Commercial Waste Collection Roundtable

For more than two years, firms that provide commercial waste collection services have dealt with the effects of the Great Recession. With the economy finally showing signs of life, Waste Age wanted to check in with some commercial waste handlers to see how their operations had coped with the severe economic downturn and see what their outlooks are for the months ahead. In this e-mail roundtable, executives at three commercial waste collection firms weigh in on how the recession affected their volumes, pricing and staffing. Other topics discussed include the state of the recycling markets, their customers’ interest in landfill diversion and their firms’ most pressing challenges.

The Q&A participants include:

• Art Gallegos, vice president and co-owner of Fort Collins, Colo.-based Gallegos Sanitation Inc.;
• John Gunnello, owner and CEO of Newark, N.J.-based T. Farese & Sons Inc.; and
• Ben Harvey, executive vice president of Westboro, Mass.-based E.L. Harvey & Sons Inc.

Waste Age (WA): Compared with this time last year, has the amount of waste you’re collecting from commercial properties increased, declined or remained about the same?

Gallegos: As commercial recycling has increased and the economy has slowed, our commercial waste has declined.

Gunnello: We have definitely seen an uptick for sure. The economy is starting to move again, and commercial establishments are starting to produce more trash and recycling material.

Harvey: We saw a slight uptick in volume through the fourth quarter of 2010 but saw that volume evaporate through January and February 2011. This could have been due largely to the weather here in the Northeast.

WA: During the upcoming 12 months, do you see the amount of waste from commercial sites increasing decreasing or staying roughly the same?

Gallegos: We anticipate that commercial waste will decrease by 3 percent.

Gunnello: Our company has seen a pretty good increase in the retail, clothing, appliance and home goods establishments.

Harvey: Volumes in March have improved but we’ll have to see if the increase is due to cleaning up after the winter or if we’re starting to see some strength in the market place.

WA: How has the pricing for your commercial services been affected by the economic climate of the past few years? Do you see your prices increasing or decreasing over the next year or so?

Gallegos: Although we experienced a decline in refuse volumes, we experienced an increase in fuel and landfill costs that were passed onto the customer.

Gunnello: It has always been a steady increase for landfill, transfer station and MRF facilities. Disposal rates always seem to increase no matter what the climate of the economy is. We have managed to keep our prices steady and consistent for our customers through our own efficiencies.

Harvey: E.L. Harvey has definitely had to deal with pricing pressures from our commercial accounts. All our competitors and us are chasing after the same accounts. There is not a lot of new business or businesses expanding so to maintain our customer base we have had to get extremely competitive.

In the Northeast, we have also seen disposal numbers erode due to the low volumes that are available, which has put pricing pressure on this part of our business.

WA: To what extent have you had to lay off workers in your commercial operations because of the recession and any related decline in waste volumes?

Gallegos: Some of our commercial workers have been relocated to commercial recycling so no lay-offs were required.

Gunnello: Our company has been truly blessed. We have not let anyone go due to the economy.

Harvey: We did have to make some necessary cuts last year due to the decline in volumes. Although for us it was a painful exercise, it had to be done. We had to let people go throughout our organization: drivers, plant personnel, mechanics, office staff and management.

However, our commercial business has actually increased 15 percent over last year, so we have been adding people to our commercial segment.

Our focus now as we grow will be to bring in good quality candidates.

WA: Many Fortune 500 companies are adopting zero-waste goals or similarly aggressive landfill diversion efforts. To what extent are your commercial clients adopting green initiatives, and what services are you providing to help them reach their goals?

Gallegos: All of our commercial clients are aware of the varied services we offer to help them meet their “green” initiatives. We believe we are ahead of our competition in meeting the needs of the customer by offering varied recycling and compost options, waste diversion consulting, education and outreach services as well as LEED/C&D recycling/reporting/consulting.

Gunnello: Our company has partnered up with a licensed Department of Environmental Protection (DEP), state-of-the-art facility to recycle C&D debris. We offer LEED certification reporting for construction companies. Single-stream or source-separated recycling are options given to our customers to meet their recycling goals.

