Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 200 - 209)



  200. So if you saw the dismantlers doing a lot of the depolluting, would you take it then that as it went down the line to the shredder there would not be substantial extra costs for the shredder?
  (Mr Hesketh) I would not have thought so.
  (Mrs Allen) No.
  (Mr Wemyss) I would not have thought so, no, because we receive monetary value for it for the metal content; we sell materials to the shredder for them to turn into a recyclate.
  (Mr Hesketh) We do have an existing competitive industry, to be honest with you.
  (Mrs Allen) And, of course, we have got a lot of dismantlers who are spread all over the country; whereas if you go just to 37 shredder sites I think the abandoned car problem will be escalated.


  201. Do you think, however, you say there is enough in the way of dismantlers, but it has been suggested that there is an insufficient number of dismantlers to Annex I standard and that there could be a shortfall in April of next year?
  (Mr Wemyss) We entirely agree with you; because, as you heard earlier, while some people have spent their money in looking to the future and thinking what the requirement will be, with great respect, we have yet to have, whilst we have an idea, the official line of what we have and have not got to do to meet the Annex I needs. And so I am sure that at April there will be a shortfall to those standards.

  202. There could be a shortfall because there is ignorance as yet of the standards that are required. Is there a capacity within the industry at present to pull itself up by its own boot straps to a standard that could be what was required in April? It is a hypothetical question, I am sorry to put it that way.
  (Mr Wemyss) The date of April, I think, is the crux. For the suppliers of the type of equipment that may be required, I think their capacity would be stretched to provide a sudden influx of orders for 300 sites; so there is going to be the logistics of actually coping with this. That being said, but also, if I may say, the Environment Agency's ability, or whoever is going to police this, their ability to put their infrastructure in place to police it and to get the permitting in place. There is a will to do it. I do not think there is any doubt the dismantling industry wishes to be part of this new standard.

Sir Robert Smith

  203. Just following up on that, I wondered if you had a view at all of what is the geographical distribution of those that will be able to cope; will there be parts of the country that will be badly hit and other parts of the country that may be less badly hit, in terms of ones that are capable?
  (Mr Wemyss) It is a commercial decision for those companies involved, in response to your question. I believe that if there is a demand to earn some money in a particular area then somebody will do it in that area. And I think therefore the majority of the areas will be covered, as they currently are.

Richard Burden

  204. Just picking you up on that point, when you said it is a commercial decision. If a company were to become an Authorised Treatment Facility, would there be any obligation on them to accept ELVs, or would they only have to accept ELVs if they felt it was a good commercial decision?
  (Mr Hesketh) They would only accept them as a good commercial decision, in the same way as the shredders would only accept them as a good commercial decision. We operate businesses. For example, household waste we pay to have removed; what we are talking about here now is vehicles which have become waste, because that is the definition by which they are going to be arrived at, and all we are saying is that everybody pays to have their waste dealt with and we are just asking for a little bit of money to help deal with the waste that we are having to deal with.

Mrs Lawrence

  205. Can I ask about preparedness for the implementation of the Directive, it has been around now, the idea of the Directive, for a considerable number of years, and I am a bit confused about the comment Mr Wemyss made, because there seems to be a dichotomy here. You mentioned about those companies who have invested and then you said you need to know what is required before investment, and Mrs Allen mentioned about the need to know which way to jump. Why have not your members generally taken a forward look and made an assessment of what is required, or likely to be required, as a result of the Directive, to prepare for it?
  (Mr Hesketh) There are a number of reasons for it. For example, there are some dismantlers who have made the commitment and the investment; in I think all those cases that investment has been funded by what is known as the salvage side of their business, which is the high value business, in trading in motor vehicles for repair, not dismantling vehicles, and they have done that, to some extent, because they have taken a look at the future and said that they can do it, but they have funded it out of their high value business, their best side of the business. So that is one reason. But the main reason that the vast majority of dismantlers have not moved forward, as it were, is because it has been unclear as to exactly what will be required to be done, there are no specifics, there is no different definition known of when a vehicle becomes an ELV. A lot of terminology within the Directive talks in terms of appropriate sites, or appropriate areas; we do not know what appropriate means. So it is very hard to formulate a business plan on supposition that a bank manager is going to accept when you go to him and say, "I want to borrow the sort of money that I need to make this sort of investment."

