More than 200 years ago, if you walked along the shores of what is now called Lake Michigan, you would find scattered settlements of Native American tribes drawn to the thick forests of eastern Wisconsin. In the 1800s, French traders slowly voyaged across the Great Lakes to add their own settlements to the area. And from a loose collection of settlements, Milwaukee eventually emerged as one of the most thriving cities in the United States.
It is fitting, then, that Onyx North America, one of the most thriving waste companies in the nation, is based in Milwaukee. Mirroring the city's history, the company was built on the shoulders of Superior Services, itself an amalgamation of several small waste businesses based throughout the region. And like the city's ties to its French trading past, Onyx North America has ties to France as well. The company is owned by Vivendi Environment, based in Paris. This year, Onyx North America was ranked the fourth-largest waste company in the United States, according to the Waste Age 100 [See Sept. 2001, page 40].
It took years of careful planning and a consistent management approach to get there, however. In 1993, Superior Services consisted of 22 local solid waste businesses pieced together to create a cohesive, economical operation that would benefit customers. It was a good idea in theory, but the company lacked direction.
To get the company on track, an executive recruiter convinced G.W. “Bill” Dietrich to take the helm. Dietrich had spent nearly 20 years in the oil industry before making the switch to the waste business, holding management positions with Laidlaw and Browning-Ferris Industries (BFI).
Dietrich is widely credited with the company's turnaround in the mid-1990s, which included a spate of aggressive acquisitions and an initial public offering in 1996. By 1999, Superior had become so attractive that it was acquired by Vivendi Environment, forming the bulk of Onyx North America. Vivendi had wanted to dramatically expand its presence in the United States — and Superior was ideally situated to provide that presence. Further growth without Onyx, Dietrich says, would have been impractical, “given the time it would take, the size of the United States and the size of the major companies already in the market.”
A major factor in Vivendi's decision, Dietrich says, was Superior's management. “They wanted a management team they could be comfortable with and that shared the same goals and ethics,” he says. “This strategy was successful, as evidenced by the fact that our management team now has the responsibility for all of Onyx North America.”
When Vivendi acquired Superior, the company had about $300 million in revenues. Today, the solid waste group, which includes Superior Services and Onyx Waste Services, is generating annualized revenues of about $560 million. About 3,200 employees work for the solid waste group, which is expected to collect more than 5.4 million tons of waste this year alone.
Earlier this year, after simultaneously holding the positions of Superior president and CEO of Onyx North America, Dietrich turned over the reins of the waste services division to Paul Jenks, who had been with Superior since 1998. “Paul's goal is for his group to be a vertically integrated provider of solid waste services,” Dietrich says.
Vertical integration is the name of the game for Onyx North America, which includes the solid waste group as well as three other lines of business: Onyx Environmental Services, Onyx Industrial Services and Montenay Power, which is the waste-to-energy division. Combined, Onyx North America's revenues are about $1.2 billion, and the company has about 8,800 employees.
The acquisition has changed the Superior culture in a key way. “What has changed is that now we are a part of [a] leading provider of waste management services,” Dietrich says. “We are in the process of evolving from a solid waste management company to a full-service integrated provider of environmental services.”
Onyx North America's revenue represents about 27 percent of the overall Onyx organization, which is the No. 1 waste-provider in Europe and the third-largest provider worldwide. Globally, Onyx serves 49 million people, collects 30 million metric tons of waste and recycles 4.8 million tons. Onyx, in turn, is just one of the four core businesses of Vivendi Environment. Vivendi Environment's net sales are about $24.2 billion, and it is one of the two arms of its parent company — Vivendi Universal. Vivendi Environment also recently began trading shares on the New York Stock Exchange [See “Vivendi Environment Active in America” on page 49].
Working with a parent company so far away does pose challenges. “Sometimes it can be difficult to develop one-on-one relationships with people you haven't met,” Dietrich says, “but we're fortunate in that during the acquisition process and afterward, we had lots of contact with our colleagues in France so that we could get to know them and develop a good working relationship.”
