Survey Finds UK Recyclers Pessimistic on Meeting Goals

A recent survey, commissioned by the United Kingdom’s Waste & Resources Action Programme, finds that more than 80 percent of the recycling businesses in the country believe the country will not meet the European Union’s recycling targets if they do not receive additional financial assistance.

The survey also revealed that 42 percent of UK recycling companies are being held back by a shortage of available capital.

A quarter of the businesses were open to an approach from potential equity investors, although only 8 percent of businesses currently had an equity investor on board. In fact, less than half had presented a business plan in order to raise investment finance.

“The industry views on targets are supported by our research which estimates that the UK recycling sector requires £6 billion (US$10.8 billion) investment in reprocessing capacity alone if the UK is to meet EU recycling directives,” says WRAP’s Business and Finance programme manager Bevis Watts.

“Attracting commercial investment will therefore be essential to grow the sector and a help to many businesses. Particularly those being held back by a shortage of capital. The two financial instruments which we have introduced, the £5.5 million Recycling Fund and the leasing scheme eQuip, should therefore provide a start in meeting a need in the industry. We also offer free advice on company business plans through our Business Development Service.”

In addition, the survey highlighted a general appreciation of the benefits of leasing, but a low use of leasing by recycling businesses.

“Overall, only an average of 16 pecent of recycling businesses were using lease finance to finance capital and working capital – a surprisingly low figure in a very asset intensive industry,” comments WRAP’s investment manager Tara Clair. “Some sources have reported the average UK SME sources 27 percent of its capital requirements from asset based finance.

 “Although companies were aware of some of the benefits that leasing could provide – for example no need for large capital outlays, companies were not aware of other benefits like the flexibility leases offer.

“In fact, six in 10 recycling companies weren’t aware that specialist recycling equipment can be leased,” she says. “Not surprisingly then, only 15% of businesses are currently leasing recycling plant or equipment which is a very low figure for such an asset based sector.