Local bottle depot Happyface recycling may be closing its doors as of June 30, if the little company that could and product stewardship corporation Encorp don’t see eye to eye.
At the moment, Happyface’s contract with the company has lapsed, and a new one has yet to be signed. Encorp Regional Operations Manager Doug Merrier has told depot owner/operator Wendyle Jones that unless Happyface accepts the agreement as it stands, Encorp’s third party transporters will cease pickups from the Nakusp-based depot.
For Jones, who has serious reservations about the contract, this could very well mean the end of what was an increasingly successful business.
Wendyle and Bill Jones, good friends who just happen to share a last name, started Happyface Recycling in 2008 after their forestry-dependent work dried up.
“We had to figure out something to do so we didn’t have to move,” Wendyle Jones told The Arrow Lakes News, “But in a small town you gotta find something that doesn’t take food out of the mouth of somebody else.”
Seeing that bottle depots in Alberta did well and that there was a need here in town, the Jones brothers-from-different-mothers decided to set up one in Nakusp. And seeing that Encorp was the company in the province that collected the bottles, they contacted them with their plan.
“They told us outright ‘we have no intention of opening a bottle depot there, the town’s not big enough,’” Wendyle said, “They weren’t going to help at all.”
“There was some skepticism about whether or not it would be worthwhile,” agreed Malcolm Harvey, Media Spokesperson for Encorp. “It’s borderline. The issue is distance for folks,” he said, “Population is one factor, distance is another.” The corporation wasn’t sure enough returnables would be collected to make the expenditure of gas to ship them worthwhile.
Corinne Atwood, Executive Director of the BC Bottle Depot Association, said this means smaller towns suffer even though every person in the province pays a deposit as well as a non-refundable recycling fee for each container they purchase.
“Smaller programs get left out of the stewardship,” she said, “If you’re in the middle of nowhere you can expect to get little to no service.”
Undeterred, the two Joneses went into business anyway, knowing that they would be able to make the sacrifices necessary to slowly build a successful business.
“We started buying bottles with a line of credit,” said Wendyle. “We were taking bottles down the road to the bottle depot in Slocan.” Paying for the shipping of the bottles was an expensive venture, and at the beginning they were losing money, not making it.
Even though there were clauses that Happyface wasn’t happy with in the contract that Encorp offered them, they signed it but they also sent a letter to the corporation from their lawyer stating what they objected to in the contract.
In the three years since they did become partners with Encorp, Happyface Recycling has garnered nothing but praise from the provincial stewardship company, which has sent letters saying they are pleased with the depot and the level of service they provide.
After three years had passed and the contract was up, a new contract was sent out from Encorp. The contract was pretty much the same as the last one except for the addition of several schedules tucked in at the back.
“They’re going to tell you everything about your business, right down to the colour of the building,” said Wendyle, who was shocked that Encorp wanted to have final say over his business’ hours and operations.
“It’s not a hard and fast rule,” Harvey pointed out, saying that the schedules were suggestions, not requirements, and that Encorp’s Area Manager has been perfectly happy with Happyface Recycling. “He’s not on anybody’s list for upgrades.”
Another point of contention for Jones was Encorp wanting be able to audit his operations, something that still rankles the owner/operator.
“If a depot does not comply with the operations of the business (i.e. theft),” read Jones from the letter from Encorp Regional operations Manager Doug Merrier in reference to the contract clause about “Operations Audits.” “We feel you and Bill would not do that based on our three year working relationship but we need it in the contract,” the letter continued.
Harvey confirmed Encorp has come across cases of fraud, which is why the clause exists.
“When you’re running a huge cash business you need a set of rules to apply to everybody whether or not there is the slightest indication [of theft],” the Encorp rep said, defending the necessity of the clause. “It’s from bitter experience that Encorp has those rules. He shouldn’t take it personal. It’s simple, prudent business practise.”
But Atwood doesn’t see it that way, and finds some of the controls that Encorp seeks in its contracts to be too far-reaching.
“There’s only one steward in the province: Encorp. Being a monopoly, they can be pretty heavy handed,” she observed about their contractual dealings.
Not all contracts between bottle depots and Encorp are the same, Atwood told The Arrow Lakes News, with different levels of control over operations being sought in the contracts.
“We have a variety of contracts in the industry,” she said, “Wendyle has a Container Service Agreement with a six month cancellation notice as part of it.” The cancellation clause makes it “very hard to secure a location and very hard to finance an operation” said Atwood, because most landlords and banks require surety that a business will be there for years, and not be shut down in a matter of months.
Malcolm Harvey admits that depots can face difficulty getting financing, but in his view it’s not because of the contracts. Some financial institutions have a hard time grasping the nature of the business, he said, because it doesn’t involve the traditional type of inventory or business model.
“All the contracts with Encorp since 2002 have been the same,” said Harvey. Some earlier agreements with the company were grandfathered in, he said, but Happyface has the same contract as any other depot in B.C. that has join up with Encorp, he said.
Atwood isn’t comforted by Encorp’s take on the contracts. In her view, the latest version of the CSA contract requires that Encorp approve the person a depot can be sold to, which is way out of line.
“Encorp doesn’t own the depot so they can’t dictate who it gets sold to,” she stated, adding that Wendyle Jones shouldn’t have to give up control of his business in order for it to continue.
Unfortunately, Jones does not have the financial resources to force Encorp to renegotiate their contract with him.
“Nothing in that agreement that Wendyle is struggling with has ever been negotiated,” Atwood detailed. “He doesn’t have the ways and means to do that and neither does any other depot.”
“Encorp isn’t out to screw the little guy,” said Harvey, “these rules are in place because someone has tried in the past to take advantage. They don’t pop up out of nowhere.”
At the end of the day, smaller depots end up complying with Encorp’s demands, said Atwood, simply because they don’t have the resources to fight them in order stay open and run a business few people want but many people rely on.
“People don’t understand the beverage container supports a lot of other people,” she added, noting that money gained from returning bottles stays in the community. Jones agreed, and as an example asked what would happen to all the groups who raised money through bottle drives if his depot closed.
Wendyle Jones is inviting everyone to a rally in support of Happyface Recycling planned for June 23 at the recycling facility in Nakusp.