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Articles from 1998 In October
New Waste Classification May Mean New Costs
If you're collecting and treating leachate, then you should pay attention to new regulations that may affect your costs significantly. In a disturbing move for some landfill owners and operators, the U.S. Environmental Protection Agency (EPA) has placed previously non-hazardous petroleum waste materials on its hazardous waste list [see "What's Being Reclassified" on page 46].
The ramifications to the generators of these types of wastes seem clear - the increased cost of disposal in a Subtitle C vs. Subtitle D landfill.
The ruling's full economic impact, however, has yet to be determined. At the heart of the matter is whether or not leachate generated from landfills accepting these newly listed petroleum wastes will be subject to Subtitle C treatment standards.
While the comment period expired on September 8, 1998, the EPA has decided to grant a six-month extension - the longest allowed by law - to allow time for compliance and to better analyze the economic impact that leachate management of these petroleum wastes has on the solid waste industry, says Ross Elliott, EPA Senior Environmental Protection Specialist.
The new Petroleum Refineries rule (63 FR 42109) goes into effect February 8, 1999, Elliott says. The related leachate issue will be reexamined at that time. "We think it's the right thing to do because the EPA didn't even look at the effect the ruling would have on the industry," says Donna Kolar, divisional vice president and assistant general counsel for Browning-Ferris Industries (BFI), Houston.
Prior to the EPA amendment, BFI formally filed its concerns regarding the rule's economic impact on the solid waste industry.
According to Elliott, the BFI response came only weeks before the final ruling, providing the EPA insufficient time to conduct an economic analysis of the ruling. However, BFI's comments prompted the EPA to defer its decision on leachate management of these new hazardous wastes.
"We feel these leachates are being managed adequately under the Clean Water Act (CWA) during the deferment period," Elliott explains. "The new ruling triggered the leachate problem, but the BFI comments came too late to be included in the economic analysis.
"We just don't know how it's going to affect the solid waste industry," he continues. "The BFI numbers are high, but they've yet to be validated."
BFI reports that it will spend $29 million in capital costs and $52 million per year in operating costs to treat leachate now legally considered hazardous. Kolar estimates the total cost to the solid waste industry for disposing of the new hazardous wastes could exceed the $100 million annual threshold which, if validated, would require the EPA to conduct a thorough economic impact analysis.
"We think it's something the EPA needs to evaluate," Kolar says. "Our main concern is having to deal with these waters [leachate] as Subtitle C." Under the ruling, all leachate generated by or mixed with the listed petroleum wastes would have to be treated under Subtitle C guidelines, increasing leachate disposal cost from an average of 10 cents per gallon to nearly 50 cents per gallon.
"It's not just [leachate]. It's also piping, training and recordkeeping. We think there already are lots of regulatory schemes to deal with these wastes," Kolar says, referring to the proposed EPA CWA leachate amendment.
In its comments to the EPA, BFI said it believes that the CWA, in conjunction with the regulatory regime specified under the municipal solid waste landfill (MSWLF) regulations at 40 CFR Part 258, is the most appropriate regulatory venue for leachate management.
Elliott concurs. The EPA prefers to minimize the possible disruptions to leachate management and is attempting to integrate the new RCRA rulings with CWA regulatory schemes if possible, he notes.
In February 1998, the EPA's Office of Water proposed national effluent limitations guidelines and pretreatment standards for wastewater discharge. In support of this proposal, the EPA conducted a study of the volume and chemical composition of wastewaters generated by both Subtitle C and Subtitle D landfills.
The EPA did not propose pretreatment standards for Subtitle D landfill wastewaters sent to publicly owned water treatment facilities (POTW), because the majority of pollutants found in raw, non-hazardous landfill leachate are at levels comparable to wastewaters typically found at the headworks of a POTW.
According to Kolar, BFI also is concerned about the overall capacity of suitable Subtitle C wastewater treatments facilities. In its comments to the EPA, BFI speculated that if these leachates are classified as Subtitle C, they will no longer be accepted by most POTWs because POTWs will not want to be subject to RCRA Subtitle C regulations.
Also in question is whether or not this leachate can continue to be trucked to POTWs if sewer line portability is not available. "If we have to treat these waters as Subtitle C, we're not sure there will be enough treatment facilities to handle it," Kolar says.
However, the largest issue for BFI is the precedent the EPA seems to be establishing by adding petroleum wastes to the hazardous list. Kolar sees it as an ominous trend and fears it could lead the EPA to reevaluate other non-hazardous wastes.
"Is this going to happen every time the EPA has a new listing?" Kolar asks. "There's no way the industry can crystal ball what the EPA is going to do. It's always been BFI's position that we don't want to accept any hazardous wastes. Now, all of a sudden, we're in with the Subtitle C regime. And, it's not just us. Everybody else is in the exact same position."
More Private Sector Response More than 200,000 gallons of leachate per day could be affected by the new ruling, according to a survey conducted by the National Solid Wastes Management Association (NSWMA), Washington, D.C.
So far, however, NSWMA has received only 38 responses from its nationwide survey. Of these respondents, four claim to be accepting petroleum wastes currently. That's approximately 22,000 gallons per day of leachate that now are classified as hazardous.
"On the private sector side alone, you could have upwards of 200 landfills that have accepted that material," speculates Ed Repa, NSWMA's director of environmental programs. "That [figure] doesn't even include some of the bigger companies. More than 2 million gallons per month of leachate could be affected."
Like BFI, NSWMA supports the EPA's decision to defer the leachate ruling temporarily to allow time for analysis.
"We're going back to all the facilities that have reported to us and are asking them to supply us with leachate data, which is a key element," Repa explains. "The proposed clean water act will deal with leachate enough that it won't have any environmental impact. So why put another layer of regulations on top of that?"
Repa predicts the economic impact will be concentrated in regions of the country where oil refineries are prevalent, such as the Gulf Coast and in Western states.
"The waste is going somewhere," Repa says. "I think it's all going to be lumped around a few areas. [Oil refineries] go to the closest landfills. It doesn't matter if it's public or private."
The Word from the Municipal Front
The ruling doesn't appear to be affecting municipal landfills as much as private landfills, according to a recent Solid Waste Association of North America (SWANA), Silver Spring, Md., survey. Of the 1,000 surveys recently mailed, only six respondents reported accepting petroleum wastes.
"I think municipalities generally have not accepted these types of materials," says Brian Guzzone, SWANA's program manager. "But documentation is going to be hard to prove for the EPA."
Guzzone acknowledges the ruling could have a dramatic economic impact on private sector landfills, but he is not as concerned for municipal landfills. SWANA decided to conduct the survey, in part, to increase awareness of the issue among its members, and to determine if an official response to the EPA was warranted, he explains.
"We were concerned early on," Guzzone says. "But, after getting such a low positive response [from affected landfills], we didn't even feel the need to file comments on it at this time. Generally, SWANA always has advised [its members] not to accept these types of material."
While municipal landfills may not feel the heat of the new petroleum waste ruling as readily as the private sector, SWANA shares BFI's concern that this may just be the tip of the iceberg when it comes to retroactively determining what is hazardous and what is not.
"I think the bigger issue is retroactive enforcement," Guzzone says. "We don't want this to start a trend for the EPA to go back on materials that were once acceptable. If you look at what the EPA has done lately, there really haven't been any new regulations - just needling of old ones.
"Probably the biggest question we got [from the surveys] was, 'Does [the rule] cover contaminated soils?'" he says. "It does not, but, if the EPA starts looking at contaminated soils, it could have a huge impact on municipal landfills.
"I think there are two trends really," Guzzone continues. "On the one hand, the EPA is adding materials to the hazardous list. At the same time, it is taking other materials out of Subtitle C and making them Subtitle D. In general, SWANA has advised [its members] to be careful. You never know when that stuff is going to come back and sting you."
February 8, 1999 marks the deadline for compliance with the general rule listing petroleum wastes as hazardous as well as the deferment expiration date for leachate affected by this new ruling.
