When MRW last caught up with Paul Taylor in 2011, the FCC Environment chief executive was still officially the boss of WRG. He was looking ahead to a re-branding and the impact of a commitment from its Spanish owner to a five-year investment strategy.
That project is now at the halfway stage, and Taylor is upbeat about the continuing transformation from a ‘landfill company’ to one focused on energy recovery and recycling. In 2010, around 80% of its income was from landfill; today it is less than 20%, with a 70% drop in tonnage to landfill since then.
“There have been ups and downs along the way, some disappointments, as you always get in business. But the general thrust of what we were talking about then, I don’t think has really changed,” Taylor said as he reflected on the earlier MRW article at his Northampton HQ.
“We are an infrastructure business. Our business is about taking waste, treating it, taking value out of it and making a positive contribution for energy production, which is something we need in this country. That’s the journey we’ve been taking the business on.”
At the heart of this has been synergy with the direction of its owner: “The core now is infrastructure and services, so we are bang in the middle of their strategy and are an important part of their business. Their support, whether it is technical, management or, very importantly, financial support has been fantastic,” he says.
FCC is the fifth largest recycling and waste management company in the UK. It employs more than 2,000 people at around 200 facilities across a swathe of the UK, from the south-east to the north-west, with a limited presence in Scotland and Taylor’s native north-east where he lives, catching Newcastle United home matches when he can.
We compete in a marketplace where we like to operate to the highest standards and we want everyone else to do the same
The company’s position was boosted in January by refinancing and £80m of additional investment from Fomento de Construcciones & Contratas SA (FCC SA), the parent company based in Barcelona. FCC SA’s own notable backers include Bill Gates and George Soros.
What all this seems to have brought, to this external observer at least, is a greater outward confidence from the UK company and a desire to engage more publicly about its activities in the wider community – to be more political, albeit with a small ‘p’.
The discussion with Taylor reflects this, taking in landfill tax, refuse-derived fuel (RDF), energy from waste (EfW), workforce skills and public opinion.
He acknowledges the extent to which landfill tax has changed society’s behaviour and driven the focus for waste managers up the waste hierarchy. But he thinks the escalator – stopped in its tracks in the last Budget – had served its purpose.
“If it is increasing by inflation, that is reasonable, but I wouldn’t be an advocate of increasing that further because I think it has done its job and does not need to do any more.
“In fact, if you were to increase that differential, then you are only going to encourage more activity around trying to avoid paying tax, and that’s not good.”
He is adamant that some waste crimes are driven by the economics of the tax, and is also concerned that inert material needed in the environmental management of sites would be lost by a skewed tax regime.
“It would be massively wrong, if landfill tax was to increase to the point where you could not attract inert materials in,” he says. “We compete in a marketplace where we like to operate to the highest standards and we want everyone else to do the same. If that isn’t the case then there is a danger the tax loses its purpose.
“It came in as an environmental tax, but if it then caused environmental harm, then that’s not what it was there to do.”
The policy of cutting waste to landfill has opened the door to RDF and the hot topic (pun intended) of exporting it to EfW plants on the continent, a practice virtually unknown in the UK three years ago.
“The choice comes in: you’ve got residual material so what are you going to do with it?” he asks. “Well, you either landfill it or you produce a fuel. Until the energy infrastructure is available in the UK, it is going to RDF [exports] because it is cheaper than landfill. That’s where landfill tax has made a big difference; it has in a way created its own issues around RDF.”
The collection market is cutthroat. There are an awful lot of players out there, and to think that you can just turn up and put some trucks on the road and you can sweep up the marketplace, that’s just naïve
Taylor adds that exports of RDF will tail off as UK infrastructure is built. The shift in FCC’s business strategy offers opportunities to diversify.
“As we have developed the infrastructure, our focus is to try to make sure that we can feed that infrastructure and grow our collection business around it. Our strength is that we [have] good infrastructure and therefore we can grow our collection activity and be closer to the producer, where we have got something positive to offer.
“We have had success where we’ve been able to show medium and larger companies that we can offer something more aligned to their corporate goals.”
One example of that is a three-year waste management contract for Imperial Tobacco’s manufacturing plant in Nottingham which began in 2013. FCC’s EfW and RDF facilities nearby allow the processing of nearly 5,000 tonnes a year and deliver the client’s zero-waste-to-landfill goal.