Harvey: E. L. Harvey has always had a leadership role with our customers to divert materials from disposal. We operate a commercial MRF, a recycled paper collection and packing plant, a C & D recycling facility, and an electronics collection and dismantling operation. We offer resource management services to our corporate accounts to help them better manage the wastes they generate. We have dedicated people that will evaluate our customer’s waste stream to identify as many recycling or diversion opportunities as possible. We also offer educational services to these same accounts.

We are prepared to offer our customers whatever service is needed to divert materials. I feel that beyond traditional materials — paper, plastic, metals, etc. — we’ll see a big push to remove organics from the waste stream.

WA: What kind of markets are you finding for the recyclables that you collect from commercial properties?

Gallegos: The markets were steady and adequate last year for paper, cardboard, and plastics recycling. Our single-stream recycling volumes increased and, consequently, the markets responded appropriately. Our efforts to create our own cardboard/paper/plastics recycling business developed as a productive entity.

Gunnello: The commodities market — i.e.: cardboard, paper, metal and newsprint — has been red hot.

Harvey: The markets for almost all commodities currently are quite robust. After collapsing in 2008 we have seen a steady rise in pricing. Hopefully the markets will remain strong long enough to erase the memory of 2008.

WA: Describe the safety programs that you have in place for your commercial collection workers?

Gallegos: Safety is of the highest priority at Gallegos Sanitation. Our programs are dynamic and backed by our company ethics of (1) sustainability, (2) safety and (3) customer commitment.

Gunnello: Our company has teamed up with an outside risk management and safety awareness company to constantly drive the importance of safety home on a daily basis through on-the-job training, video meetings before and after shifts are completed, and daily compliance efforts by our management team.

Harvey: Jerry Sjogren, our director of safety, strives to make sure that every one of our people goes home safely every night. Our goal to do it safely or not at all comes from the top. The senior management team fosters a safe work environment and we try to get this point across to all our employees. Our toolbox talks always have some aspect of safety to refresh to everyone on the commitment we have. Safety is good for business.

WA: What expense increases are you dealing with in your commercial operations?

Gallegos: We expect increased fuel costs, landfill fees, insurance costs, and workman’s comp expenses. Along with these we anticipate increased equipment expenses.

Gunnello: The most inconsistent cost we encounter is fuel. This commodity is constantly moving in an upward trend. This does have a huge impact on our bottom line.

Harvey: Is there anything that has not had a price increase? In an effort to combat the increasing price of just about everything we are continually trying to get more and be more efficient. I do feel that the out of control cost of diesel fuel will greatly impact all of us in the hauling industry. It will be an opportunity for more of us to explore compressed natural gas vehicles.

WA: Broad question: what is the biggest challenge facing your commercial operation, and what are you doing to address it?

Gallegos: For Gallegos Sanitation to continue to develop as an innovative leader of sustainability in the waste and recycling industry in Northern Colorado, we must capture the recycling and diversion business. This means that we have to think ahead when purchasing equipment, look for efficient and environmentally safe programs to offer our customers, plan on adding quality people to our labor force, and discern which investments will bring profitable stability to our company’s future.

Gunnello: The most troublesome experience we have encountered has been the stealing of cardboard, paper and metal. There is no DEP or permitting process to pick up recyclables, so the end result is anyone who has a truck or open vehicle can access these commodities in the early evening or early morning and sell the commodity in the spot market.

Harvey: Of course there will be many different challenges for us and the industry. As the volumes of materials start being generated again we will have to add personnel but we need to grow in a controlled way. We need to grow more efficient not just grow with people. As more and different types of materials get diverted from the waste stream, stable markets will need to be developed. Collection logistics could change as source separated special materials will need to be collected in dedicated trucks.

RELATED STORIES:

• The 2010 Commercial Collection Roundtable

• Keeping It in the Family: The family owned T. Farese & Sons has served customers in Newark, N.J., and the surrounding areas for more than 50 years.

• Competing with Goliaths: The family-owned E.L. Harvey & Sons gives the big haulers a run for their money.