John Osmond profiles a social enterprise which has struggled against the odds to become a success story in the Rhondda

October 29th, 2011

Cleanstream Carpets, a social enterprise based on the Rheola Industrial Estate in Porth, Rhondda, recycles carpet tiles. It estimates that 1.75 million carpet tiles are disposed of in south Wales and south west England every year. This is the equivalent of 2,500 tonnes of waste going to landfill, all of which has the potential of being re-used or recycled.

The business collects or takes delivery of used carpet tiles and then grades them into three categories – nearly new, some wear, and relatively worn. Since it began trading in 2009, it has diverted 150,000 tonnes of carpet tile waste from landfill and sold more than 20,000 square metres of re-used tiles.

The Coalfields Regeneration Trust in Wales

Three early evening seminars to debate the work of the Trust and the future of community regeneration in Wales are being organised by the IWA in Merthyr, Neath and Wrexham on Monday 14th, Tuesday 15th, and Wednesday 16th November. For more information about the seminars and to register to attend, which is free, click here. The IWA’s Review of the work of the Trust can be found here.

Tomorrow: Rhys David investigates Marshy’s world at the Pant and Dowlais Boys and Girls Club in Merthyr.

Cleanstream has provided more than 150 small businesses, community enterprises, and individual homes with hardwearing flooring at a fraction of the cost of buying new. It provides top quality grade A tiles for around £1 each, compared with the £3 per tile it costs for new, but lower quality tiles at commercial outlets such as B&Q. As Ellen Petts, founder and Director of Cleanstream Carpets, put it:

“The variety of carpet tiles we are receiving is fantastic and the quality amazes us at times. It is hard to believe that so many of them would have gone to landfill when there is obviously so much life left in them. Some of the carpet tiles look nearly new. We have had some great feedback from customers and over the last year our reclaimed carpet tiles have ended up in all sorts of places from community centres to small businesses.”

Starting from a low base, Cleanstream Carpets’ turnover has grown significantly despite the recession – from £35,000 in 2009-10, to £100,000 in 2010-11. It is predicting a £150,000 turnover in the current 2011-12 financial year. At its launch in 2008 the enterprise had two part-time paid staff, which have now grown to four full-time paid staff, assisted by a number of volunteer workers, one of whom it is hoped will become full-time by the end of the 2011-12 financial year.

Ellen Petts was formerly Communications Manager with Cylch, the Wales Recycling Network that provides advice and support to community recyclers across Wales. As she says, “I reached a point that rather than just talking about recycling I wanted to become actively involved in putting it into practice.”

The idea for recycling carpet tiles followed a meeting she had with Mark Halifax, the UK Sustainability Director for InterfaceFlor, one of the world’s largest multinational manufacturer of carpet tiles. They discussed how the company’s problem with disposing used carpet tiles – it offers a take-back facility to purchasers – could be turned into a social enterprise opportunity.

Cleanstream Carpets’ business plan was developed through 2008, and a small amount of capital raised to launch the company. InterfaceFlor invested £10,000, a local flooring retailer in Porth £5,000, individuals £55,000. In addition a £25,000 loan was raised from the Charity Bank.

Initially, the company rented part of a unit occupied by a Porth second hand furniture shop Too Good to Waste. However, from the start this presented difficulties, both in terms of establishing a distinctive identity for Cleanstream Carpets, but also because there was an acute lack of storage space for carpet tiles.

Meanwhile, a more fundamental problem turned out to be a basic flaw in the company’s business plan which initially led them down the wrong track. Guided by advice from InterfaceFlor, whose main outlets are designer led, at first Cleanstream Carpets aimed at supplying the low volume top end of the market. This proved disastrous since this segment of the market was invariably looking to buy new.

After nearly a year of trading at an increasing loss, using up most of Cleanstream’s investment capital, Ellen Petts resolved to change course completely, and go for higher volume, lower cost sales utlising the internet as the main marketing tool. This proved a very steep learning curve. As Ellen Petts explained:

“We had to up skill ourselves virtually overnight in using every technique we could think of to promote  search engine optimisation to drive traffic to our website. We posted news items, created a blog, used Ebay and Facebook and so on. We also ensured we were linked to a wide range of local business directories. Eventually, however, this effort paid off and we began developing a much improved sales record as the increase in our turnover has shown.”

Nonetheless, the first year’s losses presented the fledgling company with a critical dilemma. Going in the new direction meant it urgently needed greater space in order to store a higher volume of carpet tiles. But having exhausted most of its start-up capital it was not in a position to commit the increased outlay that was needed to rent new premises.

It was at this point, in early 2010, that Ellen Petts contacted the Coalfield Regeneration Trust and sought a small Level 2 grant of £9,440 to cover the cost of renting a unit on the Rheola Industrial estate.  “I was given the idea of approaching the Trust by Jeff Lovell, the Wales Co-operative Centre’s regional development officer,” she said. “It was precisely the help we needed at the time.” The support gave Cleanstream the confidence to be bold enough to make the critical change that it desperately needed to take – to move into its own, larger premises. As Ellen Petts out it:

“The Coalfields Regeneration Trust intervention was exactly what we needed and at exactly the right time. At a stroke we had our own warehouse with much needed extra space and our offices in one building. Within a month we saw our sales beginning to lift. We haven’t looked back since then, really. After a year we were well able to cover the rental costs ourselves from our increased turnover.

“We had a lot of interaction with the Trust’s staff in Pontypridd in making our application. They also put us in touch with the Fairwood Trust’s mentoring scheme which has been useful.

“At the time the Coalfields Regeneration Trust offered us the grant I think we must have looked quite a shaky prospect. At that point, in late 2009, we had very little in the way of a track record of implementing a credible business plan. But we were able to persuade them that the business had enormous potential for growth. Moving into the new premises also allowed us to provide work placements and volunteering opportunities. Cleanstream Carpets is providing people in the local area with the chance to get experience within an office and warehouse environment and also of the carpet industry”.

Looking ahead Cleanstream Carpets aims to position itself as the leading alternative to landfill for all kinds of carpets in south Wales, not just carpet tiles. In the medium term it is aiming to be the lead filter for the take back of 2,000 metres of carpet a month, double its current capacity. It also hopes to establish a contract carpet cleaning business utilising much of the machinery it has already invested in to upgrade the carpet tiles it currently processes.

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John Osmond is Director of the IWA.

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