By watching expenses, maintaining fleets and focusing on value over price, smaller collection firms can survive – even thrive – in today’s refuse market.
Rick Galliher isn't what you'd call a big operator in the refuse and recycling world. In fact, he's downright small, running just six trucks for his 1-800-GOT-JUNK? franchise that serves parts of four counties in northern Virginia.
That certainly puts him at a disadvantage when competing with the likes of, say, Houston-based Waste Management (WM), which services communities coast to coast with a fleet of 22,000 vehicles. It doesn't help that Galliher's Centreville, Va.-based franchise must pay tipping fees to use the local landfill, separating out recyclable metals by hand, while WM owns 277 landfills, 105 recycling centers and 16 waste-to-energy plants.
It certainly looks like a titanic mismatch to pit a $1 million-a-year local refuse franchise against a nearly $14 billion annual refuse and recycling behemoth. But, looks can be deceiving.
“Basically, we provide a very expensive niche service, so it's all about providing value, not necessarily price,” Galliher explains. “What our customers value most is speed. We get a lot of last-minute stuff that the big guys don't have the flexibility to handle.”
Tailoring service to meet customer needs is a tactic Ken Burkett used to successfully develop his own refuse operation in Tulsa, Okla. Originally a baker by trade, Burkett got into refuse hauling in 1970 by mounting a 16-cubic yard packer on a 1958 Ford truck chassis.
He picked up residential trash for 10 years, then sold out and founded American Waste Control (AWC) in 1980 to service the commercial side of the refuse market. Starting with just two trucks, Burkett's fleet now boasts 70 vehicles, including front and rear loaders and roll-off trucks. The firm serves Tulsa and towns within a 75-mile radius of the city. Specializing in hauling industrial and commercial waste, Burkett's company also owns and operates its own landfill, as well as a recycling and transfer facility.
He succeeded despite competition from not one but two national companies, relying on a philosophy of “good service.”
“We've always prided ourselves on being able to tailor our services to the customer's individual needs,” Burkett says. “As I like to say, we are a company ‘big enough to serve you and small enough to know you,’ with the flexibility to meet your individual waste disposal needs.”
Smaller haulers should focus on the little things, even in the price-sensitive residential collection market, that the big companies sometimes overlook. For example, Jim Flyte, president and owner of Fountain Hills, Ariz.-based Arizona Sanitation Services, sticks with the “time-honored method” of garbage collection, using multi-man crews and eschewing automation. The company feels this allows them to collect more than the contents of the customer's trash can, including garbage that other companies might not touch.
“Coyotes and wild pigs knocking over garbage cans is a fact we all deal with in Arizona,” Flyte says. “We are the only garbage company in Fountain Hills that carries a pitchfork, broom and shovel with a man on the back of the truck. If our customers have spillage, we will clean it up for them. We always leave the area clean!”
Tools of the Trade
If there's one thing that can make or break a waste firm, large or small, it's the reliability and cost of its equipment. Only trucks that are up and running make money for the company. Keeping up with maintenance and avoiding downtime becomes even more critical for smaller players.
“Equipment is your main tool in this business,” AWC's Burkett says. “We have maybe six or seven spare trucks, total. That's why maintenance for us is so critical. We'll look at anything to help improve our maintenance practices, so we can reduce unexpected downtime.”
Mario Ondarza, AWC's service foreman, agrees. “Preventative maintenance is the key to running a successful and efficient fleet,” he says. “Major problems can be avoided as long as you change your oil on a regular schedule and take care of the minor issues before they escalate.”
Yet the waste business is tough on trucks, requiring them to operate in landfills, transfer stations and other treacherous environments that present the constant risk of tire failure, body damage or worse. If you don't have a good support system in place to get trucks back up and running, Got Junk's Galliher says, the resulting downtime and repair costs can eat into a small player's bottom line.
Galliher contracts with a local maintenance provider, G&C Express, and says the personal attention is worth the extra expense. “They are dependable; they provide fast service; and they help me if I have an unusual problem,” he says. “For my operation, price isn't so much a factor as service. Sure, I can get my maintenance done cheaper; but when I need it fixed, I need it fixed fast and permanently.”
Flexibility to find the best service option highlights one of the key advantages enjoyed by smaller players, says Darry Stuart, president of DWS Fleet Management Services in Wrentham, Mass., a firm specializing in fleet maintenance issues.
“The smaller companies can turn left or right so much faster than the big guys,” he says. “Everything is closer to the top; there are few if any layers separating the owner/chief executive from the trenches.”
Smaller players also avoid much of the corporate overhead shouldered by the big guys, he adds. “Sure, maybe Waste Management can buy trucks a little cheaper, but that advantage is not significant when comparing overhead costs,” he says. “It's not enough of an advantage that smaller companies can't be in the waste business and be in it successfully.”