The Trash Blog

Bigger is Better?

If you look closely, you can see us standing beneath the shady trees at the base of Republic's corporate headquarters.

If you look closely, you can see us standing beneath the shady trees at the base of Republic’s corporate headquarters.

On June 23, 2008, the third largest company in waste disposal, Republic Services, purchased Allied Waste Industries which used to be Browning Ferris Industries, formerly American Refuse Services, creating the new second-largest waste disposal company, again.

This confusing story begins in 1966, when Tom Fatjo bought a garbage truck and started the Houston-based American Refuse Services, joining the host of private haulers in the US waste disposal industry.

In 1969, American Refuse Services purchased Browning Ferris Industries (BFI), and became a publicly traded company. By 1975, BFI had 2800 trucks in 131 cities and became the second largest waste disposal company in the world.

How often do you get to pose with the logo of the second largest waste disposal company in the world?

How often do you get to pose with the logo of the second largest waste disposal company in the world?

In 1999, Allied Waste Industries purchased BFI, taking the coveted second-place position behind Waste Management, Inc (WMI). The new second-largest waste disposal company continued the trend of growth, buying local haulers all over the world. Republic Services‘ 2008 acquisition of Allied Waste further consolidated the industry.

It is hardly shocking then, that as Margaret and I travel the US, we have yet to discover a town that is not serviced by WMI or Republic or one of their subsidiaries. The size of these corporations has partially been created by regulations (as meeting landfill regulations becomes more expensive, small players are driven out of the industry) and is partially due to aggressive business tactics (both WMI and BFI have plead guilty to price fixing on many occasions, as well as agreeing not to solicit each others’ customers).

It may appear from this picture that Republic Services is an insurmountable story, but the truth is we managed to climb on top of the sign eventually.

It may appear from this picture that Republic Services is an insurmountable story, but the truth is we managed to climb on top of the sign eventually.

Dr G Fred Lee, the landfill expert, told us that he and other experts believe the waste disposal industry will be characterized by a massive collapse since the regulatory structure has placed an incredible amount of future liability on waste disposal companies. The industry remains lucrative now, but profits will begin to drop as landfills cease to create revenue (due to closures) and become net expenses (due to the thirty years of financial responsibility for maintenance, monitoring and clean-up required by law).

It makes me wonder if the trend towards consolidation won’t be replaced by a trend towards moving assets out of the industry followed by a series of bankruptcies. It seems like we need to rethink both our regulations and our expectations.

Image credit: We are deeply grateful to the splendid and wonderful Christina DeBusk for providing us with the images for this story.

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This entry was written by Philip and published on June 15, 2013 at 4:56 pm. It’s filed under Businesses, Economics and tagged , , , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

3 thoughts on “Bigger is Better?

  1. Uncle Chris on said:

    Some insightful business observations in your last paragraph! However, what regulations, other than those that now exist in bankruptcy laws, do you contemplate being able to foreclose a business from draining its assets in advance of becoming insolvent?

  2. Pingback: Waste Pickup Overcharges – Just Bad Accounting? | The Trash Blog

  3. Pingback: Still Sticking Our Nose in Garbage | The Trash Blog

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