In the Spotlight

Royal Disposal: Keeping Its Finger on the Pulse of the Industry

From growing significantly despite a down economy to planning for the inevitable future changes in the waste industry, Royal Disposal has firmly placed itself at the forefront of its market.

From the time that Royal Disposal (Houston, TX) opened its doors in April 2001 to currently operating at full capacity, the company has done things its own way. Eleven years ago, Charles Gregory, Vice President, CEO and General Council for Royal Disposal was working as a corporate and commercial litigator when he was approached by his friend and partner, David Hannah, President and CEO, who brought to Gregory’s attention a company called Royal Maintenance which was primarily a recycler. “That company would go into businesses and condominium associations and pick up the trash with pickups and trailers, take it back to their home base and sort the aluminum cans, paper and plastics in order to take them to the recycling facility,” says Gregory. “They were doing the job primarily to eliminate disposal costs and obtain some revenue for the recycling material that they could sell; however, they were doing it very inefficiently, sorting the trash at another location. The owner at the time also was picking up janitorial contracts from high rise buildings as an additional business. As a result, he had outgrown his ability to keep growing his garbage company because he wasn’t mechanized.” When the previous owner finally sold the business to Hannah and Gregory, not only did they immediately started automating the company, they also started sorting trash on routes instead of in one central location—saving in countless man-hours and additional costs.

Growing from eight to 70 employees, Royal Disposal’s primary business focuses on solid waste and recyclables; however, Gregory stresses that they are looking at liquids waste as well as other elements in the waste stream in order to expand. Currently, the company services 55,000 residences, gated communities, high-rise townhouses, condominium projects and retail stores. Their area covers Montgomery County to the North, Chambers County in the East, Disoria County in the South and Fort Bend County in the West, encompassing most of the major metropolitan areas of Houston. “Houston and Harris County and the surrounding counties make up the fourth largest major metropolitan area in the U.S. in terms of budgets and population density. Houston grew in the last 10 years by 1.28 million people. Because the population has continued to grow, we have become the largest independent residential trash hauler in this part of the state.”

A Changing Economy

Despite a difficult economy these last few years, Royal Disposal has bucked the trend and grown 30 percent annually. Gregory points out that even through a major factor is that the city and the surrounding counties where they work has been growing in population density, as a company, they have also been much more deliberative of acquisitions and equipment purchases, they have accumulated cash as opposed to spending it and they have curbed hiring. Even though Royal Disposal is now more careful with their money, Gregory points out that they haven’t lost a customer due to service. “We do very well here because David has had prior experience in buying and selling trash companies and I had owned a trash company back in the 1980s which was primarily commercial and we’ve brought two skill sets together in the buying and building of this company. We have a perfect relationship, David spends more time looking at the minutia of excel spreadsheets and I do all the operations, from buying the equipment to training and maintenance programs, etc. Our skill set, and the different ways we do things, has allowed our growth.”

Gregory also stresses that they have not become a slave to debt. “The most important thing you can do as a private hauler is to conserve cash. You don’t spend it when you can. When you do decide to spend it, you have to make a decision on what competing needs are going to build you a return. The way to do that is to dollar cost averaging.” This philosophy involves buying the best used trucks available when you are first starting your business, rather than spending money on a new vehicle. “You don’t go out and buy new when you’d like to because although though the cost of maintenance is artificially low for the first couple of years, the capital cost is usually 50 percent more to buy new versus used,” says Gregory. He goes on to explain that when you are buying used you need to be mindful of the vehicle’s maintenance records and know where you’re getting it from. “I started looking at the cities since they typically take better care of their vehicles (depending on the city and where its located). You don’t want to buy trucks that run on ice and salt covered roads in the wintertime. You want to buy trucks that run in a dry climate like Arizona or Palm Spring, CA, etc.,” Gregory stresses. When evaluating a used truck, he says to also look for key indicators like engine hours, maintenance records, etc. as well as checking out trucks that have only run half a day. If you can’t get any them from the cities, the next step is to go to small truck dealers that know private haulers who may be selling their equipment. Say Gregory, “You have to look at the truck you’re buying and buy the best quality you can and that means you have to look at the total package.”

Maintaining the Fleet

Currently, Royal Disposal has more than 30 trucks and is purchasing additional ones as well. They have been moving towards getting trucks from Crane Carrier because not only do they specialize in building garbage trucks, Gregory likes that Crane Carrier provides enough customization to give its customers the kind of equipment they need in order to be efficient and productive. Gregory says that Royal Disposal started buying all new vehicles about three to four years ago in order to avoid having their fleet become obsolete or having to re-fleet at the same time. “When you are a young hauler the last thing you want to do is buy ten trucks in one year because those trucks are going to age at the same point in time and require the same maintenance about 36 months into it. After that, they are going to require more maintenance in year five and go downhill from there in year seven and eight. You’re spending all that money and then you’re going to have to re-fleet and buy the same 10 vehicles over again. At this point, you’re just going to be treading water and the same cycle will happen. As a result you won’t have the money to support the growth rate every year, so you have to decide do you want to grow or do you want to buy new trucks and how do I do both?” says Gregory. “And when a hauler gets to that point in the equation, that’s usually the beginning of the end. If you don’t grow in the hauler business, you’re dying it just becomes a matter of time and that’s what we’re not going to do. I’ve seen too many haulers make that mistake.”

