PSIRU 06/02/2002
Waste management multinationals 2002
By Steve Davies
Senior Research Fellow, School of Social Sciences, Cardiff University
February 2002
1. Introduction 4
2. The main companies 4
A. 2000 turnover of European-based companies 5
B. 2000 Turnover of top US companies 5
3. Developments among the multinationals 6
A. Onyx 6
B. Sita 7
C. RWE Umwelt 7
D. Cleanaway 8
E. Rethmann 8
F. Shanks 9
G. Biffa 9
4. Selected developments by region 10
A. North America 10
¨ Retreat of the US multinationals 10
¨ Onyx now No 4 in the USA 10
¨ Sita enters the US hazardous industrial waste market 10
B. Europe 11
¨ Big UK push towards incineration offers large long-term contracts for multinationals 11
¨ Cleanaway Germany sees PPP opportunities in 2002 after profits slip in 2001 11
¨ Sita sets up joint venture in Poland 11
¨ Onyx wins multi-million UK municipal contracts 12
¨ Further UK expansion for Sita 12
¨ Onyx claims ‘lead position’ in Scandinavia 12
¨ Sita gains ground in Sweden 12
¨ Onyx and Sita battle for market share in the Czech Republic and Slovakia 13
¨ UK call for waste regulator 13
¨ Sita buys large Dutch municipal waste company 13
¨ Vivendi Environnement gains its first multi-utility municipal contract 14
¨ Sita alliance with Rhodia pays off in Spain 14
¨ RWE expansion in Europe 14
¨ Sita claims over 12 per cent of UK market 14
¨ Cleanaway gains in UK 15
¨ Sita humiliated in Brighton (UK) 15
C. Asia-Pacific 15
¨ Rethmann accused, then cleared of corruption - but still pays AUS$250,000 15
¨ Onyx builds a platform in Asia with China as the prize 16
¨ Sita becomes No. 2 in Australia 16
¨ Cleanaway consolidates position in Australia and expands to New Zealand 16
¨ Waste Management New Zealand aims to be regional player 16
D. Latin America 17
¨ Onyx’s Mexican business hit by downturn 17
¨ Sita continues growth in Brazil 17
¨ Sita restructures in Argentina 17
E. Africa and the Middle East 17
¨ Onyx active in North Africa 17
¨ Vivendi in multi-utility deal in Iran 17
5. Trends 18
A. A new environmental services industry? 18
¨ The Vivendi model of the multiservice future 18
¨ The Suez model of the multiservice future 19
B. Possibilities for expansion in the waste management market 20
¨ Privatisation estimates for municipal waste management in key markets 20
¨ The United States market – the target for the European invasion 20
Financial Data for the US Solid Waste Industry 21
Proportionate size of public and private sectors in US waste industry (a) 22
Proportionate size of public and private sectors in US waste industry (b) 22
¨ Expansion outside the USA 23
Global Environmental Market Growth 23
Global Environmental Markets by Region (1998) 23
Global Environmental Markets split by Environmental Sub-sector 24
Global Market Forecasts to 2010 24
Value of EU Eco-Industry by Member State 25
Germany 25
United Kingdom 25
Central and eastern Europe 26
Total waste generated (tonnes/capita) in 1995 and 1999 in selected central and eastern European countries 27
Latin America 27
Asia-Pacific 28
6. Industrial relations implications 28
A. Dangers of job losses as ‘synergies’ follow consolidation 28
B. The continuing threat of privatisation 28
C. Potential for international union co-operation 29
¨ European Works Councils 29
¨ National co-ordination as part of an EWC 29
¨ Global representation 29
¨ International solidarity 30
7. Annex 1: EPSU Resolution on European Works Council Coordinators Network 30
1. Introduction
The waste management industry worldwide is dominated by a relatively small number of companies. It is also an industry in flux. Just a few years ago, the huge American companies were market leaders in almost every part of the world. Today, the situation is very different. The US multinationals have withdrawn from everywhere except North America and their place has increasingly been taken by European-based multinationals.
However, the sheer size of the US market means that these American companies are still larger than their European rivals. It also illustrates the scale of the task facing the European multinationals if they wish to challenge the US companies on their home turf and make gains in the lucrative American market.
The market worldwide is fairly well developed in Europe, North America and parts of the Asia-Pacific region, but most of the larger companies see plenty of scope for expansion – even in the relatively competitive markets of Europe and North America.
