Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 161 - 179)




  161. Good afternoon. Mrs Allen, would you like to introduce your colleagues?
  (Mrs Allen) Duncan was going to do that.
  (Mr Wemyss) Thank you very much indeed. Duncan Wemyss. I am the Association Secretary of Motor Vehicle Dismantlers' Association. We have been in existence some 58 years, we represent some 212 companies in the industry, which represents probably something like ten per cent in the number of companies, but probably in volume of vehicles handled that is a greater number. We cover in membership all aspects of motor vehicle dismantling, which covers premature end of life vehicles—that is the salvage, the insurance end, some quarter of a million—and the volume, the natural end of life vehicles, the one and a half million plus. So we cover the whole spectrum of the dismantling industry, and we are administered, in the normal way of trade associations, by an elected committee, etc. Madam Chairman, Mrs Dawn Allen, if I may introduce, is Financial Director of an active dismantling company, Albert Looms of Derby, they probably are the largest company in the East Midlands handling natural end of life vehicles, some 200 vehicles a week are processed by her company; a lady of great knowledge and is leading us, in the very modern way. And also, it is probably of interest to the Committee that Mrs Allen's company is involved with DVLA in the Certificate of Destruction trials on the hardware and the technical side that is being processed at the moment; so we have hands-on knowledge of that. Mr John Hesketh, our President, is also a director of his own company in Stockport; they process premature end of life vehicles, are specialists in one make of premature vehicles, their volumes are somewhat less than that, but a man of great experience. Thank you very much.

  162. Thank you. You have, I think, painted part of the picture that we were wanting to try to establish. You do represent, at the end of the day, a relatively small percentage of those involved in the dismantling business, that would be correct, to say that?
  (Mr Wemyss) That would be correct.

  163. What are the criteria for membership of your organisation?
  (Mr Wemyss) The criteria are, firstly, adherence to the regulations that are imposed upon the industry, whether it be through the Environmental Protection Act, Waste Management Licensing, the various needs of that, so that is a statutory demand, that you have a site which is administered by the Environment Agency. There is a Code of Practice, which, I have to say, is there; like most Codes of Practice of trade associations, it is probably not administered as tightly as it could be, although in areas where members of the public are concerned and they have problems with member companies, that is one where we very much invoke our Code of Practice. And if a member company, in the view of the committee, has not met the criteria that we would expect of a member then action is taken forthwith.

  164. Do you include within your membership shredding activities as well?
  (Mr Wemyss) No; the shredders from the group this morning, British Metals Recycling Association, they are a separate entity, they are a separate trade association. We have one company that has recently joined us, one of the independent shredders, maybe wanting to know what the dismantling aspects are, thinking in relation to this Directive, and they have been taken on as associate members of the Association.

  165. Why I am asking that is that there is perhaps a suggestion that were your line of business to become less attractive then shredding would perhaps be the option, and I just wondered if people were ...
  (Mr Hesketh) If you mean, by less attractive, financially to the existing people, I think what we would argue is that, obviously, we offer the distribution, both through our membership and through other operations of a similar type, and most of it is small businesses.

  166. The DTI has suggested to us that there are about 1,500 dismantlers operating outside the law; now they were a wee bit coy here as to exactly what they meant by that, it could be that they are not adhering to environmental regulations, that they are not meeting proper planning considerations, or that they are just cowboys, and cowgirls. But I just wonder if you have an estimate of the number of people who perhaps choose not to be in your organisation because they cannot meet the standards that you set?
  (Mr Hesketh) I do not think it is a matter of choosing not to because of the standards, I think people tend to choose not because the business is a parochial type of business; people tend to be very insular in the dismantling industry, and, although the Association has been going for a long time, it is only in recent years that we have started to draw more members in, who see that there is a future there, or who are looking perhaps to the future, looking to preserve their future, I think perhaps would be more accurate.

  167. So you would think that 1,500 is roughly a correct figure, or is that an exaggeration?
  (Mr Wemyss) I think 1,500 is probably a figure that is on the top side. As far as companies which have not been regulated under the laws that are there for us to be regulated under, i.e. Waste Management laws, it was estimated by the Agency that some 500 or 600 sites were still unregulated. On top of that, there is this grey area of sort of somebody who is operating from his front drive, as a dismantler, doing two vehicles every six months.

  168. Yes, we all have a few of them in our constituencies.
  (Mr Wemyss) I apologise for that, but you have the picture.

  169. Yes, indeed. Do you think that the introduction of Authorised Treatment Facilities for ELVs will deal with this, do you think that this will perhaps straighten out some of the businesses?
  (Mr Hesketh) That is very much dependent upon how the Directive is implemented, the introduction of Treatment Facilities. If it can be policed then, yes, certainly, there is no reason why it should not, but the crux of the matter is the policing, because, obviously, having a level playing-field, as it were.

  170. Given that MoT certificates by and large work, okay, there is obviously going to be grey, shady, dark areas, but you are in the business, it is not necessarily your specific area, but do you think that if we had a similar sort of policing to the MoT business there would be grounds for optimism?
  (Mrs Allen) Surely, the Environment Agency is already policing a lot of us, and we are visited every month without fail and they do chase up yards that are dealing with the natural end of life vehicles, and look as if they are doing that, they will chase them up to make sure that they do come up to the standards. So there is a policing area there that is already on its way.

