Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 8, 1992 TAG: 9203100383
SECTION: BUSINESS PAGE: B-1 EDITION: METRO
SOURCE: SANDRA BROWN
DATELINE: LENGTH: Long
This group is circling the Roanoke Valley looking to latch onto some modern gold - the hauling, dumping and recycling of what the rest of us throw out.
Since January, when Waste Management Inc. purchased the hauling facilities of Cycle Systems Inc., the area's solid-waste business has been fermenting.
Folks at the already-present Handy Dump Inc. and Virginia Container Service Corp. are practically rubbing their hands in anticipation of confronting the international newcomer. They're also doing practical things, like adding trucks and sales staff.
The companies are not just preparing to do battle with each other. They smell money in an industry that's sure to grow and which has an average return on investment of about 18 percent, making it one of America's more profitable businesses.
Timing is what it's all about.
Timing is why the 75-year-old family-owned Cycle Systems sold its hauling division. It was faced with having to spend money to update and replace equipment for hauling while its mission was to concentrate on processing recycled materials.
Cycle Systems decided it could leave the hauling of trash to Waste Management Inc. and have a shot at processing recyclable materials collected in the larger geographic area where WMI already operates.
Timing also is why WMI wanted to buy.
The solid-waste business in Virginia is sure to get bigger, for a variety of reasons:
Recyling isn't just the environmentally right thing to do. It's being legislated. New state law requires that localities recycle 15 percent of their solid waste by 1993, 25 percent by 1995.
Many localities can't afford to develop landfills that would cost at least $500,000 to set up and are looking to private developers for help.
As municipalities struggle with budgets, there's more talk about the privatization of services such as residential trash collection.
The Roanoke Valley already is slated to build the new regional Smith Gap Landfill and a transfer station where trucks will bring waste to a trash train. Those plans mean there will be a need for some company to operate a materials recovery facility, where recyclable items are sorted and processed.
The Environmental Protection Agency is considering tough rules on medical-waste collection. Even the needles used at home by diabetics might need to go in special containers and be picked up by a licensed hauler.
Virginia Container, Handy Dump and trucks now owned by Waste Management of Virginia-Blue Ridge hauled 89,495 tons of commercial and industrial waste to the Roanoke landfill in 1991.
They paid $2.2 million just to dump their loads and aren't saying how much they made to haul them.
Waste has big figures attached to it.
The handling of solid waste and hazardous waste had revenues of $25 billion in 1990, according to Waste Age Magazine in Washington, D.C. That was double the revenues of 1980.
Virginia Container and Handy Dump are privately owned companies, meaning they do not reveal sales and revenues figures. Together they employ 36 people. WMI of Blue Ridge has the same number of employees.
Virginia Container is strictly a hauling company; Handy Dump does both hauling and processing of material for recycling.
WMI in its various identities hauls trash and recyclable items in 48 states and 20 countries. In 1990, it employed 62,000 people and had revenues of $6 billion and net income of $685 million.
Its services range from residential recycling to low-level radioactive-waste storage, transport and disposal.
Waste Management was the company that cleaned up Kuwait after the Persian Gulf war ended last year.
> Gary Phillips, manager of WMI of Blue Ridge, said his first job is to "blend" the Cycle Systems hauling facilities into WMI's operations. That means getting to know a new staff, assessing equipment and evaluating the cost-effectiveness of routes.
In 30 days, he said, he'll be ready to pursue aggressively new commercial and industrial business.
After that, he has a few more ideas.
He wants to haul your trash, and mine, and anyone else's who lives along the Interstate 81 corridor.
He wants to operate the transfer station for the Roanoke Valley Regional Landfill.
He wants medical waste from local hospitals to burn at the WMI incinerator in Kernersville, N.C.
He wants to set up recycling programs for every individual, business and industry that's willing.
He wants to establish a private landfill for any locality that can't afford a public one.
Some of these things may seem far-fetched. Roanoke and Roanoke County haven't said anything publicly about hiring an outside firm to handle residential trash collection. And the Roanoke Valley Resource Authority plans to operate the transfer station.
But, in case these things change, Phillips' company has the resources to grab the business. WMI already has 9.3 million residential customers and operates 130 solid-waste landfills.
Phillips' forte is setting up new operations. A graduate of East Tennessee State University, he has been with the company 12 years and is on his fourth assignment. He came from Greenville County, S.C., where WMI is one of many private haulers and operates a private landfill.
Phillips is one of WMI's "people persons," his definition. "The company likes for us to be involved in a community," he said.
