As major changes begin to take place and smart technologies are becoming more prominent, 2017 saw a year of impacts that has changed the way in which the industry views collection, recycling and beyond.
Looking back on 2017, what are the significant changes you have seen over the past year in the waste and recycling industry?
David Biderman: Clearly, the most significant development affecting the waste industry in 2017 was China’s imposition of import restrictions on waste, scrap and recyclables. The combination of reduced import quotas, lower prices, tougher inspections at Chinese ports and North American recycling facilities, bans on certain categories of materials, and the impending March 1, 2018 carried waste (contamination) standard is affecting recycling operations from coast to coast in the U.S. and Canada. What was once sent to China is being placed in landfills (Oregon), disposed in waste-to-energy facilities (Massachusetts) and stockpiled in a number of locations. Many recycling operators have taken steps to improve the quality of their material to meet the more stringent standards. These include hiring more workers, slowing down the line and accelerating investments in new processing equipment (e.g., optical sorters) that reduce contamination. In addition, some companies and local governments who were reliant on China are sending recyclables in increasing quantities to other Asian countries, including Indonesia, Vietnam and India. SWANA has played a leadership role on this important issue, advising state agencies, municipal officials, companies, and other stakeholders on developments and urging that the quality of material improve. SWANA has filed two sets of comments on China’s proposals, urging a longer transition period for implementation of more stringent requirements. Finally, we are in close and frequent contact with the three federal agencies in the U.S (Department of Commerce, EPA, U.S. Trade Representative) involved in the China/recycling issue, and have had several conference calls with Canadian government officials.
Marc Rogoff: In July 2017, the Chinese government filed a notification with the World Trade Organization indicating the government’s proposal to ban the import of 24 solid waste materials. Further, the government said in November that it would impose a 0.3 percent contamination standard on bales. These two unprecedented factors are expected to impact many sellers and solid waste agencies dependent on the Chinese market. We are already seeing impacts on the west coast with communities’ petitioning their environmental agencies to landfill collected recyclables. Our firm has negotiated one recycling processing contract that specifically addressed this phenomena to provide sufficient protection to the material processing facility contractor to keep them afloat during these depressed market conditions.
Will Flower: Every aspect of recycling continues to evolve, including markets, technology, equipment and economics. Globally, the biggest impact to recycling has come in the wake of China’s National Sword program. The biggest challenge that recyclers are facing is the cost of recycling, which has been escalating over the past two years. Customers, including municipalities, business owners, homeowners and everyone else who wants to recycle, are going to be paying more for the service in 2018 and beyond.
Michael Paglia: The materials commodities market for pre-sorted clean material is now a much more stable environment. There has been some upward movement, most recently in November and December, where we saw some of the largest gains in commodities prices. Florida Express Environmental does not do any single-stream recycling, rather we do all clean recycling and the markets on fiber and metal commodities have been rising in price. As far as garbage markets go, we are not seeing price cuts and competition is strong, but it seems like everyone is able to push through increases because everyone has been experiencing significant increases in labor.
Larry Wyluda: I see a lot of changes with regards to continuing to move towards zero waste. There are more improved technologies for this out there. I also see the move toward electric and hybrid-type vehicles and the move away from CNG. The technology is evolving and companies want to get away from the diesel engines. California is a big driver for it. They pushed for years towards CNG and now they are focusing on electric trucks. These will be more prominent in late 2018 and into 2019. Cities are not requesting it quite yet, but I do see that some private trash haulers are pricing it out in order to get a leg up on the competition.
Is there a particular type of technology that really stood out in 2017 with regards to moving the waste and recycling industry forward?
DB: We are seeing increased investments in new technology platforms and an increased use of data across the industry. Waste Management hired a chief digital officer in 2017, and I strongly suspect others in the industry will do so in future years. Self-driving vehicles are being tested and if they work in the challenging operational environment that is solid waste collection, it could be a game changer for the industry.
