‘Delivery’ is the motto at Onyx

Cyrille du Peloux, a graduate of the École Polytechnique and École des Ponts et Chaussées, two renowned engineering universities in Paris, subequently achieved notable success in high level management roles within the French cable, satellite and broadcasting sector including being Managing Director of TF1, NOOS and TPS. He joined Onyx in September 2002 from a position as CEO of Integris, the service arm of BULL, a French IT company.

Onyx, part of Veolia Environnement, is one of the UK’s leading waste management companies operating in all of the industry sectors. With a sizeable presence throughout Britain, Europe and the world, Onyx employs 71,000 people worldwide, servicing 34 countries comprising more than 50 million inhabitants.

Veolia Environnement lays claim to be the world leader in environmental services with 251,000 employees operating in 75 countries worldwide. Its activities are focused on water, transport, energy and waste management.

In the UK Onyx is the acknowledged market leader in the provision of waste management services in the local authority sector, where the company runs two flagship contracts, among a long list of projects – the SELHP waste to energy plant in South East London, and integrated waste management in Hampshire, under the Project Integra banner, reviewed in LAWE last month.

Despite the disappointment at Onyx at the group’s recent exclusion from the final four bidders shortlisted for the GMDWA’s multi-billion contract for Manchester, the company received speedy consolation with the news that it had been awarded preferred bidder status by Nottinghamshire County Council for the county’s 26-year waste PFI contract.

This followed four years of complex evaluation by the county council.

Leader of the county council, Councillor David Kirkham, said: “The tender from Onyx is seen to offer the best potential solution. Onyx has a great deal of experience and offers a quality service. The county council has worked closely with the districts in their capacity as waste authorities whilst making the decision and we look forward to progressing the details further.”

Nottinghamshire County Council will now work with Onyx to develop the current proposals and negotiate the £800 million contract with a view to making an official appointment within the calendar year.

The proposed contract includes a balance of solutions including recycling, composting and energy from waste. The contract, once agreed, will commit Onyx to delivering recycling and composting rates of 52% by 2020 through the kerbside collection of mixed dry recyclables, green waste and glass. It will also make sure that there is virtually no direct delivery of material to landfill from 2011, ensuring that the authority more than meets its landfill diversion requirements.

Proposed facilities

Facilities to be provided include:

Mr du Peloux commented, “We are delighted and proud to have achieved preferred bidder status and are looking forward to working with Nottinghamshire County Council in helping to deliver an environmentally friendly range of recycling, composting and recovery solutions. We appreciate that there is much work to be undertaken before the contract is signed but are confident that our experience in managing large integrated waste management contracts will help meet the challenges of recycling and landfill diversion targets faced by Nottinghamshire.”

Business philosophy

Asked by LAWE whether there was a

particular business philosophy behind Onyx’s success in the UK, Cyrille du Peloux said: “In the local authority market particularly, I think, there are probably two sets of reasons for that, first we have been used historically as a group to dealing with long term contracts. Now, as this municipal market moves towards long term integrated contracts we are rather familiar with this approach.”

He also underlined the ability within the group to transfer know-how between different countries.

There is also a French tradition in long-term contracting with local authorities, through the “concession”, which is in a way the equivalent of PFI, and had been developed for quite a long time for the water industry and for other types of business, such as the cable TV business, for example.

The Onyx Chief Executive also said: ” For collection we have a unique concept which is the ‘village’ approach, it’s a way to manage our people with a very local grip and this is how we maintain the success in Westminster or Camden or Liverpool and other areas.”

Turning to the major PFI contracts he said: ” I think our motto is ‘deliverability’ – we deliver,” citing the examples of long term contracts in Hampshire, Sheffield and Birmingham.

Asked about the lessons which major projects such as the Hampshire Waste Strategy can offer, Mr du Peloux said that both the Hampshire authority and Onyx had taken a long-term and strategic view. “We have established reciprocal confidence, and, despite some natural difficulties in all these type of projects, we have overcome all the major difficulties. We have learned to work efficiently and we have a good strategic mutual understanding of what has to be achieved for the future.”