After that date, Elliott explains, the EPA either will decide to remove the deferment, thus placing the identified leachate under Subtitle C regulations, or make the deferment permanent, rendering the leachate exempt from the definitions of hazardous waste.
In the interim, some in the solid waste industry are building a case for economic hardship.
For more information, contact Ross Elliott at (703) 308-8748. Or visit the EPA Office of Solid Waste's website: www.epa.gov/epaoswer/hazwaste/ id/petroleum/
Piecing Together the Right Pros
Finding the right consultant for a certain project can be like finding the correct plug to fit into an electrical socket: Select the wrong one, and you won't get any juice, but select one that has the correct "prongs," and you'll get a current.
When evaluating consultants for a specific project, don't use a "one-size-fits-all" mentality to eliminate companies because each firm's expertise can vary widely from that of its competitors.
For example, if a consultant is needed to investigate the extent of contamination or to design a remedial plan, an environmental consultant would be the appropriate choice.
While the personnel at these consulting firms may not be engineers, they are trained in the specialized arts of sampling, testing and analysis, and are well-versed in applicable regulations and filing requirements.
Although the past years' shrinking environmental remediation market has reduced the number of firms dedicated exclusively to environmental work, there still are plenty to be found nationwide.
If a project is limited to construction design, a firm of licensed engineers would be a more logical choice, especially if the consultants have considerable experience on similar projects.
Fortunately for prospective clients, there is a great deal of overlap between environmental consultants and engineering firms. Some firms offer both environmental and engineering departments, while others employ professionals trained in both disciplines.
The American Consulting Engineers Council (1015 15th St. NW, Washington, D.C. 20005. Phone: 202-347-7474) provides a list of engineering firms and their specialties - a useful tool for starting a consultant search. State oversight boards, trade publications such as the Engineering News-Record, local directories and other companies or municipalities that have undertaken similar projects are additional referral sources.
Prior to searching for a consultant, it's important to define project goals and objectives thoroughly. The clearer the stated intent and the more detailed the request for proposal (RFP) documents, the more responsive the candidates' proposals will be. Take time to define the project's goals and objectives. List all the project components and identify anticipated problems.
Also estimate the project budget, if possible, and draw up a rough schedule for completion of the work. All of this information should be included in the RFP sent to prospective candidates.
Selection Based on Qualifications Public and private entities differ in their preferred procurement methods. The private sector often will contact a reputable consultant and negotiate the project's scope and cost, while the methods of public entities often are dictated by procurement statute or policy.
Although some public entities still rely on competitive bidding for professional services, qualifications-based selection (QBS) of an environmental consultant is preferred.
The QBS method is most useful on solid waste disposal and landfill design projects because they require creativity, knowledge and judgment - intangibles that may not be distributed evenly across candidates. The QBS method results in lowest life cycle cost and also helps ensure public health and safety. Considering the amount of money the client will spend and the consequences of a job poorly done, it behooves the client to find the consultant that offers the best credentials and ideas rather than the lowest price.
When undertaking a QBS, the client first invites firms to submit information on their qualifications, typically through a request for qualifications (RFQ). On a large, multi-million dollar project, 10 candidates would be a reasonable number to contact; on a smaller project, it is common for a client to contact four to five. The firms then are compared on the basis of technical competence, managerial ability, resource depth and experience.
If immediate response is a factor on the project, the client will take into consideration the firm's location. Next, the client narrows the field down from the initial list to a shorter list of three or four firms to whom an RFP is sent. The client often will meet with key personnel at these firms, either individually or in a respondents' conference, to clarify project details.
The client compares proposals to determine which offers the most appropriate solution. The client looks for a proposal that shows a thorough understanding of project elements and a detailed, innovative, cost-effective plan for accomplishing the presented goals. Past experience with the specific services required on the project should be demonstrated, along with a working knowledge of applicable codes and regulations.
A good proposal will explain the firm's technical approach and list the personnel who will carry it out. Although a senior firm member may be assigned to oversee the effort, the project manager will be the key person to identify, because he or she is the one with whom the client will be working on a daily basis. The proposal should demonstrate an ability to meet the client's schedule and budget requirements, and show that it has the financial and business background to see the project through.
Finally, the prospective client will contact the firm's prior clients for their feedback on the firm.
Based on these criteria, the short-listed firms are ranked in order of preference. Once quality and competence have been determined, the client will meet with the top-ranked firm to negotiate cost.
If the client never has embarked on a similar project, it may wish to ask the firms for a detailed presentation that includes a breakdown of estimated staff hours and billing rates.
This is also a good time to discuss whether or not the consultant will provide liability insurance. Because the cost of insurance has become increasingly prohibitive for environmental professionals, owners often are expected to be self-insured.
The project's scope or other terms may be redefined as both parties see fit in an attempt to reach a mutually agreeable figure. If no agreement is made, the client contacts the second consultant on the list and so on, until a contract is signed.
Although not everyone agrees that QBS is the best approach, environmental consultants and engineering professionals have long advocated its use. They know that when price is the primary deciding factor, the quality of work performed almost always will be compromised.
While cost must be a consideration, what may look like savings at the outset can lead to heavy future expenditures resulting from contamination and/or regulatory noncompliance, especially in the environmental arena.
For such reasons, New Jersey's Governor, Christie Todd Whitman, recently signed legislation requiring QBS for consulting engineers on state projects, and its use is gaining favor quickly in other states.
By removing the focus on price, QBS ensures that sufficient time and attention are given to communicate needs and solutions, and that candidate firms have an opportunity to put their best efforts forward.
The "qualifications-based selection" approach is geared toward identifying consulting firms that have the expertise and depth of resources best suited to your project.
* Begin your search by sending a request for qualifications to prospective candidates. Pare the respondents down to a "short list" of three or four preferred firms based on:
* technical expertise;
* depth and experience of staff;
* experience with similar projects; and
* recommendations from prior clients.
* Send these firms a request for proposals. This should provide as much detail as possible about the project so that the respondents can design a suitable plan.
Additional information can be provided at meetings with key personnel at each firm. Be sure to convey:
* the project's scope and objectives;
* a detailed timetable for completion;
* all of the project's components;
* the total budget; and
* any anticipated problems.
* Review the proposals to be sure that they respond to all project variables and ask for clarification, if necessary. Rank the firms in order of preference, taking into account:
* technical approach;
* experience with similar projects;
* qualifications of key personnel;
* ability to meet project schedule and budget; and
* financial stability.
* Finally, meet with the top-ranked candidate to negotiate cost. Ask to see a breakdown of estimated staff hours and billing rates if necessary.
If an agreement can't be reached, move down the list to the second name, continuing until a contract is signed.
What's Being Reclassified
What is harmless today may be hazardous tomorrow - at least that's the precedent the U.S. Environmental Protection Agency (EPA) appears to be setting with its recent decision to reclassify certain types of petroleum waste materials as "hazardous."
The reclassifications, which were enacted on August 6, 1998, are part of an amendment to EPA regulations on hazardous waste management under the Resource Conservation and Recovery Act (RCRA).
The materials include:
* crude oil storage tank sediment and/or in-line filter/separation solids from petroleum refining operations;
* clarified slurry oil storage tank sediment and/or in-line filter/separation solids from petroleum refining operations;
* spent hydro treating catalysts from petroleum refining operations, including guard beds used to desulfurize feeds to other catalytic reactors (excluding inert support media); and
* spent hydro refining catalysts used in the above process.
Landfill Permits Out of Corps' Hands
The U.S. Army Corps of Engineers has no authority to prevent construction of a municipal solid waste landfill on a wetlands site, under a federal appeals court ruling. [Resource Investments Inc. v. U.S. Army Corps of Engineers, No. 97-35934, 9th Cir., July 27, 1998]
In 1988, Resource Investments Inc. ("RII") bought a 320-acre site in Pierce County, Wash., where it planned to construct and operate a municipal solid waste landfill. The proposal conforms with the county solid waste management plan, which recommends an in-county solid waste landfill as the primary means of solid waste disposal, and encourages private sector efforts to meet the county's landfill needs.