MR: Not unlike other industries, the solid waste industry has in recent years embarked on a quest to include “smart technologies” in everyday processes and programs. The objective for most municipalities and private haulers is fulfill the mantra: providing services, cheaper, quicker and better to their customers. I see a variety of new software products to improve collection routing, back office accounting and electronics (cameras, onboard computers) to improve safety. To improve the quality of the products recovered from the recyclables stream, MRFs have become more highly automated as well as increasing in design throughput capacity. Recent surveys of the recycling industry have shown more reported application of optical scanners, drum and eddy current separators, and air classifiers, as well as increasing retrofits of dual-stream systems to handle single-stream recyclables. This application of technology has resulted in a reduction of manual sorting labor on the picking lines, although manual sorters appear necessary in many facilities to ensure quality control over the recovered products. Industrial robots have increasingly taken on routine tasks of many operations in a variety of manufacturing situations as well as in surgical settings. More advanced robots are gaining sensors and software, allowing them to perform non-routine manual, repetitive tasks such as welding, cutting and suturing. Most MRFs already use a combination of advanced sorting technologies followed by hand separation. Further, we are involved with an interesting mixed waste processing facility in the Northeast that is innovative and has a particularly firm financial structure, secure waste delivery agreements and negotiated tipping fee with the host communities. The mixed waste material process is relatively simple. Most of the standard two-dimensional recyclables materials like paper, cardboard, plastics, and metals are removed and sold, but the remaining materials are washed and processed through a pulper to recover the remaining cellulose materials. The organics in wash water are processed in an anaerobic digester generating biogas. Screened residuals are either disposed of at a landfill or used as alternative daily cover. In all, about 80 percent diversion is projected at a competitive tip fee.
WF: The growth and development of processing systems that liberate recyclables from the municipal waste stream are noteworthy. Dirty MRF technology is advancing rapidly because despite the industry’s best efforts to educate citizens and make recycling easy, consumers still place a significant amount of recyclable material into the trash that ends up being disposed of at incinerators and landfills. Over the next several years, I think there will be more investment in systems that process MSW for the purposes of recovering recyclables that were either mistakenly or erroneously placed in the garbage can.
MP: GPS has been coming on for awhile and it has really become perfected. It is much more affordable than what it was. We installed it in all of our trucks and it has been a great thing—it helps our dispatch, it helps in accountability and it helps in routing. All size companies now can afford that. The next thing is the DVRs and cameras in the trucks. We are now investigating companies that specialize in those offerings and we anticipate over the next 12 months that we will be introducing that technology into our culture. The fact that there are bundled services that handle the DVRs and the cameras in the truck is something that is evolving now. You have these companies that will monitor DVRs and send you e-mails when certain trucks may go out of predetermined parameters so you’re not sitting there looking at TV screens on all of your drivers. They have algorithms to do it. It is a very interesting technology that is coming down the line and it will be much more affordable for all size companies to integrate into their business. It is another layer for companies like us to protect against lawsuits liabilities, workers comp and accidents—all of those things. We are excited about that. Another thing that is that Florida just made a major move in investing in artificial intelligence drivers. The state is right now looking at legislation to earmark a portion of the Florida turnpike to allow artificial intelligent drivers on the road. They are also investing in a large training area for artificial intelligent testing grounds. I think that as the driver shortages continue, this is the way for the driving world to help mitigate that. How and when it hits the garbage side, since we are in neighborhoods, is a whole different issue, but I think that by the trucking world introducing artificial intelligence and integrating that into their systems, it may help relieve the pressures on their drivers and opens up the possibility that those operators will come to the local markets giving garbage companies a whole other pool of drivers to choose from. That is taking place quickly—it is already in California, Florida, etc.
