Commercial's Challenges

In a wide-ranging Q&A, commercial collection operators discuss how the recession has impacted their firms and how their customers are more interested in going "green."

For nearly a year and a half, commercial collection operations have been grappling with the effects of the recession. In a recent e-mail Q&A with representatives from three firms that offer commercial services, Waste Age discussed exactly how the economic downturn has impacted their operations. The roundtable hit on other topics as well, such as the health of recycling markets, the interest of customers in increased landfill diversion and increased expenses.

The Q&A participants include:

Waste Age: Compared with this time last year, has the amount of waste you're collecting from commercial properties increased, declined or remained about the same?

Pratt: Compared to this time last year, the amount of waste Rumpke is collecting is about the same. At this time, we are not necessarily experiencing the impacts of a rebounding economy.

O'Brian: Commercial collection volumes have declined over the last 12 months. Many customers have requested reduced service levels (number of pick-ups).

Kruszka: Overall volume has decreased although we are currently experiencing a seasonal volume increase.

WA: How has the recession affected the pricing of your commercial services?

Pratt: Cost adjustments are always necessary to account for the cost of doing business. Rumpke communicates directly with its customers to explain pricing and develop structures to accommodate both the customer and our business needs.

It is even more crucial during challenging economic times to examine costs and pricing structures to ensure appropriate service levels to meet customer requests.

O'Brian: Pricing pressures have definitely increased to keep existing business or to win new business. It varies by state or individual marketplace with our greatest pressure in the Florida marketplace, where the economy and employment have been hit the worst.

Kruszka: We are currently holding pricing to maintain our customer base, and we hope our competitors do the same.

WA: Have you had to lay off workers in your commercial operations because of the recession and any resulting decline in waste volumes?

Pratt: While there are less business opportunities, Rumpke works hard to find ways to avoid layoffs when possible. Instead, we have shifted our focus to safety improvements and productivity enhancements to stay on budget. None of that would be possible without our family of employees.

In some instances, Rumpke has had to shift work duties among team members or reduce hours, but in all instances, our goal is to keep our team intact while staying on task and on budget.

O'Brian: No. We actually have increased hiring, especially in the sales divisions, to keep and win new business.

Kruszka: We laid off some drivers to adjust to the decrease in volume, but as previously mentioned we are increasing routes to respond to seasonal volume and sale increases.

WA: Are you seeing efforts by your commercial customers to increase their landfill diversion efforts? If so, what services are you providing to help them reach their goals?

Pratt: In recent years, there is definitely a growing interest in green initiatives among customers. Being one of the largest recyclers in the Midwest, Rumpke is fortunate to be able to offer complete recycling services through its Rumpke Recycling division. The division allows Rumpke to offer a variety of recycling options customizable to meet customer demands.

In addition, we make construction recycling services, e-waste and universal waste, and tire recycling services available as part of Rumpke's normal service offering.

O'Brian: About 10 percent to 15 percent of our commercial customers are looking for waste diversion opportunities, primarily large waste generators and construction and demolition (C&D) customers. We offer LEED recycling assistance, including LEED-certified sales consultants as well as various recycling collection opportunities ranging from compactors and roll-offs to 95-gallon carts.

Due to the rising interest in recycling, our company recently acquired two recycling companies — Sumrall Recycling with five MRF operations in the Southeast as well as a small C&D recycling operation in Nashville, Tenn. With these recent acquisitions and other Advanced Disposal recycling facility operations, we operate eight recycling processing facilities of varying volumes and capital investments in Florida, Georgia, Mississippi and Tennessee.

Kruszka: There is a greater demand for landfill diversion by our roll-off customers, due to LEED requirements in construction. We offer sole source collection (single container) and sort at the landfill.

WA: How healthy are the markets for the recyclables that you collect from commercial sites?

Pratt: In late 2008, the markets for recyclables fell by about 70 percent. In recent months, the markets are beginning to rebound. Better markets combined with Rumpke Recycling's recent plant upgrades combine to make recycling efficient and more appealing to customers as we can broaden our service offerings.

O'Brian: Recycling commodity pricing is presently very healthy, especially for fiber, aluminum and plastics.

Kruszka: Currently they are more stable than in the past, but are still subject to market swings.

WA: Describe in brief the safety programs you have in place for your commercial operations.

Pratt: Rumpke's Corporate Safety Director Larry Stone suggests that safety must become the culture at your company. Company leaders should always be working to raise the bar on safety. You must have clear and consistent policies and practices implemented at the highest level of management down through the company ranks.

This is accomplished through a management or leadership style involving coaching, encouragement and training. Every situation must be looked at as a teaching opportunity. Employees must receive consistent encouragement in order to promote positive results. Training is the cornerstone of improving results. Disciplinary action should be used as a last resort.

Kruszka: We have installed Drive Cam along with GPS tracking to augment our normal safety program and anticipate a very successful program.

WA: What expense increases are you dealing with?

Pratt: The plastic resin market is currently up, and we have experienced a pricing increase on our some of our plastic residential containers.

Rumpke also experienced increases in the prices of oils and lubes. Meanwhile, we have observed steel price increases twice since October 2009 and by as much 7 percent total.

O'Brian: The biggest expense increases have been in regards to municipal solid waste landfill construction, 2010 emission-approved truck purchases (caused by technological improvements and availability), telecommunication rates, and health and auto insurance rates.

Kruszka: Currently we are dealing with the fluctuation of fuel, which is on the rise, and parts/services in general.

WA: What is the biggest challenge facing your operation, and what are you doing to address it?

Pratt: As always, there are various challenges that arise in the waste industry. More recent challenges include ensuring compliance at all sites as additional monitoring is implemented, while managing new operational challenges.

Growing business during a recession is another challenge — working with struggling business to make certain Rumpke can provide a waste solution that accommodates their current situations is another focus.

Finally, Rumpke is faced with the challenge of attracting more tonnage to landfills when the construction industry remains slow.

O'Brian: We are a fast-growing Southeastern-based company, and our biggest challenge is finding additional individuals to fill new positions in both new and existing markets who are committed to working hard, providing excellent customer service, and being held accountable for their operational and financial results.

To address this challenge, we are hiring in a down employment market to maximize talent and availability. We have implemented a management trainee program at both our landfill and hauling operations to train candidates in the "Advanced Disposal way," and we are looking outside the industry for fresh, innovative approaches to solid waste and recycling issues and solutions.

Kruszka: We are striving to control costs through more efficient routing and increase our emphasis on safety. We are also concerned by the lack of pricing discipline by some of our competitors.

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