Market potential

Discussing the era of the multi-million and even multi-billion, very long-term – up to 30 to 40 years – waste management services contracts with local authorities, which has very much arrived, LAWE asked how Onyx viewed potential growth in this market and whether the company set itself a target.

Mr du Peloux said: “There is quite an acceleration, because the infrastructure is huge and there is a catch-up as the UK was very much based on landfill, and landfill

is not sufficient. You need to treat and to recover and dispose, so we see tremendous opportunities in terms of how we select and prioritise.”

Onyx has its own internal criteria and classifies all tenders between priority one,

two and three, using criteria linked to geography, the company’s understanding with, and proximity to, clients and also with the way the tender was specified.

The Onyx Chief Executive said: “If we have the freedom of finding the right solution – the optimum solution – we are much more confident than in a tender where everything is decided according to criteria that are not necessarily rational.”

Asked if there were still good opportunities for a company like Onyx to keep expanding, he replied that it was expanding with a growth rate of eight per cent a year.

In the UK, he said, local authority business accounted for 60 %, with 40 % from industry and commerce. He added: “We are also expanding in industry and commerce where we are more and more aiming towards integrated contracts.”

Whilst Onyx aims to offer a “one-stop-shop” to customers there are limits to the

size of contracts the company would want to undertake.

There is obviously no upper ceiling, but Cyrille du Peloux told LAWE, “For collection, we tend not to take the smaller jobs. And for integrated contracts I would say our lower limit is probably in the range of 200,000 tonnes of waste to be managed per year.”

Future trends

LAWE posed the question: “Bearing mind the huge resources required to fund and undertake these very large contracts, do you think this is going to be a dynamic in changing the nature, or the make-up, of the waste and environmental services industry? Will we be left with a handful of very large and possibly global companies, such as Onyx, in five to ten years time?”

Mr du Peloux’s response was that “First of all, I think there will be constant pressure on the main players in order to cope with this huge investment.” He was looking for partnership between the contractor, the local authority and the banking in industry, but he emphasised “Our business is not to finance, our business is to build and operate.”

Turning to a possible concentration in the market he said: ” I do believe there will be a few key players. I don’t know how many it would be – three or four in the UK.” He added that there would obviously be many other smaller operators, starting, growing, selling and acquiring businesses.

Discussing activity in recent months in the waste sector where some investment companies have been active, he saw this as “very encouraging because we need to interest equity in this market.”

Training and safety

A major concern for a leading group like Onyx is ensuring the flow of the very high calibre of management to run major projects. Whilst Cyrille du Peloux is himself a high profile example of the Onyx group’s willingness to recruit top line talent externally, it has a highly developed culture of growing its own managers.

The company runs a training college at Staines and encourages and finances potential high fliers to study for MBAs and similar qualifications. Future leaders are selected and then groomed for development.

Training is at all levels. Onyx Chief Executive says: “We have training for operatives, we have training for sales people, we have training around health and safety issues, we have training about leadership and we are going more and more to train about project management because, in all these major integrated contracts, we need project management skills.”

Onyx gives top priority to health and safety, says Cyrille du Peloux, who sees communication playing a key role to get the message across.

The group also places a high value on technical skills and globally there is an interchange of experience and know how through the company’s R&D centre.

There are world wide expert groups covering areas such as landfill, efw and composting on which individual Onyx companies can draw for solutions to problems.

One of the issues causing general concern across the waste sector is planning delays which Cyrille du Peloux agrees is “a major problem because it’s a long process.” He said that the industry did not control the planning process, which was much more in the hands

of local authorities, adding that financing a PFI contract was very difficult when a company did not know how and when it would be authorised.

But he concluded on a more hopeful note, saying: “Some progress is being made, first by giving more flexibility on a contract in terms of who takes the risk of planning. It’s now a shared risk while in the past it was a risk for the operator. And secondly, there are now many more authorities which propose in a tender to have the site ready.”