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The Big Interview: Neil Grundon

Neil Grundon, deputy chairman of the largest privately owned waste management group, has been at the company since he was 21, when one of his first tasks was to help repurpose a closed landfill site into a golf course.

Promoted to his current role four years ago, Grundon says the reason for the family firm’s enduring success is that it is “not an aggressive company”. Rather than go on an indiscriminate drive for greater market share, he believes his company has picked its battles carefully, including reluctance to offer a council collection service.

Grundon has been startled to see some councils, including Liverpool and Bristol, set up arms-length companies to run their own waste services.

“The weirdest thing is you have got a Conservative Government in and more stuff is coming in-house than it ever did under a Labour government,” he says. “We don’t do it because it is so cheap, so that has got to tell you something. How local authorities think they can get it done any cheaper, I don’t know.”

The fact that 40% of the waste management industry is in public hands is preventing it from being as “dynamic” as it should be, he believes, because it prevents “intellectual and financial” capital from being released.

Neil Grundon’s grandfather, Stephen, set up the business in 1929, mainly dealing in sand, gravel and haulage, and buying the company’s first quarry. The firm moved into the waste sector in the 1950s, before Neil’s father Norman took the reins and Stephen took a back seat from the late 1970s.

We have got a solid balance sheet and no real debt so there is no reason to [sell].

Becoming chairman in 1993, Stephen recently presented a gold watch to his son for 25 years’ service which, Neil says, “aged both of them”.

A family-owned business for 87 years,now in its third generation, it has never been tempted to sell to a larger firm, turning down takeover bids “on a regular basis”.

Grundon

Grundon

“Quite honestly, I don’t see anyone out there who is doing better than what we are doing, so to me there would be no sense in it all,” says Grundon. “There would not be more stability compared with what we have already. We have got a solid balance sheet and no real debt so there is no reason to [sell].”

This attitude runs counter to the expectations of some in the industry. It contrasts with Biffa’s chief executive Ian Wakelin, who told the Financial Times last year that he predicted a “wave of consolidation” in the sector, and the waste giant is now preparing for flotation.

When Grundon joined the sector, it largely dealt with landfill sites but most of these have now closed with only two remaining: “From that respect it has completely changed from just chucking stuff in the ground to trying to find something else to do with it.”

We are going to be in a problem in this country where you have got some of the larger players who are closing landfills.

The company is engaged in a variety of large recycling facilities including an energy-from-waste plant, a clinical waste division and has a majority stake in carbon-positive aggregate firm Carbon8. He credits landfill tax as “completely” driving the company’s shift towards recycling facilities, but is critical of its effect now it has reached £84.40 a tonne.

As many industry figures have recognised, this level makes it cheaper for waste to be exported as a refusederived fuel to an energy-from-waste (EfW) facility in Europe rather than landfill it domestically. With more than three million tonnes a year of waste resources being exported from the UK, according to latest figures, Grundon thinks the amount of potential landfill tax being lost could be used to fund hospitals and schools.

While some people in the sector expect exports to level off as European facilities fill up and UK EfW plants come online, Grundon is concerned about a shortage of landfill sites.

“Once the eurozone economy picks up, which it will do, that capacity might not be there,” he says. “Then we are going to be in a problem in this country where you have got some of the larger players who are closing landfills. There is not going to be the capacity.”

To challenge a perceived ‘monopoly’ of large waste management contracts being won only by companies such as Biffa that have a national coverage, a group called the National Resource Consortium (NRC) launched this year. It aims to bid against major players for national contracts and then, if successful, distribute the jobs among its regional members.

But while not a national company, Grundon says there are no plans to join the scheme because it is already “regionally dominant” in Oxfordshire, Berkshire, west London, Gloucestershire and the Midlands.

“I think anything that gives the national companies a run for their money is a good thing – we are all about competition. I don’t think we would join in though,” he says. However, he might consider working with the NRC if members got a large contract he was interested in, such as with previous client Boots.

Concerns about investment in the waste industry were heightened in April after major US firm Air Products announced its withdrawal from the EfW sector, mothballing two huge gasification plants in Tees Valley. A knockon effect for other EfW investments was feared.

And the announcements followed the Government’s decision to move the Green Investment Bank into private ownership, with some MPs concerned it will lose its focus on innovative green technology.

But Grundon said funding had not been a problem for his company, believing “there is plenty of money about for the right things”. He described Air Products’ withdrawal as “very sad”, and said the move was sending out the wrong signals for the industry.

“We wouldn’t have built something on that scale, you just wouldn’t. You would say, ‘let’s make it a quarter of the size and prove it’.”

Another recent source of uncertainty for the industry has been the UK’s potential withdrawal from the EU. Organisations such as the Resource Association, the CIWM and Suez have all expressed concern for the industry’s future without an EU environmental policy drive behind it.

Grundon remains unconcerned about this, saying he thought the Government would most likely continue in the same policy direction if the result is to leave.

Any company that is just paying lip service, ‘greenwash’ or whatever, will be found out.

He says: “Probably the only bit of legislation that has come out of Europe that governs our industry is the Landfill Directive, and we had to wait god knows how many years for that. The UK has been pretty good at putting in waste management legislation on its own without the EU. I don’t see that we would be in any sort of policy vacuum.”