Under Washington State's municipal solid waste landfill permit program, which was approved by the U.S. Environmental Protection Agency (EPA), an applicant must prove its case to the same extent as EPA itself requires in Subtitle D regulations. The state has delegated its permit authority in Pierce County to local officials.
To develop the landfill, RII would have to clear, excavate, fill and grade about 21 acres of wetlands. Offsetting the wetlands loss, RII agreed to create, preserve and restore wetlands on a dedicated 85-acre wetlands conservation area on the site. Moreover, RII successfully proved to county officials that:
1. a practical alternative to the proposed landfill with no wetlands impact was unavailable;
2. landfill construction and operation would meet state water pollution requirements and would not threaten protected species and habitats; and
3. all reasonable measures had been taken to avoid or mitigate wetlands impacts.
RII filed an application in 1990 with the Corps of Engineers ("Corps") for a permit under Section 404 of the Clean Water Act to discharge "dredged or fill material" into waters of the United States, including wetlands.
After a time-consuming review, the Corps denied RII's permit application on the grounds that the company had failed to demonstrate the unavailability of practicable alternatives to waste disposal (e.g., long-hauling solid waste by rail to out-of-county landfills) and that the proposed landfill would cause a significant degradation of wetlands and would pose an unacceptable risk of groundwater contamination. The denial shut down the project, which, by then, had received all required approvals, including a Subtitle D permit.
A federal district judge upheld the Corps' permit denial decision on the grounds that it was not arbitrary, contrary to law or an abuse of discretion.
On appeal, the U.S. Court of Appeals for the Ninth Circuit overturned the district court's order, ruling that the Corps had no authority under Section 404 to insist that a developer obtain a permit from the Corps before constructing a landfill on a site with potential wetlands impacts.
"The construction of a municipal solid waste landfill on a wetlands site is regulated by the EPA and states with solid waste permit programs approved by EPA under RCRA," the opinion said.
The decision represents yet another major setback for the Corps, which has lost several high-profile cases lately. And, as if to add insult to injury, the Ninth Circuit used the Corps' own regulations and words to justify banishing it from the landfill permitting process.
First, noted the appeals court, municipal solid waste does not meet the Corps' regulatory definition of either "dredged material" or "fill material." In fact, the term "solid waste" is a specific exception in the definition of "fill material." When it first issued its rules, the Corps intentionally excluded "the disposal of waste materials such as ... garbage, trash and debris in water. ... The Corps and [EPA] feel that the initial decision relating to this type of discharge should be through the NPDES program." [42 Fed. Reg. 37,122 (1977)]
Second, the opinion continued, the siting, design and construction of a solid waste landfill on a wetlands area is specifically regulated under RCRA by EPA and by states with EPA-approved solid waste permit programs.
"The Corps' interpretation of its jurisdiction under Section 404 ... creates a situation [where] the Corps on one hand and a RCRA-approved state regulatory program on the other, would make the same wetlands-impact determination, using the same criteria, with potentially inconsistent results," the opinion said. "This ... overlap is inconsistent with the Corps' own regulations, which provide that ... state and federal regulatory programs should complement rather than duplicate one another." Indeed, the appeals court pointed out, the Corps, by letter in 1984, conceded authority over "garbage disposal regulation" to EPA under RCRA.
Two years later, the Corps and EPA signed a memorandum of agreement that, by 1991, formally transferred solid waste permitting responsibility to EPA and approved states.
Should You Compete for Commercial Accounts?
Municipal solid waste managers who are considering competing against private haulers for commercial customers should research the viability of such a venture before stepping up to the plate.
Commercial collection's operational challenges are what makes these accounts more profitable than residential accounts. Indeed, private haulers that provide residential service in an exclusive franchise often do so in order to capture the more lucrative commercial business - business that, in turn, subsidizes residential rates.
Although residential collection brings in less money, operationally, it is a cinch when compared to commercial collections. For starters, residential service levels and expenses are uniform. Collection becomes just an invariable mathematical formula as long as haulers know the number of residential accounts, the set-out rates for refuse, recyclables and green wastes, and the projected weights.
Haulers even can project the seasonal fluctuations of green waste volumes and adjust their procedures accordingly.
Conversely, commercial accounts keep haulers on their toes. For example, the customer base varies - from small, mom-and-pop grocery stores to industrial complexes and mega-malls - and the waste generated can range from 32-gallon, manual collection bins to 40-cubic-yard compactors.
Service frequency for commercial accounts can become a nightmare as well. For example, while one account might need a pick-up only once per week, a neighboring account might require waste services seven days per week.
Or, today, a hauler's commercial trucks might return to the yard early, but tomorrow, each account's bin might be overfilled, requiring more trips to the landfill and hours of overtime.
Overall, commercial collection can be a tough business to gauge, but it could be a worthwhile prospect for municipal haulers that understand the challenges.
The Wild West's Commercial Collection SHOW-DOWN
There's a territory dispute brewing across Arizona, pitting municipal waste collection departments against their private sector counterparts. At stake is the lucrative commercial collection markets in Flagstaff, Glendale, Mesa and Tucson - markets that could make or break those cities' municipal hauling operations.
Arizona is no stranger to managed competition. For years, the state's regional governments have been vying against private waste companies for residential collection contracts - and thus, have positioned themselves as models for communities facing similar situations nationwide. However, residential collections amount to mere pocket change in the city and county coffers when compared to commercial collection's bounty.
During the privatization wave that swept the industry over the past two decades, municipalities that provided commercial waste services were regarded as anomalies. Commercial collections historically were handled by the profit-driven private sector, which banked on the revenue generated from these high-volume and service-intensive accounts to subsidize their residential routes.
This is not necessarily the case anymore. Municipal waste operations in Flagstaff, Glendale, Mesa and Tucson use a mixture of practical customer service policies, low rates and good-old-fashioned hustling to strong-arm commercial accounts away from their private sector brethren.
A state statute originally opened the doors to managed competition for commercial accounts. According to this law, once a city reached a population of 60,000 residents, it must compete with the private sector for commercial hauling accounts.
Given Arizona's explosive growth, many municipal operations, which historically had provided all refuse services within their cities, suddenly found themselves faced with the prospect of losing their long-standing commercial customers.
While some cities elected to just turn commercial collections over to private operations, others, like the city of Mesa, were incited to duke it out. Mesa's solid waste department currently serves approximately 1,000 commercial accounts with a fleet of 12 front loaders and offers bin services ranging from 2- to 8-yard bins.
While this figure comprises less than half the total commercial market share, the city remains the dominant single waste service provider, having kept the competing eight private haulers at bay - thus far.
"Service and a competitive price will keep us in the game," says William Black, Mesa's solid waste administrative supervisor. "We're here to provide a service, and we try to keep our prices down so that we're competitive with the private sector."
In Mesa, there is an open market for refuse service. But any private hauler that desires to operate within the city first must meet city-imposed requirements, which regulate the minimum insurance amount, bin markings and operational procedures.
Mesa's municipal operation has managed to stay on top of the competition through its emphasis on quality service and on generating new customers. City solid waste officials punctuate this commitment to customer service and sales by recognizing drivers for their efforts in promoting the city's solid waste operation.
"Our drivers [report what] they see out in the field and try to hustle accounts," Black explains. After generating three successful leads, the driver is awarded a pass for a free car wash. "Leads" qualify as spotting potential customers as well as noting that a current customer might be over-buying the city's service.
In addition to these efforts, Mesa monitors new business license applications and building permit activity weekly to refresh its list of leads.
"Every employee is a salesperson and is in customer service - from the operators and foreman to myself and the people who answer the phone," Black says.
"We try to treat our customers as we would expect to be treated ourselves," he continues. "The customers can go [with any service provider] they want. We know they're not locked into our service at all."
A Level Playing Field in Glendale To Mesa's west, the city of Glendale is busy serving its 1,165 commercial customers that are situated along five front loader routes. In addition to the front loader service, the city runs five roll-off trucks daily. It handles most of the roll-off business on an on-call basis, and its varied clientele includes a major shopping mall and several manufacturers - one of which nets the city $120,000 in annual sales.
