We welcome Colin Drummond OBE, Chief Executive of Viridor, to our series of regular interviews with leading members of the South West Business community.
Hello Colin, tell us about your role as Chief Executive of Viridor.
I have been an executive director of the Pennon Group since 1992. Back then, Pennon was basically South West Water. I was appointed to build a non-water business. We diversified into waste management by buying Haul Waste at the end of 1992 and subsequently renamed our waste management wing Viridor. The initial purchase price was £20m and according to City analysts Viridor is now worth approaching £2bn.
For the first ten years of operation we concentrated on waste collection and landfill which accounted for 85% of our profits. Then we began to treat waste as a resource (either by recycling it or by using it to generate renewable energy), now 50% of our profits come from recovering value from waste. We recycle 2m tonnes of waste per annum, making us one of the biggest recyclers in the UK, and have nearly 140MW of renewable energy capacity. Waste accounts for nearly as much renewable energy as wind and has the potential to produce 6% of total UK electricity by 2015.
How has the economic recession impacted your business?
The recession has had an impact on my business, but because the environmental sector is so strong, we have fared better than most. We sell recyclate (material such as waste paper, plastics, scrap metal, etc) to markets worldwide and the price has been steadily increasing for most of the past four years. Recently however the Eurozone crisis has led to a fall in recyclate prices, but they remain higher than they were four years ago and recyclate offers manufacturers a more cost effective raw material than primary resources provided quality standards can be met. The recession does not affect our company strategy; we have secured backing from the City for a significant expansion in energy from waste and public private partnership contracts and expect the company to double again in size within the next 5 years.
What challenges are you facing over the next 12 months?
We are currently halfway through implementing a £2bn investment plan, so the majority of our attention is on ensuring that it is delivered on time and within budget. We are also focussing on continuing to improve the quality of the recyclate we are producing so it fetches the best price on our various markets.
Do you think that the government should intervene more?
I am particularly frustrated about the length of time it takes to get planning permissions. Indeed I had dialogue with the Prime Minister about this last year, when Viridor had £1bn worth of investment ready to go and were held back simply by needless delays in the planning process. Substantial progress was made but we still have £500m tied up. These are sound projects for investment in the green economy and represent a way for the government to encourage growth without increasing public sector borrowing.
What is your view on the South West’s business scene?
Viridor is proud to have its base in the South West, and we look forward to moving into our new HQ in Taunton. Viridor operates throughout the UK but the South West is ideal as an HQ location in terms of value for office space, housing and quality of life. Modern communications and transport links ensure that we can do business anywhere in the UK (as well as handling £80m p.a. exports to China and elsewhere).
Do you have any Non-Executive Directorships?
I was Non-Executive Director of Vymura PLC before it was taken over. I also chair three government committees, so most of my experience of being a non-exec is in government work.
Do you have any advice that you’d pass on to a newly appointed company director?
I recommend that you are always open, honest and on the front foot with your shareholders and financiers and other business partners. Have a good business plan and explain it clearly and consistently; avoid being subterranean. More generally there was a tendency in the waste management sector to ‘keep our heads down’: this was a mistake as it allowed others to set the agenda; now we have got our resource management and renewable energy agenda on the table and waste management is recognised as the leading sector in UK for carbon reduction.
What do you like to do outside of work?
I enjoy music, playing the piano and listening, and like to grow vegetables somewhat in the manner of a peasant farmer. I try to keep fit by going to the gym and cycling.
Who is your hero / personal inspiration?
I don’t have one.
What is on your I-Pod and what are you reading right now?
I listen to various current affairs and classical music downloads in the gym. I enjoy the detective novels of Ian Rankin and am proud owner of a bottle of whisky he signed for me. I also have a passion for history books, although my wife sometimes eyes my tomes on Stalin with suspicion. Most of my reading nowadays is done electronically on my Ipad.