What helps is Vivendi's decentralized and largely hands-off approach. The company recognizes that “different companies have different ways of operating,” Dietrich says. “This gives us autonomy in running the Onyx North America business.” Onyx North America staff meet with the Paris staff monthly by teleconference and in person several times a year. The biggest challenge, Dietrich says, is simply accommodating the time difference.
A Full-Service Approach
Looking at the big picture, Onyx North America's main goal is to serve as a one-stop shop for large customers that have a full range of environmental needs. The company aims to integrate its four business lines into a cohesive unit at the sales and marketing level. “There are tremendous opportunities for us in offering the services of all four of our groups to large industrial customers who want to outsource their services to a single-source provider,” Dietrich says.
Recently, Onyx inked a service agreement with one of Detroit's “Big Three” automakers that combined the waste management, environmental and industrial service arms. “This approach met the needs of this customer, who wanted to move away from multiple vendors for environmental services, and enabled us to take the business away from our competitors at several of the manufacturer's plant locations,” Dietrich explains.
Yet the company also makes a point to understand each potential customer's needs and not overwhelm them with choices. “We've not tried to be everything to everyone,” Jenks says. “There are very small numbers of customers that need all or a number of the services we provide.” But for those customers that do need multiple services, working with one company helps to reduce duplicated effort, wasted time and confusion. “We work out that overlap ourselves.”
There was a time, however, when Superior spread itself too thin. Back in 1993, blending 22 waste businesses led to infighting and a dispersal of the core business. In 1997, Dietrich discussed the problems with the Milwaukee Business Journal: “Internal competition was probably greater than external competition,” he said. “It was taking its toll on the company, both in terms of a lack of culture, a lack of core business identity, a whole variety of things, and the end-result was that the company's performance was going in the wrong direction.”
But Dietrich does not believe any of the problems that plagued the company in the early '90s are a concern for Superior — even if the company is part of a large and broad corporate structure.
“Back in the '90s, Superior was too small to be a full-service provider,” Dietrich says. “We just didn't have the economies of scale, and our management team was too thin to successfully pursue the full-service approach. It's an entirely different situation with Onyx North America. Each of our four businesses has its own management team responsible for daily operations.”
Essential to successfully pursuing such a full-service approach, of course, is keeping up with the latest technology. The company is investing in information technology systems that will standardize certain operations, such as e-mail and payroll processing, and is using Onyx's Intranet site to consolidate customer information and exchange leads.
The company also is undertaking several Internet initiatives. Onyx Environmental Services, for example, operates a web-based customer information management system that allows registered customers to request waste shipment activity data, view manifests and invoices, and download environmental documents. “We believe that this focus on facilitating closer ties with our customers through technology,” Dietrich says, “is the key differentiating factor that sets Onyx apart from the competition.”
Riding the Storm Out
One reality of doing business these days is the current economic downturn. The economy had already been slipping for the better part of a year when the September terrorist attacks drove things further downhill.
“Given the current situation following the September 11th tragedy, we are expecting a dramatic downturn in the economy through this year, and are anticipating that it will tick back up next year,” Dietrich predicts. “On the project side of the business, we believe that companies that can postpone environmental projects during this period will do so, as they work to reduce their operating expenses.”
On the plus side, however, Dietrich is not anticipating any layoffs. The company already has undergone some internal downsizing, he says, and is continuing to work to cut back-office costs.
The company also is doing its part to help the nation recover from the terrorist attacks. In New York, Onyx Waste Services has offered to help with the cleanup, and facilities have held longer open hours to accommodate traffic congestion caused by closed bridges and roads. Monetarily, Vivendi Universal has contributed $5 million to the United Way's September 11th Fund, and the company is matching — on a two-to-one basis — any contributions that employees make to the fund.
“This is a very difficult job for the crews on the ground,” Dietrich says. “While it's difficult to imagine what they are going through as part of the cleanup process, we support them and thank them.”