There are a number of reasons for the largest companies’ optimistic view of potential growth:
Ø environmental pressures (both public and legislative) for improved standards of waste management;
Ø the continuing drive towards privatisation throughout the world;
Ø the similar (and related) push for outsourcing of ‘non-core’ operations in large private sector concerns;
Ø and the growth of market opportunities in developing and transition economies.
There is also likely to be a continuation of the process towards industry concentration as the major multinationals are better placed to bid for the larger projects that are increasingly favoured in Europe and North America.
Those waste companies that are part of multi-utility groups believe themselves to have an additional advantage in that they can offer integrated utilities service contracts to large industrial customers.
2. The main companies
In 1997, the UK government’s Joint Environment Markets Unit (JEMU) commented that the global environment market (which includes water and wastewater) “exhibits many characteristics typical of an immature industry”.[1] As evidence of this the JEMU pointed to the fact that there were few global players. It noted that there were signs of ‘maturity’ in the waste management sector with the emergence of some global players.
However since that report was written, two of the genuinely global players - WMI and BFI (now Allied Waste) – no longer operate globally and of the other major waste multinationals, only Sita and Onyx could be described as genuine global players.
Cleanaway and Rethmann are active in both the European and Asia-Pacific markets but RWE, Biffa and Shanks are, so far, confined to Europe.
A. 2000 turnover of European-based companies
Company / Parent / Home country / Turnover (€million) / Area of operation /Onyx / Vivendi Environnement / France / 5,260* / Europe, North America, Asia-Pacific, Latin America, North Africa, Middle East.
Sita / Suez / France / 5,030** / Europe, Asia-Pacific, Latin America, Middle East, North Africa.
RWE Umwelt / RWE / Germany / 2,045 / Europe
Cleanaway / Brambles / Australia / 1,350*** / Asia-Pacific and Europe
Rethmann / Rethmann / Germany / 936 / Europe, Asia-Pacific,
Shanks / Shanks Group / UK / 814**** / Europe
Biffa / Severn Trent / UK / 642**** / Europe
Sources: PSIRU database, company annual reports
* does not include results of FCC
** includes results of Watco and EdS
*** converted from AUD at a rate of 1 AUD = 0.582627 EUR (15 January 2002)
**** converted from GBP at a rate of 1 GBP = 1.62110 EUR (15 January 2002)
B. 2000 Turnover of top US companies
Company / Parent / Turnover ($million)Waste Management Inc / Waste Management Inc / 12,492
Allied Waste Industries / Allied Waste Industries / 5,708
Republic Services / Republic Services / 2,103
Onyx* (after acquiring US no 4, Superior in 1999) / Vivendi Environnement / 1,650
Sources: PSIRU database, Hoovers, Vivendi 2001 Year end overview.
* Figures for Onyx show US turnover only.
As the value of one dollar is roughly equal to one euro, it is possible to see the relative size of the European and American companies from the two tables above. Despite being active only in North America, WMI and Allied Waste are still the largest waste management companies in the world (measured by turnover).
As can be seen from the table, this position of dominance in North America is, for the first time, beginning to be threatened by the Europeans, particularly Onyx.
3. Developments among the multinationals
A. Onyx
Onyx is the waste management division of multi-utility Vivendi Environnement (itelf a subsidiary of Vivendi Universal). During 2001 Vivendi Universal ‘clarified’ the structure of its financial holding in Vivendi Environnement (VE) and disposed of 9.3 per cent. This still leaves Vivendi Universal holding 63 per cent of VE, something it expects to maintain.[2]
VE signalled its desire to be a major player on both sides of the Atlantic by listing its shares on the New York Stock Exchange in October 2001.[3]
Through Onyx and VE’s participation in Spanish company FCC, the company claims to be the largest waste management company in Europe and the third largest in the world:
· provides waste management services to 70 million people on five continents;
· has waste management contracts with approximately 4,000 municipalities;
· has contracts with 250,000 industrial clients;
· own or operate approximately 120 sorting, recycling and transfer facilities (not including waste paper facilities), 119 solid waste landfill sites and 83 incineration and waste-to-energy transformation facilities worldwide. The company owns approximately two-thirds of the solid waste landfill sites it operates.[4]
Although its principal markets are in Europe and North America, it also operates in the Asia-Pacific region and in Latin America. The company conducts waste operations in Latin America through Proactiva, a 50/50 joint venture with FCC.[5] The company has consolidated most of its waste management business in the region into Proactiva.
