Small Players, Big Ideas

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.”

Bottom Line Basics

Stuart says small players need to be nimble to be successful in the waste business. This can be difficult, as small, family owned refuse companies often are so focused on day-to-day business issues that they fail to look for ways to make things simpler and easier.

“You've got to get out in front of the eight ball, especially when it comes to trucks, because that's where a lot of your capital is going to be tied down,” Stuart says. “For example, if you have really old trucks, get new ones. Yes, it costs money, but not as much money as you spent on repairs and downtime when the older ones [broke] down on a route.”

The key, Stuart says, is to take money out of the equation. “When you attach money to a solution, that becomes the focus, and that fogs up the thought processes, causing confusion and a lack of clarity,” he says. “Focus on the process and the solution. Because at the end of the day, you are going to spend money anyway. The key is to spend it wisely on the best solution for your business.”

For example, many smaller fleets may feel pressured to invest heavily in computer technology to track part numbers, log in repair orders, compile reams of data of truck life cycle costs, etc. But Stuart says a lot of these investments may not pay off for a smaller firm.

The operative word, Stuart reiterates, is maintenance, not repairs. “Inspect the radiator, coolant, brakes, electrical cables and tires constantly,” he says. “That's where you have most of your failures.” The rewards for this vigilance over the long run, Stuart adds, are less downtime, savings on equipment and a better ability to compete.

Stuart adds that as Republic Services prepares to merge with Allied Waste (despite WM's recent attempts to buy Republic and head off the massive expansion of one of its biggest rivals) small players will see more, not less, opportunity.

“[If] Republic and Allied come together, they'll divest in many places to find synergies and that will create opportunities for smaller players to grow their business,” he says. “There are going to be tremendous opportunities for the mom and pops and smaller companies. They just [need] the right service and cost structure to go get them.”

Sean Kilcarr is a senior editor of Fleet Owner, a sister publication of Waste Age.

TIPS FROM THE TRENCHES

When you're a small player in the waste business, its pays to look for any and every advantage you can get, especially if you don't have the resources to provide your own maintenance or the clout to get priority service at a dealership.

Rick Galliher, a 1-800-GOT-JUNK? franchisee since August 2003 and the owner of six trucks, knows this better than anyone. Despite being part of a nationwide network of fellow franchisees (and one of the largest, racking up $1 million a year in sales), Galliher still must contend with the headaches common to all small fleets. He shares some of that hard-won knowledge below:

Talk with your peers: Galliher constantly networks with other GOT JUNK? franchisees across the country to find solutions to common and not-so-common problems. “For example, we have to cover our loads with a tarp — it's a regulatory requirement,” he explains. “We used to buy bigger tarps, cut them down and re-sew them with a fishing line to fit over our special dump bodies. But a fellow franchisee told me a company in Missouri made tarps in exactly our size for only $40, saving us a lot of time and expense.”

Galliher, in turn, found a local parts store that stocks hard-to-find hitch pins for securing the rear doors of his dump body and regularly supplies them to fellow franchisees that can't locate similar parts in their areas.

Spare trucks wanted: In a big fleet, having spare trucks on hand is anathema, tying up capital and maintenance dollars. But for a small fleet, having access to a spare truck can be a big benefit. “If we have a truck break down — mechanical issue, flat tire or otherwise — we can redistribute the workload onto the other two until we get the third back up and running,” Galliher says.

Find a maintenance partner: After Galliher bought his first truck, a Nissan UD, he had trouble getting it serviced at the local dealership. “I had to schedule an oil change two weeks in advance with them, then they had my truck for a week and never changed it,” he says.

By sheer luck, he discovered G&C Express Auto Service, a local fleet maintenance shop that offers both preventive maintenance and warranty work but, most importantly, has become a one-stop resource when problems occur. “If we have a breakdown, my crews call G&C and they line up a tow truck for us to their facility. That helps us keep costs under control.”

Seek alternate solutions: One of the aggravations Galliher faces as a small player is how awkward truck specs impact his operation, often leading to sustained maintenance issues. “For example, the fuel fill line on our medium-duty cabovers is between the rear tire and the mud flap, back under the truck, so not only was it hard to refuel, mud was literally getting into our fuel tanks,” he says. “We said, ‘that won't work,’ so we had G&C go under the trucks and extend the fuel refill line for us.”

G&C also designed custom metal flanges to prevent flying road debris from damaging back up alarms installed on the back of Galliher's trucks.

Think ahead: Galliher serves a four county area in Northern Virginia. He says it's paid handsome dividends to locate suppliers of truck parts and tires in each area in the event that his crews are stranded by a problem. “The nature of a small fleet is to address a problem only when it happens,” he says. “We went a year without a flat tire and then we had one. Suddenly, it's like, ‘where do we go for a new one?’ Because truck parts and tires aren't sold at the [do-it-yourself auto parts store] around the corner.”

Galliher lined up four or five parts providers — what he calls “little truck places” — so if his crew loses a tire, they know where they can go to get a replacement without having to scramble. “It just makes it easier to have places like these mapped out in advance before you need them,” he says.
— Sean Kilcarr