LW: There are still some issues with infrastructure on the electric side but then again there is still issues with CNG infrastructure in parts of the country. In certain states that have embraced CNG, the stations are not only for the haulers, but they are also for taxi cabs, utility vehicles, etc.—it is a regional, local thing where they have embraced that technology. However, in some of the more remote areas, not so much. Infrastructure is easier for CNG because it has been promoted for so long. However, I see big infrastructure changes coming to the industry. Berkshire Hathaway just bought into Flying J, one of the largest truck stops in the country. They are going to own 80 percent of them by 2024. Love’s is transforming all of their filling stations to repair facilities. I think part of that has to do with the fact that there are new technologies around. Some of these truck stops are going to turn into filling stations for electric vehicles. I expect to see more of that taking place. Creating your own infrastructure is a tough nut to crack. So, what is the next best thing? Buy the existing infrastructure and convert it. We also have to be concerned with the fact that we can’t just have a repair facility to service a diesel truck and then throw in a CNG or electric truck in there—each process is different; the mechanics are different. There is a whole other level of certification and infrastructure that they have to do for that as well. Plus, until they improve the electric battery storage, you are only going to see these trucks on a local basis, rather than a long-haul route.
There have been many mergers and acquisitions taking place over the last few years. Do you see this trend continuing?
DB: The stronger economy over the past few years, combined with lower borrowing costs and a rising stock market, is helping to spur mergers and acquisitions in the waste sector. The recently enacted tax bill, which reduces tax rates, will likely be a catalyst for increased transactional activity in 2018 and 2019.
MR: The principles of consolidation in the solid waste industry have remained the same. The goal of most waste companies is to be vertically integrated so that it can control the flow of waste to the disposal facilities and provide sufficient return of investment to the investment groups. Consolidation allows for that to occur. Many investment groups have three to five year windows for recovery of investments, after which they sometimes look for an exit from the investment, which provides opportunities for further consolidation.
WF: Startup businesses thrive during a robust economy and over the past several years we have seen the development and growth of some strong local and regional companies. As these companies evolve, the potential for greater acquisition activity increases. Other economic drivers that are fueling acquisition activity include low-interest rates for borrowers and readily available capital from private equity investors.
MP: I see it continuing for a couple of reasons that may have not been as prevalent in the past and that is, number one, to obtain good management. The scarcity to obtain good people in our business is common so I think that some of the larger companies are looking to expand in a way to increase their profitability and their footprint, but also to the management that might be in place with that experience that they are not being able to pull out of college or off the streets. For every two companies that are selling, there is one new startup (a reversal from 20 years ago). It is more difficult to get into the business than in years past; it is much more capital intensive, you can’t fund operational losses, so at some point this trend will slow down because there won’t be a lot of companies to acquire. I think that acquisitions will continue in the near term.
LW: You are always going to see mergers and acquisitions, but I think it is going to be at a slower pace this year and next year. All the companies that needed and wanted to be acquired have done so in the last two years. As the population grows, the small hauler who may have only wanted two trucks now all of a sudden has 10 trucks. As the economy grows and there is more waste, these companies grow and become a target for mergers in larger hauling organizations. It will be interesting to see what will happen with the new tax laws and some of the regulations and de-regulations that Trump has put into place.
Are there particular U.S. regulations that have been implemented or updated that you think have really affected the industry already or will in the coming year(s)?
DB: The tax bill contains provisions that will allow purchasers to fully expense certain capital investments and increases the cap on such expenditures to $1 million. This will likely result in an increase in equipment and vehicle sales in the industry, which will benefit manufacturers, distributors and suppliers.
MR: The regulations in California and New England states regarding organics diversion have or will have some of the greatest impacts on the industry, in terms of the types of materials being disposed of at traditional facilities like landfills and waste-to-energy facilities. In my opinion, the constraints are sufficiently sized and priced organics processing facilities and generating product that can be sold. Contamination both in the incoming materials and outgoing product is an issue that the industry will need to resolve.
WF: Laws affecting the transportation industry will affect the waste industry as we rely on over-the-road truckers to move waste and recyclables. Recent regulations that mandate the use of electronic logging devices (ELD) cost truckers and could result in higher transportation rates.
