Shanks Group plc History

Company Perspectives:

Waste from laboratories or heavy manufacturing. From factories to homes. Stable or volatile. In binbags, skips, drums, by the lorry load or in any other form that you can imagine. And many more that you can't. Shanks' containers and waste collection vehicles are an everyday part of countless local communities throughout the UK. Shanks has a proud history of innovation in industry. We have a network of people working at sites throughout the country. So wherever there's waste, there's a team of Shanks experts close at hand. And we haven't achieved our success alone. We are an integral part of modern life, working in partnership with customers, local communities and regulators. We do what we say and keep our promises. We have an open door policy and welcome thousands of visitors to our sites every year. Our success is something we're keen to share. While we manage the waste, our customers are free to concentrate on their core business--with total confidence in our people, our services and our commitment to the environment.

Key Dates:

1880:

Andrew McEwan and Guy Shanks found Shanks & McEwan construction firm.

1986:

Shanks & McEwan acquire London Brick Landfill, beginning shift toward becoming a focused waste management firm.

1988:

The company goes public on the London stock exchange.

1991:

The acquisition of Rechem Environmental Services gives company entry into the hazardous waste disposal sector.

1994:

Management shakeup leads company to restructure and abandon construction industry to focus entirely on waste management services.

1996:

Shanks & McEwan acquires Scottish dry waste business from Leigh Interests, beginning long acquisition drive, including TRASH, Greenacre Waste, and Goodwins Mini Skips; the company is awarded its first MBM incineration contract; the company opens materials recycling plant in London.

1997:

The company launches Contaminated Land Services; the company wins managing and operating contract for Milton Keynes Materials Recycling Facility; Robinson Brothers and Safewaste is acquired.

1998:

The company pays £66 million for Belgian waste management operations of SITA; the company acquires Lothing Chemical Company, MRJ Waste, and others; the company opens Elstow Transfer Station and Municipal Recycling Centre, as well as Glendevon Recycling Facility.

1999:

The company acquires WE Jenkins, AB Hendry, then pays £50 million for Caird Group Plc; the company changes its name to Shanks Group plc.

2000:

The company pays £209 million to acquire Waste Management Nederland; the company acquires Ghent, Belgium-based NV De Beer and Partners; the company tops £500 million in sales.

2001:

The company wins 25-year contract to provide waste management services to Argyll & Bute Council in Scotland.

Company History:

Buckinghamshire, England's Shanks Group plc is the United Kingdom's leading independent waste management company. Shanks Group's operations in Belgium and The Netherlands also make it one of Europe's largest waste management companies. Operating from more than 75 sites in the United Kingdom alone, the company offers a full range of waste collection, transport, recycling, treatment, and disposal services, including landfill and incinerator operations, and hazardous waste collection and disposal systems--including a contract to dispose of more than 45,000 tons of cow carcasses following the 1990s outbreak of so-called mad cow disease in the United Kingdom. Shanks's landfill operations have led the company to invest in electrical generation, using the methane gas produced by the decomposing waste at its landfill sites. Shanks also offers industrial cleaning operations and, in 2001, became the first nongovernment-run company to provide waste management services to a local government council in Scotland. Chairman Gordon Waddell and CEO Michael Averill have been responsible, in large part, for redirecting Shanks from a diversified building group to a streamlined company focused on waste management services--the company was an active participant in the sector's consolidation trend of the 1990s, pursuing an aggressive acquisition program. More than half of the company's 2001 revenues were generated in the United Kingdom; the rest of Europe accounted for nearly all of the remainder.

Late 19th-Century Civil Engineer

Shanks Group began as construction firm Shanks & McEwan. Based in Glasgow, the company was established by partners Guy Shanks, an engineer, and Andrew McEwan, an architect, near the end of the 19th century. Shanks & McEwan was to grow into a prominent Scottish civil engineering firm, helping to construct the railway system in that country. For most of its early history, the company was led by Guy Shanks, who remained at the company's head until just after World War II. He was succeeded by nephew Alec Shanks, and both the Shanks and McEwan families shared ownership of the company. The McEwans only sold out to the Shanks in the early 1980s.

By then, the company had swelled into the Shanks & McEwan Group, a diverse collection of companies centered around the civil engineering and construction fields, but which also ran extensive quarrying operations. A growing component of the group was waste management services, a sector that had been building steadily since the 1970s. New management, under the form of Chairman Peter Runciman and Chief Executive Officer Roger Hewitt, began to accelerate the company's participation in waste management services in the mid-1980s.

One of the first steps of the company's transformation was the purchase of London Brick Landfill, a subsidiary of the Hanson conglomerate. That 1986 acquisition gave the company clay pits and other landfill sites, particularly in the northern Home Counties region. In 1988, the company went public as Shanks & McEwan Group Plc. The public offering helped fuel the company's expansion into waste management services, as well as an attempt to expand its civil engineering component into road construction.

