Rising fuel costs. The impact of new engine emission regulations. And the constant battle to hire and retain good workers and keep them safe.
These are just some of the issues facing collection operations that were discussed in Waste Age's cyberspace roundtable with public- and private-sector collection managers.
The roundtable participants are:
Dan Kirkpatrick, vice president of operations for Manassas, Va.-based EnviroSolutions (ESI).
Mike Wegner, solid waste manager for Abilene, Texas.
Joe Williams, solid waste director for Franklin, Tenn.
George Walter, president of Blain, Minn.-based Walters Recycling and Refuse Inc.
WA: What is the biggest challenge facing your operations, and what are you doing to address it?
KIRKPATRICK: At ESI, we find that it's becoming much more difficult to hire qualified people to fulfill necessary functional roles in this aggressive and competitive business. We see the entry-level position becoming harder to fill, therefore leaving us with bench strength that lacks experience as we continue to grow and expand our company.
We have undertaken some steps to identify key personnel within our organization to train and promote into our entry-level management positions to help with our growth model. We are also utilizing recruiting firms that can offer our company strong qualified individuals who will bring strength and experience to our company on an as-needed basis. We find that offering competitive wages; a safe, clean and healthy work environment; and excellent benefits also aid in our efforts to attract and retain good, qualified people to help us grow in this exciting business.
WEGNER: The costs of fuel, steel and trucks have really hit us hard, but I think the biggest challenge is getting and keeping good people. Being a municipality presents challenges in paying a competitive wage for this type of work. We have a 3.7 percent unemployment rate, which is one of the lowest in the state, making it difficult to get qualified workers.
WALTER: Our biggest challenge is the constant regulations imposed from various government agencies. From the state and federal agencies to the local units of government, it seems these units want to have more control over more segments of the waste stream.
We find that it is extremely valuable to be active in our local chapter of the NSWMA. With a blend of both large publicly traded companies, local independents and a good lobbing representative working together, we can have some influence on whatis beneficial for our industry and ultimately the consumer.
WILLIAMS: Our biggest challenge continues to be maintaining a premium level of service at a discount price. As part of the general fund of the city, we continue to wrangle with other deserving projects while the expectations continue to rise. Specifically, personnel costs, capital and fuel costs are eating away at the operational efficiencies we've developed over the last nine years.
WA: How have your fleet operations been affected by the rising cost of fuel? Are you using any alternative fuels?
KIRKPATRICK: The struggle to balance the ongoing impact of escalating fuel prices in our various markets is always a challenge to our management team. We are continually looking at our various equipment suppliers to help us find equipment that will meet our need to reduce our fuel consumption by providing us with more efficient equipment that will meet our needs today and into the future. In 2006, our company began using biodiesel at our largest collection company in an effort to manage our operating costs while testing these new fuel options.
WEGNER: We spent more on fuel last year than was budgeted because of the rising costs. All of our sideloaders have an “Operate in Gear at Idle” system, which allows you to pick up a container without having to rev up the engine, thereby saving fuel as well as the engine life, and not having to shift the transmission hundreds of times a day whenever a container is dumped. It is a hydraulic system that uses the hydraulic pump to do the work instead of the engine RPM. The system won't let the operator rev the engine. We are now buying it for frontloaders, also. Any time you can leave an engine at idle it saves fuel. We saved between 5 percent and 10 percent of our fuel over the previous year, which helped a little with the rising costs. We do not use alternative fuels.
WALTER: We are not at this time using any alternative fuels. It has been a challenge to keep up with the continuous changes in fuel prices in the past 4 to 6 months. Like most business in the transportation industry, we have imposed a fuel surcharge onto our bills. Recently it has been more of a challenge because of the peaks and valleys in the price per gallon. We adjust our fuel surcharge based on these changes in the pricing of fuel.
WILLIAMS: Our fuel budget has taken a direct hit to the tune of 100 percent for FY ‘06. We were able to plan better in FY ‘07. We began a pilot project in November 2006 using B20 [a fuel made of 20 percent biodiesel] in three vehicles and have had no issues. We began using B20 in the entire fleet in February 2007.
WA: How have EPA's 2007 emission regulations affected your truck purchasing decisions?
KIRKPATRICK: We have not been impacted by the new emission standards to date, but we do believe the new standards will influence our purchasing decisions as we forecast replacement of our equipment.
WEGNER: We moved up the purchase of some trucks that we needed sooner rather than later.
WALTER: We have postponed any purchases in new equipment because of the new EPA emissions regulation. We feel a little more comfortable waiting a year or two so the engine manufacturers can get the bugs worked out of the new engines first. We probably will be purchasing additional trucks in 2008 and 2009 to make up for the non-purchasing year of 2007.
