[00:00:00] Liz Bothwell: Hi everyone, welcome to Waste360's NothingWasted! Podcast. On every episode, we invite the most interesting people in waste recycling and organics to sit down with us and chat candidly about their thoughts, their work, this unique industry and so much more. Thanks for listening and enjoy this episode.
[00:00:27] Liz: Hi, everyone. This is Liz Bothwell from Waste360 with Joe Ursuy, Senior Vice President and Department Manager for Comerica Bank. Welcome, Joe, and thanks for being on the show today.
[00:00:39] Joe Ursuy: Liz, it's a pleasure to be here. Thanks for having me.
[00:00:44] Liz: Joe, we normally start in the beginning. Could you please tell us about your background and how you ended up in environmental services?
[00:00:52] Joe: Sure. It wasn't really planned. I ended up at the bank out of school and right out of college. I went into our commercial lending program, a credit analyst program, and did rotations there through middle market lending and through real estate. They liked me in middle-market, so they hired me back as a junior lender. When you're a junior lender, you get a portfolio of companies that are clients that we have lending relationships with.
I got about 15 customers when I became a junior lender and there was a bunch of different industries. Manufacturing, heavy industrial companies, distribution, there was a cemetery mixed in there, and then there were two waste companies in there. I knew that part of my job was to bring in revenue for the bank, take care of those clients, and bring in revenue for the bank. I was a fairly young looking, 22-23-year-old kid, and I was struggling, calling on the local manufacturing companies and the auto suppliers.
I was not getting traction, very young, didn't have a lot of credibility, they knew a bunch of other people at the bank already. In Detroit, even to this day, there's a lot of banking options and it was tough. I looked at that portfolio, those 15 clients, and I just said, "How can I differentiate myself? Where can I become effective at bringing in some business for Comerica?" Those couple of waste-- I took care of all the clients, but I really got to know them well.
I asked a lot of questions. I started calling everybody in the industry, started calling the couple banks that were doing it. This is back in 2000-ish. Learning, going to my first WasteExpo, going to other conferences, getting all the trade publications at the time, and really stumbled into something that was a fantastic industry. Frankly, at the time, was not really banked. It was under banked. Long story short, that's how it all started, Liz.
[00:03:29] Liz: That's awesome. Until recently, I didn't realize that you had started the Environmental Services Group within Comerica. I know you did it to differentiate yourself and help the industry at large, but what are you most proud of now that it's such a thriving business?
[00:03:46] Joe: I think I'm most proud of the relationships. I think that we have very long-term relationships with customers, friendly, loyal, and the team that I've built. Then, I've added on just tremendous bankers on the team that are just very skilled and experts in taking care of our clients. I've great relationships with our team, people that worked for me. Frankly, I have a great mentor and boss at the bank, too, president of the bank, Mike Ritchie.
If I look at my career, what I have today is I have a really good thing. I have great customers, I have fantastic people around me, and I have fantastic leadership. The chain in our company that really supports our business and wants to help me grow it. I would say those are my proudest achievement so far outside of my personal life, of course [laughs].
[00:04:53] Liz: [laughs] Of course. Like you said, relationships, and I don't know if you realize, but that's what you're most loudest for. Every client we've ever spoken to in any format has not only giving you credit for helping them grow their business, but they also feel this immense connection to you on almost a family level. Any advice you can give to people out there in developing close relationships like that? Because you're obviously a pro at it, Joe.
[00:05:26] Joe: I appreciate that. Again, the whole team that we have here, they're really good at it. I think it comes down to a lot of things. I think, in terms of client selection and the type of companies that we want to work with-- I've said this to many people, we're looking for just really good guy character people, transactional people, and people that don't really view banks as a partner and more as a commodity.
We try to avoid those situations, so we pick really good clients and then we're just ourselves. I grew up blue-collar, and I think we have a blue-collar team. We don't pretend to be people we're not. We are bankers. There's a connotation of being a banker or whatnot, dealing with large sums of money and exciting transactions or whatnot, but I think we've always been plain-spoken. I think that the relationship to us means everything.
It's a lot of little things done right. A lot of little tactics, but the big picture it's doing what you say you're going to do and delivering. Our clients might not always like what we have to say, but ultimately, at the end of the day, they know that what we say we're going to deliver on. We're not out there baiting and switching people, we're not out there just trying to gain a bunch of clients, then, when something goes wrong or we don't know what to do.