Unlike other cities, Glendale considers multiple-family accounts as part of its residential, not commercial, waste collection service. This distinction renders multi-unit apartment complexes off-limits to private haulers, which only can compete for commercial sector accounts, explains Robert Donovan, Glendale's sanitation superintendent.
This classification is supported by the fact that the city charges multi-unit dwellings at the residential water rate, which is "considerably lower than" the commercial water rate, Donovan says. "The philosophy is that [multi-unit dwellings] are family dwelling units, and therefore, they take advantage of the same residential water rate as [single]-family units," he adds.
Glendale's municipal collection operation currently handles 70 percent of the city's commercial accounts, and three private companies comprise the remaining 30 percent. These private haulers do not operate under any franchise agreements. Instead, all refuse operators, including the municipality, must meet the same operating requirements, which includes paying annual inspection fees for each truck in the fleet.
"I pay the same $1,000 per truck fee that the private [companies] do," Donovan says. The city also inspects every public and private collection vehicle annually for safety.
"If a truck is found to be without a permit, we pull the deposit," Donovan says. "Then, it's up to the company either to make this right or lose its opportunity to operate in the city."
Beating the competition in Glendale hinges on prompt customer service, Donovan says. The city capitalizes on the fact that some of its competitors are busy with recent mergers, acquisitions and consolidations - factors that may have affected their levels of customer service. This situation, in turn, may provide a "unique window of opportunity" for the municipality, Donovan adds.
Thus, while it might take the preoccupied competition up to several days to deliver a container, the city can hustle to provide next-day delivery, Donovan says.
"With roll-off business, we guarantee that if a customer phones in a request for an emergency pull before 2:30 p.m., we'll complete that pull before 5:30 p.m.," he says.
"Even if it means that I have to keep employees overtime, we'll get that container pulled and a new one spotted," he says. "None of the private [companies here] will give their customers that guarantee, and that's what's pulling in a lot of new business for us."
Donovan is bullish on the feasibility of municipalities competing successfully against private haulers for commercial collection accounts. "It's a fertile field for making money," he says.
"A winning [business] formula will not guarantee that [your service] will sell, but it will give you a good start," Donovan continues. "If you play this game right, it ultimately lowers the residential rates."
Finally, Donovan emphasizes the role political support plays in municipal commercial hauling success. "Make sure that you've built the political consensus necessary to take you not only in the door but to success," he advises municipalities that are considering competing for commercial customers.
"Municipal haulers must understand what this [endeavor] is going to take, and that [they're] not going to make money overnight," he says.
Flagstaff Finishes First In northern Arizona, the city of Flagstaff competes against only one private company for commercial collection accounts.
Although this city's 55,000 residents render it 5,000 people shy of being affected by the state's mandate, Flagstaff officials decided that it wouldn't hurt to permit a small, local company to compete against the municipal collection operation.
They had no idea that several years later, this innocuous private hauler would become a part of a larger waste company - and suddenly would be a threat.
"We no longer have true competition," says Ben Fisk, Flagstaff's solid waste superintendent. "We have a conglomerate that could lower the rates easily and absorb a loss trying to force [the city] out of business."
Despite this David vs. Goliath struggle, the city still controls more than 57 percent of the commercial collection accounts, to which it provides seven day per week commercial collection, as well as an aggressive roll-off business.
Fisk recognizes that competitive pricing is the determining factor as to whether its 570 commercial accounts remain with the city service or sign on with the private hauler.
"Commercial [collection] is a frugal business," Fisk says. "Businessmen will jump off your ship the minute somebody else lowers his rates, so we try to concentrate on service. Often, commercial customers need special collections, and we try to respond to all service requests within 24 hours.
"A lot of our contacts with customers are complaints or inquiries, and we try to follow up to make sure that the service we provided is adequate," Fisk continues.
Due to the region's weather, the city's roll-off business is concentrated in the summer months, when the construction market is booming - a situation that pushes the city's equipment, personnel and customer service to their limits.
"It can go helter-skelter," Fisk says. "In the winter, we just have our regular compactor service. We run about 16 pulls per day."
The city's growth also has pushed the front loader operation to the maximum. "I'm at the point now where I've got to make a decision about [hiring] an additional operator," Fisk says.
Given Flagstaff's small size, the city relies on a personal touch for garnering new business. "We try to do a variety of soliciting, but I do not have a salesperson," Fisk says.
Thus, the supervisor and operators are recruited to drum up new business. "If it's a slow day, they will go out and contact businesses. Our operators sell our services, even when they are off of work, by talking with friends who are business owners."
Tucson Turns the Tables Last year, the city of Tucson reaped approximately $4.5 million in commercial revenue from its 4,500 commercial accounts. Tucson provides service up to six times per week with 1-cubic yard to 8-cubic yard containers, operates 14 front loader routes five days per week and runs two routes on a Saturday collection schedule.
In addition, the city runs seven to nine roll-offs daily with each roll-off handling between six and eight containers per day.
This ambitious operation is sustained by a staff of 11 people in the container and compactor maintenance department, including supervisors, welders, painters, fabricators and trade helpers. Their combined efforts have helped Tucson capture 35 percent of the commercial market.
The road to commercial sector success has been a rocky one for Tucson. Over the past four years, this city of 450,000 residents has seen the competition fluctuate from seven private haulers to two national firms and one small, independent operation.
By 1994, the municipality's market share was eroding: Over a five-year time span, it had lost approximately 1,000 commercial customers a year, says Guy "Mack" McMahan, Tucson's commercial solid waste administrator.
Tucson did not take such losses lying down. Through an aggressive restructuring of its commercial program, the city experienced a 29 percent growth rate over the past three years, picking up 1,500 new accounts, McMahan reports.
Before the restructuring, the city performed a commercial solid waste service analysis on its routing and personnel efficiencies. Based on the results, Tucson decided to invest in a computerized routing system, which would enable it to place trucks in specific areas or beats.
"We have customers that [require pick-ups] anywhere from one to six times a week," McMahan says. "We wanted to allow the customers to dictate their schedules. I want to have a truck in every area, every day, so that the customers can have the service that they want."
This more efficient routing system allowed the city to reduce its front loader routes from 24 to 12 by doubling the routes' densities, McMahan says.
The restructuring saved Tucson approximately $1 million. "We're passing on that savings to our current and potential customers, giving them an approximate 25 percent rate reduction in their solid waste services," McMahan says.
Still striving to boost efficiency, Tucson now is attempting to move away from smaller bin sizes, hoping to pick up more pounds per stop.
"Since I've been here, we've been phasing away from the smaller containers because they can be handled with either a 90- or a 350-gallon automated cart," McMahan says. "We're trying to stay with four yards and above. However, depending on the commercial customer's needs, we will put out 2- and 3-yard bins."
Unlike some private companies that tie up their customers through a service contract, Tucson opts instead to use a simple service agreement. "This agreement outlines what the customer can and cannot do," McMahan says. For example, it specifies that customers cannot block their containers or overload them with non-compactible material.
The only binding detail in the agreement is its stipulation that the customer give a 30-day cancellation notice.
Thus, Tucson's promise to continue to provide quality service at a low price is the only tenuous string keeping Tucson's commercial customers loyal to their municipal hauler.
"Our initial goal is to provide the highest quality of comprehensive solid waste and recycling services available anywhere at the lowest possible cost," McMahan says. "As long as we do that, we'll continue to be picking up."
For more information on collection in Arizona, see "Getting Your Customers Back: One City's Story" [World Wastes April 1998, page 48] and "Collection Strategy Blooms in the Desert" [World Wastes September 1996, page 26].
Chaos struck the garbage industry following a slew of government regulations that altered the way landfills had to be managed. Innovations in commercial waste handling led to a reconfiguration of the markets and to heightened customer expectations. In addition, the public, newly informed about the crisis in a growing solid waste stream, started to demand recycling.