WILLIAMS: At this point, we are trying to stretch a couple of extra years out of the current fleet. Vehicles that are added or must be purchased are running $8,000 to $15,000 more depending on the unit. I am more concerned with the standards that become effective Jan. 1, 2010. One rep told me last week that the cost increase on that date would be “exponential.” It will be even worse on the private sector.
WA: What steps does your operation take to improve the safety of your collection workers?
KIRKPATRICK: Careful screening of applicants, thorough orientation and new employee training, weekly safety meetings, frequent supervisor observations to enforce programs and employee behavior, stepped-up accident investigations, consistent discipline and re-training, mandatory personal protective equipment, and well-maintained equipment. By consistently following these steps we feel we offer our employees the best possible working conditions in the safest environment possible with the best training available. All this should lead to a safe and successful operation.
WEGNER: We constantly provide safety training, from monthly meetings to weekly tailgate meetings. We have an employee committee that identifies problems and recommends improvements. Each truck's operation is checked to make sure the employee “fits” comfortably and is able to operate comfortably and efficiently. The position of an arm rest is very important when operating the joysticks.
We have a division safety and operations manual developed with employee contributions. We have a quarterly monetary program where safe drivers can get gift certificates to local stores plus annual awards. That has helped reduce accidents considerably. We also have a SWANA sponsored Road-e-o, where accident-free drivers compete and have the opportunity to advance to state and national Road-e-o's.
WALTER: We have monthly driver meetings with all of our route drivers. We do extensive training on defensive driving, right-to-know, proper lifting techniques, proper protective clothing and overall safety issues at these monthly meetings. We also start all new drivers out with a two-day classroom training prior to getting behind the wheel of one of our trucks. New drivers then receive at least two weeks of training behind the wheel in the truck prior to turning them loose on their own.
WILLIAMS: The city of Franklin was the first in the state of Tennessee to go to fully automated collection in 1990. While there have been adjustments, the first thing we do is collect everything we can by automation. When we can't, we use semi-automated units to reduce as much lifting as possible. Training is our largest step, even for experienced employees.
WA: How do you monitor and improve your day-to-day operations?
KIRKPATRICK: At ESI, we are constantly measuring our daily, weekly and monthly performance to find ways to improve on our quality of service, reliability of service and to find ways that will allow us to manage our internal costs and be flexible in our competitive marketplaces. Our maintenance team tracks every possible expense and part failure to ensure we are managing our operating expenses to the best of our ability.
Our safety team is continually enforcing our training programs through daily observations, weekly meetings and monthly statistical reporting to our management teams to ensure our efforts are producing the results we need to see.
WEGNER: We provide a lot of lower-level supervision by crew chiefs who are responsible for no more than six to eight people/routes. That way they can be in contact with each of their employees often during the day. Our employee committee gives us feedback on issues that we may not think about. Everyone here stresses the importance of customer service and the image of our division. Clean trucks and good and reliable service are our key mandates.
WALTER: We have a tactical plan in place with bi-weekly meetings with sales, operations, maintenance and office managers. All of the managers meet with both partners of the company. We discuss ongoing issues and long-term plans. We also take a lot of feedback from our customers and employees to help improve our overall customer service.
WILLIAMS: Daily route production data is required from each route, noting total time, travel time, units collected, tonnage, disposal time, etc. The real measure is a simple mathematical calculation of containers collected divided by total route time to generate a container per hour average. We have benchmarks for each group of collectors. Unless there are unforeseen issues, each route is accountable for meeting or exceeding the benchmarks. We change the benchmarks annually based on the prior two years of data.
WA: Does your operation use fully or semi-automated collection vehicles? Why or why not?
KIRKPATRICK: ESI currently uses semi-automated vehicles for the majority of our residential waste and recycling collection services. We feel that the semi-automated vehicles offer ESI the most efficient collection operations that support our current market conditions. Our existing routes service highly dense homeowners' association/condo/apartment collections that do not provide acceptable traffic access for fully automated vehicles, but do offer an acceptable density and accessibility that supports single person semi-automated collection vehicles.
WEGNER: We use automated side loaders and have for over 20 years. A one-person operation is the most efficient for us.
WALTER: Our entire residential, commercial, recycling and roll-off operations are fully automated. We still pick-up our yard waste with semi-automated rear load trucks. We find the rear loaders are a little more user-friendly with larger bundles of brush.
WILLIAMS: Automated everywhere we can, semi-automated otherwise. It's all about protecting your people.
