Encorp: Significant price increase in Hebert's bid (audio)

Council chambers were full last night to hear Fred Hamilton, General Manager of Hebert's, ask council for its support in trying to save 40 jobs at its recycling plant in Miramichi. The company was recently informed it was not the successful proponent on an bid for the contract with Encorp Atlantic, the company that facilitates the recycling of all recyclable drink containers in the province. Encorp has responded to the issue in an interview Miramichi Online.

Hebert's business began in 1992 with one truck, providing transportation services to Encorp. In 2001 Heberts was awarded 100% of Encorp's business and employment increased to 15 people with a fleet of 8 tractors and 14 trailers.

In 2007 Heberts continuously expanded services, increased employment to 24 and increased efficiency by researching, patenting and manufacturing the Enviropactor™, which was capable of reducing loads by 300%. The company also added plastic manufacturing which resulted in total employment of 40 at Miramichi plant and substantial net savings to the beverage container program. The company's innovation earned it the province of NB's Innovation Recognition Award. The company has spent $2 million to improve the delivery of services in respect to the Beverage Container Act in NB.

Hebert's business spread to Newfoundland where they are now on their second 5 year contract to provide province-wide processing and transportation of recyclable non-alcoholic beverage containers. They employ 20 people in their operations there.

In January, after being the sole service provider to Encorp for 13 years, the company submitted a Request For Proposal (RFP) to Encorp in an attempt to win a 5 year contract to continue providing sorting, processing and transportation of recyclable drink containers.

In Encorp's spring 2015 newsletter, it stated that several excellent proposals were received, and that it a company from Edmunston was chosen for the work.

"This agreement with Gilbert M. Rioux & Fils Ltée will allow us to implement further efficiencies into our recycling process which will return extra funds to the provincial government’s Environment Trust Fund,” said Pierre Landry, General Manager of Encorp Atlantic Inc. in the news letter. “This will be done mainly through a reduction in the number of sorts between types of non-alcoholic beverage containers and other cumulative efficiencies. This is very good news for redemption centre operators, the beverage containers program and for the provincial government.”

Gilbert M. Rioux & Fils Ltée has done business with Encorp in the past, prior to Heberts becoming the sole service provider in the province.

“The quality of service offered by Heberts has been outstanding over the years. This factor weighed heavily in our deliberations,” the newsletter said. “But in the end, we had to take costs, efficiency and the good of the overall system into consideration. We will continue working with Heberts until October, when the new contractor will take over full time after a period of transition. We hope to work with Heberts again in the future.”

The RFP (found online HERE) states clearly that it is not a tender call, and that the proposals were scored on the following criteria:

• Reputation of Buyer in UBC Market 10%
• Ability of Buyer to accept UBC shipments, commencing October 5, 2015 10%
• Frequency of price setting (monthly, quarterly) 10%
• Purchase price 40%
• Provision of access to independent data point(s) that price is set against 10%
• Freight arrangements 10%
• Payment terms, method of payment 10%

It is understood and accepted by any Proponent/Buyer submitting a proposal that all decisions, as to the degree to which a proposal meets the requirements of this RFP, are at the sole discretion and judgment of Encorp.

At the council meeting, Hamilton said that Encorp did not disclose all the reasons Hebert's proposal was not the winning one, leaving them to wonder where they fell short.

"We do know that partial awards have been announced, but the other part of the awards have not been announced, and despite repeated requests from us, Encorp is unwilling to provide this information citing privacy and confidential reasons for not doing so," said Hamilton.

MO))) has requested an interview with Owner Kevin Sargent and General manager Fred Hamilton, but neither will elaborate more than what was told to council on Thursday night. Similar comments have been made by Hamilton on a facebook page called "Save Miramichi", where many group members have taken to blaming local politicians for the pending job losses.

A source tells Miramichi Online that Miramichi MLA and Tourism Minister Bill Fraser arranged a meeting between Hebert's and Environment Minister Brian Kenny, where the company was told the government has no role in how Encorp awards its business contracts.

