Waste Management Market Report - UK 2017-2021 Analysis - 5 Key Facts

• By value, the market for controlled waste management is estimated at just under £10bn in 2016.

• EfW, landfill and other non-hazardous waste treatment & disposal services are estimated to account for up to 45% of industry revenues.

• It is estimated the largest overall revenue stream for waste management contractors is the non-municipal sector.   

• The top 5 companies represent over 40% of the turnover in the industry.

• Almost 50% of CIW is recovered for recycling, with the retail & wholesale industry accounting for around 25% of the total.

These facts have been extracted from AMA Research's report 'Waste Management Market Report - UK 2017-2021 Analysis', available from www.amaresearch.co.uk or by calling 01242 235724. 

UK waste management contractors benefit from new income streams

The UK waste management contracting market, which includes collection, treatment & disposal and materials recovery, was estimated to have decreased slightly in 2016 compared to the previous year. The reduction has been partly due to the impact of Central Government cuts to local authority environmental services budgets and the impact of falls in global commodity prices on recyclable materials.

Up to 2015, annual growth was primarily driven by the implementation of EU Directives, aimed at reducing the volumes of landfilled waste and increasing the levels of material recovery through recycling, composting and energy-from-waste. Above all, the impact of the Landfill Tax escalator on landfill gate fees has made these alternative approaches more commercially attractive.

From 2014 through to 2015 the drop in the price of crude oil also contributed towards a fall in prices for key commodities including certain grades of steel, plastics and glass. This then forced down prices for recyclates in turn making single-stream waste collections and recycling financially unviable. Also, with reduced volumes of higher value materials being accepted for treatment at recovery facilities, growth overall gate revenues have also been constrained. However, later in the second half of 2016 through to early 2017, commodity and recyclate prices for some grades have recovered.

Growth in contractors’ annual revenues has been driven by the development of relatively new income streams, including segregated recycling collections, organic waste collections and the development & operation of energy-from-waste (efw) plants. Investment in the expansion of efw and recycling infrastructure capacity has contributed towards growth in aggregate industry revenues from these sub-sectors, and diversification into new areas of product recycling e.g. WEEE (waste electronic & electrical equipment), ELV (end-of life vehicles) and mixed plastic packaging have also stimulated growth.

EfW, landfill and other non-hazardous waste treatment & disposal services are estimated to account for up to 45% of industry revenues, with collection and recycling services each contributing around a quarter of the total. However, as a considerable proportion of MSW, CIW and C & D waste management services are delivered under bundled contracts covering most or all elements of waste management, these are only broad estimates. There is still a need for the UK to improve commercial and industrial waste recycling although in recent years there have been improvements in recycling rates, mainly driven by voluntary initiatives, there being far fewer legislative drivers than for municipal waste.

In recent years, there has been substantial market consolidation through acquisition resulting in an increased level of polarisation between the national contractors and also larger regional operators and smaller contractors operating mainly within the commercial and construction markets. The creation of added-value income from the sale of recycled materials, compost, electricity sales and refuse derived fuel (rdf) has also brought in recent market entrants from the energy, facilities management, composting and manufacturing sectors (especially paper).

Keith Taylor, Director of AMA Research, commented “Over the short term, industry prospects will still be determined by EU legislation. However, now that Article 50 has been signed, there may well be a possible slowdown in household spending combined with rises in imported goods, driven by uncertainties surrounding 'Brexit’ and likely volatility in the economy. There are also concerns as to whether the Government will remove some of the more prescriptive elements of EU waste legislation and replace them with voluntary targets for local authorities and businesses.”

Even before the 'Brexit' referendum, the government had already stipulated that after March 2018 there will be no subsidies for new AD plants under 5MW and EfW plants of 5MW and above, thereby most likely leading to a decline in capacity over the medium term. However, there remains a substantial volume of EfW incinerator and gasification capacity in the current development pipeline scheduled for completion by 2020.

The ‘Waste Management Market Report – UK 2017-2021 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience within the construction and home improvement markets.  The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Waste Management Market - 5 Key Facts

Did you Know:

1) By value, the market for the collection, treatment, recycling and disposal of controlled waste was just under £20 billion in 2014.

2) It is estimated that UK CIW (Commercial and Industrial Waste) arisings are around 55 million tonnes in 2012/13.

3) There has been a slowdown in the growth of household waste recovery in England in recent years, stabilising at around 10.6m tonnes.

4) The volume of controlled waste landfilled has been declining steeply since 2002, towards 25m tonnes in 2014.

5) The leading 8 contractors account for around a quarter of the waste management services market.

These facts have been extracted from AMA Research's report 'Waste Management Market Report - UK 2014-2018 Analysis', available from www.amaresearch.co.uk or by calling 01242 235724.

