Collective VIEW

February 1, 2005

11 Min Read
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Lynn Merrill

BUSINESS IN THE solid waste management industry is, well, solid. That doesn't mean there aren't challenges to running a successful business, however. According to today's collection managers, competitive and economic pressures force them to continually look for operational efficiencies. Moreover, collection managers are always seeking good employees and then providing them with training and equipment to help them do their jobs safely.

To find out collection managers' views on the industry, Waste Age recently sat down with four operators across the country to host a cyberspace roundtable. The participants included:

Tom Brown, senior vice president and chief operating officer for IESI Inc., Ft. Worth, Texas;

Ellen Harvey, executive vice president for E.L. Harvey & Sons Inc., Westborough, Mass.;

Dennis Hein, director of the Solid Waste Utility and director of the Regional Solid Waste System for both the city and county of Spokane, Wash.; and Nathaniel R. Hudson, operations manager for the city of Tallahassee, Fla.

Waste Age (WA): Let's start out by describing your collection operation.

BROWN: We are located in nine states in two different regions. In the South, we're in Texas, Louisiana, Oklahoma, Arkansas and Missouri. In the Northeast, we're in New Jersey, New York, Pennsylvania and Maryland. We have approximately 560,000 residential and 57,000 commercial and industrial customers. We have 304 residential routes, 165 commercial routes, 140 roll-off routes and 50 recycling routes. We offer the full gambit of collection services and disposal, transfer and recycling throughout the nine states we operate in. By last measurement, we are the eighth largest and fastest-growing nonhazardous, solid waste collection company in the United States.

HARVEY: We are strictly a commercial/industrial operation, although we do have a small company that services two towns in Westborough and Northborough, Mass. We're heavy on roll-offs. We run 105 trucks and 60 roll-offs, and the remaining are front and rear packers. We have about 4,200 commercial/industrial customers and service the central Massachusetts area, into Boston, and also southern New Hampshire and Rhode Island. We are an independently owned, family business [that's been operating] since 1911 with four generations. There are seven Harveys that still own and operate this company.

HEIN: We're a full-service collection and disposal operation. We put about 65 units on the road every day, including recycling, front loaders, roll-offs, automated and semi-automated collection trucks. We collect from 65,000 residential customers and about 5,000 commercial customers. We have 24 automated trucks, six semi-automated trucks, 10 front load trucks, 10 roll-off trucks, 20 curbside recycling and six clean-green trucks.

HUDSON: We have divided the city in half. We serve half of the customers, about 22,755 customers, and Waste Management Inc., Houston, serves 22,884 residential customers. We utilize 10 side loaders. We provide one curbside and one back door service day. We do all the commercial solid waste collection. We have 10 front-end loader routes and seven roll-off routes every day.

WA: What are the most crucial challenges, events and trends facing you today, and how do you plan to overcome them?

BROWN: All of us face a lot of the same challenges. We've seen double-digit increases in insurance costs, both in medical and liability insurance, for the past three to four years. It's been a huge cost increase. Fuel costs this year have gone up tremendously, and there doesn't seem to be an end in sight. We burn about 10 million gallons of fuel per year in our company. It's a big number for us. We've put in fuel surcharge increases to try to mitigate it.

HARVEY: We have traffic concerns everyplace we go. Traffic issues extend the time that it takes to service our customers. It all filters back to overtime for drivers and fuel costs. In Massachusetts, the Boston City Council is considering restricting hours of operation for trucks. Another problem we face is finding experienced, qualified drivers. We constantly work to try to get the best that we can and then just train, train, train.

HEIN: Cost increases are one of the dynamics that we have to live with, and unfortunately, the solid waste industry tends to suffer the most immediate impact. We deal in tires, steel, fuel, and it seems that whenever there's a cost spiral, the elements that we need and use the most always seem to be in the forefront of rate hikes.

HUDSON: The challenges are to maintain a high level of customer satisfaction in the face of rising costs and an ever-increasing customer demand for services.

WA: What techniques or approaches are you using to improve your day-to-day collection operations?

BROWN: We've been installing some GPS (global positioning systems) on a test basis in some of our trucks to track productivity on a minute-by-minute basis. That tracking allows us the ability to see what the truck did all day long without being in the cab. That's one thing, to know what your trucks are doing. We also use tuck-in acquisitions in certain markets. We can improve our route density and increase our productivity by buying out a competitor that has overlapping routes and merging those into our existing routes.

HARVEY: We are reorganizing our truck routes to make them more efficient, eliminating ones that we can and consolidating. As far as rising costs of fuel and other expenses, that is definitely something that we've had to deal with. We analyze the trends in fuel costs, and we purchase contracts for a number of gallons over a period of time to lock in prices. Right now, we've fixed our fuel costs through February 2005.