On that topic, we have clients that are doing a tremendous amount of M&A activity, they're growing very quickly, they're going to have hiccups. I think our response to hiccups sets us apart. I think that we have built our most loyal customers and our deepest relationships when there's problems. We can use our skillset and all the knowledge that we have at the bank through our 25 years of doing this, whereby we don't need to overreact.
We can sit down with an owner and come up with a shared solution where we give a little bit, they give a little bit, and then life goes on. But those relationships, the best ones we have, usually have come from when we've gone through something hard together. I was talking about Joe [unintelligible 00:08:06] before we started. A dear friend. Joe and I did his first long Island deal together where he bought 30 some companies in a very short period of time.
He bought Allied Waste out, he bought Waste Management out. He bought a company, and then he sold that. He bought a company in Connecticut from the US Marshals that was seized by the government. It was very poorly performing and he turned that business around, but there was a lot of lumps in the road. Then, he bought his old business back. That would be an example of a person and a family that we've done a tremendous amount of deals with. There's always going to be delays, there's always going to be some hiccups when you're moving that quickly, but that relationship and friendship, ultimately, that comes from that is just what makes the job so rewarding.
[00:08:59] Liz: I bet. You want to see them succeed on that level because you get to know them so well and know their families. I think that's wonderful.
[00:09:07] Joe: Yes, absolutely. Ultimately, when we sit down in front of a prospective client or a client, we want to understand their goals. Sometimes their goals are, "I want to build this thing up really quickly, sell it, and put a lot of money in my pocket." Sometimes their goals are, "Want to grow slowly and not take on a lot of debt. I got a couple of children grooming to take over when I get to a certain age and I think they're ready. That's my goal." Ultimately, if we understand our customer's goal and what do they really see, five, 10, 15 years out in the future, and what do they want, that gives us a great ability to try to help them get there. That's very important to us.
[00:09:52] Liz: Absolutely, I bet. Again, I'm sorry about Joe. I know COVID has taken quite a toll on the world, frankly. I know you've been in this industry for 20 plus years. I'll hit the pandemic and wild year affected waste and recycling, beyond the personal and losing a friend like Joe.
[00:10:14] Joe: Yes, business-wise, it's been interesting. It's been surprisingly positive. When we looked back in March, we were looking at our portfolio and the obvious signs at that time were customers and urban markets with heavy commercial activity. "We're going to get hammered." Businesses would just shut down. Yes, "Who has a lot of leverage and who has a lot of commercial activity in an urban market?"
We looked at that. Every two weeks we would look at our portfolio with our credit partners and more informally just saying, "Okay, where are the problems?" Trying to anticipate problems and there really weren't any. The solid waste business, which is about 75% of our loan portfolio that I oversee called Environmental Services. Solid waste is about 75% of that. A lot of those companies had fantastic years. Residential weights were up a little bit, a few months.
That hit margins a couple of months. Commercial activity was interesting because, if you didn't have a mix of social distance types businesses, restaurants, hotels, sports, arenas, that business just went on and that revenue was there. On the roll-off side, on the construction side, residential construction is very hot right now so that business has been good. Then, on the commodity side, cardboard prices started going up in March. That was a little bit of a tailwind for our customers.
Fuel went down. That was a little bit tailwind. When you take all that and net it all out, the industry actually did really well. Our loan portfolio, we have about a hundred and ten customers. It really, really performed nicely, but big picture that's what we saw through the pandemic. Again, we're very happy with how the portfolio was stood up.
[00:12:39] Liz: Good. That's a bright light in all of this. I know you've worked a lot with mid-sized haulers, Joe, what's on their minds these days? Are there challenges unique or is it similar to some of the larger companies?
[00:12:54] Joe: I think their challenges are similar for their size. If you looked at middle-market size, waste and recycling companies across the country, they all have similar challenges. I think that finding labor, finding talent is very high on their list. The industry, from my opinion, is getting older so I think that we need to do things as an industry to attract young talent to driving positions, to mechanic positions, even the starting their own waste companies.
The industry needs to have that, so I think labor has been a unique challenge. I think the other challenge that we're seeing across the board is just risk management prices. Insurance is challenging, given all the natural disasters in the environment. Frankly, this is a very dangerous industry. I think that there's some technology out there that people can use with cameras and things like that, in terms of risk management and safety.