Annual growth of 4-5% expected in the UK Facilities Management Outsourcing Market

The facilities management market has exhibited good levels of growth for much of the last twenty years, influenced by organisational desires to control non-core operational efficiencies and costs, and a trend within the private sector for companies to refocus their business in order to concentrate on core competencies. In 2014, the market for outsourcing bundled and Total Facilities Management services was valued at almost £19.5 billion.

The deterioration in the UK economy from mid to late 2008 had a negative impact on the development of the overall FM market. Previously the Labour Government’s policy to stimulate economic growth through public sector spending had supported the FM market, though the Coalition’s focus on reducing the deficit removed this stimulant. This market has now returned to more positive growth and is expected to continue to show annual growth, reaching a forecast £23.2 billion by 2018.

The market is considered to be relatively mature across a wide range of sectors. However, there are also newer forms of service which are far from mature – such as energy management, compliance services and workspace management – which, if approached professionally, will broaden the industry’s scope and client base. 

The economic downturn has heightened price competition in the market with end-users seeking better value for money. This has had a negative impact on contract prices and has resulted in lower market values and tighter margins. In addition the climate has led to clients seeking shorter contract lengths and more flexible terms.

The development of the facilities management market has been positively influenced by the trend to outsource an increasing array of services, with a gradual shift towards ‘bundled service’ and TFM contracts, adding to contract values. The corporate market represents the largest end use sector, accounting for more than 50% of the market, with central and local government accounting for around a quarter. Healthcare and education had been the most rapidly growing sector in recent years and now represent 18% of the market, though the growth of this sector has now slowed sharply.

“The impact of public sector spending cuts is not clear at the moment. The Government estates will undoubtedly shrink but our forecasts assume that outsourcing will be viewed as a means of saving costs - more so than an expenditure element to be cut”, said Keith Taylor, Director of AMA Research. “In addition some government cuts in the education sector for example have not led to construction output reductions, as Universities and Academy schools for example appear to have been successful in drawing in private sector investment.”

The key to advancement will be maintaining a high standard of service in core activities whilst adding value by offering enhancements and differentiated services. A key area of opportunity in the public sector is likely to arise within local authorities. This sector retains potential for an increase in the level of outsourcing, which may provide an opportunity to meet cost savings required.

The overall FM market will also continue to benefit from the shift away from single service contracts towards bundled service and total facilities management packages. The trend for private and public sector clients to outsource an increasing number of services, as well as to reduce procurement costs through seeking ‘one-stop-shop’ solutions is expected to continue, adding to contract values and favouring larger facilities management providers which can supply the full range of services required.

The ‘Facilities Management Outsourcing Market Report – UK 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Waste Management Market expected to reach £24bn in 2018

By value, data indicates that the market for the collection, treatment, recycling and disposal of controlled waste was worth an estimated £18.9 billion in 2013. Strong underlying annual growth rates have been driven by the implementation of EU Directives, aimed at reducing the volumes of landfilled waste and increasing the levels of material recovery through recycling, composting and energy-from-waste.

Above all, the impact of the Landfill Tax escalator on landfill gate fees has made these alternative approaches more commercially attractive. The downturn in the UK economy suppressed growth rates in 2012 due to lower levels of waste arisings, declining prices for many types of recyclate and the delay to many infrastructure projects.

Over the medium-longer term, however, the key 2020 targets for both the EU Landfill Directive and renewable energy mean that regardless of the economic situation, central government, local authorities and businesses do not have the option of scaling back waste reduction and recycling objectives. There remains a pressing need for the UK to improve waste recovery rates, particularly in the commercial and industrial waste (CIW) sector, and to develop a suitable waste collection, treatment and recycling infrastructure in this sector.

From 2014 through to 2018, it is expected that there will be an increase in the market growth rate, underpinned by the EU Landfill Directive target for 2020 which will necessitate an increase in waste recovery rates and a major increase in investment in the infrastructure needed to deliver this, by possibly as much as £5bn.

To achieve both these aims, energy-from waste (EfW) technologies, in particular advanced conversion technologies (ACT), will be core to government plans to meeting both the Landfill Directive and renewable electricity targets. Despite opposition from local interest groups and NGOs, there are a large number of 'mass burn' EfW incineration and ACT plants in the development pipeline that will be used to dispose of large volumes of the 21 million tonnes of residual ‘black bag’ waste currently being landfilled.

There has also been marked growth in the rolling out of anaerobic digestion (AD) plants treating food waste, underpinned by Landfill Directive requirements to divert biodegradable municipal waste from landfill. From just one facility in 2005, there were over 60 AD plants taking food waste at the end of 2013.

Keith Taylor, Director of AMA Research said: “The current rate of expansion and convergence with the EfW sector continues to attract new players into the UK waste management industry, particularly from overseas. The market has also seen further consolidation among UK companies over the past 2-3 years.”

By 2018, it is estimated that the market for the collection, treatment, recycling and disposal of controlled waste will be worth around £24bn, following annual growth rates of between 3-7% per annum during the period.

The ‘Waste Management Market Report - 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.