Next, came a consolidation frenzy when companies bought each other in a mad scramble to satisfy these new market realities and, in the process, built revenues, operating capital and profitability. One company purchased 115 other waste management operators.
These events are not snatched from today's headlines. Rather, they harken back to the 1960s in Illinois, Indiana, Kentucky and Ohio. The winner of this Midwest consolidation lottery was Rumpke Waste Inc., a family owned waste collection, landfilling and recycling business founded nearly 70 years ago in 1932.
Today, Cincinnati-based Rumpke is a $250 million, mid-sized waste management company, with nearly 2,600 employees and 1,600 trucks, including rear loaders, front loaders, roll-offs and service trucks. It owns six landfills and operates three others. Rumpke collections flow through seven transfer stations, four of which are company-owned. Rumpke also owns nine recycling facilities.
As the solid waste industry battles modern-day problems of volatile markets and consolidating private companies, Rumpke executives survey the waste business with an experienced eye and lay plans, secure in the knowledge that the company has faced many of these problems before and always has managed to ferret out the opportunities inherent in an unsettled marketplace.
"People keep reinventing the wheel," says William Terry, Rumpke's chief operating officer. "It happens in the public sector when district directors turn over.
"Thus, you have to be constantly alert, and not just for emerging trends, issues and policies; you also have to be attuned to those [companies that] are discovering waste management ideas that are not necessarily new and raising those ideas to new levels of importance in public discussions," he says. "For example, some people today are just discovering recycling, while companies like Rumpke have been in the forefront of that business for more than 40 years."
In the hectic modern world of waste management, Terry strives to keep his company focused on time-tested fundamentals. "In our business, what's really important is growing one collection customer at a time," he says. "[Using this focus] allows us to deliver an essential public service," he continues. "When you focus on things such as private and public competition or on shareholders interests vs. public interests, you lose sight of the fact that garbage removal is essential to public health and safety. What we really do is collect garbage and get paid for the value that service adds to the environment."
Rumpke's consistent 60-plus year record of growth is grounded in the company's balance in the marketing of all the components of waste management. Each business area makes its own contribution to the whole. Each business area may take reasonable risks, but never without a fallback position offering low-risk opportunities for success.
But before anything else can happen in a waste business, the fundamentals first must be satisfied by a truck driver picking up trash.
Collection: Going the Extra Mile Rumpke collects trash from residents under municipal contracts and direct subscription agreements, as well as from commercial customers. From time to time, the company loses collection customers to smaller and larger competitors.
"Companies often come into our areas and offer lower prices," says Jack Kerr, Rumpke's general manager, who is responsible for collections, transfer stations and landfills in Illinois, Indiana and Kentucky. "Many times, smaller companies don't know what their costs are and don't know what to charge. Larger companies offer lower prices to gain market share."
In either case, Rumpke refuses to compete on price, acting on its corporate philosophy: Charge a fair price, provide excellent service and avoid "junk yard feuds" with competitors over price. "We have to make a profit, and we have to stay in the black," Kerr says.
However, Rumpke employees believe that the company's standards and service record ultimately will win back lost customers. For example, two years ago, a competing company blitzed a Rumpke district with aggressive price offers and ate a big hole into Rumpke's market share of commercial collections. Within a year, as the competitor's contracts came due for renewal, Rumpke's market share began to come back as customers left the lower-priced competitor and returned to the Rumpke fold.
"We stress the idea of providing worry-free service," Kerr says. "We tell our people to take good care of customers and not to worry if a competitor undercuts [our] prices. We may lose that customer, but if we have provided service on a higher level than the competitor can offer, we will get the customer back."
What constitutes good service at Rumpke? While many companies train employees to follow the contract requirements, Rumpke stresses flexibility. For example, if a municipal contract specifies a three-can limit and 60-pound cans, Rumpke will collect extra bags and will accept a can if it happens to weigh 70 pounds.
"If it is legal to pick up, and we can finagle a way to get it into the truck, then we'll do it," Kerr says. "Once in a while, someone will have extra trash, and we try to pick it up. This [effort] means a lot to customers. However, if a particular customer regularly abuses the system, we'll have a rep offer a contract increasing service [to that customer].
"We also train employees to stop and pick up waste that has blown out of the can and to set the cans back up, off the road," Kerr continues. "If it's raining, we put the lid back onto the cans or turn the cans upside down. These little things mean a lot to the customer - so much so that when we lose customers to lower-priced services, it often is only for a short while."
Other value-added Rumpke services include designing, building and installing compaction systems for commercial customers, and designing waste packages for building construction. "Some customers need more than a standard compacting machine," Kerr explains. "Maybe a business or plant needs a chute that goes through the wall or a compacting system with pre-pressure to deal with bulk materials. We design and build compaction systems for customers, and we can incorporate these features into the equipment we design."
Rumpke's construction waste packages include construction and demolition containers, portable toilets and waste and recycling audits designed for newly constructed facilities.
Feeding Rumpke Landfills Rumpke trash generally travels through one of seven company-owned or -managed transfer stations on its way to a landfill or recycling center. Kerr manages three Rumpke-owned transfer stations in Indiana and currently is developing three more.
According to Kerr, Rumpke's transfer stations have one purpose: to feed company-owned or operated landfills. This holds down the cost of disposing of company-collected trash. Lower disposal costs, of course, raise the profits on collection revenues.
In addition, trash transferred by third-party haulers generates additional revenues for the transfer stations and the landfills.
"We probably could move our trash to closer landfills without our transfer stations," Kerr says. "But by moving the material as economically as possible to our landfills, we can offer better prices on the collection side."
On the revenue side of the transfer operations, Kerr estimates that trash brought in by other waste haulers accounts for 20 percent to 25 percent of the volume passing through Rumpke facilities. "That business is almost totally a matter of pricing," he says. "If the price you offer at transfer is less than the price of a close landfill, you will get the business."
Rumpke's transfer price is approximately $8 per ton, plus the landfill charges, which range from $19 per ton to $35 per ton in the Rumpke trading area. While price represents an important component when it comes to marketing landfill capacity, "service is important, too," Kerr notes. "A number of independent, third-party haulers use our facilities when they could go to other equidistant landfills. They come here because they are treated better. We maintain our roads and make it easy for them to get in and out quickly."
Another selling point for Rumpke landfills is an excellent environmental compliance record.
These marketing angles are more or less important in areas with more or less available landfill space. Within Rumpke's four-state marketing region, some areas have excess landfill capacity, while other areas don't have enough. Rumpke facilities in Indiana and Kentucky, for example, operate in an environment with more landfill space than trash.
Rumpke's integrated approach to the business dilutes this problem: The company uses its landfills to take care of its own collections first, accepting material from other companies within the region to make the profit and loss numbers work.
On the other hand, Rumpke generally restricts waste inflows into its landfills to materials coming from the region surrounding the landfill. This restriction serves two purposes: It helps to preserve landfill capacity and it boosts Rumpke's community relations.
"Most people don't like the idea of living next to a landfill, let alone next to one that is accepting waste from four states away," Kerr says.
Community Friends, Not Foes Rumpke fights its public relations wars through direct personal contact with communities, especially when there is a problem. Take, for example, the community opposition Kerr faced in 1992 when he sought approval for a major landfill expansion in Georgetown, Ohio: A well-organized citizens' group not only opposed the expansion but wanted the landfill closed.
"The public isn't educated about what a modern landfill is," Kerr says. "My job in Georgetown was to provide information to the community about what our landfill was and what we were trying to do with it."
Kerr, then a Rumpke district manager, campaigned like a politician, speaking at the Rotary Club, the Lion's Club and other local groups. He arranged for a local television station to tape a program about the landfill. He also founded a citizens' advisory group and invited landfill opponents to the site to examine the operations and study its records.
The campaign lasted 18 months, eventually overcame the harshest community criticisms and earned approval for the expansion.
"Our community efforts have two goals," Kerr says. "First, we try to educate communities about the waste management business and how we approach it. Second, we work to be a good corporate citizen by participating in activities important to the community."