Civic involvement is so encouraged by WMI that for every hour an employee volunteers, the company makes a comparable cash donation to a local charity.
Phillips said he has coached Little League and, as the father of a 13-year-old, expects to do more of it.
Waste Management courts a good citizen image. It issues an annual environmental report, and in 1990 listed $850,000 in grants to environmental organizations. Its chairman, Dean L. Buntrock, is a director of the National Wildlife Federation.
Part of what Phillips has been doing since he arrived in Roanoke in mid-January is getting to know the community and its power structure. In three weeks he made the circuit, from a Salem Rotary Club meeting, to a Clean Valley meeting, to the Roanoke County Board of Supervisors ("to see who was who") and to a Roanoke Regional Partnership meeting.
He and Blake Rhodes, the local company's controller, are the only two WMI people transferred to Roanoke. They have offices in a small house adjacent to Cycle Systems' property on Broadway Street Southwest.
The house and a nearby trailer will house the operation until it finds permanent quarters, preferably in the Hollins area close to I-81.
Rhodes, a Northern Illinois University graduate, started seven years ago with Waste Management in its Oak Brook, Ill., corporate offices. He came here from Atlanta.
The rest of the staff includes one new hire and 35 people who used to work for Cycle Systems.
Roanoke is but another toehold in the Interstate 81 corridor for WMI, which already has divisions in Northern Virginia and Harrisonburg. Elsewhere in Virginia, it operates in Richmond and Tidewater.
WMI has been in the state since 1983, when it bought Sanitation of Richmond Inc.
In 1983, it set up Waste Management of Northern Virginia. It started its first recycling program in the state, in Manassas, according to Meg McKnight, spokeswoman in the company's regional headquarters in Marietta, Ga.
In 1987, Waste Mangement of Hampton Roads was set up. In 1991, it got contracts with the Peninsula Public Service Authority to collect waste at 64,000 homes in Virginia and North Carolina. It also operates a materials-recovery facility in Hampton.
WMI's Central Virginia Waste Management serves 56,000 homes and operates a recycling program with Philip Morris Cos. in Richmond. There's also a Waste Management of Tri-Cities, and WMI owns American Refuse Service Inc. in Harrisonburg.
Recycling is major business for the company. It has a staff of experts who can be called in to counsel a company or community on setting up a program, said Phillips.
WMI's Recycle America service has contracts in more than 560 communities to pick up items at 4 million households. It operates 11 tire-shredding and recycling facilities; has more than 60 materials-recovery facilities and more than 20 yard-waste composting facilities in operation or under development; and provides paper recycling for more than 600 offices.
The company is a major contributor to Keep America Beautiful and provides the program with a full-time consultant, said Phillips.
In some areas, WMI operates programs that pick up residential trash to go to the landfill, recyclables to a processor, lawn clippings to a composting center and usable donated items to Goodwill and the Salvation Army.
The company's good-citizen image is not spic and span, however.
In December 1991, WMI's Chemical Waste Management Inc. division was fined a $1 million by the state of Illinois. The civil penalty involved safety rules at a hazardous-waste incinerator in Chicago. According to reports in The Chicago Tribune, WMI already had paid $3.9 million in fines and expenses to the state and $3.75 million to the federal government.
The newspaper also reported that in October 1991, Waste Management of Pennsylvania Inc., agreed to pay $4.1 million to the Pennsylvania Department of Environmental Resources for accepting excessive waste and falsifying records at a landfill at Erie in 1990.
Phillips's response to the fines was that, like any major business with thousands of employees, WMI has had "individuals" who made mistakes. He said the company has taken care of its mistakes or violations promptly. He said both the Chicago and Pennsylvania incidents were discovered by the company's internal audit process and reported to authorities.
Last May, the Greenpeace environmental action group targeted the company with a booklet, "Trash into Cash. Waste Management Inc.'s Environmental Crimes and Misdeeds," urging institutional investors to sell their WMI stock.
Greenpeace, which timed its attack to WMI's annual stockholders meeting, said the company was cleaning up on Wall Street but leaving a "trail of environmental havoc around the world in communities where it operates."
The activists' basic argument was that WMI encourages waste by being so efficient at collecting it.
At the meeting, stockholders heard that WMI's revenue had grown at an annual compound rate of 30 percent in the preceding five years.
Phillips said the Greenpeace "maintains that all wastes can be eliminated" and its report supports an environmental ideology that "can't be attained."
By July of last year, each Virginia community had to submit to the state its plan for achieving recycling mandates. Localities were required to recycle 10 percent of their solid waste by the end of 1991. That goes to 15 percent in 1993 and 25 percent in 1995.