We're talking to clients a lot about-- it's funny as bankers, we're not really talking about ratios, liquidity, and their balance sheet. I was just on a call last week here in Michigan with a prospective client, and we're talking about safety. We're talking about pre-trip and post-trip. We're talking about fire suppression systems in their transfer station. Not that we are know-it-alls by any means, but when we see things that have gone wrong in other areas of our portfolio and other clients, we know a little bit to ask those questions, and that's really it.
I think labor is a challenge. I think, in certain markets, disposal is a challenge, disposal prices, disposable availability. I know in certain parts of the New England market; disposal costs are going up. If you're running a collection company, you got to pass those through, ultimately, to your collection customers. Otherwise, you're going to have your margins compressed, but I think it's a very strong industry. We're looking forward to the economy bouncing back nicely this year. Construction activity, especially on the residential side being in a good spot, fuel being reasonable. We're excited about 2021 as well.
[00:15:49] Liz: Good. That's great to hear. What are your thoughts on M&A activity in the industry as we head into '21?
[00:15:56] Joe: My team brings in about 15 to 20 new customers a year, and I would just venture to say that about half of those are because of a M&A activity. The other half are just us taking them from other banks because of our brand, service, and reputation. If you look at 2020, I think that COVID really shut down the M&A environment for four to five months, in my opinion. Some people would probably say shorter or longer, but I think it's four or five months with just no activity.
Frankly, if you don't have to sell your company in a pandemic, why would you sell your company? I think that from our perspective, there was a lot of M&A activity in 2020. We didn't personally see a lot of payoffs from it. We did have a hundred and seventy million of loans paid off through capital markets and company sales. We did have some companies sell their businesses last year and pay us off. They sell them to very large companies that we don't finance. That's always a factor we deal with every year, clients selling and paying us off.
In terms of '21, it's going to be interesting. I've read some articles on the Capital Gains Tax. It's going to go up and is it going to be retroed back to January 1st, 12 days ago? Or is it going to be starting next January? I think if it starts next January, it's a material percentage, so I think you're going to have more M&A activity this year. I think that if they retroed it back to January 1 of '21, I think you're going to see less M&A activity. Just my opinion on that. That's how I view it, Liz.
[00:18:07] Liz: That makes sense. I know you mentioned safety and technology behind that, is there any technology or any other innovation that you're paying attention to?
[00:18:21] Joe: On collection side, obviously, the cameras on the vehicles are huge in terms of more of coaching your drivers and helpers. Also, insurance, if someone claims you did something that you didn't, you have proof. The cameras are big. If you can move certain collection areas to automated side loaders where you have one guy in a truck, and hopefully he doesn't have to get out of the truck a lot, that compared to a rear loader with two or three people in it is much safer. We see that.
The amount of robotics going into the MRFs because of the China sword to lower the contamination numbers. The robotics ultimately replace people, and the positives of that it's a safer environment. There's just less people up there on the picking line to get injured and things like that. We're looking at all that stuff and we like it. We support it, we finance it and we think it's smart. The technology in the industry, over the last five to seven years, has been really outstanding. It's something that is accessible by our clients, it's not something that they're priced out of and it's something that they can get.
I think that if you look at the companies that we have in our portfolio today versus 10 or 15 years ago, they're better managed and they're better run. The managers have more information, they have more data, they have KPIs, they're tracking this stuff daily, weekly, they can make quick decisions. The companies that we have today are really well run relative to 10 years ago, and I think a lot of that is due to technology.
[00:20:23] Liz: Yes. I think a lot of people would agree with you. I know your level of investing, you get these companies before, obviously, they go public, but ESG and sustainability are a huge focus today. Are you seeing this? Does it impact how Comerica considers companies before you invest? Or is that just something that's built into this industry at the stage that these companies are in when you help them?
[00:20:56] Joe: Yes. It's a great question. In my world, we've actually been doing renewable projects for about a dozen years now. Back in the 2000s, we had landfill, we had clients that own landfills. We would notice, "Hey, what is that plant over there on the side?" "That takes the gas, it powers this CAT engine and we're selling electricity, and it's renewable." We said, "That's interesting, who does that?" "There's a company that owns that plant, and we have a 20-year gas rights agreement. We give them the gas for 20 years with a royalty, then they take it, and they do whatever with it", we were like, "Okay, that's interesting".
Matt Breight, who is one of my talented managers along with Ian Mearns, 15 years ago we started studying landfill gas energy. It took us two or three years to learn it and get people internally understanding it. I think we're the largest bank lender to the landfill gas energy industry. It's a fantastic business where our bank is a member of the renewable natural gas coalition. That industry is something that we've drawn with and it's changed over time.