WA: Does your operation collect recyclables in a single stream? Why or why not?
KIRKPATRICK: We do operate single-stream collection routes in our larger collection markets where single-stream sorting facilities are available. Our smaller collection markets are source separated due to lack of full-service sorting facilities in those markets.
WEGNER: We offer once per week office paper recycling for city offices and businesses, frontloader cardboard recycling (130 customers), nine recycling drop-off sites plus a comprehensive permanent Environmental Recycling Center. We take our recyclables to a local vendor separately for baling.
WALTER: We do pick up all of our recycling with the single-stream system. Our experience is the single stream has dramatically increased our recycling participation. Therefore, it has increased the amount of recycling from our customer base.
WILLIAMS: The city currently offers no recycling. Two private companies provide the service for a subscription fee, and Williamson County has drop-off centers inside the city. There is a strong push to implement a curbside recycling program within the city. However, costs appear to be the main drawback, along with a lack of incentive.
Additionally, processing facilities for a single-stream program are too far away to help defray the costs of going single stream. Landfill rates in Tennessee are still relatively inexpensive, and there is no state mandate for diversion that carries either an incentive or a penalty. Additionally, as long as we continue to provide the premium service demanded for well under market rates, there is no urgency on the part of the public or elected officials to add additional costs.
WA: What steps do you take to attract and retain quality employees?
KIRKPATRICK: We make every effort to ensure we are offering a market-competitive wage package; the best benefit package available; training; clean, safe, compliant facilities; and well-maintained equipment that will offer our employees the satisfaction of knowing they have the equipment and support of our company to be a productive team member of our ESI companies.
WEGNER: It is very difficult to find qualified and quality people with one of the lowest unemployment rates in the state. We try to draw from our Air Force base retirees and have had some success there. Once we get them, we have quarterly monetary safety incentive programs, continuous training, opportunity for advancement, and a nice and friendly place to work. We have also upgraded our fleet in the past three years to take away a lot of that stress.
WALTER: We are continually looking for and recruiting quality employees. We are always networking with our current employees and sometimes our customers to recruit and hire quality individuals.
WILLIAMS: The city takes excellent care of its employees. With a full benefits package — including medical, dental, life, long-term/short-term disability, etc. — at a very reasonable price, workers who start here typically stay. Twelve sick days a year, 10 days of vacation, and 11 paid holidays to start doesn't hurt. The 55/20 retirement package is also a strong point.
This department currently has an average tenure of 14 years of service, with three over 35 years, three more over 30 years, and seven more over 25 years. The drawback is the cost of such a program. I'm hiring three today in entry-level positions that gross approximately $25,000 per year. I have to budget $49,000 per year to cover all costs for each.
WA: What is the biggest change that has taken place in your operation during the past decade, and what changes do you see occurring during the next 10 years?
KIRKPATRICK: Government entities are becoming more involved in the collection business, or the franchising / contracting of their communities services with much more emphasis on how collection companies will collect their refuse and recyclables. This has driven much of the market toward automation or semi-automation where communities have density to support these changes.
As government becomes more involved in our industry, we will continue to see changes in the regulatory area that will shape the way our industry works to comply with new regulations and laws that will drive how we look at prospective employees, purchase equipment and operate our business in the future.
WEGNER: Technology has continued to make more efficient changes in our industry. Comfortable truck cabs; computerization in the office and in the truck; electromagnetic braking systems; “Operate-in-Gear-at-Idle” systems; better turning radiuses; better cooling systems; and more efficient hydraulic systems have been big changes. The future should bring biodiesel and natural gas engines to the forefront in some areas. Hopefully GPS will become more available and less expensive. More reliable electronic systems are also needed.
WALTER: The biggest change for us in the last 10 years has been the conversion to fully automated collection systems and the conversion from dual-stream recycling to single-stream recycling. With these conversions it takes an enormous amount of capital and scheduling of replacement of both carts and containers. In the next 10 years, I see the continuous challenge of regulations in our industry.
WILLIAMS: For both — growth! The city has grown from less than 28,000 residents nine years ago to more than 51,000 today, and is expected to be in excess of 100,000 in the next 10 years.
The capital cost of equipment is another major battle coming to the front. While incremental cost increases are expected, the major increases due to the emission requirements that just hit have been a major shock to those outside of the industry (read: elected officials) and the changes for 2010 are expected to be even more shocking, sticker-wise.
Looking forward 10 years, I expect three questions to present major challenges: 1) the availability and pricing of disposal options, 2) service level changes, and 3) the sustainability of current service levels at below-market pricing.