MP: There are some relaxing of DOT rules. For example, during the previous administration, there was talk that if commercial drivers had certain medical conditions, they would take them off the road, but now it has been put on the backburner. With the new tax bill increasing the bonus depreciation will spur asset purchases. This administration has relaxed some things that have benefitted us on a business level. This trend will continue into the coming year, especially if an infrastructure bill is passed. An infrastructure bill will put more pressure on labor and with that there will need to be some easing of Department of Labor or environmental laws. They want to fast track infrastructure improvements. On a state level, we are seeing the artificial intelligence legislation being passed to encourage that; we see that as a big benefit. I see all of that leading to a very aggressive business cycle over the upcoming years.
LW: The Obama Administration was a big proponent of zero waste, waste diversion, windmills, electric trucks, etc. The Trump Administration has gone back to good old-fashioned oil and gas. I think the push towards the environmental regulations, laws and technologies are going to slow because of that. You don’t see the big tax subsidies or tax breaks that you’ve seen in the past. Then, you have states like California that are still pushing it, that still want zero waste. The California market is going to be quite a bit different from all the others. They’ve come up with some newer technologies for cleaner diesel fuel, and engines and engine components have evolved. If you look back at 2010 when they had the new aftertreatment components for diesel engines, they broke down frequently and had issues; it took several years for that technology to evolve. Once you started hitting 2014 to 2016, the same trucks that were breaking down frequently had been fixed. With the new Administration, there is not nearly as big of a push for new technologies, alternative fuels, etc.
Since the Chinese ban on recycling material has officially begun to take place, how have you seen the industry deal with this change so far?
DB: I expect that if the China waste import restrictions are maintained and enforced, we will see increased interest in siting new facilities for recycled paper and plastics in the U.S. and Canada.
MR: To date, most trade organizations suggest that the impacts to local recycling programs from the Chinese actions depends on three basic site-specific issues:
- Depends on whether you export—and where
- Depends on your contract (force majeure?)
- Depends on your contamination level
Some have argued that reducing contamination is the answer through efforts of education of customers to reduce contamination curbside, adding more workers and robotics at MRFs to clean up the bales leaving the MRFs, and to find other Asian markets such as India and Vietnam to sell U.S. recyclables. While education is clearly a reasonable answer, and one that municipalities should be doing as a matter of course, investment in U.S. facilities that would use these recycled materials is the only long-term answer. But this will take time. In my opinion, we, as well as our European allies, have looked to Asian markets to dump our “unwanted materials”. While we talk about entering the closed loop of materials management, we have done little, if anything, to facilitate the development of this new paradigm. Our Federal and state tax codes continue to encourage the use of virgin materials rather than recyclable products. Even the new tax code changes eliminate the use of private activity bonds for investment in recycling facilities. Another answer is changing the way many municipalities fund their solid waste programs. Typically, many fund them out of landfill tipping fees that oftentimes don’t take into account the cyclical changes in recycling markets. Funding appropriate operational fund reserves or rainy day funds is a way to insulate solid waste programs from the ups and downs in recycling; also looking at life cycle costing of solid waste programs could help. The Chinese import ban and contamination requirements will impact recycling programs both in the U.S. and Europe. In the short term, many programs may consider elimination of mixed paper and plastics from their curbside programs. There may be calls to landfill these materials in other programs. In my opinion, the long-term solution is to develop viable local and regional recyclables markets. This will take time.
WF: Paper mills, aluminum smelters and plastic recyclers have long complained about quality issues because it costs money to clean up recyclables at the mill. As recycling grew, and Asian markets were rapidly expanding, there seemed to be a wide open outlet for recyclable materials and some recyclers took advantage of the situation by egregiously shipping substandard materials to overseas markets. But let’s be honest … National Sword is as much about economics as it is about the environment. Economically, China found a way to help its manufacturers lower their costs at the expense of worldwide recyclers. To combat the challenges, owners and managers of recycling centers have changed processes, added Quality Control stations and developed plans to upgrade recycling centers to improve the quality of recyclables.
