Smells Like Money: The Business of Waste Management 1

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With the bright lights of Las Vegas reflecting in his rearview mirror, Keith Ferguson listened to his wife, Cheryl, who was convincing him to finally start his own business. “Why don’t you do it? Just do it,” he remembers her saying. “If it doesn’t work out in 6-8 months, then you can just go back to working for someone else.”

That was 19 years ago. Today in Oklahoma City, Okla., Keith and Cheryl own three separate companies that manage and dispose of a variety of waste, from hazardous and commercial waste, to the treatment of industrial waters and grease trap cleaning.

Keith never had dreams of building a career in handling other people’s trash. “It started off really as a summer job while I was going to school [...] the company at the time was called USBCI. They had just started in 1979 or 1980, somewhere in that area, and I got a summer job with them.” He planned on becoming a basketball coach after college, but the daily variety in his waste disposal job kept him there even after he had his degree in hand.

“It was just fun and different back then,” he says, “I traveled all over the country, just getting to meet different people, working in different states, seeing different parts of the country. Every day is not the same when you’re dealing with hazardous waste or waste in general. Every job is different; there are no two jobs that are alike.”

When Keith and Cheryl decided to branch out on their own in 1995, it was an exciting time. Keith’s former employer had gotten big enough that they had started losing touch with their customers. The salesperson who built the relationship with you in the beginning would make the sale, and then pass you off to a retention manager, and it was easy to slip through the cracks or simply become a monthly paycheck.

This would ultimately be the advantage Keith had, and still has, in running a smaller operation: relationships mean more to the owner and the customer.  His new customers were ready for the change. “Most of them said, ‘Hey, we’re glad you did. You’re the one that makes the call now and we know who we’re dealing with. Our money’s not going to some major corporation or something like that.’ And a lot of them said, ‘What took you so long?'”

Chuck Herb never planned on owning a waste management company either. He always wanted to run his own business, but didn’t develop a passion for waste management until he spent 15 years doing it for someone else. In 1999, he and a business partner launched Sunshine Recycling Inc., a dumpster rental and waste hauling company in both Orlando and Jacksonville, Fla. He now also owns AYD (At Your Disposal) Waste Services in Austin, Texas. “My family was so excited the first year [that] we made a dumpster truck our Christmas card.”

The waste management industry in America is massive. Residential trash and garbage, or Municipal Solid Waste (MSW), which amounts to roughly 251 million tons each year, accounts for over half of all non-hazardous waste collected in the U.S. The second largest group, Industrial Waste (referring to the materials that result from the production of goods and services), contributes around 45 percent of the country’s non-hazardous waste, pushing the $52-billion industry total to nearly half a billion tons of waste each year. To bring those numbers a little closer to home, the EPA estimates that the average American generates 4.38 pounds of trash every day.

Consider for a moment how much of what you touch each day ends up in the trash or recycling bin. The cup from your morning latte. Leftover food. Plastic packaging on new electronics. That box from your latest Amazon order. Dirty diapers. The list goes on and on, and that’s just on the MSW side. Drive through your town and take a mental note of every business and every back alley dumpster.

At each point in the chain, there exists an opportunity to make money off of our trash, from the Glad trash bag and Rubbermaid bin, to the residential or commercial pickup service, to the local dump, then off to the landfill or recycling plant.

It doesn’t stop there either. When the waste decomposes, it releases a precious commodity: natural gas that can be piped back to your city’s utility provider to power your home’s electricity, and one day, maybe even your car.

Universal Pictures / via RealClearScience

Universal Pictures / via RealClearScience

While our nation’s waste disposal industry is dominated by the big national players like Waste Management, there are plenty of smaller businesses across the country who are involved in the process of keeping your trash out of sight and out of mind. The Bureau of Labor Statistics reports that as of last year, there were over 26,000 establishments in the private sector “engaged in the collection, treatment, and disposal of waste materials.” That’s a number that has been growing on average 2.5 percent every year since the new millennium.

However, that growth rate paints a pretty picture that doesn’t exactly tell the full story. When the economy slowed to a crawl in 2008, businesses everywhere were hit hard. As they failed to overcome the economic hurdles, the domino effect toppled down to commercial waste management companies. No businesses, no trash. In the waste management sector, unemployment in 2009 and 2010 hit 10.5 and 11 percent, respectively—double what it was in 2008, and triple what it was in 2005.

When asked to name a time when his business struggled the most, Keith Ferguson quickly points to the economic recession. “When everything was down, we didn’t lay anybody off. I should have, but we didn’t, and it cost us a lot of money.” Keith and Cheryl put all of their money back into the business to keep it floating. “We had good employees and I didn’t want to have to let them go, so I took a huge hit during that time to keep people on.” It may have been a tough choice, but the decision was ultimately worth it. “I look at it this way: I have 25 people who work for me, but you add on spouses and kids and stuff and you have a lot of people depending on you,” Keith says.

“All my employees are like family, and we watch out for each other and help each other out when we can, even on the weekends and stuff like that when we’re not working. It’s not like a huge corporation where you’re just a number on a payroll slip.”

The economic challenges of 2008 impacted Chuck Herb in Florida as well, but overcoming them was something of a milestone for his company. “When the economy went south, a lot in construction just stopped. There was a big hold in the building industry which affected my business, but I was able to reorganize and keep my business afloat until the economy recovered.” Things aren’t back to normal yet, but the unemployment rate has dropped below seven percent, and they are picking back up. “The construction industry still experiences seasonal lulls when there aren’t as many projects, but we survived and now we’re busy year-round,” Chuck affirms.

