Waste Management
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Industry Overview
The private waste management industry in the US includes over 10,000 companies with combined annual revenue of $50 billion. Three national companies, Waste Management, Allied Waste Industries, and Republic Services together handle more than half the solid waste generated in the US. Beyond the top three companies, the industry is highly fragmented: a midsized company has $10 million in annual revenue.
Competitive Landscape
Demand depends on the volume of waste generated, which depends on the level of economic activity and consumer spending. The profitability of individual companies depends on efficient operations, because the service is a commodity sold based on price. Big companies have large efficiencies of scale in operations. Small companies can compete successfully by offering specialized services or serving local markets. Annual revenue per employee is $200,000 at large companies, $125,000 at smaller.
Products, Operations & Technology
Major services are waste collection, waste treatment and disposal, remediation, and recycling. Waste collection accounts for about 55 percent of industry revenue, treatment and disposal for 20 percent, and remediation for 15 percent. Small companies usually operate in only one of these segments. Larger companies often have vertically integrated operations that include all of these components.
Waste management involves primarily the collection, transfer, and disposal in landfills of non-hazardous, solid waste. Companies may also handle and treat hazardous, low-level radioactive, and liquid wastes. The business is conceptually simple: trash is collected from businesses, industrial sites, and residences, and is buried. Growing public awareness of possible environmental dangers of this simple approach have complicated the business, making it more technologically demanding. US homes, businesses, and institutions produce more than 200 million tons of solid waste per year, approximately 4.4 pounds of waste per person per day. About 30 percent of waste is recycled or composted, 15 percent is incinerated, and the remaining 55 percent is disposed of in landfills.
Trash is usually collected from commercial sites using either small (1 to 8 cubic yard) steel containers (dumpsters) that are mechanically emptied into collection trucks, or large (20 to 40 cubic yard) "roll-off" containers that are loaded onto a special truck and hauled away. Residential collection is mainly done with back-end loading trucks.
Recycling and material recovery are a major part of waste management. Recycling is collection and disposal of commodity items like paper, cardboard, newspaper, glass, plastic, and metal cans that have been sorted out of the wastestream. Materials' recovery involves separating recyclable items from collected waste, usually by manually picking through a wastestream on a conveyor belt. Recycling collection is frequently part of commercial and residential waste collection, but may be charged for separately. Recyclables are sold to purchasers at prices that can fluctuate wildly, depending on demand. Waste management companies usually insulate themselves from price fluctuations by passing profits or losses from sales to the original customer.
Because landfills are now often located at a significant distance from many cities, companies operate transfer stations, where waste is received from various trash collectors, compacted, and hauled to landfills in special trailers. Operators charge fees based on the type and volume of trash received and the distance to the landfill. Recycling and materials' recovery operations are often located alongside transfer stations.
Modern landfills are technologically very different from the town dumps that used to exist in every city. Landfills usually have a clay liner on the bottom and sides to prevent waste from leaching into the local water table. Wastes are spread, compacted, and covered with earth daily. Monitoring devices detect leakage, and piping systems vent the methane gas created by organic decomposition. Full landfills are capped and may eventually be used for other purposes such as parks. For hazardous material landfills, the design, operation, and post-closure requirements are more stringent. Landfill operators usually own the landfill, but sometimes operate them for a municipal owner for a fee. The eventual closure costs of a non-hazardous landfill involve monitoring and possible repair for up to 30 years, while monitoring responsibilities for hazardous and radioactive sites last much longer.
Handling and disposing of hazardous (usually liquid chemicals); low-level radioactive (high-level radioactive wastes are handled by the federal government); and other liquid wastes are technologically complex and expensive, often involving chemical treatment to separate the toxic components. In some cases, treated hazardous wastes are injected into deep wells that are geologically isolated from the water table. The growing need for remediation services - the cleaning up of crude oil spills and ground contamination, asbestos and lead paint removal, and restoration of strip-mined areas - is allowing small companies with sophisticated technology to enter the field. While much of the work is technologically driven, it also usually involves disposal of materials in a hazardous material landfill.