Over the last few years, all of the new trucks that Royal Disposal has been purchasing have been natural gas. Because of the rules and regulations imposed on the waste industry by the EPA, Gregory says he has found it easier to do this since the natural gas trucks meet emission standards well beyond anyone can dream up. “You are not going to get anything cleaner than natural gas. It has reduced our emissions and maintenance by 50 percent and we haven’t looked back.”

In addition to these reductions, Gregory points out that the trucks help the community as well because since the natural gas trucks are much quieter, the people in the neighborhoods served don’t hear them coming, they don’t smoke up the neighborhoods and they have no NOX or greenhouse gas. Says Gregory, “It’s our way of giving back to our community and contributing as well as keeping our dollars in the U.S. We support our own State energy producers and buy our own natural gas.” Currently purchasing their natural gas from Clean Energy, Royal Disposal’s plan is to build a compressor of their own in 2012.

Training Programs

Royal Disposal’s training programs are started and maintained by Gregory who believes that to be able to teach it, you have to know it and they have been very fortunate to have the best drivers in this industry. In the last 10 years, the company has only had one workers comp claim. When experienced drivers are hired, they ride with Royal Disposal’s driver for 90 to 120+ days. Driver’s safety training programs are also held and those in attendance talk about the best practices or what they’ve learned. “There is peer pressure to be the safest operator or to have the least customer complaints. It is the corporate culture that you have to start with every day—inspect what you expect. Inspect what your employees do every day and let them know what their expectations are. By doing this, they deliver because they know that their jobs depend on it,” says Gregory. “Our employees know they have to do a good job because if they don’t somebody else will and that’s a pretty good inducement to maintaining your job security.”

Gregory’s philosophy is to manage from the bottom up, stressing that their drivers are the ‘captains of the ship’. They are responsible for what happens on the street from the time they leave home base to the time they get back. On the side of each truck is the captain’s name and each one takes care of his own truck. They also have the ability to hire and fire their own crews. If somebody has been violating the rules or not doing a good job, the driver can put that particular helper on the side of the curb and call a supervisor to pick him up and take another helper out to them in order to continue on their route. The supervisors typically do not have the ability to overrule what that captain has decided. “Our guys are held in high regard because either rain or shine they are out collecting garbage. We take care of them because they do the heavy lifting. They are important to us and we make certain crews work together and they are a unit. Management stays out of that aspect because the more you put into that, the less unity and less cohesion you are keeping in it. Everybody has a lot of respect for each other; that is why our business works so well,” states Gregory.

He explains that he also likes to train from the ground up as well. “I’ve put drivers in trucks that have started as helpers. I take people who are starting on the back of the truck and I try every way I can to put them in the cab of the truck as a driver,” says Gregory. “We’ll take those people that have the aptitude and desire to driver a bigger truck and have the desire to make better money and climb up the ladder and they’ll be the guys that I put in the cab of the truck. Since it is a bottom up approach, the guys that are the supervisors once started as helpers, became drivers and are now supervisors. You want to get to management? I’ll bring you to management, but you have to learn from the bottom up.”

As far as safety goes, Royal Disposal focuses on lead drivers. These are the drivers that have not missed any work and have had no accidents over an extended period of time. The company also has supervisors show up on routes and do spot checks. However, they don’t show up in company cars, they keep a low profile so they can get up close and record what they see. Then, during driver seminars, the speaker will show a video presentation that shows what somebody may or may not be doing. In addition, Gregory says that the Harris County Sheriff’s Department, who are primarily responsible for roadside truck inspections, have attended luncheons at the company and will go over with the drivers specifics about equipment and best practices. “We have the benefit of having the people that are responsible for the enforcement of the safety regulations teaching our guys firsthand. As a consequence, those guys are the point of the spear and they are very happy to know that we are sincere about what we do. Our equipment is very well taken care of, rarely do we find any infractions,” says Gregory.

