Waste & Recycling Services
Industry Alert: Waste Broker M&A Activity Threatens Customers’ Bottom Lines
Have you noticed the increased merger and acquisition (M&A) activity in the waste broker market?
As a broker customer, are you aware of the threat this activity poses to your organization?
A couple of significant recent examples of this growing industry trend include:
- In May, Rubicon entered an agreement with lenders to pursue a sale of the business.
- And in August, Connecticut-based Lincoln Waste Solutions was acquired by a U.K. firm.
The waste industry already had an inherent competitive landscape problem due to landfill ownership among the industry leaders. Years of M&A-driven industry consolidation has only exacerbated this problem, weaking customers and emboldening suppliers. As they gain power via reduced competition, suppliers train customers to pay more for less, knowing their options are limited.
The Threat
Waste broker customers should be on high alert for operational disruptions. A few inevitable examples include:
- Cost-cutting measures by acquiring entities
- Service level deterioration
- Broker employee turnover
- Sudden spend level increases
- High risk of service shut-offs
Waste industry customers need to recognize that if they’re not making choices to advance their own interests, the industry will make the choices for them. As such, there’s never been a better time to take stock of your options—however minimal they may be.
That said, to truly capitalize on what competition the marketplace does offer requires a willingness to take your business elsewhere. Supplier transitions can seem risky and burdensome, but the truth is, if you’re not willing to actually transition your business, you have ceded all the power to your incumbent vendor. At minimum, you must be capable of putting forth a credible threat of lost business, and that means preparing for a transition, even if you don’t wind up moving your business.
The Mitigation
So what should you do today to prepare for a potential transition?
- Recommendation #1: Gather key field specs. Record details such as container quantities, container sizing, frequency of service, and equipment particulars such as compactor specs.
- Recommendation #2: Consider and plan ahead of scheduling challenges. Document any holidays or scheduled turnarounds so you can avoid a supplier handoff/change during these periods.
- Recommendation #3: Develop a transition plan and implement it. Step #1 above will drive your transition plan, which will include details such as: compactor specs, profiled waste streams, proper equipment and their order timelines, container intra-webbing considerations (identification, mapping, replacement need, etc.), and contemplation of any back-end liabilities in the current contract.
M&A activity is a fact of business—and every procurement professional has been forced to deal with industry consolidation. To avoid losing marketplace leverage, the buyer simply must put forth a credible threat of lost business—and this means planning and preparing for supplier transitions (and, on occasion, actually taking your business elsewhere).
Amid broker shakeups and industry consolidation, Fine Tune’s experts are here to help you on the path to success.