You started out where it was, "Hey, I got a 20-year gas rates arrangement with a landfill, and I got a 20-year power purchase agreement with a utility." It's just a great cash flow business, it's a great business for debt. Over time, it's evolved into we have clients that have a portfolio of projects, they do some of it. Maybe it's a little bit of merchant pricing, there's things like rents involved, and rocks. We've learned all about those types of things, but the renewable part of it is something that we wanted before.
We do some biomass facilities in my world, and we're looking at other renewable projects and financings as well. I think it's a massive opportunity. Even before the election it was a massive opportunity. Solar is probably going to be the highest growth energy source over the next 10, 15 years in this country, if you look at that. We've been doing renewable, and we're going to do more of it. We think it's a great business to be in.
[00:23:42] Liz: That's great. I didn't realize you were in it for so long, that's great.
[00:23:47] Joe: Yes. It's something that was tangential to what we were already doing. We studied it and we made a little business out of it. The only problem with landfill gas, frankly for us, is it's just small. It's a small industry, and we already bank a lot of the players, there's a handful that we don't. Frankly, a lot of the waste companies themselves, they own landfills, Waste Management, Republic, Connections, they have become to understand that industry long time ago. They put their own plants and they harvest their own gas for themselves. The industry is a little bit small, but there's still a lot of landfills out there that are eligible for gas projects. There is some growth opportunities on that side as well.
[00:24:40] Liz: That's great to hear. Joe, I know you've been helping Waste360 launch the business leadership forum, and it's coming up again in June. Can you give us an overview of this event? What people typically learn and who's there? Why you thought this event was so important to bring to the market?
[00:25:00] Joe: We've had two of them, and the Business Leadership Forum is a partnership with Informa, it's at WasteExpo, and our first one was a couple of years ago in Vegas. Very well attended, 350 people. We had about four hours of panel discussion, covering topics that are relevant to the waste industry. It was more of, "What do we talk about and what our clients talk about that maybe the whole industry doesn't talk about?" Putting some of those really high growth regional waste company owners and operators up on the stage, having a conversation with them about maybe some unique topics that are not covered in other parts of WasteExpo.
This summer, we did a virtual Business Leadership Forum, which is still available on Waste360. Then, here we come end of June, we're planning for our third. It is going to be in person, we're going to be there, and we're building out that content now. We're always trying to be fresh, topical, and what's on people's minds. We're doing that right now, but a couple of topics I think people are going to want to talk about is we talked about COVID, and I think a lot of people learned, or had the courage to pull some levers in their companies at the start of COVID that they'd never pulled before.
I think that maybe in terms of looking at pricing really hard or in terms of overtime expenses, there's some lessons learned out of COVID that these business owners can apply. I think that might be something we talk about. We might want to talk about we just had a massive shift in our political environment, we have a wonderful political analyst at the bank, we might have Dan in to come in and talk about, if it all, how is this going to impact your industry. I don't mean banks, I mean the waste and recycling industry. Maybe even beyond corporate taxes, regulations, and things like that. I think that'll be a topic that people want to hear about.
The fantastic event it's going to be on Tuesday of WasteExpo Week, it starts around noon. We have a lunch, and then we have three or four hours of panel sessions. The attendance is outstanding, it's business owners, and it's CEOs, CFOs, Chief Operating Officers, it's money sources, it's private equity people that can help you grow your business, that know your industry. They're there, other banks are there listening in. It's a very good audience of people and we really enjoy doing it.
[00:28:11] Liz: That's great. I think what makes this event so special, and I'm sure you see it, is everyone who speaks is so transparent. They are sharing secrets of success and their stumbles along the way. I think it's just so valuable to the audience that they're getting these nuggets of wisdom maybe they didn't realize that they could get or would get.
These speakers and Comerica in general putting this together, everyone is so generous with their time and advice. It's just time well spent from what we've seen and the feedback we get from attendees. I don't even know if you know this, Joe, but the first year-- the second was slightly different, but a 100% of people would recommend this to a colleague [laughs]. This event.
[00:29:02] Joe: No, I didn't know that, that's fantastic. That's what we're shooting for, that's great to hear. Like I said earlier, we think we have the crème de la crème of the private waste company, recycling company, renewable energy people. We think that we pick the best. Maybe we don't, I don't know, but by large, we think that we pick the best. One of our customers always says, "Fall in love with the truth", and it just always has been with me.
