin Wilcox, director of textiles recycler JMP Wilcox, told MRW: “The failure of these businesses and other medium sized textile businesses has purely been that of margin over turnover. It’s an overvaluation of the price of used clothing on the open market. People are paying too much for it – then they are finding out they don’t have a margin.”
He said: “There’s a lack of margin in the entire industry and that’s what’s causing the closures.”
Wilcox also claimed that the export markets are not buoyant enough for the textile recyclers to increase prices. This has overheated the buying market, which has not been reciprocated in the sales market.
He added that the merchants with the smallest production volume and poorest sales and marketing strategies are the most vulnerable.
In December last year resources management minister Lord De Mauley introduced a ‘Rags to Riches’ campaign to highlight the potential of the clothing recycling sector to help reach a zero waste economy.
- Article amended 25 July: In the original version of the article we said that Retrograde had gone into liquidation, when it had gone into administration and has now been bought by Envirotex. We have also added a statement from the administrator.
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