MP: It was destined to happen. We were putting together a poor package and then shipping it off to China where they have cheaper labor. It was only a matter of time when it did not make sense anymore—that business model has to change. Single-stream recycling, while conceptually is good, cutting back on the driver and truck times out on the routes, it continually makes a bad product for resale and it really works against the concept of circular economy because what we are doing is taking good stuff that could be pre-sorted by the consumer, telling them throw it into one place for convenience purposes, putting these good resources all into a truck that packs it all up together, and really diminishes its value by doing so, and then say we’ll take it as a resource. It continually works against itself. There has to be a change in the single stream approach—the consumer has to be aware that it is costly to recycle; we have to be prepared to pay more to have the resource recovery benefit from recycling and in doing so we have to be able to put a better asset out there to retrieve this pre-sorted material. The mentality is going to have to change right down to the consumer. The state of Florida Legislature is working on legislation that will penalize consumers for contamination in single stream. All of the big companies need to make the first move in saying to municipalities we have to change this single-stream concept around. Once that happens, it will follow suit right on down the line and people will take notice of this. We have to look at another way of doing things and single stream is not going to be the answer. Single-stream packaging was a Band-Aid and, unfortunately, it helped to promote bad habits, so reversing that will be a major national culture change.
LW: This change is huge. It has affected our industry adversely, especially on the recycling side with metals companies going out of business. They had those Asian markets requiring and demanding a certain tonnage every month, but now it is different. A lot of it has to do with the federal government. You see in the news every day how Trump is re-negotiating a lot of the agreements with different countries. I think this Administration is really changing how we negotiate with other countries. There is a huge benefit to the U.S. overall, but in smaller niche markets like recycling, there is not as much of an outlet as there has been in the past. He’s promoting more mining, more coal, more U.S. products. The spec has changed quite a bit—there are a lot of rules and regulations in place when it comes to trading commodities.
There seems to be a growing trend to move from the term “solid waste management” to “resource management” and the “circular economy”. What is the difference between these terms and why is this an important change?
MR: The concept has been in place since the formation of the “resource” conservation and recovery act (RCRA). In my mind “resource management” is the process of handling discards to minimize disposal or minimizing the generation of discards in the first place. “Circular economy” refers to a larger concept, which involves a combination of regulatory and business initiatives to purposely maximize the reuse of discarded materials for beneficial purposes. This will ultimately require a transformation of the way we approach materials and perhaps require a transformation of many of our manufacturing processes.
MP: I think that it needs to be promoted on a larger scale so people understand that what they are putting at the curb is no longer considered trash; it is not a throwaway item anymore. Let’s get that mentality trickled into the average Joe so it becomes more resource management and it truly becomes a circular economy—treat it as a resource it is. Perhaps with that, people will take some ownership of guarding the environment by doing their part and putting a little extra effort into recycling. Sometimes changing the term alone helps promote a different attitude amongst people and how they participate in the whole effect of recycling. The information that has been delivered to a vast majority of people has changed dramatically over the last couple of years. The industry leadership, association, members and large companies all have a role to play here. We have to do public service announcements and media advertisements. All this brings exposure to our industry. We don’t do enough of that as an industry. There has to be a broader buy in by everyone in the industry to contribute to a national effort to promote it and get these terms out there in common practice.
LW: Waste is now looked upon as a resource. Technology has advanced so much. Years ago, a traditional trash hauler, collected garbage from the front of a house and took it directly to a landfill—no MRFs, no transfer stations. Those trash haulers had to become recyclers. Now there is automation involved—your recycling can be curbside, MRFs are now more prominent, transfer stations are in place, there is source separating. Eventually, haulers are going to evolve into power companies. Trash is a valuable commodity. Technology is going to advance so much in the coming years that they will literally become a source of power. Now waste management has transitioned into resource management because trash has become a resource. On top of that comes the circular economy as well. We are going to see more of those terms changing over the years as the technology improves. We are looking for ways to take trash and convert it into energy or reusable products.