For example, in Colerain Township, near Cincinnati, Rumpke has built a six-field softball complex. The company owns and operates the complex, which Kerr describes as "the best in the region."
Rumpke also sponsors events for local 4-H clubs and county fairs - all under the theory that the garbage business, like politics, is local.
Seeing Trash from its Better Side Rumpke Recycling Inc. was formed in 1989 - a time when most states were implementing legislation mandating waste reduction and recycling. The new subsidiary refocused the company's then 30-year-old recycling business on the new governmental priorities.
Steve Sargent joined the company as director of recycling operations and created a business system that matched recycling's realities.
Sargent recommended securing long-term contracts for fiber with paper companies before Rumpke made any moves toward building facilities. The fiber markets were key to the business structure because fiber constituted about 60 percent of the material that Rumpke collected on its recycling routes.
From the beginning, Sargent locked in 7- to 10-year contracts with paper mill recycling operations. Why would those companies agree to such long-term contracts? "The No. 1 concern of a paper mill or other manufacturing [company] is to secure long-term sources of feedstock," Sargent says. "At a paper mill, for example, it is expensive to run out of fiber. Today, we have long-term agreements with companies that will take other kinds of recycling materials, including aluminum, steel and plastics."
Under these long-term contracts, Rumpke guarantees a certain amount of tonnage. In turn, the mill guarantees a pricing structure with a floor price. The contracts generally do not limit prices on the high end. Such contracts form a structure that prevents disaster when prices fall through the floor, but does not limit upside profits.
"These kinds of contracts enable us to offer a more stable market to our customers, generally the municipalities," Sargent says.
Nevertheless, Sargent also insists on shared risk clauses in municipal collection contracts. Thus, when prices fall to the floor price, the company still can afford to collect recyclables.
Municipalities agree to these clauses because Rumpke can produce contracts with buyers that guarantee continuous markets despite price volatility. In other words, municipalities want to avoid situations in which falling prices drive their recycling company out of business, leaving uncollected recyclables on the street.
"There are two costs in recycling: the cost to collect and the cost to process," Sargent says. "If the whole process costs $2.50 for a unit of recycling, and you know you can recover $1 from a guaranteed floor price contract on the sale of the materials, then you have to get a floor price of $1.50 from the municipality on the collection side. Of course, that's not a problem when fiber is worth $150 per ton. But you have to plan for the worst case."
Under this business plan, Rumpke has built a network of recycling facilities in major cities in Indiana, Kentucky and Ohio. Each site has been selected to meet the service needs of municipalities, the delivery needs of processors and manufacturers, and the logistical requirements of Rumpke's own waste hauling divisions.
"We feed our facilities through our transfer station and hauling network, which allows us to consolidate loads and transfer recyclables within a 50- to 100-mile radius of the recycling plants," Sargent says. "This regional network also allows Rumpke to provide recycling opportunities for many non-urbanized areas.
"Naturally, the cost of handling and transportation must be added to these services, but with our high-volume regional facilities, we can minimize our processing costs per ton and allow a greater percentage of our customer base to participate in recycling," Sargent says.
PET Peeves Nothing is perfect, however - as exemplified by the polyethylene terephthalate (PET) plastic market of 1996-'97. Prices plunged from historic highs to historic lows in a matter of months. Rumpke's business structure protected the company from the worst consequences of the failing market. Nevertheless, Rumpke executives decided that the PET business required some strategic changes.
In 1997, the company installed a complete debaling, sorting, grinding and washing system to produce PET flake at the company's Dayton, Ohio, material recovery facility (MRF).
The Dayton facility was selected because it had room for expansion and offered a central location for shipments from Rumpke's transfer stations and other MRFs.
The goal of the expansion was to sell bottle-grade PET flake and try to stabilize the prices that Rumpke receives for PET. "Unfortunately, our grinding and washing system was not able to produce flake that was clean enough to meet those specifications," Sargent says.
But the business plan for PET also included a fall-back position. "We have been able to refocus our efforts on the fiber and strapping markets for PET, and we're quite pleased with the results," Sargent says. "Full-scale operations now are underway, and we expect to produce 10 million to 12 million pounds a year."
Does Rumpke plan similar undertakings for other materials? "PET is one of the few materials that you can do this with," Sargent says. "Paper mill equipment, for example, carries huge costs.
"In addition, we had an opportunity to partner with another firm to install the PET processing equipment," he continues. "That made the costs reasonable."
So, Rumpke does take risks and make mistakes, but not often, and never without a fundamentally sound fallback position that offers a relatively sure chance of success. Because in the end and in the beginning, a waste business succeeds by making a profit on collections. Everything else is extra. Rumpke has built its business by making sure that the extras never compromise the basics.
* Trucks and Body Types 646 Navistar rear loaders; 204 Mack, International and Ford roll-offs; 107 Mack front-loaders; 144 Navistar recycling vehicles
* Containers Rumpke manufacturers most of its own containers through Rumpke Ironworks Inc.; waste wheelers from Rehrig-Pacific
* Customers 350,000 residential; 320,000 yardwaste; 49,000 commercial
* Collection Employees (Solid Waste/ Yardwaste) 1,058 drivers
* Collection Employees (Recycling) 450 drivers
* Service Area Illinois, Indiana, Kentucky, Ohio and West Virginia
* Collection Services Provided Business; industry; residential waste collection; construction/demolition debris removal/ recycling; recycling
* Landfill Equipment 225 pieces of equipment, mainly from Caterpillar (crawler dozer, crawler loaders, trash compactors, dirt compactors, water scrapers, skip loaders, scrapers, articulated dump truck, rigid frame dump truck, track hoe, track excavators)
* Equipment 3 Excel horizontal balers, 1 Densi-Can densifier, 3 electromagnets, 1 HRB baler, 5 Rumpke-built horizontal balers, 1 Dover combo-flight feed conveyor
* Amount of Recyclables Processed Rumpke Recycling currently processes more than 34 million pounds per month; its capacity is 50+ million pounds per month
* Sources of Recyclables Residential (55%); commercial (35%); industrial (10%)
* Employees More than 450 full-time
* Tipping Fees Rumpke Recycling charges a variable tipping fee for co-mingled recyclables. Average landfill cost is approximately $24/ton
* Equipment Caterpillar IT rubber tire loader; rubber tire back hoe; J&J and East trailers; Keith Walking Floor
* Annual Amount of Refuse Processed Ohio: 189,00 tons Indiana: 72,00 tons
Rumpke Sales and Service (farm equipment); Rumpke Power Components; Rumpke Hydraulics; Rumpke portable restrooms
How to Make the Most of Your Preventative Maintenance Program
Keeping all of your trucks on their routes and out of the shop does not have to be a crap shoot. Savvy fleet managers realize that preventative maintenance (PM) contributes to safety, reduces failures and breakdowns, lowers cost, extends equipment life and improves trade-in/resale value.
However, any old PM program won't do: If intervals are off, repair schedules are ill-timed or work is redundant, PM programs could harm a fleet as well as help it.
Solid PM programs should be reasonable, clear and specific, and be customized to the particular fleet, operation and equipment type being inspected. The work must be performed by qualified technicians, not "shop help." Placing your PM inspection (PMI) under a microscope can tell you how effective it truly is.
For example, Bob Weiler, fleet manager for Batesville Casket Co., Batesville, Ind., reports that when he analyzed his PM program, he discovered that 27 percent of all his fleet's repair needs were found during PMI, and 11 percent of those repairs were made during the inspection.
When assessing the value of your current PM program, Weiler suggests that you don't try to prove how "good" your program is. "Look for 'over/under PM' and for repeat failures [especially following a PM]," he suggests. "Also, train your technicians in your PM philosophy. Never refer to PM as an 'oil change'; use the manufacturer's recommendations as a starting point and adjust your checklist and intervals as required."
Have specific goals when you implement or evaluate your PM program. For example, Jimmy Mathis, fleet manager for Federal Express Corp., Memphis, outlines the PMI tasks to be performed for each vehicle class in his fleet, calculating out-of-service hours and days/miles between roadcalls.