HEIN: The biggest thing on a day-to-day basis is to constantly work on routing. A lot of solid waste managers don't realize that routing is a series of peaks and valleys. Routes should be made up from a stabilized area and a non-stabilized area. A stabilized area is an area that is completely filled in. A stabilized area can be well defined and collected on the same day 20 years from now and on the same route pattern. The other areas that are a little more difficult to route are growth areas in which you need to leave some time and space available. We now have three cameras on our automated trucks. We have a camera that looks at the garbage in the hopper, a tailgate camera, and we also put a camera on the opposite side mirror. When you put the truck in drive, the driver can look in the monitor to see if there's a little car hiding under the truck before he pulls out from the curb line. Those are consistent with modern safety management, and they make sense.

HUDSON: We want to provide daily feedback to collection crews regarding the specific number and nature of the complaints and compliments received from customers. This is incorporated into employee evaluation. We have an Awards and Recognition Incentive Program. Whenever an employee or group of employees does something good, we like to recognize them.

WA: What has been the single most important breakthrough in collections operations in the past five years?

BROWN: The sophistication of GPS software is probably the biggest innovation I've seen. Fifteen years ago, the half-pack front loader was a pretty good productivity improvement for front-load systems. The advent of more cities specifying fully automated residential collection speeds up collection, but it also adds more maintenance costs and has its own challenges from a capital standpoint.

HARVEY: Going from a completely manual system for picking up residential [trash] to a semi-automated and now to a fully automated residential collection system. We have a truck in which the driver doesn't need to leave the cab. That's been a real big plus. There's been an improvement in single-stream recyclables processing. It's a very political issue. Mills fought this for a while because they don't want to deal with contamination. Consumers want it because they want something that's as easy as possible. That's a key with any kind of recycling. Recycling has a way to go, but I believe it has come a long way.

HEIN: For front loaders and automated trucks, the pack-on-the-go feature has been the biggest innovation. On the large, front-mounted hydraulic systems, the torque of your engines is great enough that you can pack at idle.

HUDSON: The co-collection system, garbage and recyclable materials, has been the biggest breakthrough. You can use one vehicle as opposed to two. Instead of sending a garbage truck down the road and a recycling truck down the road, you can use one truck to do both jobs. We've implemented a Smart Cart system for collection of fiber and commingled recyclable materials in a divided container that is collected with a split body automated truck.

WA: What challenges do you expect the waste industry to face in the next five years?

BROWN: Insurance costs are somewhat leveling out at this point, so I'm hoping that we've seen the worst of that. The ability to pass on cost increases and still remain competitive is one of our challenges, and then to cover our fuel costs and insurance costs and all that. The other challenge we face is the continuing ability to attract and retain quality drivers and other employees. There's a lot of turnover in this industry. I don't see that getting any better, unfortunately.

HARVEY: Insurance. It's harder and harder to write, and it's more and more expensive. Our insurance agent came to us last week and said, “The bad news is your insurance has increased by 30 percent. The good news is I can write you.” It's going to continue to get worse. A lot of carriers just don't want to write our industry. Another one is health insurance for employees. The costs are going up and up for less and less coverage.

HEIN: We have hit a wall in that we cannot start and stop a truck more than 700 or 800 times in a day. We're not going to be able to soften rate increases through increased efficiencies. We were able to absorb a lot of cost increases because of improved efficiencies. Residential collection is getting to the point where we've hit the wall, and that means the impacts of cost are going to be very dynamic in our operating structure and on our customer rate base. We're not going to be able to improve our collection efficiency and generate more money per route in the same relationship that my grandfather, my father and even myself had in our early career.

HUDSON: Providing customers with services that will enhance the community's ability to increase the amount of materials diverted from the landfill will be a big challenge. The challenge includes making our citizens aware of long-term disposal capacity issues and the potential environmental impact if disposal capacity cannot be secured. If alternative disposal technologies are not developed, we may run out of a place to take our solid waste material.

WA: What “pearl of wisdom” could you offer to your fellow collection managers?

BROWN: In the 26 years I've been in this business, the one thing I've learned is to not skimp on people. Always hire the best that you can find. That's good advice for any industry, but it's certainly something that I live by and we live by as a company.

HARVEY: Customer service has always been and needs to continue to be key in our industry and our individual businesses. At the end of the day, your relationship has to be with your customers, your communities and your employees because they make it happen. Something that I've worked on constantly in the past 20 years is image. We are no longer the garbage men going in the back door. We are the material managers going in the front door, meeting with the people who make the decisions, the environmental engineers, the vice presidents, and the health and safety people. We need to be professional in our knowledge, our delivery and our appearance at all times.

HEIN: Hire smart people. Hire the best. Don't be afraid to relate, to pay a little better. Good people will do a better job for you. If you want to make money, use good people. It's that simple. The other part of it is we are going to have to recognize the value of trash. It's got to become a useful commodity. Otherwise we are in a vertical cost spiral that's going to be impossible to step out of.

HUDSON: Build and maintain a highly motivated work force committed to providing superior customer service. Always be perceptive to change. Seek innovation. Always put your customers and employees first. Provide exceptional day-to-day service, but be strategic. Challenge your employees at all levels to plan for where you want to be in the next five years and then the next 10 years. Solid waste is a good business. We need to do all we can to protect it.

Contributing writer Lynn Merill lives in San Bernardino, Calif.

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