The source of Onyx North America's strength in this difficult time may be its management team. “One example of [our] integrity is that among the solid waste companies here in the United States, the management team of George Farr, our CFO [chief financial officer], and myself, is the only management team that is still intact,” Dietrich says. “George and I have worked together since 1994. If you look at some of the other firms in the industry, you'll find that through acquisitions and mergers, their employees have lost jobs and their key managers are gone. We've gone through major changes ourselves, while continuing to operate with many of the employees that were part of the Superior organization.”
For his part, Farr has seen the waste industry weather the ups and downs of the '90s and come out ahead. “Landfill capacity is now in the hands of a small group of people, and that has changed dramatically from when it was a mom-and-pop business,” Farr says. “That has come with an increase in the professional management of the sites, obviously, and access to capital. The industry as a whole is much healthier than it was.”
The Highest Standards
Although it is now a far cry from a local Midwest garbage company, a few things about Onyx North America have stayed the same since its Superior Services days. “While we are now part of a larger, international organization, our operations still are managed at the local level,” Dietrich says. “And our decentralized operating structure also remains the same.”
Jenks agrees, adding that the waste business evolves slowly. “We still are fundamentally a low-tech service industry,” he says. “I don't see the need for landfills declining in the near future. Recycling will obviously get better, but I don't think it will replace landfilling or disposal.”
What has changed is that the industry is no longer consumed with consolidation and growth. “We're now a mature industry,” Jenks says. “You can't expect growth from a mature industry the way you expect rapid growth from a consolidating industry. It's a challenge for the future.”
And as Onyx North America faces that challenge, Dietrich says that consistency and integrity will be the keys to the company's success, just as they always have. “I always tell our people that compliance is not negotiable — it's expected,” he says. “We have always operated to the highest standards of professional conduct — legally, morally and ethically. This is the focal point of all that we do.”
Kim A. O'Connell is a contributing editor based in Arlington, Va.
Onyx N.A./Superior Services At-A-Glance
No. & Types of Trucks: 1,900+ trucks and hundreds of support vehicles. This includes approximately 780 Ford, International or Mack rear loaders with Heil, Leach or McNeilus bodies; 430 Ford, IHC or Mack roll-offs with Galbreath or McClain hoists; 285 Mack or Volvo front loaders with Heil, McClain or McNeilus bodies; 209 Ford, Lodal or International recyclers with Kann, Labrie or Lodal bodies; and 95 International, Lodal or Volvo side loaders with Heil, Labrie or McClain bodies.
No. & Types of Containers: Containers are purchased by locations with local suppliers and national vendors. Among the vendors are: D&B, Galbreath, Ideal Fabricating, IRS, Par Kan, Perkins, Poinette Iron Works, Tarcon and Waste Quip.
No. & Types of Customers: For Superior/Onyx Waste Services only, there are 915,743 residential, 112,524 commercial and 12,615 industrial.
No. of Employees: 8,869 for Onyx North America.
Services and Service Area:
Vivendi Environment, headquartered in Paris, is comprised of four core businesses:
- Vivendi Water (U.S. Filter/Culligan in the U.S.);
- Waste (Onyx);
- Transportation (Connex); and
- Energy (Dalkia).
Onyx provides waste services to 49 million people worldwide.
Onyx North America represents approximately 27% of Onyx's worldwide waste services revenue. Onyx North America has four lines of services:
- 43% solid waste;
- 24% environmental;
- 21% industrial; and
- 12% waste-to-energy.
Onyx Waste Services, headquartered in Milwaukee, provides collection, transfer, recycling and disposal services, largely through the Superior Services network of 59 collection operations, 28 transfer stations, 19 recycling operations and 25 landfills.
Onyx Energy Services, based in Chicago, handles and manages hazardous materials.
Onyx Industrial Services is headquartered in Baytown, Texas.
Montenay Power, Onyx's waste-to-energy arm, is based in New York.
Most Interesting Items Found in the Trash: $10,000 diamond bracelet.