Community Involvement

Gregory stresses that the company is part of the communities they serve everyday because they are out there picking up the trash. “We are where they live and we have a sense of responsibility to drive carefully so that we don’t damage their property or worse yet harm anyone.” Royal Disposal is extremely involved in helping their own area. Not only did the business begin and grow in the Houston, but they also still hire and buy equipment locally. They are also involved in several local charity organizations as a way of giving back to the surrounding communities. “We decided long ago that we are going to take care of our charities at home. David is involved very deeply in the Heart of Texas Foundation which is designed to put theological seminary extensions within the Texas penitentiaries,” says Gregory. “On a different note, we have a pink truck coming out in November that is designed to foster breast cancer awareness—the tagline says, ‘We trash breast cancer’. Designed to benefit the local breast cancer foundation, it’s the only one of its kind in the U.S.” In addition, Royal Disposal also contributes to the Texas Children’s Hospital and they have put graphics on their equipment for the local Shriner’s Hospital in order to bring awareness about what they do. “We have to start in our own communities because they give us the money to do what we do and there is a lot of trust there. We are becoming more community conscious because it is our way of giving back and it deserves to be done,” says Gregory. Royal Disposal also sponsors community events by giving them free garbage service and also provides pickup service at no cost to families of soldiers in order to support the troops. “We’re just starting in those endeavors and we’re going to get more proactive the bigger we get. Houston is deserving of that. Royal Disposal is going to be the leader of that pack. We didn’t get where we are by not being good stewards of our benefits and now that we’ve grown, it’s time for us to give back.”

Keeping Its Finger on the Pulse of the Market

One of the things that Royal Disposal believes companies need to do in order to get things to happen in the industry is to use a social medium to get messages disseminated as far and as wide as possible. “No longer can one person get the job done and cover as much territory as you can with the other mediums that are out there. You have to be more efficient about how you use it and you have to be more strategic about where it is you are aiming it because if do a shotgun approach, it won’t get you anywhere and you will have wasted all of your money,” says Gregory. “In order to make the best use of these tools and your money, you have to know where to aim the gun. You can’t hit your target unless you know where it is.”

For now, Royal Disposal is concentrating on growing the business and getting into the disposal side of the industry, rather than just hauling. “For most private haulers, the single largest expenses they face are landfill, labor and fuel. You’re either going to control costs by reducing the waste stream that you collect from, by being the disposal site or by diverting the waste stream away from the disposal sites,” says Gregory. As a result, Royal Disposal is moving forward with plans to go into that side of the business in January 2012. In addition, the company has acquired two other small garbage companies and has looked at a few more potential acquisitions as well.

Gregory stresses that the one thing he is most proud of is the ability to stay in business after 10 years with the kind of record that they have. “The waste industry is an extremely capital intensive business. Royal Disposal has been here for 10 years and we know what we’re doing; we know what we’re going to be doing the next 10 years. The trash business is evolving significantly and the only way we’re going to be here in the future is to know what’s going to be over that hill and I think we are already doing things to prepare for what’s on the horizon. The waste industry is constantly changing and you need to be able to plan now for what those changes are and that is what we are doing. We are not going to get in a position where we are unprepared. We plan on being there when people are still trying to figure it out.”

For more information on Royal Disposal, contact Charles Gregory III at (713) 526-1536 or via e-mail at [email protected] or [email protected]

Sidebar

The Beginning of a Career and Partnership

I came to Houston, TX in 1977 to go to law school. I didn’t want to be a lawyer full-time when I was finished. I had visions of being in the garbage business and I wanted to be in the garbage business from the inside out so I went to work for anyone that would hire me. That same year, I started working in sales at a company where David was already employed as sales manager. I went to school in the evening and worked during the day. When I learned all I could learn about selling trash, I went to another company. Because of my equipment knowledge and background, I didn’t want to be on the manufacturing side, I wanted to be in the hauler/service side. I had been delivering new equipment and demonstrating garbage trucks ever since I was able to get a commercial driver’s license, so I already had this long lineage of being in the trash business because I was born into it, so I wanted to continue doing that. I had the opportunity to go to law school because that was the deal I made with my grandmother—in order to get started in the trash business I had to go finish school. I decided that Law is more complementary to the trash business so I went into the trash business after I passed the bar.

Since that time I’ve had plenty of reasons to use my lawyer expertise in the trash business and that’s part of the reasons that I have been able to maneuver the minefields and continue to grow. I am a good garbage man but a better lawyer. If you don’t have to educate your lawyer about your trash company, you have a real advantage. Before Royal Disposal, I was doing corporate and commercial litigation and David was running janitorial companies for high-rise buildings and corporate development cleaning. He came to me with this opportunity and wanted to get my opinion on whether or not it was the right thing to do. At that time, I wanted to get out of the law office anyway because I didn’t want to grow old as a litigator, so I looked at the financial statements he gave me and two days later we met and talked again. I told him this is what you have to do: go buy a garbage truck, don’t do things the way they’ve been doing it and he agreed saying I don’t want to do this without you, so we started Royal Disposal.”

Charles Gregory

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