Waste Firm Hemorrhaging Customers As Monopoly Ends
BY BUDDY NEVINS
Pity poor the waste disposal giant Wheelabrator Technologies.
Forced to compete in Broward for the first time, some of the company’s customers have fled as newer firms fought for Broward’s waste disposal business.
Wheelabrator, a subsidary of the international waste firm Waste Management, has lost about a third of its business from cities in Broward.
Competition has also proved a bonus for customers. It forced Wheelabrator to cut its disposal rate in half!
The big winner is Sun/Bergeron, a joint venture of Broward entrepreneur Ron Bergeron and Palm Beach Count-based Sun Recycling.
Sun/Beregeron competes in only one aspect of the waste business – disposal.
Here is how the garbage that leaves your house is handled:
The business is divided between haulers and disposal firms under separate city contracts. Haulers pick up waste at homes and businesses and carry it to disposal firms.
The hauling and disposal are combined as one charge to homeowners and businesses.
The dominant disposal firm in Broward has been Wheelabrator, which burned or buried the waste for 26 of Broward’s 31 cities since the 1980s. Its contracts end in July.
Two Wheelabrator plants now burn some waste and turn it to energy at two Broward plants. The rest is buried in its landfill, with the bulk going to the huge mountain of waste along Florida’s Turnpike in North Broward.
Sun/Bergeron has a different approach. The firm pledges to recycle at least 75 percent of the waste although some in the industry are skeptical of the firm’s ability to reach that goal.
The latest disposal contract was handled out this week – Deerfield Beach.
It went to Sun/Bergeron after frenzied lobbying which included Wheelabrator hiring former County Commissioners Scott Cowan and Sylvia Poitier, who was also a Deerfield Beach commissioner.
Why did the margins grow so much last quarter? Why was the net up so much with the price of gasoline up so much? Who owns the most landfills in the USA? This is what you call a wide moat company. Moms and pops can start a collection business but where does all the garbage go? Let me know if you have any other good ideas. FL is not densely populated and it is harder to make money if you have to travel around so much. Is it a good thing that WM isn't chasing low margin business? I think so but you can differ.
Concord, 6 other towns pull out of Wheelabrator trash contract
By LAURA McCRYSTAL
Thursday, June 27, 2013
(Published in print: Thursday, June 27, 2013)
Concord and six other towns will stop sending their trash to Wheelabrator’s incinerator in Penacook.
A new contract with Wheelabrator Technologies Inc. was approved by 17 of the Concord regional trash cooperative’s 24 members last night. Franklin, Laconia and 15 other towns will send trash to Wheelabrator through 2022.
The seven communities that won’t enter the contract must find somewhere else to send their trash by 2015 – though they’ll remain members of the co-op. Director Jim Presher said all member communities still have a stake in the co-op’s assets and must care for the landfill in Franklin. By allowing some members to opt out of a new contract, Presher said he hopes to avoid negotiating withdrawals from the co-op.
But the Concord City Council took action last week that authorizes City Manager Tom Aspell to withdraw from the co-op. Chip Chesley, the city’s general services director, voted against the contract on behalf of the city last night, but took no further action. Concord remains a member of the cooperative.
Six other towns voted against the contract: Belmont, Bradford, Dunbarton, Gilmanton, Henniker and Pembroke.
Concord is the co-op’s largest member, and its departure was anticipated during contract negotiations. To pass the contract last night without Concord, the remaining members needed to commit to sending just 58.5 percent of the trash it currently delivers to Wheelabrator.
Though last night’s vote fell short of that required amount – members only committed 55.04 percent of the current tonnage – Presher said Wheelabrator had agreed to move forward.
“We have had discussions with them once we knew basically where we were here,” Presher said. “They have indicated that they are comfortable with 55.04 percent.”
Under the new contract, Wheelabrator will lower its tipping fees to $64 per ton. That rate can increase between 1 and 5 percent each year.
The contract will go into effect retroactively to April, and will continue through 2022.
Concord and the towns that voted against the contract can continue paying the current tipping fee of $66.80 per ton until the end of 2014.
In Concord, officials have said they’re reviewing all options for trash disposal. The city has a contract with Bestway Disposal Services, which picks up trash and delivers it to Wheelabrator’s incinerator in Penacook.
Earlier this year, the city issued a request for proposals from trash haulers. That request yielded proposals from all the major trash companies in the area, Chesley said at a May co-op meeting, according to the meeting minutes. But there’s still time for the city to choose an option; its contract with Bestway expires at the end of next year. (Bestway is now owned by Case
Sentiment: Strong Sell
WM is becoming like ECL with legacy assets that pay for new ventures. It is also going heavy in the Bakkan with waste services. It is leaving the low margin mom and pop businesses and going into the more difficult and financially rewarding higher margin businesses that moms and pops cannot handle. WM is a growth stock and that is why it trades at around a 20 multiple. Short it if you like buy you will be paying me the divy ... so thank you.