Of course, the ideal PMI mileage or time intervals are fleet-specific calculations. It would be impossible to set different intervals for all the vehicles in any fleet that has a diverse mix of truck ages and operations. However, by using oil analysis and maintenance history, you can determine the parameters that fit the majority of vehicles in each class.
Quality Check When evaluating your PM program's performance, check the following:
* budget goals (maintenance cost per truck);
* roadcall goals;
* PM compliance percent; and
* scheduled vs. non-scheduled repairs.
Note the OEM's recommended service and repair schedule, and compare that to the work order history for PMI-related items, such as a non-scheduled repair to replace a water-pump, between PMIs. Also, calculate the vehicle's downtime.
Seek ways to reduce timed component changes that can be caught during PMI. By evaluating repair order history and using a maintenance tracking database, technicians can identify potential failures instead of just replacing components that are still in working order on the assumption that they might fail.
To avoid backtracking, PMI forms and procedures should have a logical format. Additionally, managers, employees and vendors should be trained thoroughly and then evaluated while they are performing the procedures. In companies that have a pay-for-performance criteria, the employees' overall performance evaluations are tied directly to their pay incentives; the PM evaluation is generally a portion of that total evaluation score.
The following are four performance criteria that can be used to evaluate your PM program's quality:
1. Establish road call goals based on historical data. Then, each year, gain a certain percentage of reduction.
2. Try to achieve a 100 percent on-time goal for PMI compliance. However, the reality is that trucks are not always available for a scheduled PMI due to accident damage or operations. Therefore, make the work schedule flexible enough to accommodate such scenarios.
3. Use budget goals to gauge whether your PM program is on target. Reviewing the per-truck cost will identify vehicles that may have ill-timed intervals.
4. Analyze scheduled vs. non-scheduled repairs to pinpoint the improvements that should be made in the inspection criteria or methods.
Steve Smola, a fleet manager for Pepsi Cola General Bottlers Inc., Chicago, says that he aims to maximize asset life by maintaining vehicles within specs - both safety and mechanical - and to maximize equipment availability. He also tries to schedule repairs in a way that optimizes the mechanics' labor hours and thus, minimizes operating cost.
A good way to set up a PMI system is to diagnose key areas for premature failures and to test components to identify potential failures before occurrence.
In Smola's fleet, the PMI includes a systematic inspection of components, chassis lubrication, oil and filter change and tire inspection and inflation. This is done at 5,000 miles, 90 days or 250 hours.
To Outsource or Not to Outsource? Managers of both small and large fleets are beginning to realize that it is not always economical or feasible to maintain their trucks in-house - especially in today's high-tech and regulated equipment arena. Leasing companies, OEMs and independent garages are filling this need, offering increased maintenance services and dealer networks.
The following changing dynamics affecting equipment maintenance are spurring more fleet managers to outsource their PM:
* OEMs are producing trucks with extended service intervals;
* annual truck service hours are dropping;
* fleets are buying extended warranties and turning trucks over after three years; and most vehicle downtime up to 350,000 miles is for PM reasons only.
Fleet managers' decisions on whether or not to outsource are as varied as the fleets themselves. In-house PM proponents cite three main benefits to in-house servicing:
* Timing. Some fleet managers believe that an in-house facility can complete the work faster than an outside source.
Also, while the vehicle is being fixed for one problem, it can be checked simultaneously for other repair needs. If necessary, an in-house shop could work around the clock to get a vehicle up and running.
* Control. Because the mechanics are employees, and thus are accountable to the company, the repair quality is thought to be higher and cheaper, because the third-party profit is eliminated.
* Cost. Some fleet managers believe that outside shops do not offer enough flexibility and reliability at a reasonable cost.
Enterprising fleet managers can enhance their in-house PM programs by servicing other fleets that have decided to outsource.
If you decide that outsourcing PM is the best choice for your operations, be sure to outline your program's key elements before choosing a vendor:
* vehicle types to be inspected;
* inspection frequency;
* checklist of items for each PM level;
* process for modifying PMI scopes and frequencies, and
* responsibilities for scheduling and notifying vehicle users about PMI intervals.
Also, stipulate that all vehicles and equipment units be inspected within six months of the contract's signing, starting with those vehicles that are designated as "deficient." (Generally, the contractor is reimbursed separately for the costs incurred to bring these units to a safe and serviceable condition.)
Summarize the contractor's repair responsibilities, such as the repairs identified through PM inspections, by users or by breakdown/malfunction.
Finally, highlight the protocols for various repair-related services, such as repair prioritization, hours of service, cost limitations, road calls, "quick fix" service, warranty maintenance, repeat repairs, outside repairs, vehicle commissioning/decommissioning and accident services (including appraisals, repair bids and processing).
Carolina's City and County Cousins
Nothing could be finer than collecting trash in Carolina ... or at least, that's the opinion of the municipal solid waste departments in Charlotte, N.C., and surrounding Mecklenburg County, hosts of this year's Wastecon.
Municipal garbage collection and processing certainly is not taken for granted in this region, which routinely is hailed as being a trailblazer in managed competition. But beyond this national recognition, solid waste collection and disposal in Mecklenburg County and in Charlotte, its largest city, is like a fine-tuned machine: efficient and reliable.
Although the city and county have faced different challenges in competing against the private sector for solid waste accounts, both have progressed to a working model that, so far, has delivered what they promised.
Mecklenburg's Strategy Forty-six employees make Mecklenburg County's solid waste operations hum. Each day, 22 haulers drop off waste at one landfill and two transfer stations that serve the county. These haulers submit monthly activity reports to the county, which licenses them. While both the municipalities and private haulers provide curbside solid waste, yardwaste and recycling pick-up in cities and towns, residents in unincorporated areas often contract with private haulers.
To help boost diversion, Mecklenburg County provides four unstaffed recycling drop-off centers, which accept materials such as office paper, cardboard, magazines, newspapers, phone books, aluminum/ steel/tin cans and plastic/glass bottles. In addition, three staffed "convenience centers" accept regular recyclables as well as goods that are banned from landfills, such as propane tanks and appliances.
Other elements of the county's solid waste system include:
* a staffed metal recovery facility that accepts appliances;
* a "swap shop" located at the North Mecklenburg Recycling Center, where residents can leave, exchange or pick-up for free, reusable items in good condition;
* household hazardous waste disposal sites at two recycling centers, which accept materials such as paint, thinners, flammable oils, gasoline, kerosene, pesticides, cleaning agents and household batteries; and
* two composting facilities - Compost Central, located on a 30-acre site and opened in 1991, and the North Mecklenburg yardwaste facility, which was opened in 1989. Both facilities accept yardwaste generated from commercial/industrial and residential properties. The tipping fee is $14 per ton or $6 per pick-up truck load. "We set our fees to break even," says Cary Saul, Mecklenburg County's assistant director with the Department of Engineering and Building Standards.
North Carolina prohibits landfilling yardwaste; fortunately, Mecklenburg County has no trouble selling all of the compost it generates, Saul says. For compost end-use, the county has contracted with Charlotte-based New Solutions, a firm that packages and sells compost and potting soil regionally. To increase composting education, the county, in conjunction with the city of Charlotte, also holds neighborhood fairs to teach homeowners how to compost their own yardwaste.
Lower tip fees may be on Mecklenburg's horizon, as the county prepares to open the long-planned Foxhole Landfill next summer. Reaching this point has not been easy, Saul says. Along the way, the county has had to shut down a waste-to-energy (WTE) plant on which it still owed millions of dollars and practically had to jump through hoops to get the landfill permitted.
The county closed the WTE plant because its ash emissions contained an unacceptably high lead content and the pollution control equipment necessary to bring the plant into compliance would have cost at least another $5 million. "It didn't make sense to pay that much money to handle 10 percent of our waste," Saul explains.
Making this decision on the WTE plant was fairly easy; resolving the problems encountered in siting the new landfill has taken the county much longer - about 15 years. "We never stopped the process," Saul explains. "We kept going, but there were obstacles in the way."