Aside from the economic challenges over the last six years, the landscape of waste management has been steadily changing for the last 40 to 50 years. Since the late ’60s and early ’70s, there has been growing concern about the environmental impact of our culture of waste. That concern has resulted in a variety of successful attempts to raise national awareness of how to be better stewards of our planet by reducing the amount of non-biodegradable items we’re sending to landfills.

Earth Day was established in 1970, the “Reduce, Reuse, Recycle” campaign began in the ’80s, and who can forget Captain Planet and the Planeteers in the ’90s?

The movement continues, with more conscientious consumers taking note of a company’s carbon footprint, and supporting brands that exhibit a concerted effort to “being green.” Entire cities, like San Francisco and Austin have committed to generating “Zero Waste,” reducing their landfill waste to 10 percent or less within the next 6-20 years.

This doesn’t necessarily mean that waste management companies are under threat of extinction. Instead, it presents an opportunity to adapt to the market’s environment and provide services that match the demand of an evolving customer base. For the owners of waste management companies, it can also be a source of pride knowing that they can be part of the solution, not the problem.

For Chuck Herb, the most satisfying aspect of what he does is “the feeling of helping other people and doing good in the community. We are LEED certified and are able to recycle construction debris. We work hard to support environmental initiatives like the City of Austin’s Zero Waste program by recycling a lot of materials that usually end up taking up a lot of space in landfills.”

“We’re a ‘green’ company,” says Keith Ferguson, regarding one of his three waste management businesses, FER Wastewater, LLC. “We’re able to tell people we separate out the water, we turn the solids into compost, and the water that we discharge to the city [...] is still recycled. Even though it comes in with all the human waste, they still clean it up and they discharge water out into the environment.” He continues, “We take pride in that we’re turning something back into, you know, [giving] the water back in the environment. We’re not just getting rid of it.”

Adapting to environmental changes can be difficult, but rewarding, with rewards sometimes coming in the form of the unique projects that present themselves. Take for instance, Joe Lewandowski, who in 1983 was in the process of acquiring a 300-acre landfill in New Mexico, when he saw the first of nine truckloads arrive from El Paso, Texas. Their cargo? Thousands of unused Atari cartridges, including the major movie tie-in flop, “E.T. the Extra Terrestrial.” Just last month, Lewandowski found himself in the middle of Atari’s story once again when he helped documentary filmmakers excavate the burial ground of the fabled “worst video game ever.

In Florida, Chuck Herb has had a wide range of experiences hauling trash. From hauling eight loads a day for the $150 million construction of the Cabana Bay Resort in Universal Studios, to finding a dead 11-foot long alligator in one of their dumpsters in Orlando. In Oklahoma, Keith Ferguson’s projects can range from an 80-truck job of transporting soil contaminated with polychlorinated biphenyl oil to Alabama, to getting rid of hazardous liquid used to strip muscle tissue off of animal bones.

“This gentleman that owns this is the only museum like it in America, I believe, and he has, like, whale skeletons, and different skeletons of different animals in this museum, and he does a lot of it for universities, for studies. That’s probably the strangest thing we’ve ever had to haul. We had to make sure that there was no pathological material in the solvent and stuff when we took it to burn it.”

“It smelled like dead animals in there. When I walked in and said ‘Man, it stinks in here,’ he said, ‘Well, it smells like money.’ And I’ve used that phrase [about garbage] ever since.”

No matter how bad it smells, the business of garbage doesn’t seem to be slowing down anytime soon. There will always be waste to dispose of, but the methods we employ to dispose of it and the what we do with it may look vastly different in ten or fifteen years. Earlier this month, British Airways announced the purchase of $500 million worth of fuel from Solena Fuels, a company that is able to convert landfill waste into jet fuel. It will amount to roughly two percent of the airline’s total fuel usage, but it’s just the beginning. The world’s waste has the potential to provide up to 25 percent of the aviation industry’s fuel needs.

When Keith and Chuck were asked what they would tell a younger version of themselves before starting their own waste management businesses, they both advised being prepared for future changes.

“Don’t ignore technology,” Chuck advises. “Now, all of my sales reps are going to have iPads with them and new app programs. Everything is going more electronic for drivers, too. We’ll have more hand-held devices and we’re moving away from paper transactions so everything will be automatic and online for quicker, efficient service.”

Keith adds, with the struggles of 2008 and 2009 still fresh in his memory, “Just plan. Save up. Don’t try to grow quite as fast as you did at the time.”

Despite the ups and downs over the last 19 years, Keith doesn’t regret starting his own business, and is glad for the people that have made his business what it is today. “You get mad at each other, you have your ups and downs, but, in the end, you take care of each other. And, I don’t care about making [a lot of money], I don’t want to be the next Bill Gates. I just like seeing people make a living, and know that you’re helping them out. That’s my benefit from all this.”

 

 

 

About the Author Jonathan is the Community Manager for Bplans.com Follow Jonathan on Google+ Read more »

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  • http://www.liveplan.com/ Noah Parsons

    Great article, Jonathan. I especially like how forward-looking both of your case studies are and how they are aware of the different technologies out there, especially recycling and energy generating technology.

    It’s amazing how big this industry is and surprising that you can still be a startup in this arena.