Finger on the Pulse

Finger on the Pulse

Waste Age discusses the state of the waste industry with Bruce Parker of EIA

As WasteExpo nears, we thought it would be a good time to talk with Bruce Parker, president and CEO of the Environmental Industry Associations (EIA), about the state of the waste industry. EIA organizes WasteExpo's conference sessions.

With the Great Recession and the efforts of communities and generators across the nation to reduce the amount of material they send to landfills, these are, to say the least, interesting times for the waste industry. Read on to get Parker's take on the lingering effects of the recession, federal climate change legislation and the biggest challenge facing the solid waste industry.

Waste Age: When we talked before last year's show, the Great Recession was in full swing. One year later, how does the sluggish economy continue to affect the waste industry?

Bruce Parker: Many economists believe the so-called Great Recession has bottomed out and that the economy will show definite improvement in 2010, but they say the recovery will be gradual with bumps in the road. The major economic indicators in the last two quarters of 2009 and this year's first quarter support this view.

Roll-off volumes have stabilized, a positive sign, although it's unlikely we will see a big spurt in commercial construction this year. Recycling commodity pricing also is slowly improving. As of this writing, the price for old corrugated containers (OCC) is substantially higher. On a less positive note, credit is still tight and has resulted in unprecedented business closures, which has clearly hurt waste volumes.

In last year's Waste Age interview, I noted that residential collection overall is recession resilient. This is still the case, and waste companies still have in place most of the cost-containment measures from last year. This is true for equipment manufacturers, too, who have had a more difficult time with the economic downturn because, unlike many haulers, they lack the more stable revenue stream and free cash flow.

WA: Federal legislation addressing climate change has gotten stuck in the Senate. Do you have concerns about how such a bill may impact solid waste operations if it were to become law? On the flip side, how might such legislation benefit the waste industry?

Parker: In last year's climate change bills, H.R.2454 (sponsored by Reps. Henry Waxman, D-Calif., and Edward Markey, D-Mass.) and S.1733 (sponsored by Senators John Kerry, D-Mass., and Barbara Boxer, D-Calif.), NSWMA's main issues were maximizing potential greenhouse gas emissions offsets for converting landfill gas to energy and making sure that New Source performance standards for landfills were not more restrictive under the bill. NSWMA Director of State Programs Chaz Miller and our outside lobbyists were actively involved in drafting proposed amendments to these bills to advance our interests.

This year, Senators Kerry, Lindsey Graham, R-S.C., and Joe Lieberman, I-Conn., have been drafting a new climate change bill, which is substantially different in concept from last year's bills. We don't yet know the full details, but what is known from press reports is that power plants would be regulated beginning in 2012 and other sectors phased in over time. Until we have a copy of this bill, however, NSWMA has no basis for knowing what provisions we can or cannot support.

WA: What other federal legislation is NSWMA either actively supporting or opposing?

Parker: We have been following closely an interstate waste bill by Senate Majority Leader Harry Reid, D-Nev., which has yet to be introduced and which is aimed at keeping California solid waste out of Nevada. Senator John Rockefeller, D-W.Va., has sponsored a bill, the "Stationary Source Regulations Delay Act" (S.3072), which is intended to give Congress time to pass comprehensive climate change or energy legislation before EPA regulates greenhouse gases under the Supreme Court's Massachusetts v. EPA decision. We have met with Sen. Rockefeller's committee staff in support of this bill and suggested some legislative language to clarify that landfills would be covered under the bill.

Last, NSWMA continues to strongly oppose H.R.1409, the Employee Free Choice Act, commonly known as the "Card Check" bill, which would make union organizing easier and has other provisions that would interfere with an employer's authority to make essential management decisions. NSWMA is part of a broad business coalition that, thus far, has been effective in lobbying against this bill.

WA: In recent years, private equity funds have demonstrated a lot of interest in the solid waste market. Does that continue to be the case?

Parker: Private equity always has played a role in driving growth and consolidation in the waste industry, and 2010 is no exception. In fact, this year is especially opportunistic for acquisition growth because credit is tight, the multiples are less than pre-recession, and buyers and sellers are more in line with one another.

In March 2010, Clairvest Group Inc., a Canadian private equity group, announced a $35 million investment in Hudson Valley Waste Holding, Inc., a regional Northeastern waste company. In February, Action Carting Environmental acquired some of Republic Waste Services' New York City assets with assistance from Summer Street Capital Partners. And towards the end of 2009, Roark Capital Group made a $100 million equity investment in Waste Pro USA to finance the company's aggressive acquisitions growth.

WA: What do you consider to be the most pressing issue or issues facing the solid waste industry?

Parker: The waste industry is in the early stage of a major transformative change, and successfully responding to this change is the biggest challenge facing the industry over the next 10 to 20 years.

The aspirational goal of "zero waste," with its environmental, economic and other benefits, is the change agent. In simple terms, zero waste means that today's waste is tomorrow's resource. Implicitly, less waste will be landfilled or incinerated. So how does this challenge bode for the solid waste industry?

First, this transition will take time and won't happen overnight. There still will be plenty of waste to manage safely and environmentally. Second, the industry processed more than 60 million tons of recyclables in 2008 (EPA's latest numbers) and collected the majority of compostable materials.

As recycling and composting increase, the industry will continue to play a major role, and as more waste is diverted for other beneficial uses, the industry's challenge is to develop new business models, technology and resources in response to this change. I recommend that your readers reread "A Ton of Changes," the feature article in the December 2009 issue of Waste Age, as it covers in some depth the opportunities for the solid waste industry during this period of transition and the types of adaptations that may be necessary.

Other future industry changes I see are integrally related to zero waste. For example, technologies that convert municipal solid waste into energy and waste residuals into new commercial uses, such as plasma gasification and pyrolysis, will eventually become tested and fully permitted options for local government to consider in developing municipal solid waste management plans. Landfill mining to retrieve metals and other materials for recycling also will become common.

Last, some European manufactured refuse vehicles, probably from Germany, will be manufactured and sold in the United States. This is because U.S. vocational vehicles, such as garbage trucks, are becoming more and more expensive due to federal and state regulations imposing strict emissions standards on greenhouse gases and air pollutants, and due to regulations necessitating the use of more electronics on trucks for operational data analysis and compliance monitoring. European trash trucks have been considered too expensive because they are overbuilt with all the "bells and whistles," but perhaps price parity between domestic trash trucks and those manufactured overseas will change this.

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