New legislation required the country's utilities companies to seek alternative fuel sources and energy suppliers. Shanks & McEwan turned toward power production in 1991, beginning construction of an electrical generation facility at its Bedfordshire landfill, using the methane gas produced as byproduct of the decomposition of waste at the site. The company also expanded into another waste management area, that of hazardous waste disposal, when it acquired Rechem Environmental Services in 1991. That company owned two of the United Kingdom's four hazardous waste incinerators and disposal sites.

The waste management sector was expecting to boom in the United Kingdom in the early 1990s with the coming passage of the Environmental Protection Act of 1990, which tightened emissions levels for businesses and set new requirements for the disposal of waste. Yet the slumping economy and the more stringent requirement increased Shanks & McEwan's operating costs as well. At the same time, the company's new Rechem hazardous waste operations were under threat as the European Community enacted new legislation governing the import and export of hazardous waste--giving the British government the authority to ban all hazardous waste imports into the country. Such a move threatened to cripple Rechem, which, following technical difficulties at its facilities, had slipped into losses at the end of 1993. Meanwhile, the collapse of the construction industry had brought the company's construction arm into trouble. Worse for Shanks & McEwan, its recent expansion into road construction proved ill-timed and the company began posting losses.

With the company heading into deeper difficulties, Runciman stepped down as chairman in 1992. Taking his place was Gordon Waddell, who had played professional rugby before becoming a prominent player in the gold trade. Waddell and Hewitt began dismantling the company's construction and civil engineering side, selling off most of those businesses by 1993. But the pair quickly disagreed over the company's direction, with Hewitt pushing toward centralized management of the company's far-flung operations, and Waddell touting just the opposite.

Deepening losses in 1993 led to Waddell having his way. Hewitt was ousted by the middle of that year. Waddell then took over as acting CEO while the company struggled to overcome its losses and placate its disgruntled shareholders. Shanks & McEwan restructured its operations, shutting down its head office, shifting administration to Buckinghamshire, and regrouping its business into more or less autonomous operating divisions. Waddell was later joined by Michael Averill, who moved from his position as chief of Rechem to the chief executive position for the entire group. By 1995, the company had sold off its remaining construction industry holdings.

Streamlined Waste Management Leader for the New Century

Shanks & McEwan's fortunes rose as it moved into the last half of the decade. New landfill taxes not only helped boost the company's revenues in that area, but also encouraged businesses to turn to Shanks for its incineration services. The company also was banking on new European legislation that added stricter recycling requirements. As Averill pointed out to the Daily Telegraph, "The regulations say thou shalt recycle whatever the cost. Previously people were not doing so, as the environmentally friendly option was always more expensive." The company added three new recycling plants, raising its total to five plants and making it the out-and-out leader in the U.K. recycling sector.

Meanwhile the company took a leading role in what many saw as the much-needed consolidation of the U.K. waste management sector. Shanks & McEwan hit the acquisition trail in earnest, starting with the acquisition in May 1996 of the Scottish dry waste operations of rival Leigh Industries, which had been acquired by General Utilities (subsidiary of France's Generale des Eaux). That year saw the company acquire Goodwins Mini Skips, based in Hertfordshire; Greenacre Waste, which added trash collection, transfer, and recycling operations in South Wales; Oxfordshire's TRASH waste transfer business; and 20 million cubic meters of landfill freeholds.

The company also was growing organically, adding a methane gas power plant in Scotland, opening a recycling plant in London, and winning a contract to incinerate 45,000 tons of cattle meat and bone meal (MBM) piled up in the midst of the outbreak of BSE (bovine spongiform encephalopathy, otherwise known as "mad cow disease") among the country's cattle herds. This contract was expected to be only the first of many, as the country's stockpile of MBM topped two million tons, and the company stood out as the sole U.K. facility capable of its incineration.

In 1997, Shanks & McEwan launched a dedicated Contaminated Land Services operation when it won the contract for cleaning up the Millenium Dome site in Greenwich. The company also was beginning to pick up a number of contracts to provide waste collection and disposal and other services to local governments, including Peterborough, where it opened a new materials recycling facility, and Milton Keynes, where the company won the contract to manage and operate that community's recycling plant. At the end of that year, the company acquired two new companies, Safewaste, based in Nottingham, and Robinson Brothers Environment, adding to the waste collection business Leigh Corby acquired earlier that year.

The company's acquisition drive continued into the next year. In January the company added South Wales' MRJ Waste, then Pembrokeshire Environmental the following month. Shanks & McEwan added to its hazardous waste business in March 1998 when it acquired Edinburgh's Lothian Chemical company, which offered solvent recovery services and produced recycled liquid fuels. The purchase price of this company, as with most of the company's latest acquisitions, was low, at just £3 million.