  206. So your organisation has not brought a number together, to look for a strategic way forward for them, of members? If some have done some work necessary to confront the implications of the Directive, it seems unfair that if they have put in that investment the lack of preparedness of other members is perhaps going to reflect on those that have invested?
  (Mr Wemyss) I would not wish to give the impression that they have not given thought to it, and we, through the written word and through, in fact, we had a seminar just in September for our members to update them with as much physical knowledge as we had available to us of how we think the final written requirements will be. The Environment Agency is not in a position to give you that information yet. It is not to say that we have not been involved with discussions with officials, etc., we have been doing the groundwork, but people are reluctant, particularly in the current climate of the economy, people are nervous, particularly in certain areas, and so they are waiting to be told what the requirement will be and what will the technical requirements be. They probably have laid some of the groundwork, they may have put their buildings up, but they have not yet gone probably to the extent of putting in depollution equipment, which could be, as you have probably heard, £50,000, £70,000, etc., they have not taken that final step; once they know what they will be required to do in technical terms, they know they have got to take certain things out, but how it is acceptable to take them out, then they will make their move. So I would not wish to have given you an impression of unpreparedness from the industry, the industry is clamouring to find out, there are people out there very concerned, because it is their living, it is their businesses, and to be part of this game, to stay in it, they will have to spend that money. So they have the preparedness of that, but they are just awaiting the final comments; and I think it is probably exampled by us being here today, that people are still investigating and thinking about it.

  207. Can we turn to the DTI's consultation and the options that are there. As an organisation, what is your opinion of the SMMT's Option 4?
  (Mr Wemyss) Mr Hesketh would like to respond to that. The one thing, if I may just add, I am indebted to the Clerk for allowing us sight of this particular document from last Friday, to enable us to try to answer your question, but to make it clear that SMMT have not involved us in their thoughts, and just to make that clear to you, that that is their thought and they have put it down, but we are very grateful to have a chance of seeing it and responding to it.

  208. Just one final point, picking up on something that Richard said earlier, in your opinion what mechanism could be used to differentiate between ELVs with a positive and a negative value?
  (Mr Hesketh) Quite honestly, I think it is an unanswerable question. I just do not think there is a mechanism to do it. As was said earlier, I think by the BMRA, two vehicles, ostensibly the same, can have different values, because of the quality of the parts, they can have different values because of their arising in different parts of the country, they have different values just in the fact that possibly one person has got a number of that particular type of vehicle and one has not. So the issue of negative value, after all, value is only an agreement between a willing buyer and a willing seller, and it is a completely subjective issue. I think, possibly the only way forward on this is to take a view that the extra treatment that will be required is obviously going to reduce the value of vehicles and spread that over perhaps the volume of vehicles that need to be treated. But it really needs people with a willing mind to sit down to try to arrive at some solution to it, rather than people just saying, "Well, that is what it says, that's what we're going to do."
  (Mr Wemyss) If I may, Mr Chairman, we did have sight of Option 4, and for the vehicles to go directly to the shredders, in our view, and "we would say that wouldn't we," supporting the dismantling industry, it is not an option. But one must remember that the shredders would have to depollute that, and one would question whether they would have, even with the finest of resources, sufficient space, etc., to handle two million vehicles, or one and a half million vehicles, in this case, that we are talking about. So, no, we are not too keen on Option 4, thank you very much, but we would be delighted to try to work with them to find some solution.


  209. Fine. Thank you very much; we are very grateful to you. We realise that, as a trade association, you are one of the smaller ones, but in coming to us at this time it is not really a chore and we hope that you find it useful, and if we need any additional information we will be in touch with you. So thanks very much indeed.
  (Mr Wemyss) We are glad to have the opportunity. Thank you very much.

  Chairman: Thank you.

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