With the Great Recession officially over, the waste industry is finally returning to a sense of normalcy. Waste Age took the opportunity to survey the heads of several small hauling operations around the country to get their take on the state of things. In this e-mail roundtable, executives at four independent waste collection firms weigh in on the economy, recent blockbuster mergers and their approaches to competing with the industry’s goliaths. Other topics covered include best practices for recycling, safety and community relations.
The Q&A participants include:
- Mike Camara, vice-president and general manager for New Bedford, Mass.-based ABC Disposal Service Inc.;
- Charles Gusmano, president and CEO for Lantana, Fla.-based Southern Waste Systems;
- Ronald Schmidt, general manager for Bryan, Texas-based Texas Commercial Waste; and
- Troy Schuette, president for Jordan, Minn.-based Elite Waste Disposal.
Waste Age (WA): After a prolonged recession, the economy appears to be showing signs of life. Have you seen this reflected in your business? How so?
Camara: You think?! Yes, after several years of not knowing when we were going to see things turn around, it is finally here. We are experiencing growth in all markets we service and an increase in pricing.
The one component of our business that stands out is our temporary roll-off business. Our average number of pulls per month is higher this year than it has been over the last four years. I think this is a good solid gauge that things are finally moving in a more positive direction.
Gusmano: We have seen positive movement in all areas that are related to the construction industry. Construction permits for building and renovation are up. Our C&D [construction and demolition] roll-off business is increasing and we have had to purchase more roll-off containers. The positive swing in the construction business also directly affects an upswing in our portable toilet business.
Schmidt: 2011 has been a better year for our company than 2010 but we are beginning to see the private sector slowing down because of the uncertainty in the economy. Our federal and state governmental business in 2011 has been flat due to their budgetary constraints. We are lucky though to be in the Sunbelt as the recession has not been as dramatic as in other parts of the country.
We do have concerns going forward into 2012 and 2013 that the economy may slip into another slow- or no-growth period. If not, so much the better.
Schuette: Yes, on the residential and commercial side of the business we have seen our accounts receivable aging decline and on our roll-off side we have seen an increase in restoration and remodeling business.
WA: As a small independent hauler, are you finding it increasingly difficult to compete with the “big guys,” or is it about the same? What’s the toughest aspect of this competition?
Camara: As a small hauler I think there are some unique advantages. We have an advantage with other small businesses whereas they are more likely to work with a family owned business than one of the big guys. The biggest difference is service; the big guys seem to be more focused on the bottom line in an effort to bring more value to their shareholders with less focus on service.
We, on the other hand, like the bottom line, but at the same time we want to have a very long-term relationship with our customers. We make sure that our service is second to none!
Gusmano: Our area of expertise is in the collection and processing of construction and demolition material. After 30 years in this arena we certainly can hold our own and compete with any company, regardless of size. It is all about how you take care of your customer and our focus is on serving them, so we spend little time worrying about the competition.
Schmidt: The contraction of business in the larger metropolitan areas has caused the national waste companies to look at some of the smaller markets in their quest for additional revenues. If and when the economy gets back to normal we expect their focus to return to the larger markets.
Schuette: We find it to be about the same. As you know, the business is very capital intensive. I wish we could grow faster.
WA: It would seem one of the advantages a small hauler has over the larger firms is the ability to connect with a community on a local level. What steps do you take to reach out to the customers you serve?
Camara: We have made it a priority to do business with our customers. It is our way of showing them how much we appreciate the fact that they use our services. All of our weekly family lunch meetings are at one of our customers’ establishments. We also feel the need to be active members in all chambers of commerce, local organizations and state- or regional-level environmental and trade groups. We encourage our employees to do the same.
Gusmano: My partners and I, along with our entire leadership team, live and work in the communities we serve. We have a vested interest in serving those communities and our core values revolve around our employees, our customers and the community. We have proven that cultivating ongoing relationships with customers and retaining a great staff to serve them is possible in today’s day and age and truly makes a difference.
Schmidt: We stay very involved with nonprofits and chambers of commerce in all the areas we serve. We also have a very aggressive customer relations program.
Schuette: Participate in their local events, get involved in the local chambers and treat them like family!
WA: What was your reaction to the merger of Waste Management and Oakleaf Global Holdings? How do you envision it affecting your business, if at all? What about the recent partnership between WM and Recyclebank?
Camara: It was a good business decision for Waste Management and a painful outfall for all Oakleaf hauling vendors. Over the years, Oakleaf had developed a very competent and loyal list of hauling vendors who provided a variety of services for Oakleaf customers. Now that they are Waste Management customers, we along with every other Oakleaf hauling vendor will lose business.
Not sure how the Waste Management/Recyclebank deal will play out at this point. Ask me again in six months.
Gusmano: We were not surprised by either move. Both are good fits for Waste Management. At this point it has not affected us in any way and we don’t really expect it will for some time, if at all. We believe it reduces competition and actually enhances our relationship with them.
Schmidt: We have not seen any immediate change in business but we expect down the road to see more business directed to Waste Management hauling companies and recycling facilities. Long term we expect to see new independent companies to crop up and compete with Oakleaf and Recyclebank.
Schuette: Regarding the merger, I don’t believe it will affect us much. We have never worked with Oakleaf. Regarding WM and Recyclebank, we have had customers come on board with our organization from other competitors that have Recyclebank. Therefore, I don’t see it having much of an affect our organization.