Waste collection continues to stay in the top five most dangerous jobs in the U.S. according to the BLS. What more can the industry do to help improve these statistics?
DB: The continued ranking of waste collection workers as having the 5th highest fatality rate in the U.S. is something that frustrates me deeply. It’s an issue I’ve been working on for more than a decade. Unfortunately, there is not a simple solution to this complex problem. Workers in the industry are killed, on nearly a weekly basis, for a wide variety of reasons: the truck turned over; the truck backed into the helper; the helper fell off the riding step or was struck by the driver of another vehicle, who may have been distracted at the time; the MRF employee was struck by a falling bale or didn’t disconnect the power before doing maintenance on a baler or compactor. In addition to industry employees, our trucks are involved in up to 80 fatal incidents annually in which another driver, a pedestrian, bicyclist or motorcyclist is killed. In just the first week of January 2018, there were four more fatalities. The status quo is simply not acceptable, and nothing we do at SWANA is more important. SWANA’s review of the industry’s safety data suggests a disproportionate percentage of the fatal incidents in the industry involve smaller companies who are not members of SWANA or other national waste associations. These companies may lack access to relevant safety resources, and potentially place a greater emphasis on productivity than safety. SWANA will be rolling out a major new safety initiative in 2018—through its chapters and Safety Ambassadors—to reach the owners and workers at these companies. SWANA is collaborating with other organizations who share our view that the status quo regarding safety is not acceptable (e.g., Environmental Research & Education Foundation, also known as EREF), and will continue to work with others who can help us get the waste collection industry off the list of 10 most dangerous occupations.
MR: In my view, it is a matter of statistical probability. Solid waste collection has so many “touch” points with potential harm, whether the number of miles driven, the number of times heavy materials are lifted or the exposure to other hazardous conditions. There is always more that can and should be done to improve worker health and safety. I believe the industry is committed to that end in terms of improved training and the use of smart technologies. Ultimately, we may have to transition to “driverless” solid waste collection vehicles and robots in MRFs.
WF: The collection and management of society’s waste is a risky business. We work with heavy machinery, drive large vehicles, perform in all types of weather conditions and lift tons of waste every day. Given our working environment, a strong safety program is a necessity. Most importantly, every safety program must begin with the personal commitment of every employee, supervisor, manager and executive to keep safety top of mind. Remember, the only acceptable number of accidents and injuries is zero.
MP: This is a challenge. Every day I wake up and look at all those things that continue to make this such a dangerous occupation. Unfortunately, there is no getting around that when you put employees on a road with other vehicles, there is going to be an increase in possibilities of accidents, mishaps, etc. In order to help minimize this, we need to try to bring more awareness to it and try to work with governments to eliminate distracted driving incidents. We have a lot of trucks that hit the streets every day. Fifty percent of the mishaps we’ve had out in the field were as a result of distracted drivers around our trucks. This is a main contributing factor to that statistic. We also need to continue to improve on the technology, embracing automated pickup. In the retirement communities here, they don’t want to have anything to do with pushing the carts down to their curb. Anytime you can integrate and automate a system and pull those guys off the streets from dumping garbage, it is a good thing. On a national level we have to do a better job of training our drivers. This year, Florida Express Environmental is adopting much more aggressive training for defensive driving for any potential mishap that may occur.
