The Fifth Waste360 Investor Summit, May 8, 2017, in New Orleans, held in conjunction with WasteExpo, drew hundreds of attendees interested in learning about the growth strategies of some of the top waste and recycling firms in the country.
Organized by WasteExpo and Stifel Financial Corp., St. Louis, the day included a host of executive interviews by Michael Hoffman, a 28-year Wall Street veteran who wasn’t shy about asking the tough questions from how is the acquisition of Progressive Waste going to whether Casella Waste Systems is planning to sell or if it is true that the big waste firms all want to bury the waste they collect in landfills.
Ronald Mittelstaedt, CEO, Waste Connections, The Woodlands, Texas, told Hoffman, “Fortunately most things have come out a little better than we thought,” of how the acquisition and integration of Progressive Waste is going nearly 11 months later.
He said price is doing a lot better at north of 3 percent and safety has improved by 65 percent in 11 months. “Most things have gotten materially better and gotten better than we thought,” Mittelstaedt said.
As for what was worse than expected, he said, “the condition of the fleet.” Mittelstaedt said the fleet's condition was poor and continues to be a challenge, referencing “a lot of wrong applications.”
He continued, “We gather lot of data, we use a little of it." However, he said Waste Connections shut down 80 percent of the data that Progressive Waste was collecting, saying that people were “gathering data to gather data.”
He added, “You cannot have your front-line people measuring 200 things a day. You need to have incense focus on 10 pieces."
Hoffman asked the Rutland, Vermont-based Casella Waste Systems' team of CEO John Casella,Chief Operating Officer Edwin Johnson and Chief Financial Officer Ned Coletta what they were thinking about the sale of the company. He was informed that two or three paths could be taken, including sale, modest growth or much larger growth.
“For Casella there is a tremendous number of opportunities in terms of direction,” he was told.
Republic Services, Pheonix, rejected an earlier hypothesis posed by Atlanta-based Rubicon Global CEO Nate Morris that “bigger companies are geared toward landfill.”
Where the waste goes depends on the customers needs. “You need landfills, but we are growing recycling faster than our solid waste. It helps meet their needs. I reject this hypothesis,” one of the company's representatives said.
That sentiment was echoed during the CEO panel that included Richard Burke of Advanced Disposal, Ponte Vedra; Steve Jones of Covanta Holdings, Morristown, New Jersey; Mittelstaedt; and Jim Fish of Waste Management (WM), Houston.
Fish said that if it implied WM was married to its assets, at 30 percent margins, “I am OK with our marriage at this point.” He said WM had experienced volatility with recycling that its landfills did not have.
“Once we de-risk the business, I am agnostic as to whether it goes to landfill or recycling plant,” he said.
Mittelstaedt said, “We are agnostic as well.”
He noted that recycling is not as prevalent in other states as it is in California, New York, Florida, New Jersey, Washington and Oregon. “We’re not seeing the clamoring in Nebraska that we are in California and New York. It is a very state issue and a very local issue. We don’t feel like we have to shape the conversations. We are comfortable or agnostic. We are not as concerned about controlling the conversation. At the end of the day customer decides where volume to go.”
The CEO panel also addressed the topic of safety and trucks equipped with technology. On-board cameras are helping to identify common issues that drivers are experiencing and helping to change bad habits before an accident or injury occurs, according to Burke.
Fish said cameras also can exonerate a driver in some cases. It is also helping with what Fish described as “predictive safety.” By looking at data, you can predict the likelihood that Driver A is going to have a backing accident within 60 days and get him or her some backing training. “If I am wrong, I’m going to have some backing training. If I am right, I might have saved a life. It is good for us and whole industry as we think about safety.”
In light of the number of accidents to date in 2017, Hoffman said, the industry could be the third most dangerous in the U.S. by the end of the year. Hoffman asked, “What is the message we need to get across?”
Burke said, “As leaders we need to make sure nothing is more important than the safety of your people.” He said this should be more important than productivity or a new customer and called it, “Service first, safety always.” He said, “If we don’t have a safe process and well-trained driver, we shouldn’t be putting them out on the street. We don’t want to be ranked where we are ranked; we don’t want to be on that list.”
“At the end of the day, safety is about leadership and what responsibility you have to your people,” said Mittelstaedt. He alluded to Progressive’s previous safety record, saying while the company had safety slogans, it had 31 fatalities in 48 months and 1 in 2 employees had an or injury in 12 months. “We reduced that by 70 percent in 11 months.”
He added, “A lot of times, we as leaders want to try to hold our front line people accountable reality is there is a reason for accidents and injuries.” He said public, private and municipal companies should be held accountable and do a better job. “When something goes wrong in this business it doesn’t go a little wrong it goes really wrong.”
Fish noted WM has been able to renegotiate 90 percent of its contracts to help minimize risk. One reason behind this success, he said, was that not many companies are responding to requests for proposals (RFPs). “If no one shows up, something must be wrong with the model.” He adds, “We think it is a good business for environment but it has to be a good business. We aren’t in it for charity.”