Select Committee on Trade and Industry Appendices to the Minutes of Evidence


APPENDIX 12

Memorandum by Universal Salvage plc

THE ECONOMIC IMPACT OF THE EUROPEAN UNION, END OF LIFE VEHICLES DIRECTIVE

  A brief report from Universal Salvage plc, submitted to the Parliamentary Select Committee, examining the economic impact of the European Union End of Life vehicles Directive.

  You will have received a detailed report from Dr Charles Ambrose, representing, not only his own company "Charles Trent Ltd", but also the other dismantler members of the CARE group, which Universal Salvage plc is a member of.

  The report produced by Dr Ambrose, is very detailed and gives a very accurate account of the current problems facing the more professional vehicle dismantler in the UK. I thought it would be beneficial to give you an insight into another section of the salvage industry, so you can see that the forthcoming ELV directive will affect large and small companies alike.

  Universal Salvage plc is the largest service provider to the insurance industry in the UK. We have just over 37 per cent of the market, and will this year handle in excess of 130,000 accident damaged vehicles. The company has been offering the insurance industry, as well as vehicle manufacturers, over the past 30 years a wide range of services. We are the only Public Limited Salvage Company currently represented on the stock market, and this year is likely to have a turnover of £100 million. So as you can see we are a very large organisation which depends greatly on the UK having a viable dismantler industry.

  To explain this in more detail, as stated earlier, we will handle around 130,000 accident damaged vehicles this year, through our ten sites nation-wide, and run our own fleet of 140 vehicle transporters. Our main core business is to store these accident damaged vehicles until the insurance companies categorise them, using the ABI (Association of British Insurers) Code of Practice. The ABI code will, depending on the severity of the vehicle damage and its age, put the vehicle into one of the following categories "A", "B", "C" or "D". To give you a brief description of these categories (I have enclosed one of our categorisation guides to give you more detail).

    Category A  Vehicle burnt-out or very severely damaged. (Not sold at auction, put through processing only)

Category B  Vehicle damage excessive, to be dismantled for spare parts use only and body to be destroyed.

    Category C  Financial total loss, vehicle to be repaired and put back on road.

    Category D  Same as Category C but newer vehicle or stolen & recovered vehicle.

  From what we can gather, although this has yet to be confirmed by Government, all category A and B vehicles will be regarded as "End of Life" vehicles as the last owner will have discarded them in the current form.

  We currently offer all the vehicles we handle for the insurance industry (excluding Category "A", see above), for sale by auction. We hold two different types of auctions:

Closed Breaker Auctions

  This would be for the entire category B vehicles, and the only people who can attend are approved dismantlers who hold a Full Waste Management Licence or an Exemption.

  We control and audit this to ensure that all the vehicles are as detailed in the Code of Practice, fully dismantled and the bodies destroyed. We don't auction category A vehicles as they are so badly damaged, so are only suitable for ELV processing.

Open Salvage Auctions

  These would be for all category C and D vehicles and can be sold to the general public, as long as they have pre-registered with us.

  So as you can see we, in support of vehicle security and environmental control, will only sell our Breaker category B vehicles to approved dismantlers, who are registered with the Environment Agency.

  Of the 130,000 vehicles we will handle this year, the split will be as follows:

    Category A =    9 per cent

    Category B =  42 per cent

    Category C =  29 per cent

    Category D =  20 per cent

  So as you can see, over 50 per cent of the vehicles we handle will be categorised as ELVs also Hazardous Waste.

  Up until 1998, we used to sell our entire category B vehicles at our auctions, as the dismantlers would buy them, if only for their scrap value. With the drop in scrap metal prices, and the increase in landfill taxes, the lower value category B vehicles, with very few saleable parts are no longer a viable purchase for the vehicle dismantlers. So we have seen over the past two to three years, that we now have a lot of vehicles that we cannot sell, on average we find that 14/15 per cent of the category B vehicles, are not viable to sell as dismantler donor vehicles. So as a company we will this year have to handle not only the 9 per cent of the category A vehicles, but also 15 per cent of category B vehicles (24 per cent over 40,000 units) as low value ELV's.

  To accommodate this we have applied for and obtained Waste Management Licenses at all of our sites. We have also set up ELV processing facilities, from Greenfield sites. To date we have spent well over £2 million setting these up as they have all been designed to meet the full Annex 1 requirements of the ELV Directive. Part of Dr Ambrose' report details work carried out by the CARE groups Annex 1 working group, on the likely costs of setting up approved treatment centres to Annex 1 standards. A lot of the practical work for the surveys was carried out on our sites. We have also had the local EA representatives bring people to our site, to show them how they expect ATC's to be correctly set up.

  So as you will appreciate, we as a company have not only taken steps to set up suitable processing sites for ELVs, we have incurred a lot of expense, mainly in the expectation that the UK Government will implement the ELV Directive correctly. Also that the professional dismantlers and shredders, who have also in their own way, invested heavily will not be disadvantaged by "back street operators".

  I am on the CARE Management Committee as well as the BVSF's Management Committee, so we have spent a lot of time over the past four/five years attending meetings with DTI, DETR, EA and now DEFRA. At all these meetings we have tried to explain to the various Government representatives, that with the exception of the approved dismantlers that purchase accident damaged vehicles for the purpose of dismantling them for parts that the average ELV or abandoned vehicle is not drained of fluids. Nor has its battery been removed or any other form of depollution been carried out, before it is fed into the metal shredders.

  So as explained earlier, around 50 per cent of the accident damaged vehicles fall into category A or B, so of the overall UK accident damaged vehicles most of 500,000 units, around 250,000 are correctly depolluted by dismantlers. These with licences or exemptions leaving, of the annual 1.8 million ELVs, 1,550.00 that are not depolluted in any way!

  So if the UK Government is to implement this directive correctly, it has to support the operators who have not only invested in ensuring that vehicles are correctly environmentally handled, but also in professional companies and not just carry out a paperwork exercise in handing out permits to any company.

  This Government has an ideal opportunity to introduce environmental controls in line with more forward thinking European countries, instead as it is today, letting the professional dismantlers and shredders down, and being seen by Europe as a polluter.

  All we ask is for a level playing field. And that the back street operators who have no interest in the environment are not allowed to have a financial advantage over the professional companies. Especially the ones who have supported this directive from day one and invested in their premises, in line with the requirements detailed in the ELV directive. Expecting that the UK Government want to lead environmentally in Europe and not be third rate.

Environmental Services Director


 
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