  171. What I was really meaning was that the motor industry covering technical as distinct from, let us say, environmental areas, there is a track record available to us to say that we might not be having misplaced optimism if—
  (Mr Wemyss) Yes, I can understand where you are coming from there, and I think, yes; for instance, one has to have the ability to transfer the information to Swansea, for a start, under Certificates of Destruction. So, once one is an Authorised Treatment Facility and has been seen to be that facility; we must keep harping back, but that is very important to us, that we have a fair and equitable balance that all sites who are operating in this industry, under this new regime, should be authorised. And, yes, I think that the style of somebody meeting the requirements, etc., as an MoT station would, would probably fit that bill.

  172. One last question from me. The membership you have at the present moment, what is the level of profitability, I do not mean that in figures that the Inland Revenue will come chasing you; are you surviving, are your heads above water, as businesses?
  (Mrs Allen) Yes.
  (Mr Hesketh) Yes, certainly, we are surviving. Times are not as good as they have been in the past. We have certainly been hit, as an industry, I think, Dawn more so than myself, with the downturn in metals prices, particularly over the last few years; but my own business does not depend on that, my business is a parts-focused business, whereas Dawn's is much more a metal-focused business, would it be true to say?
  (Mrs Allen) It has become that way, because of the importing of spares from abroad, which has made it less attractive for people actually to come and strip parts off the cars. Nevertheless, there is still a thriving parts industry there, which is again part of recycling by reuse, and it also is attractive, of course, to a lot of people who have not got a lot of money, they need to keep their cars on the road, and that is one way of doing it, by coming to people like us and buying the part for recycling.
  (Mr Wemyss) I would endorse that, as an industry, the return for efforts put in and the ability to build up a strong capital base has not been available in recent years, and, as you probably heard this morning, very reflective of the world commodity prices in metals, etc. So it is an industry that is paying its way, it is probably not heavily rewarded, but it is holding its head above water and paying its way at the current level; but that is before we go into the subject we are discussing today.

  173. There is, of course, the other side of it, Mr Hesketh, that as our economy maybe slows down and people have less money they will choose to get the cheaper spares and they will not necessarily go to dealers to get new replacements, they will stay with people like yourself to get replacements which they consider cheaper?
  (Mr Hesketh) That is assuming we continue to exist.

  Chairman: Well, that was what I was asking you.

Sir Robert Smith

  174. Just a quick question. This morning, talking about recycling by reuse, there was mention of the deterrent of product liability making it less attractive. I wondered if that was also affecting your end of the market, that there are worries about what would happen, the come-back on you of reusing parts, do you have to have more vetting of the parts, and so on?
  (Mr Hesketh) We operate with the same guarantees of our parts commensurate with the type of part they are and the age at which they appear, and all our members offer a guarantee because it is part of our Code of Practice, and the standard of guarantee varies as to the standard of parts that people are dealing with. With regard to product liability, I think that is an issue that we have faced all along; most of us carry insurance for that eventuality.

  175. But you are seeing it as a more difficult operation, or less profitable, to handle recycling by reuse?
  (Mr Hesketh) Recycling by reuse is less profitable: no, if the materials are available. I think that is borne out by the very competitive market for late model vehicles, there is certainly a very strong market for those.

Mr Hoyle

  176. I just wonder, the Association's submission talks of "significant extra costs". What assessment have you made of those costs and what figure would you be looking at?
  (Mr Hesketh) Since we do not know exactly what we are going to have to do, we cannot really put a figure on those costs.

  177. No idea; no assessment?
  (Mr Hesketh) It is very difficult to know. There have been some studies done by the CARE group, where they have looked at the potential extra costs just in terms of processing, but we are going to face costs in terms of processing, in terms of infrastructure, in terms of data collection, all those things are going to be added. But until somebody can tell us what we are actually going to do, it is very difficult to quantify anything.

  178. So you just decided that it would be "significant"?
  (Mr Hesketh) Yes.
  (Mr Wemyss) If I may, they are not insignificant costs, and I think the sorts of figures that you were given this morning, figures of £50,000, £100,000 and £150,000, to meet the style of requirements and infrastructure that have been intimated to us to date, that is to put equipment in, to depollute the levels they are now, we will be required to put the infrastructure around that equipment, to have the training of manpower of that standard, which is probably higher than we have been used to, we have not quite used that type of equipment on a regular basis; concrete is rather expensive, and we have to lay a bit of that as well, as part of what is projected. So there are major costs to be faced by the industry. Now some companies may already be there, they may have had that foresight, they may have decided by a commercial decision to do that, and they are to be applauded for putting that down. There may be other companies who are aware of the Directive, are aware that they are going to have to spend money, but maybe they have just kept that in reserve safely until they know what they are going to need to spend it on, on facts rather than the discussions we have had to date.

  179. Presumably, of course, in your talks, you suggest there are three major cost implications, one has been mentioned, of course, that is in finance record-keeping and policing; but would it not be fair to say that part of that, or the majority, may fall on the Environment Agency and the DVLA, especially in the case of record-keeping?
  (Mr Hesketh) Certainly, there will be costs there, and the cost areas that we looked at covered the whole spectrum, including the Environment Agency; when we are talking about policing, we recognise that there will be costs as well.
  (Mr Wemyss) If I may just add to that. The Agency does have a habit of charging those they are policing, if I may say, and make that point. And also that when we are putting in this extra, new equipment for the computerisation, which is a plus, it is driving the industry forward and I believe it to be a plus, that is a new cost to us, that is something we do not currently do. We will have to be putting in software packages, we will have to train staff, we will have to find accommodation to put that equipment in, in an environment that it has probably not been used to. So there are additional costs.

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