How former Dixons executive Sean Feeney has revitalised Environcom, which recycles electrical items, after fearing the business was risking its reputation for short term gain.
If the point of your business is helping others to “do the right thing” then you better make sure you’ve got your own house in order.
When Sean Feeney left a senior role with retailer Dixons to set up his own company recycling electrical goods, the opportunity to buy into Environcom, which had been doing so since 2003, came lit up with warning lights.
“It had a poor reputation and financially, was performing badly,” he said. “It was a green company but it had applied the standards loosely to try and maximise profit.”
As well as losing money, the company had a health and safety prosecution hanging over it, after an employee was injured by a falling pile of washing machines and cookers at one of its sites. Another questionable practice was Environcom sending old-fashioned cathode-ray tube TVs to Africa, when they couldn’t be safely disposed of there.
“There is no recycling solution for those TVs in Africa and they contain hazardous products, so I stopped those exports straight away,” said Mr Feeney. “It meant our income dropped but it improved our ethical credibility with customers.”
As a former employee of Tesco as well as Dixons, Mr Feeney, 43, was well aware that his new business would live or die by its reputation with customers.
“They need to know we’re doing the right thing with their waste,” he said. “You really don’t want to end up on Panorama with poor African children playing amongst abandoned TVs that you’ve sent there.”
In the first month under his leadership in 2011, Environcom’s revenue fell 30pc and continued to drop for the next three months. This led to “difficult conversations” with private equity firm Aloe, the company’s majority shareholder.
However by bringing down costs and attracting new customers with higher standards, the business has grown sales by between 25pc and 30pc a year since then, to £17m last year. Environcom is profitable and on track to meet or exceed its revenue target of £25m for 2013, said Mr Feeney.
Environcom’s business sprang out of European legislation governing the safe recycling and reuse of waste electrical and electronic equipment (known as WEEE), which put an obligation on manufacturers to reduce the volume of old household appliances going to landfill and to ensure they were broken up safely. Scandinavian countries were the first to bring in laws, and Mr Feeney was working for Dixons in Norway at the time. Part of his job was upholding the WEEE obligations.
“I came back to the UK as the legislation was being introduced here and I thought it was a great opportunity to get into the industry while it was young,” he said. “I was approaching my 40th birthday and I could see my future rolling out, sat in meeting rooms, so I handed in my notice and got stuck into this.”
He approached private equity companies and made two unsuccessful bids for electricals recycling companies. He then met Aloe, which had parted ways with the previous Environcom chief executive. Mr Feeney bought shares in the company and started trying to turn it around.
The company is supplied with used fridges, cookers and TVs by retailers including Mr Feeney’s former employer Dixons, and Argos. If they collect an old appliance when delivering a new one it ends up at one Environcom’s three sites in Lincolnshire, north Wales and London. Waste management companies and local authorities are also customers.
After the appliance has been repaired for reuse or broken down into parts for recycling, the company sells to a diverse range of businesses, from commodities dealers who take the steel and copper from inside washing machines and export them to China, to charities including the British Heart Foundation, which sell the best-quality repaired appliances. The rest of the second-hand goods go to Africa, the Middle East and central Europe.
The company has around 30 staff in training schemes or apprenticeships, learning fault identification and repair, and Mr Feeney would like to increase that to 10pc of the 400-strong workforce.
“Recycling and reuse is relatively new and there aren’t many trained people out there,” he said. Environcom has also seen the benefit of training staff first recruited to do relatively low-skilled jobs loading recycling machines. “If you show faith, particularly in someone who was turned off the school system relatively early, you get a lot of loyalty.”
Environmental legislation is on the company’s side as it seeks to expand – at present 45pc of UK waste electrical goods are recycled, which must go up to 85pc by 2020, Mr Feeney said. He also has plans for expansion abroad, which he hopes to start in the next year.
The first obvious target is the rest of the EU, because electricals recycling rules are Europe-wide. Mr Feeney hopes to start operating there in partnership with one of the retail or waste management companies it already works with in the UK.
His second goal “makes slightly less business sense”, he admits. Mr Feeney wants to open a recycling centre in Africa, and is already in talks with one West African government. The analogue TV signal is due to be switched off across the continent in the next three to four years, leading to a glut of abandoned old sets.
“The tube TVs will be dumped all over the place. They have hazardous products in them, the glass screen is sharp. Most producers we’ve talked to want to be part of the solution but they don’t want to pay money to potentially corrupt governments. If we set up a recycling plant, it won’t make a huge amount of money but it will wash its face.”
Mr Feeney may have left multinational corporate life behind, but he’s still thinking big. “UN statistics show it could be a $50bn (£32bn) industry worldwide if all electrical waste was recycled,” he said. “I see no reason we can’t have 10pc of that.”
By Amy Wilson