The Direct Approach

In a global economy where corporations dominate and brokers handle trading, some companies  are still finding ways to stay profitable and to grow on their own while keeping out the middle man. One such company that has grown to be one of the largest independent collectors of scrap paper in the Benelux region of Europe is Netherlands-based CVB Ecologistics.

The company’s Commercial Director Richard Getkate says being independently owned and run makes for a streamlined business. “The decision making is quite short and quick. If a depot manager needs a new truck, there is no written permission in threefold and there is no red tape to get the decision passed,” he explains. “If the depot manager needs a new truck and supports his demand, the managing director will immediately say yes or no and why.”

FAMILY TIES
The company, which also recycles plastic, was formed by Cees van Berkel in 2000. That may seem like a young company, but van Berkel had spent more than three decades in the recovered fiber business prior to forming CVB Ecologistics. His daughter, Linda van Berkel, heads the safety and marketing aspects of the business. Getkate is Linda’s longtime boyfriend.

Getkate, now 38, didn’t start out in the recovered fiber business. His career began in hospitality, having attended hotel management school in the Netherlands and having worked in the hotel business in Amsterdam. But he gave that up in 1999 to work for van Berkel and has no plans to go back.

“What sets us apart is that we are an independent family company,” says Getkate. That philosophy carries into the company’s buying methodology as CVB Ecologistics buys all of its equipment rather than leasing it.

Through acquisitions made during the last decade, CVB Ecologistics operates eight plants—three in the Netherlands and five in Belgium. All of the sites collect, sort and bale paper and plastic. CVB also has purchased an 11-plus-acre site in the United Kingdom to replace a site that was destroyed in a fire a few years ago. The U.K. plant is expected to be operational sometime in 2011. The company has 140 full-time employees.

Shredders and balers are installed at each location, and the company owns a fleet of collection and delivery trucks.

CVB receives its supply of paper through long-term contracts with supermarkets and printers as well as through household collection. About 30 percent of its recovered fiber and plastic is sold within the European Union, and 70 percent is sold in Asia, although those percentages can change depending upon market conditions.

BUSINESS STRATEGY
CVB has a total production of 600,000 tons per year. The company’s trading business accounts for 200,000 of those tons. The trading also is something that CVB has decided to handle on its own. The company has several sales offices throughout Asia where it meets with customers. By using this approach, the company says it can stay knowledgeable about the marketplace and offer increased flexibility and transparency to its trading customers.

Another business strategy that CVB employs is that is keeps all of its selling and purchasing centralized. It is only done by the head office, based in Tilburg, Netherlands. The baling plants do not make those decisions. The company says the way it runs its business allows it to keep a close watch on financial results each month, allowing it to correct any negative influences rather quickly.

CVB goes further than selling the mainstream OCC (old corrugated containers) or ONP (old newspapers) grades. The company says it sells more than 80 grades of paper, including grades containing cigarette paper or game cards, which come directly from the manufacturer. CVB says it is able to find end markets for those materials.

The company started recycling plastic because many of its OCC contracts required CVB to collect plastic wrap as well.

FORGING ON
Getkate says he knows the industry is facing challenges, one of them being substantial overcapacity in the finished paper market. “Many mills are financially insecure,” he remarks. “We have to be aware of getting our payments in time.”

When the recession of 2008 hit, CVB was able the make the most out of a difficult economic climate. The company invested in new trucks and balers during a time when Getkate says, “These companies needed orders and gave us interesting discounts.” He adds that CVB was also able to benefit from incentives offered by the Dutch government.

And on the supply side, he says the company has been faced with a decrease in generation of recovered paper. CVB also has been affected by smaller margins, which has caused it to ramp up its business.

 “We think we will see that in the recovered paper business, small business will not survive,” he says. “The only way to survive is to have large tonnages that work with small margins. We have seen that over the last years our margins keep shrinking, so the only way to compensate that is to have more tonnage.”

Getkate’s philosophy is to learn as much as he can from van Berkel. When van Berkel retires, it is Getkate’s hope that he, Linda and other employees can continue operating independently and build upon the foundation laid out by van Berkel. Getkate says he sees continued expansion in the future that will reach into France, Germany and possibly other countries.

CUSTOMS CONTROL

Exporting recovered fiber and plastic is fraught with challenges in Europe, according to Richard Getkate of Netherlands-based CVB Ecologistics. Exporting waste material is strictly prohibited in the European Union, and the checks are getting increasingly severe, Getkate says.

“We have had recovered paper shipments stopped by customs officers who claim that the quality is not up to mark,” explains Getkate. “However, there are many customs officers, and none of them have any notion of the different grades of paper, so it can be that one officer lets the goods pass and the other one refuses it.”

CVB has gone to upper courts defending itself in cases, but often times the company has opted not to proceed in what can turn out to be a lengthy, expensive legal process. Getkate says CVB is only a small link in the chain when it comes to this issue.

The author is associate editor of the Recycling Today Media Group. She can be contacted at ksmith@gie.net. This article first appeared in the Jan./Feb. 2011 issue of Recycling Today Global Edition.