Plus, the legislature can kick up the recyclable limits after 1995.
As governments plan for keeping materials out of landfills, turning over collection to private companies is a valid consideration, said Harry Gregori, policy director for the state's Department of Waste Management.
"As local governments go through the planning process and begin to see the costs, they look at options in the private sector," Gregori said.
Recycling doesn't mean financial gain for communities, he said. Its value comes in keeping material out of landfills, "even if it means paying to have the material collected."
The business potential is there in the valley's solid-waste industry, said John Hubbard. In a week, the Roanoke County assistant administrator will become executive director of the Roanoke Valley Resource Authority that will operate the Smith Gap landfill.
Hubbard said the authority will run its own transfer station and won't need bids from companies like WMI.
"But, if their interest is collecting residential, there's always that potential," he said.
Hubbard said there also will be an opportunity for some company to set up a materials\ recovery facility to serve the new Smith Gap landfill's transfer station.
The authority already has heard from several companies interested in setting up a centralized processing plant for the solid waste that will be trucked to the Hollins Road transfer station, where it will be loaded on the trash train to the landfill. Hubbard said WMI hasn't made a presentation, though.
It will, said Phillips and Rhodes.
They said WMI can reduce by at least 20 percent the amount that would go in the landfill. Maybe, it can recycle as much as 30 percent, Phillips said.
Blake knows from personal experience that the Roanoke Valley is ripe for a more sophisticated recycling program.
When he and his wife unpacked at their new home, they had empty boxes that were too large to fit in the trash container Roanoke County provides.
"We called the county for pickup and were told that what wouldn't go in the container wouldn't be picked up," said Rhodes. "They said put in a little bit each time."
Instead, Rhodes hauled the boxes to the Community Recycling Center containers near his temporary office.
But he'd rather have sent a Waste Management truck to his neighborhood to pick up his boxes. And yours, too.
WASTE MANAGEMENT INC.\ Business: The company claims to be nation's largest provider of services for waste reduction, recycling, collection, processing, air pollution control systems, water treatment technologies, environmental engineering and consulting and disposal of solid and hazardous wastes. The company has 900 operating divisions in 48 states and 20 foreign countries Units: Waste Management of North America Inc., Chemical Waste Management Inc., Wheelabrator Technologies Inc., Waste Management International Inc. Headquarters: Oak Brook, Ill.\ Employees: 62,000\ History: Began about 24 years ago as local Chicago trash hauler; went public in 1971 when it reported a $4.4 million profit; also owns companies that provide lawn care, portable toliets and operates waste-water treatment plants.\ Ownership: A public company whose shares are traded on the New York Stock Exchange\ Financial profile:\ Revenues: (in billions) 1991: $$7.55; 1990: $6.03; 1989: $4.41; 1988: $3.53; 1987: $2.73.\ Net income: (in millions) 1991: $787.3; 1990: $684.8; 1989: $562.1; 1988: $464.2; 1987: $327.1.\ Local operation: Waste Management of Virginia-Blue Ridge Inc., a division of Waste Management of North America Inc.\ Temporary offices: Broadway Street Southwest, Roanoke\ Employees: 36\ \ VIRGINIA CONTAINER SERVICE CORP.\ Business: Industrial solid waste hauler, a companion company to Walter S. Bandurski Inc. and Arrow Disposal Inc. of Dover and Wilmington, Del., which serve 2,000 commercial-industrial accounts and over 15,000 residents\ Headquarters: Wilmington, Del.\ Employees: 35 plus 6 in Roanoke.\ Territory: Dover-Wilmington, Del., and Roanoke.\ History: Incorporated in Virginia Sept. 22, 1986\ Ownership: Walter S. Bandurski Sr., Dover, Del.\ Privately owned, revenues and profits are not made public.\ Local operations: Office on Irvine Street Southwest; its principal customer is Norfolk Southern Corp.\ \ HANDY DUMP INC.\ Business: Solid waste management and recycling for about 1,500 businesses.\ Headquarters: Roanoke\ Employees: 30\ History: Incorporated Sept. 20, 1977\ Territory: Roanoke and New River valleys, Franklin County and Smith Mountain Lake area. The company also has customers in Clifton Forge and Covington.\ Ownership: President: Leman Dudley, and daughters: Vice president: Denise "Dee" Dudley Vice president, secretary, treasurer: Karen Conklin\ Financial: Privately owned, revenues and profits are not made public.\ Local operations: Roanoke office: 1132 River Ave., S.E.
by CNB