LW: I don’t see how we can get away from it unless we have automation and robotics to separate the trash. There are a lot of technologies moving in that direction, however you don’t see any of those technologies on a large scale in the U.S.; they are mostly in Europe. It is always going to be a dangerous job, especially any time you have manual labor doing the work, such as sorting lines, picking up trash, moving it around, etc. I’m surprised there are not more safety and training programs around on smaller scale. You see a lot of them implemented at large companies, but I think some of the smaller ones need to take more advantage of these programs and use them. Even the insurance companies support and promote it. Especially now with new technology, people have to be re-trained on it. Machines that were being used 10 and 20 years ago, don’t operate the same way. Educating the public would definitely help. I don’t think that the majority of the public has any idea how the whole waste industry works. They see it from a distance. A truck stops in front of their house and puts out an automated arm and dumps the trash and they really don’t know what happens from there. I know of several trash companies that work with the local schools bringing kids into a facility with a safe barrier and showing them how they process the trash, pull out recyclables, etc. Any kind of consumer education we can do is good. We need to start out at the school level so as kids grow up they are familiar with it.
An ongoing industry concern among waste and recycling companies and organizations is the difficulty in finding employees and retaining them. What advice can you give to address this problem now and in the future?
DB: The driver and mechanic shortage continues to be a problem for many solid waste companies. This issue exists in much of the transportation sector, as well as in other sectors that employ blue-collar workers (e.g., construction). Some companies are focusing on recruiting military personnel, who often have a background in operating heavy equipment. Others are using social media to attract younger workers, and a few are offering to pay employees to get a commercial drivers license (CDL) if they will work for them. Driving a garbage truck is a challenging, and potentially dangerous job. It faces a lot of competition from other companies that hire drivers, whose trucks are not quite as fragrant. It would be helpful if there were not weekly fatal accidents in the industry, and I suspect driver (and mechanic) recruitment and retention rates would improve if they were paid a bit more money.
MR: As the unemployment rate further declines, it will become more difficult to find a pool of experienced staff members in many parts of our industry. It will be critical to find ways to value your employees. Further, pay people a salary they can live and thrive on, and you can retain them.
WF: A battle is raging as employers compete against each other to find, hire and keep qualified employees. Hiring qualified people can be a challenge. To ensure an adequate number of qualified workers, managers must have a strategy to find, recruit, select, train and keep good employees. Managers and supervisors have to be diligent in working to retain employees who are dependable, talented and dedicated at the workplace. The hiring and on-boarding of new employees is a time-consuming and expensive process. But an employee relations program should not stop after the employee’s first day on the job. Instead, supervisors and managers have an ongoing responsibility to keep employees motivated, focused and happy.
MP: Labor is our biggest challenge. Everything revolves around the impact of lack of drivers and the labor market and how tight it is for our business. It includes climbing wages (grown 15 – 18 percent) in the last year and added benefits—we are contributing a lot more to their insurance; we are contributing more for their family coverage such as providing all kinds of different medical tools like Teledoc, where they can actually call at home using a specific device to get a common cold taken care of. In order to attract the younger generations, their biggest concern is experiences, which translates to more time off. In addition, they like new equipment with nice radios and the creature comforts. It is a change of culture that needs to happen. All of that goes into not only trying to just recruit drivers and employees, but also helping to keep the ones you have. That is our challenge. One of the things that we are examining now is how to market all we do for our employees using a mix of old media and new media. The DOT has also updated its rules where healthy drivers will be advocated in the near future. In response to that, we have provided gym memberships to our employees and we are trying to do driver pooling and flex time.
LW: I think that the Trump Administration needs to promote more of the technology. We have all these kids going through college and coming out with a good education, but no place to go. Years ago, in high school, we had shop—learning how to build things and working on engines. I think that starting at a young age and having classes like that would go a long way. In colleges today, there are a lot more environmental classes than there has been in the past. I think many of these kids who are looking the green aspect of the industry, want to learn more about it and how they can help.
What are the current challenges for the industry?