Our interactions with our clients are probably a little bit more direct because we just want to cut all of it out and just say, "Okay, you have a problem, here's our opinion." We're pretty transparent and we think that we're very high character, integrity, honest, trusted advisors as bankers to our clients. To see them act the same way doesn't surprise me. To be candid and transparent up there because that's what we value in people.
When we meet with prospective clients that we're calling on and getting to know people, part of it is just being able to understand how to answer questions. Part of it is understanding their vision. You wouldn't believe how many business owners can't articulate what they want, and they can't look at their business in a simple way. Those are things that we look for with clients, and it doesn't surprise me that's the feedback that we got. But that's great to hear, I didn't hear that. That's really good news.
[00:30:48] Liz: Good, it makes sense based on everything that we've talked about that it would show on stage, and through the speakers. That's awesome. Joe, any advice you would give to young folks entering the industry?
[00:31:03] Joe: If they want to enter banking, we're growing [chuckles], we're always looking for talent. If they want to enter banking and they like the waste and recycling and waste energy business, call me.
In terms of the waste and recycling industry in general, like I said, I think the industry needs to think about attracting young talent. It probably already is, but that's a fascinating business, and I think that it's a little underrated in terms of how interesting it is. Certainly, when we bring new people on the team, they start going out to see companies and facilities and we're talking about certain things, they say, "Wow, we never knew that much what went into this industry". I get the The Wall Street Journal in the house every morning, there's always 10 articles in there at least that touch the waste business from the general economy, to construction, to energy, to commodity prices, metal prices, to renewable type things, which has been in the news a lot lately.
That's all available for young people coming into this industry. It's not just old garbage truck going to the landfill. It is that, but it's way more than that. We need to have more people coming in, but in general would help me-- is my advice to my sons. My advice to my two boys is, "Do good in college, and then when you get to a company, they're not going to pay you unless you add value. For you to add value, you probably got to be better at something than your peers. Become the best at something, become the best at something relative to your peers at your company and you'll stand out".
Then, the most important thing, though, is to spend some time and find a mentor. It was easy for me because the business unit I got hired into, I had very strong leaders, the mentors were right there in front of me every day. Some people don't have that advantage. Find a good mentor as a young person at a company and that is just absolutely invaluable. If you find a good mentor, you have to respect their time, you can't expect them to drop, you have to schedule meetings. You have to reach out as a young person, you can't expect the mentor to be reaching out to you. You reach out, you have an agenda, you sit down, and you talk to that person for a half hour every week or every couple of weeks.
You take notes with a piece of paper. You remember what they say, and you come back two weeks later with a different set of questions or observations and you take notes. I think that finding a mentor, working really hard, being the best at something inside your company, no matter who you work for, I think those are something I talk about a lot.
[00:34:14] Liz: I love that. Like you're saying, that's advice that goes beyond this industry. That's for your sons, for my son [laughs]. That can be applicable anywhere. I think that's fantastic. I think it was Susan Robinson for Waste Management, when she was on this podcast, she had mentioned that mentoring is a two-way street. She feels she's learned just as much from the young generation as they've learned from her, but I think it could be really fulfilling if done well and everyone's in sync. That's great.
[00:34:46] Joe: Absolutely. I'm a mentor here and I think I'm a mentor to a lot of people that work with me. Your personal success is a level of satisfaction, but you being a part of someone else's success, someone else's growth, and that growth allows them to do something, get a promotion, get a new job, even if they have to move out of my department, that is super fulfilling personally for me. I totally agree.
[00:35:17] Liz: Absolutely, it's one of the most fulfilling parts of the job. Joe, this has been amazing. I could talk to you for hours, but I want to respect your time. Is there anything else you'd like to share before I let you go about your day?
[00:35:32] Joe: Liz, I appreciate being on your podcast. I know you've done a lot of them and I'm excited to be part of it. We basically had a relationship with Informa for a long time and we greatly respect that. We're very excited to get the WasteExpo back in person this year.
I would just say if anybody has any questions about anything I said, or they want to talk to me this will be on Waste360's website, but you can also find me on LinkedIn. You can also find a landing page at comerica.com too for environmental services and reach out as well. Liz, thank you for your time. Happy belated New Year, I think we're all hoping for a much better '21 than '20. Thank you very much.
[00:36:29] Liz: Thank you. I'm so glad we finally did this, wishing you all the best in 21 as well.
[00:36:34] Joe: Likewise. Thanks, Liz.
[00:36:35] Liz: All right, thanks, Joe. Hope to talk soon, bye-bye.