WA: What kind of internal and external pressures are you feeling in terms of your recycling offerings? How are you meeting these demands?
Camara: I learned a long time ago that it is impossible to have any control over the recycling markets. So the area that we focus on is working hard at increasing the amount that we recycle and reducing the amount that we dispose. No matter where the pricing is for recyclables, the reduction in disposal costs helps our customers and our bottom line.
Gusmano: As pioneers in the recycling industry we were focused on diverting waste from landfills long before others in our industry. We have watched recycling percentages climb for three decades. By having the freedom to think out of the box in terms of research and development we have always stayed cutting edge on processes to create products and find useful markets for them.
Our strength has always been to seize any opportunity that presents itself and move on it as quickly as possible. We are well on our way to our goal of “zero waste” and currently recycle up to 93 percent of the materials we receive. Those percentages are achieved by overcoming hurdles and finding uses for valuable products that don’t need to go into landfills.
Schmidt: With the increase of electronic news we have seen the volume of print media decreasing, affecting the volume of recycled newsprint. We expect this trend to continue, which negatively impacts our residential recycling programs. We have also seen an increase in the volume of plastics. The price paid for plastic has not increased enough to offset the higher handling and freight costs incurred. Hopefully the use of recycled plastic as a raw material will increase, having a positive influence on pricing.
Like it or not, recycling is here to stay and will only increase in the future. With that said, it’s a commodity driven business and we need to do a better job in communicating this to our customers.
Schuette: We are always trying to find ways to recycle more of what we collect. We are constantly looking at new technologies and processes to implement in our company to improve our recycling rates.
WA: What are your biggest safety hurdles and how are you addressing them in your operation? In terms of safety, is there anything you’re doing differently now than you were doing a few years ago?
Camara: Safety is at the highest level for us. We provide pre-employment training, on-the-job training and monthly training for everyone that we hire, and continue that safety training for all of our employees. We also have safety briefings in our shop before our drivers start their routes. Our route managers are regularly observing our guys on the road to ensure that they are wearing all of the company-approved safety equipment and that they are operating in a safe manner.
We also feel that the implementation of automated collection will help reduce injuries by reducing the physical labor and eliminating our employees from being in the path of traffic. We have implemented these systems in some of our current communities and will continue to do so in the future.
The main difference is the fact that safety in our company has jumped to the top of the ladder. Everyone is involved with all aspects of safety: employees and management working together to make sure we operate safely. Our main goal is to have everyone come to work healthy and send them back home healthy!
Gusmano: People have been, and will continue to be, our top priority, so a focus on safety is a given. Safety in facilities, equipment and operational procedures are reviewed and discussed on a continual basis. A large consideration in any modifications we make to increase our recycling percentages and efficiencies is that they also make the entire operation safer. Staying cutting-edge on processes includes staying cutting-edge on safety.
Beyond the important safety programs that are mandated, we are always looking to take safety a step further by focusing on prevention. Education and communication is important and while the goal is to keep accidents from happening, if they do, we are as equally concerned about keeping them from happening again.
Schmidt: We have improved our safety record every year for the past five years. This has greatly improved our bottom line. Also, employees appreciate a safe working environment, which allows us to retain the best employees. We use a monetary safety bonus system that rewards individual employees and we also reward them as a group so that peer pressure is a big motivating factor. We have regular safety meetings where we go over current safety issues and topics.
Schuette: Our biggest challenge is keeping our workers’ compensation rates low in an industry that is known for injuries. We combat this by talking about safety on a daily basis and creating a “safety culture.” Our drivers start every day by stretching out together. During this time they discuss any potentially dangerous situations that happened the previous day to ensure they do not happen again. We also have weekly safety meetings, follow lock-out tag-out procedures and keep a neat, clean and organized operation.
I believe a neat, clean and organized organization in and of itself promotes a safety culture. Ultimately, our goal is to make sure everyone goes home safely every evening. If I can get through my entire career accomplishing this one simple goal, I believe we will have been a success!
WA: Where do you see the most potential for growth: commercial or residential? Why?
Camara: In the northeast, commercial work is growing at very slow pace. Obviously this tough recession has affected the commercial area almost as much as it has affected the construction area.
The one area at this time that has potential is contracted residential work. As more and more municipalities struggle with budgets and expanding employee retirements, the burden on communities will increase and they will be more likely to give up on collecting waste and turn it over to private collection.
Gusmano: While there is huge potential for growth in both areas, I see a bigger growth opportunity in the commercial area. Recycling begins with the generator and the easier you make it for a person to recycle, the more they will. The industry is finding ways to make it easier for commercial businesses to recycle through the collection process and the processing facilities that provide single-stream recycling. Single-stream eliminates the generators’ need to separate materials at their places of business.
Schmidt: We see growth in both the commercial and residential sector by virtue of where we are located in the country. Short term, though, we probably see more growth in residential due to the influx of people working in the oil field and related industries.
Schuette: I think as a local, family-owned business based in the southwest metro area, we have an opportunity to grow exponentially in both markets. As a small hauler with the systems in place, a quality management team with safe drivers and the ability to provide superior service, we are positioned to grow into a significant player in the Twin Cities market.