Fourteen years ago, the county was operating four landfills, three of which were scheduled to close in 1986; the remaining one was slated for closure in 1988. In the late '80s, after conducting numerous studies, securing zoning approvals and winning a series of court rulings, the county was prepared to go ahead with its new landfill construction plans.
Enter the Environmental Protection Agency (EPA) and its new Subtitle D regulations, which forced the county to scrap its design plan and start over - a process that entailed a new round of securing permits and approvals, performing technical work, and garnering political support.
The county forged ahead during the early '90s, tiptoeing through the same bureaucratic and regulatory minefield that it had in the '80s. In 1995, Mecklenburg County reached an agreement with Union County, N.C., and Lancaster County, S.C., to use the new regional landfill jointly once it was completed.
In July 1998, the state Department of Environment and Natural Resources issued the permit to construct the landfill in the county's southern section, along the border with Union and Lancaster counties. The new landfill will have a 6 million ton (approximately 15-year) capacity and will handle household, commercial and industrial solid waste.
In the meantime, waste from Mecklenburg County and its communities is being trucked to two transfer stations - one owned by Container Corp. of North Carolina, a subsidiary of Scottsdale-Ariz.-based Allied Waste, and the other, located in adjacent Gaston County, owned by Houston-based Waste Management Inc. - and to a landfill in adjacent Cabarras County, which is owned and operated by Houston-based Browning-Ferris Industries (BFI).
The county pays BFI a user fee and, in turn, sets the tipping fee for all governmental entities using the landfill.
The county now charges $32.83 per ton for commercial waste and $28 per ton for residential waste. The new landfill's tip fee has not been set, but Saul expects it to be approximately $24 per ton. The fee will be adjusted for inflation from a base rate of $21 per ton.
Saul says he hopes the county's new landfill will trigger a tip fee war. "We think the rates are too high, and we don't want all of the waste at our landfill," he says. "If [the tip fee competition] keeps rates down for customers, it's good for the community."
The Mecklenburg Waste Management Advisory Board, which consists of 20 members from local governments and from technical, legal, scientific, financial and academic fields, advises the county commissioners. The board, which meets monthly, assists in developing a long-range waste management plan that is acceptable to the county and its cities.
This 10-year Solid Waste Management Plan launches an aggressive, voluntary waste reduction program for the commercial sector and calls for government agencies and schools to lead the way.
As part of the plan, the county has implemented the internal recycling program called "PaperChase" and has formed a waste reduction task force.
"Trash Flash" newsletter and a website keeps its residents up-to-date. Designed and maintained by county employees, the website was created two years ago and offers:
* a rundown on the county's collection policies;
* solid waste statistics;
* the hours, prices and locations of individual facilities; and
* information on topics such as the new landfill and the county's solid waste management plan.
The website can be found at www. co.mecklenburg.nc.us/coeng/recycle/mcswm.htm
Mecklenburg and its municipalities have benefited from keeping the lines of communications open and from meeting quarterly, Saul says. "We keep [the municipalities] informed, and they keep us informed," he says. "We try to do our planning jointly."
Competing in Charlotte Even before managed competition emerged in Charlotte, the city's Solid Waste Services Department (SWSD) had a good reputation for providing excellent refuse collection. Its curbside recycling program, implemented in 1990, is considered one of the best in the country, according to consultant Jeremy O'Brien of Omaha, Neb.-based HDR Engineering's Charlotte office.
Five years ago, Charlotte streamlined its entire city government by reorganizing all 26 departments into nine "key businesses" and four "support businesses." Granted autonomy but put on notice that they would be held accountable, the key businesses were required to develop operational and budgetary plans, under the assurance that they would be backed up by the support businesses.
Since the reorganization, Charlotte has made broad use of managed competition, taking a systematic, business-like approach to its service.
In addition to implementing managed competition at SWSD, Charlotte has put the concept to work in other areas, such as computer operations, street/building maintenance, signage/traffic signals and at the Charlotte-Mecklenburg Utility Department, which handles water and wastewater operations. This "broad brush" approach enables city departments to learn from one another about how best to approach the request for proposal (RFP) process and how to make business decisions.
The conversion to managed competition has been incremental at SWSD. In 1995, the department put residential collection services in its south quadrant (34,074 single-family units) up for bid, but did not submit its own bid. The winning bidder was BFI, which was granted a five-year contract. Wayman Pearson, SWSD's key business executive, says SWSD sat out that round in part because it needed more time to make itself competitive enough to bid against the private sector.
But when Round Two came in 1997, SWSD was ready. The department beat out four private competitors, winning a five-year contract to provide collection to 31,871 residential units in the city's western quadrant. SWSD's bid, $4.87 per household per month, equated to $1.3 million less per year than the lowest private bid.
This contract, which began in January, calls for once-per-week curbside refuse, yard waste and recycling collection services on the same day. The city picks up bulky waste on an as-needed basis.
The SWSD submitted its bid through a separate operating and accounting division: SWS-Contract Collections - the same approach it will be using to bid for residential collection service in the east and north quadrants. An RFP for the east quadrant is expected to go out no later than November 1998, and the bids are scheduled to be opened in February 1999. An RFP for the north quadrant is projected to go out in April 1999, Pearson says.
For the 105,718 single-family housing units from which it collects garbage and recyclables, Charlotte provides:
* weekly curbside automated collection using 95-gallon containers;
* weekly curbside recyclables collection using 16-gallon bins (items collected are newspapers, telephone books, magazines and co-mingled containers);
* weekly curbside yard waste collection; and
* bulky items and used tires collection, upon request.
SWSD employees work up to a 50-hour week and are paid for 40 hours at regular salary and 10 hours at premium pay. Garbage collection at apartment complexes (67,676 multi-family units) is privatized.
Cross-training employees so that they can perform all tasks related to the four types of collection services and empowering them to make on-the-spot decisions, improves Charlotte's efficiency. For example, if one recycling collection crew is running behind schedule, and a refuse crew is finished with its route early, the refuse crew helps the recycling crew get back on track.
The city's decision to move toward automated collection resulted in development of more detailed, thorough truck specifications. "We have done an analysis on what type of equipment it takes to do the work and have written equipment specifications with the goal of having high productivity," Pearson says.
Over several years, the city retrofitted trucks with automated equipment and also purchased high-compaction, automated collection vehicles. The department currently has about 40 fully automated trucks. Additionally, SWSD uses geographic information systems and an automated route system to optimize collection.
Employee cross-training and increased automation have helped SWSD trim its staff from 350 employees in 1990 to about 120 today. Many of the employees who left took jobs in other city departments or became employed in the private sector; the rest were lost through attrition, Pearson says.
This automation and downsizing has saved SWSD about $4 million per year and has reduced the department's loss risk factor dramatically, Pearson says.
An audit of SWSD's first quarter 1998 performance in the western quadrant, performed by the city's Internal Audit Division, revealed that the department finished "significantly under [projected] costs," Pearson says.
"We've already had the opportunity to pay gainsharing to our employees," he continues. The city is holding back about half of its gainsharing payments until the end of the year, but in the first quarter alone, employees received $892 apiece, he says.
Consequently, the employees' morale has improved. Initially resistant, fearful and skeptical, employees now have a strong belief in their jobs. "Probably the most amazing thing in terms of a paradigm shift is the employees' understanding of the cause-and-effect of their actions on the bottom line," Pearson says.
Total Waste Landfilled: 634,433 tons (247,520 residential tons; 386,913 commercial tons)
Total Residential Waste: 331,030 tons
Total Residential Recycling: 83,510 tons
Average Recyclables Revenue: $54.06/ton
Recyclables' Net Revenue: $501,112
Cost to Process Recyclables: $36/ton
Tip Fee at Browning-Ferris Landfill for Commercial Garbage (fiscal year 1996-1997): $26/ton; large hauler discount, $25.24
Total Residential Waste: 232,666 tons
Total Residential Recycling: 65,614 tons
Total Waste Landfilled: 167,051 tons