Union report highlights problems faced by refuse contractors
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• Contract operating difficulties and financial problems are common among private operators of local authority refuse collection and street cleaning contracts, says a report out last week.
Six of the nine contractors involved had experienced financial problems at some stage, and private operators are three times more likely to run into problems with contracts than the Direct Service Organisations they replace, it says.
The report by the research unit at Unison—the amalgamation of unions which represents local government employees—shows that four contractors AAH Tyler Environmental Services (24), Onyx (21) Cory Environmental (18) and Biffa Waste Services account for almost half of the 209 contracts in private hands.
Unison claims 65 of the privately run contracts had experienced problems since the competitive tendering process began in 1989. The report suggests loss-leader bids are made by operators supported by large multi-national parents. Operators disagree: "We do not deny we have made losses on some contracts, but it is never our intention to do so at the outset," says financial director John Kutner at French-owned Onyx.
Onyx agrees overall losses of £6.3m in 1992 were in part attributable to the acquisition of the loss-making UK Waste Control. The 1993 figures confirm an increase in share capital of £15m and losses down to £2.7m, says Kutner.
Cory says its parent Ocean Group has addressed Cory's cash situation, and 1993 losses are down to -£70,000 from around £900,000 the previous year.