If waste management firms see a bright spot in today's extraordinarily deep recession, it is the residential collection and disposal side of the industry, the one segment that typically remains reliable during economic slowdowns.

When the economy slows, so does construction in the housing, commercial and industrial sectors. Less construction work means less construction and demolition (C&D) debris for waste firms to handle. A flagging economy reduces retail store sales and inventories as well as restaurant business. That cuts into the roll-off component of the waste industry.

The recycling business goes haywire during recessions, too. Prices paid by end users collapse to levels that make it unprofitable for waste companies to collect recyclables — though their contracts dictate that they must continue collecting.

Residential waste is what is left. During recessions, families stay at home for meals instead of dining out. They attend fewer events. Instead of going to the movies or to the amusement park, they stay home and watch videos or play games. And they continue to produce trash — sometimes, they even make more trash than normal.

The Residential Annuity

“Residential waste is kind of an annuity,” says Tony Rosback, vice president for operations support with Phoenix-based Republic Services, the nation's second largest waste management company. “When there is a downtick in the economy, the residential line of business tends to be more stable than the commercial and industrial businesses.”

Peoria Disposal Co. in Peoria, Ill., has used its relatively healthy residential business to prevent lay-offs. “We've had a lot of acquisitions this year,” says Matt Coulter, vice president and sales and recycling manager with Peoria Disposal. “And we've absorbed the new residential routes with current employees and kept people working.”

Some companies may even foster growth by in a bad economy by taking good care of residential customers. Jacksonville, Fla.-based Advanced Disposal Services, a nine-year-old $275 million company, held around 110 franchises at the beginning of 2008, when the economy began its decline. According to Mary O'Brien, the firm's chief marketing officer, Advanced Disposal won 10 residential contracts with cities and counties during 2008. So far this year, the company has signed nine new local government contracts. Overall, the contracts range from $19,000 per year to $6 million per year.