DB: China, China, China. If China does not modify its waste import restrictions, many recycling operations will either need to make major investments in their operations, identify alternative markets that are already flooded by recyclables, or else a lot of paper and plastic will end up in a landfill or a waste-to-energy facility. Last year, in my response to Waste Advantage Magazine’s Year in Review questions for 2016, I stated that if China shuts the door on exported recyclables, “it would make Operation Green Fence seem like a low impact event by comparison.” Unfortunately, I was correct. At the same time that the industry faces the challenge posed by China, lawmakers continue to expand recycling programs and establish new and increase waste diversion objectives, including Zero Waste goals. Reconciling those aspirations with the changing waste stream, the operational and financial realities of the waste and recycling infrastructure, and China, will be a major challenge in 2018, and beyond. Persuading customers and politicians that recycling and waste diversion isn’t free, and that the trucks, personnel and infrastructure associated with anaerobic digestion, composting, recycling, etc., cost money is also a challenge. We need residents and businesses to support funding and rate structures that make those programs sustainable. A second issue to keep a close eye on is franchising. Los Angeles’ implementation of waste collection franchises in 2017 has not been without a few hiccups, and New York City’s Department of Sanitation is developing proposed structures for what commercial waste franchises might look like. This complicated and controversial issue, which has economic, environmental and safety components, will continue to be a major issue in Los Angeles, New York City, and other communities in 2018.
MR: We unnecessarily get wrapped up with the technologies used to process waste, whether that is composting, waste-to-energy, recycling or landfilling. EPA’s “priority pyramid” which shows the preference for resource recovery versus disposal is still valid and should continue as a fundamental guiding principle. With that being said, you must superimpose financial and other factors in the decision as to the most cost-effective and environmentally sound approach.
WF: Safety is always the #1 issue that demands ongoing attention. Another challenge affecting the industry is the lack of stability in the markets for recyclables. Big swings in commodity prices and the lack of markets for certain material will result in rising costs. One interesting trend over the past few years has been municipalities eliminating glass from their curbside recycling programs. This was a bold move but completely understandable given the challenge that many recyclers face in finding outlets for recovered glass. While everyone wants to see glass recycled, there are some market realities that need to be addressed.
MP: The most important challenge in our industry is labor and drivers. Without this we can’t continue to deliver our service. We also have to step up training on the safety side. I am very optimistic when different states are recognizing it and looking to really push hard on artificial intelligence, etc.
LW: Adapting to new technologies and zero waste is still a big term. How do we get there? Even though the current Administration is not pushing it, I still think that some of these companies have already invested so much going in that direction that they are not going to stop. Privatization is a big undertaking, like what is happening in the Los Angeles; other cities are looking at that to see how it is going to work out. It is a huge change—not only in picking up the trash, but also from a cost standpoint.
What do you think that 2018 will hold for the industry?
DB: I think artificial intelligence will be deployed more widely in 2018 in the waste sector.
WF: The waste and recycling industry is continually evolving and each year brings new challenges and opportunities. While regulations tend to stifle growth, advancements in technological can drive efficiency and production. On the collection side, I think 2018 is going to be more of the same. If fuel prices spike we will see renewed interest in natural gas vehicles. On the processing side, we are going to see the industry strive to make higher quality products. Better engineering and advancements in technology, such as optical sorters, will aid in the effort to improve the quality of the commodities.
MP: The AI driving is going to be big as it continues to develop, improvements to the actual vehicles and the way of hybrid vehicles. The camera integration and DVR—all those are going to be important changes. On the regulations side, they really need to think hard about how much they are going to strip out DOT. While looking at the drivers’ conditions may be bad for us in the short term (lessening the pool of drivers) in the long term it is safeguarding the general public. Finally, we need to try to redefine single stream recycling to dual stream recycling; maybe the standards need to change and the governments will step up and create a template.
LW: Because there is so much going on, it is hard to pick any one thing. Everything is going at a fast pace with new technologies and improving efficiencies—not only from a processing standpoint, but also with the use of the resources. I think that since so many companies have spent so much money on these technologies, that they will continue in that direction. Realistically, that is how it should be going. Yes, there is cleaner diesel now, there are better ways to process material, but at the end of the day we need to find a way to use the waste stream and make it a resource.