On a different scale--and place--was the company's purchase, that same month, of the Belgian waste management division of France's SITA. That acquisition cost the company £66 million, but gave it a full range of waste management services, as well as a leading place in Belgium's waste management market. The acquisition also marked the company's first step toward becoming one of the European leaders in the sector.

Back in the United Kingdom, the company opened a new landfill site in north Wales, adding three million cubic meters of space to its total capacity; the company also received permission to expand an existing site in Buckinghamshire. At the same time, the company was granted the authorization to increase its electrical power generation by an additional 32 megawatts. On the recycling side, Shanks & McEwan opened two new facilities that year, in Edinburgh and in Elstow. The company also began offering disposal services for fluorescent tubes.

New acquisitions followed at the end of that year and into the next, including the smaller purchases of Whites Environmental, WE Jenkins, AB Hendry, Muktubs, Bio-Logic Remediation Ltd, and ASM Waste Services. During 1999, the company changed its name to Shanks Group plc, then paid £50 million to acquire rival Caird Group, which added six new landfill sites in England and Scotland, as well as two additional special waste operations.

Shanks took on a new scale the following year when it announced its acquisition of Waste Management Nederland BV. Paying £209 million, the company acquired a prominent spot in the Dutch waste management market. The purchase also raised the percentage of foreign sales to 49 percent of the company's total sales--and slightly more than half of the company's profits. Shanks' Benelux operations grew again in 2000, with the purchase of NV De Beer and Partners, which acted as a holding company for Ghent-based waste management group De Paepe.

By 2001, Shanks's sales had topped £500 million. The company was also emerging as a major producer of alternative energy. After expanding its Brogborough-based power generation facility, the company's total landfill-gas generated power production topped 50 megawatts. The outbreak of foot-and-mouth disease offered the company new prospects for its MBM incineration activity, which already had been boosted by the award of a new 190,000-ton contract in 1999. By the end of the year, the company was posting new gains in its public-sector operations as well, winning a 25-year contract to provide waste collection and management services from Argyll & Bute Council, the first such private contract granted in Scotland.

As it ended 2001, Shanks had successfully completed its transformation into a focused waste management services company and had gained a top spot not only in the United Kingdom, but also among the major players on the European continent. New legislation from the European Community was expected to increase the company's business at home, as the United Kingdom placed itself in line with European norms. At the same time, the company expected a place at the table in a future round of consolidation of the European waste management sector.

Principal Subsidiaries: Shanks Waste Services Limited; Shanks Northern Limited; Shanks Midlands Limited; Caird Environmental Limited; Shanks Chemical Services Limited; Shanks Chemical Services (Scotland) Limited; Safewaste Limited; Vale Collections and Recycling Limited; Page s.a. (Belgium); Fusiman Industrial Cleaning s.a. (Belgium); B & P n.v. "Sobry" (Belgium); Vancoppenolle Invest. n.v. (Belgium); N.V. De Beer & Partners "de Paepe" (Belgium); Icova BV (The Netherlands); BV van Vliet Groep Milieudienstverleners (The Netherlands); Vliko BV (The Netherlands); Klok Containers BV (The Netherlands); Transportbedrifj van Vliet BV "Contrans" (The Netherlands); Reym BV (The Netherlands); Afvalstoffen Terminal Moerdijk BV "ATM" (The Netherlands); Flection International BV (The Netherlands); Van der Stoel Containerservice BV (The Netherlands); Andre de Vriendt s.a. (Belgium; 60%); Geohess (U.K.) Limited (50%); Shanks Avondale Limited (50%); Caird Bardon Limited (50%); Silvamo n.v. (Belgium; 50%); Marpos n.v. (Belgium; 45%).

Principal Competitors: Cory Environmentals (Exel plc); Waste Recycling Group (Kelda Group plc); Pennon Group Plc; Severn Trent Plc; Société Industrielle de Transports Automobiles (SITA); Suez; Waste Management, Inc.; Vivendi Environnement SA; Waste Recycling Group PLC.

Further Reading:

• Ahmad, Sameena, "Rag and Bone Boost for Shanks," Independent, November 6, 1997, p. 26.
• Carr, Miranda, "Shanks Profits Rise Aided by BSE-Hit Cows," Daily Telegraph, November 6, 1997.
• Gribben, Roland, "Farmyard Lift for Shanks," Daily Telegraph, November 1, 2001, p. 34.
• Moreton, Philippa, "Shanks (SMG.L) Turns Waste into Profit Growth," Reuters, May 27, 1999.
• Trapp, Roger, "A Warm Glow in the Wasteland," Independent on Sunday, May 16, 1999, p. 6.
• "Waste Firm Shanks Far from Down in Dumps As Earnings Soar," Evening News, May 30, 2001, p. B1.

Source: International Directory of Company Histories, Vol. 45. St. James Press, 2002.

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