Household waste recycling targets are another piece of EU legislation that industry figures credit with providing investment certainty. But, as an executive in a company that deals with commercial clients, Grundon tries not to get ‘hung up’ on them.

Its clients decide what targets they want to achieve rather than it being a Government mandate and Grundon thinks this will drive the industry.

“It is a consumer-led revolution. Certainly for my daughter’s generation, she is one of these millennials and they are very brand-savvy,” he says. “If they see a brand misbehaving they will find them out, and that affects their share price. I think any company that is just paying lip service, ‘greenwash’ or whatever, will be found out.”

However, Grundon notes that many larger companies cut back their sustainability teams since the recession but at least the remaining few were directly engaged with their chief executives.

“I just wish they had a bit more of a budget,” adds Grundon.

He does accept that an export tariff could be introduced were the UK to vote to leave the EU, with its free movement of goods and services, but said the word ‘tariff’ made MPs “go into a tailspin”. One recent deal that has come Grundon’s way is an international contract with construction firm MAN Enterprise. Grundon says he met the Lebanese company about five years ago and discussed a potential contract in Africa at the time before deciding against it, “right in the middle of the recession”.

Under the new deal, also covering the Middle East, Grundon will recommend best available technology and offer general expertise. Grundon is pleased to work with a company that likes “big deals and modern technology”. It is not the first international deal.

A contract in Malaysia about 15 years ago to build medical waste plants was “very successful”. Then it had a contract in the Falkland Islands a decade ago cleaning up after the army.

Despite this, Grundon says the deal with MAN is the first long-term international commitment the firm had made, adding that potential similar deals were “not something we are scared of”.

The waste industry has been called on in recent months by politicians such as Labour MP Alan Whitehead to step up its lobbying activities to get its issues recognised by policy makers. But some people have recognised the particularly tough PR struggle the industry has.

I like it that there are people like us who are asking ‘what can we do with this?’

Former energy secretary Chris Huhne recently told MRW that only about 10 MPs were receptive to environmental issues and many regarded anything described as ‘green’ to be expensive.

Grundon agrees: “Politicians are never interested in waste as long as it is going somewhere. They only start getting interested when it piles up on the street.”

Trying to bring to life what he admits can be “a dry old subject” is something Grundon has had years of preparation for, gaining experience early on: “My first job in Grundon was trying to sell sand and gravel. Then trying to write brochures that make sand and gravel sound interesting. I tell you, that is a feat and a half!”

But he speaks about waste and resources with genuine passion, and regularly writes a blog that covers the company’s history and his thoughts on current recycling issues.

“I have been obsessed by it, even as a little kid. I can’t walk into a room without looking at things and thinking it is all going to be rubbish one day. I quite like that. I don’t like the fact that it happens, but I like it that there are people like us who are asking ‘what can we do with this?’

“Plenty of people go round having their Shoreditch lunches with their hipster beards, their new clothes and all that sort of stuff. But they don’t realise that, at the end of it all, however they live their lives, they are leaving this trail of destruction behind that the waste industry comes along every night and tidies away.”

The company does have people sitting on various industry boards, he says, where it tries to get its voice across. But besides landfill tax, Grundon does not think there are any “real pressing issues” for the industry at the moment.

We are not going to just go bulldozing around the country for market share – we are not building up to a sale and we are not trying to manipulate a share price. We are just doing what we are doing.

He likes the European Commission’s circular economy proposals, currently passing through the EU Parliament, and singles out eco-design as a “fundamental principle”: “No-one sets about designing anything to be waste because they are in love with whatever product they are making.”

Grundon expects his own business to grow in the next five years, but says the UK’s move from landfill to EfW sites makes it more difficult for larger waste management firms. He says a new national focus on sustainability means that clients will not be happy to have their waste transported hundreds of miles to be processed. He therefore expects the current waste giants to regionalise, aligning with Grundon’s own strategy.

“I think the days of national companies are over because you now have to have the infrastructure. Whereas before, a national operator would have 10 strategic landfill sites, I can’t see how that is going to be possible with 10 strategic EfW plants.

“I think the natural progression will be for those national companies to become dominant players in a particular region, which is what our strategy has always been.”

Elaborating on his company’s lack of “aggression”, Grundon says it is happy to complement other organisations’ work where necessary and make money wherever opportunities arose.

“We are not going to just go bulldozing around the country for market share – we are not building up to a sale and we are not trying to manipulate a share price. We are just doing what we are doing.”

Clinical Waste

Advice on the wards over waste

Clinical waste, which has fitted in with Grundon’s hazardous waste business for nearly 15 years, makes up about 30% of the business.

Lower grade waste, such as bedding and dressings, is processed in a hydroclave heat steam treatment. More hazardous waste, such as drugs and organic matter, goes into a high-temperature incinerator.

The business does roadshows and talks every day to encourage the NHS staff to do a lot more recycling on the wards.  

CV: Neil Grundon

Personal: Born in Slough, now lives in Windsor. Married with five girls. “Hopefully one of them will be interested in working at Grundon. The joy of having five is that it is going to be one of them.”

Professional: At Grundon all professional life. Promoted to deputy chairman four years ago.

Hobbies: Squash, fly fishing in the Kennet trout river, music, rugby, skiing.

 

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