It is a practical solution, with Taylor insisting that expansion of commercial collection is tied to infrastructure.
He says: “The collection market is cutthroat. There are an awful lot of players out there, and to think that you can just turn up and put some trucks on the road and you can sweep up the marketplace, that’s just naïve.”
Businesses may be persuaded of the need for getting energy from their waste instead of sending it to landfill, but the public remains largely sceptical about the benefits, particularly about having plants in their own back yards. For Taylor, it is tough for the waste industry “to be the only voice that is saying that EfW is okay”.
He is convinced the key issue is to ensure that residents affected by the infrastructure get tangible benefits from it. FCC’s EfW plant in Eastcroft, Nottingham, is one of the few plants producing district heating for a local authority.
“I think it would be really nice, when you’re building an EfW plant in an area, if somehow the benefit of relatively cheap power was able to be fed to the local population,” he says. “That would be great because then people who are affected by it, because they can see it or the traffic that leads up to it, can actually see some benefit. But the rules and regulations within the UK at the moment often make that impossible.”
The future for FCC, as with all businesses, depends on its workforce and their skills – often in short supply in crucial disciplines.
“It’s in technical areas – process engineers, control engineering, mechanical, electrical – because you are moving from an industry which was not particularly technical into one which is very technical,” says Taylor. “The fuel just happens to be waste: it is a power station, and the skills you need to run that are entirely different from running a transfer station or a fleet of trucks – they are very specific skills.
“We’ve done a lot of upskilling work, training opportunities and personal development opportunities so people are learning new skills. There are a lot of initiatives going on in the background to raise skills and the opportunity to access training programmes, including apprenticeships.”
Another challenge is an aging workforce: “I think the average age of our employees is mid-40s. That means, just on a numbers game, the whole workforce needs to change in 20 years and you have to bring people in, you have to attract people into the business.
“We tie up a lot now with EU Skills [the employer-led membership training organisation]. We’re only starting to meet the challenge. There is a lot more to be done on that, I think, for the whole industry.
“Kids at school now are much more aware of the environment than their parents, so there is a more willing audience, a more willing workforce pool. We have to be better at tapping into that, so maybe we need more engagement with schools to explain what the industry’s about and the jobs and the opportunities that are there.”
Regulation has been a big behaviour changer among people and a big change for the industry, but it’s at a cost
With a general election only six months away, it is always tempting to ask senior executives in the waste sector what they want from the politicians. For Taylor, the answer is one word: consistency.
“Not constantly changing rules and regulations,” he elaborates. “I think we have enough rules and regulations to support us now. The framework of regulations is there and we need to deliver on it.
“EU legislation proposes big increases in recycling [targets for 2030]. I don’t think as an industry we should be against them, and as a firm we shouldn’t be against them, but we have to be realistic. The danger in getting from 50% to 70% recycling is around quality as well as quantity, and we have to be careful on the quality side.
“Regulation has been a big behaviour changer among people and a big change for the industry, but it’s at a cost. It has been expensive for the waste industry to make the move from where it was to where it is,” Taylor adds.
“If you are going to take that further, you have got to make sure the benefits from recycling more are balanced properly with the cost. Unless you can be sure of the quality from 50% to 70%, there is a danger it is poor quality material you are trying to recycle, with the [added] cost of getting that to a standard which is good for the reprocessors.
“Is that giving the right balance? I think we have to be very careful.”
The past three years has seen significant change for FCC. What of the future? “We are a business which is about handling materials, producing energy, recycling everything we can and hardly any landfill, if any,” he asserts. “We need to carry on what we are doing and more of it.
“The challenge for the industry will be: can we actually deliver the infrastructure to maintain the steps we’ve already taken? Can we attract the investment to deliver the infrastructure to be able to do that in all the circumstances?”
CV: Paul Taylor
Paul Taylor is a chartered civil engineer with 25 years of experience in the waste and recycling industry. Before becoming chief executive of Waste Recycling Group (WRG) in December 2009, he was chief operating officer for Sita UK and a member of its management board for eight years.
When WRG and Focsa Services (UK) – both owned by the international infrastructure, environmental services and energy group FCC – were integrated to form FCC Environment in May 2012, Taylor became the chief executive.