Hamilton told council that Encorp's shareholders come from companies like Pepsi, Coca-Cola, and Sobeys (Big 8). It is unlikely that any of these companies would want to be painted with a patronage brush, and it would be in their best interest, for public and business reasons, to choose a proponent that provides the best value.

Hamilton says more than the 40 direct jobs are at risk in the community, and wants council to to write a letter to Minister Kenny asking Encorp to reverse its decision.

Scott Walsh of Walsh's Truck and Trailer says their company will be one of those affected. "We perform all service on Hebert's trucks and trailers and sell hydraulic supplies. They are a very good customer, and we will likely be experiencing layoffs without them," Walsh said.

[caption id="attachment_32491" align="alignleft" width="500"] Encorp promotes new compaction trucks for the fall of 2015[/caption]There is speculation that Enviropactor technology developed by Hebert's gave them an advantage when tendering for contracts in the past, as they could ship product much more efficiently. But that advantage may have disappeared, as on the front page of the Encorp Atlantic website is featured NexGen Compactor Trailors

Encorp Responds

Collette Boucher is the Controller at Encopr Atlantic. MO))) contacted her this morning to ask about the RFP process.

“We didn’t go from a tender process to an RFP process, it has always basically been an RFP process. This process is less restrictive on requesting that they do work a certain, and allows to ask that proponents bring more innovation to the table. Whereas a tender process is very prescriptive of the work that needs to be done. An RFP process is a better document to address our needs. It’s like giving an architect your plans an telling how to build your house, it’s more like telling them you need a house and allowing them to bring you ideas.

Boucher said Encorp went to the RFP process three years ago, but only for transportation and processing, and this time around added plastic materials market to the RFP.

How much was price a factor in the decision to hire Rioux instead of Heberts?

Listen to Encorp Interview

[embed]http://www.miramichionline.com/upload/encorp.mp3[/embed]

"Pricing was 50% of the decision, so it was a large component. On the other criteria, other applicants met the criteria pretty easily. Heberts, who is doing the work now, obviously scored the highest on that,” she said.

Boucher said that even though Heberts had been the sole service provider for the past 13 years, Rioux, a third generation company, had provided services in the past, and continued to provide service in the western part of the province in the alcoholic beverage container recycling industry.

“When we looked at pricing, there was a significant price increase from Hebert, if we put no innovation into the system. If we had left things as they are, our prices would have increased about 15%, assuming a 5 year term,” she explained.

“With using Rioux, and with sending our materials to NovaPet (in Amherst), our prices decrease 15% percent. From there you can gather there was a significant difference in price.”

Novapet is Atlantic Canada’s largest processor of post-Consumer and post-Industrial plastic, and is the only PET in Atlantic Canada, and only one of 5 in Canada.

Boucher said the price difference was because of the market that was going to be buying the material was going to be able to take mixed plastic, and also allows the depots to do less sorting. She said the reduced sorting would also make depots more profitable because they can be more efficient. She said she didn’t anticipate depots reducing their staffs, because at the moments most struggle with staffing and the rising minimum wage.

Encon features new compaction trailer technology on the home page of their website. Boucher says Rioux has committed to purchasing 2 compaction trailers, and that the new technology will allow Rioux to compact up to 600 bags of plastic and greatly reduce the number of loads being transported in the province. This compares to 240-300 compacted bags per load using the Hebert technology. Boucher said the compaction trailers put Rioux on equal footing with Heberts.

Boucher says the new efficiencies to be realized with technological advancements does not effect the bottom line of Encorp.

“The end result for us is nil, as far as financial gain goes. There will be additional money that will go to the Environmental Trust Fund, because there is a profit sharing agreement in place, as you can see in the Q and A section on our website. We do keep a negotiated amount of the profits for operational purposes, and we use that to look at more innovative ways of doing things. Our financials are disclosed to the government on a yearly basis, and they are fully audited.”