Going for giant could send you
WHEN small, family-owned waste management firm RCM Recycling won a multi-million pound contract with food industry giant Boparan Holdings, manager Maurice Call thought it was the break that he had been waiting for.
The former road sweeper and apprentice plasterer set up in the waste industry ten years ago and weathered the trauma of bankruptcy when his previous company failed.
Maurice, 52, thought things were going right at last after RCM, which is owned by his sons Richard, 27, and Christopher, 24, was awarded a three-year, £9million contract with the owner of the 2 Sisters Food Group and Northern Foods.
But less than a year on, the two companies are mired in a bitter dispute, which experts say can arise when small firms win contracts to supply big companies.
The contract, awarded in August, was for the management of waste from Boparan’s 26 factories and distribution facilities.
Call says his company was not given accurate information about the waste involved – a charge Boparan vigorously denies – and that as a result RCM could not make any money on the deal and terminated the contract.
‘We’re a small family business and can’t afford the cost of the contract or the cost of taking legal action,’ says Call. ‘We’re now having to consider putting the company into administration.’
RCM owes its creditors more than £700,000, has several out- standing county court judgments against it and has been threatened with winding-up petitions.
But Boparan says RCM ended the contract without explanation and says that it became clear that RCM had tendered at a non-competitive rate to win the business and did not have enough working capital to get through the initial loss-making period. A source says: ‘This unfortunately appears to be a supplier simply overstretching itself, not meeting obligations and then terminating a valid contract.’
The two companies are very different. Boparan Holdings, based in West Bromwich, West Midlands, has a £2billion turnover supplying big retailers such as Tesco. RCM, based in Grimsby, Lincolnshire, has been trading for less than a year, turning over just a few thousand pounds a month before netting the Boparan contract.
Whatever the outcome of this particular dispute, small business organisations warn that the pairing of small and large businesses is fraught with potential pitfalls. Pierre Williams, spokesman for the Federation of Small Businesses, says: ‘It is obviously tempting for small firms to do business with corporations and every suitable opportunity should be seized. But it’s important not to get car-