Vivendi Environnement has identified the group’s strategy as follows:
Ø Leverage our expertise, leading market positions and strong financial position to deliver strong internal growth;
Ø Develop unique, integrated, multi-service offerings;
Ø Achieve and maintain "best-in-class'' performance in each of our business segments by investing in technology and personnel;
Ø Seize opportunities arising from our worldwide reach
Ø Focus on high value-added environmental services;
Ø Make opportunistic acquisitions to expand our service offerings and geographic reach [6]
Onyx has continued to play a major role in waste management in France (with new contracts in Paris and a 20 year construct and operate contract for a waste-to-energy plant in Saumur) and to expand elsewhere. Throughout the period 2000-01, it made acquisitions in the Czech Republic, Slovakia, Denmark, Germany, Norway, and bought WMI’s operations in Hong Kong, mainland China and Mexico.
It won important contracts in Görlitz (Germany), Sheffield, Bromley in London, Singapore, Taiwan, Morocco, Alexandria (Egypt), Florida. Contract gains included those for large industrial customers like Novartis[7] and Usinor in Brazil.[8]
There have been some setbacks. The economic downturn has hit hazardous waste volumes, particularly in the USA[9] and the company has expressed concerns about the impact of falling paper prices on revenues.[10]
B. Sita
Parent Suez reorganised all its waste management operations under Sita (with effect from January 2001). This resulted in Watco and EdS, subsidiaries of the Fabricom group, being brought together with Sita’s own subsidiaries.
After the integration of Watco and EdS, Sita describes itself as No. 1 in Europe and No. 4 in the world. It claims that the company:
§ is present in 31 countries
§ serves more than 74 million inhabitants
§ operates 277 landfills, 14 000 vehicles, 85 composting sites, 71 incinerators, 220 sorting centres
§ with 70 000 employees
§ and 330,000 industrial and commercial clients
Suez has identified its waste strategy as follows:
· Expand waste treatment in countries where Sita already collects waste, and increase this activity’s contribution to Sita revenues
· Consolidate leadership in Europe and continue to expand into growth markets where the Group seeks critical mass[11]
As part of its policy of integrating its operations more closely, it created Sita Recycling in March 2001 to co-ordinate the marketing of raw materials from sorting activities. It is based in Belgium.[12]
The company continued to make acquisitions in 2000-01. These included major operations in Sweden and Australia bought from Waste Management Inc[13], the Netherlands, the UK and a new development in the USA with the creation of Teris LLC. The company also continued to win large municipal contracts such as those in the UK (Bristol), Lyons and Catalunya and large industrial contracts such as General Motors Quebec, Saab in Sweden, Ford Valencia and General Motors Powertrain in Strasbourg.[14]
Suez signalled its seriousness in competing in the USA by a listing on the New York Stock Exchange. Trading commenced on September 18, 2001. During the first half of 2001, Suez generated more than 10 per cent of its revenue in North America. This included contributions from Sita and its hazardous waste subsidiary Teris LLC.[15]
C. RWE Umwelt
RWE Umwelt is the waste management division of RWE. It claims to be the leading waste management company in Germany and the third in Europe. This effectively means that outside the USA, it is the third largest waste company in the world.
The company’s parent RWE, has been engaged in an aggressive policy of expansion and rationalisation to transform itself into a multi-utility. It has been involved in two major merger/acquisitions in the last two years.
First it merged with VEW and then took over Thames Water. The group was restructured to take into account that it is now a multi-utility with important operations in energy, waste and water.
Following the Thames acquisition, Thames Waste Management was placed under the RWE Umwelt operating management company.
The waste management companies that formed part of the Edelhoff Group (and came with the merger with VEW) are now being integrated into RWE Umwelt.
As well as the major acquisitions and mergers referred to above, the company also developed its waste operations in Germany, central and eastern Europe through acquisitions, increasing the size of already existing shareholdings and by gaining new contracts. It has a presence in Germany, Austria, the UK, Spain, the Czech Republic, Poland and Hungary.
The company’s strategic aims fall into two geographic parts:
Ø Within Germany, regional consolidation and expansion of the basic business (domestic, industrial, and hazardous waste, recyclable packaging materials). The company also lays great stress on the expansion of public-private partnership operations;