Size Matters

AS SOMEONE WHO'S FREQUENTLY called “shorty,” I'll attest that the little guy (and gal) can accomplish just as much as his larger counterparts. Drive and determination can influence who wins a competition. And successful small-business owners will tell you that they possess several advantages, including quicker response times when compared with larger companies. Certainly, there is a perception that large companies can become bogged down in bureaucracy, making them more cumbersome and costly to operate.

Yet despite the advantages of staying small, a movement in the waste industry indicates that a number of independent, local and regional haulers believe that bigger is sometimes better.

Rumpke Consolidated Cos. recently formed a network of such haulers to strengthen their voices. By coordinating bids, billing and audits, the network believes it will be better equipped to compete against national waste companies for waste generators such as grocery chains and apartment management firms. Approximately 2,200 haulers have registered to participate in the network, according to Rumpke.

The Independent Haulers' Alliance, a member-owned cooperative of seven independent companies in the St. Louis area, also formed recently to increase strength with numbers. In this case, the alliance wants to pool purchasing power and save money on services. With its larger size, the group can pressure manufacturers to give them a better deal. The cooperative says it already has saved its members 15 to 25 percent on such goods as equipment and insurance.

Consolidated negotiating power can have serious effects on the industry. Remember how Waste Management Inc.'s selection of Wittke and Leach as some of its preferred providers changed the face of the truck body business? The consequences don't have to end at purchasing either. Many years ago, Los Angeles was able to secure a 10-year warranty for carts because of its size and large order.

Today's independent hauling networks are just beginning. But the industry should take heed that they could be indications of a future trend in consolidation. In 1992, Superior Services (before it was purchased by Vivendi and then Onyx) was formed when 22 like-minded local business developers believed they would have better access to capital and wanted to integrate their operations. The resulting company now is the fourth-largest private operator in the industry.

The Independent Haulers' Alliance has said it plans to expand in the Midwest and then wants to take its concept nationwide. Plus, the cooperative has indicated it might be interested in linking up with the Rumpke network. If more networks form, it could begin a widespread cycle of hauler consolidations and change the dynamics of the solid waste industry.

Of course, only time will tell where such unions will lead. However, one thing is certain: The waste industry should never underestimate the little guys.

The author is the editor of Waste Age