Bill Caesar prefers to keep a low profile, but when he speaks publicly, the WCA Waste Corporation CEO may be one of the most forthright and analytical industry executives you'll find at a major company today.
This may be due in part to his unique background. Caesar came up through the CIA, McKinsey & Company and Waste Management, where he left as president of recycling and organic growth in 2014. He joined WCA after it had been taken private through a deal with Macquarie and has steadily grown the business ever since. The vertically-integrated company operates across 11 states in the Southeast and Midwest, with 1,700 employees and an estimated 650,000 customers.
At WasteExpo, where he was a featured speaker, Waste Dive met with Caesar to talk labor, landfill operations, sustainability, climate policy and more.
The following conversation has been edited for brevity and annotated for context.
WASTE DIVE: How should we think about WCA's place in the the national landscape? Where would you rank yourself?
BILL CAESAR: We're probably the largest platform company that is not a public company.
Caesar notes this excludes some franchise-centered operations in states such as California, as well as a handful of large family-owned businesses in other states.
We're of a size that we can add material revenue to our platform without having to significantly add to the back office. We have grown quite a bit over the last few years and we have a lot more room to grow, and I think we have done it intelligently. We've only made acquisitions in either existing markets or markets that are contiguous to our existing operations.
Is there a point where you get to a certain size that requires a bigger infrastructure? Is it an aspiration to ever go truly national?
CAESAR: I don't have any aspiration to be truly national. Frankly, the states that I operate in today – Texas, Oklahoma, Missouri, Arkansas, Alabama, Florida, Kentucky – are not places that are feeling anywhere near the same pressure that my friends on the coasts feel in terms of not just recycling, but organics processing and other pushes to much higher levels of cost and service for waste management.
So if I can stay out of California, I would. If I can stay out of Massachusetts, I would. I'm happy in the central south parts of the United States, and I have no aspirations.
The conversation turns to how labor trends, specifically immigration, have been affecting WCA's business. Caesar notes the effect that revoking Temporary Protected Status could have on at least 10 El Salvadoran drivers in the Houston market and also touches on how the waste and recycling industry has historically "been a natural home for first generation people." You can read more from Caesar and others in a story on immigration here.
Landfill costs appear to be rising for many companies across the industry, especially related to leachate. What are you seeing at WCA in terms of infrastructure concerns or challenges?
CAESAR: Leachate is the one most people are talking about, and it's certainly not going to go away – especially given this current bout of rain that we've had in the Houston area and across the U.S. That's just going to create additional problems. In addition to that, I think we have higher costs for the people that are doing the ground work, because we are talking about people with yellow iron and operators. Just as we have challenges finding operators at landfills, the guys that we use to push the dirt around when we're building a new cell have the same challenges. Then there's the cost associated with the plastic liners. Those have been bouncing around as well.
So it's a combination of labor as well as raw material on the cell construction side. [We've also had odor issues in areas such as Houston] because we've had a lot of storm-related debris that generates hydrogen sulfide. So that's another thing we have to do — which leads to increased levels of cover, additional wells on landfills to draw down the gas and higher operating costs in general.
Everyone appears to be baking that into their pricing more, and your markets still have plenty of land, but do we ever reach a tipping point where landfill costs start to get high enough that other options become more viable?
CAESAR: Sure, there is a point at which that happens. [States such as Texas, Missouri, Alabama, Oklahoma, Arkansas, Kentucky] are probably not the first places that's going to happen. That's going to happen to my friends on the West Coast and on the East Coast, and you're already seeing it.
Whether it's through absolute cost or through regulation that adds cost, this is pushing some disposal locations to allow them to do greater organics processing or other things ... [That could mean the] potential for transformation of one form or another, waste into energy or into chemicals. That's on the straight MSW and maybe the C&D side.
I think there's a whole other world that's affecting plastics. Because the economics, which I think had previously been the primary driver of whether or not plastics to oil, plastics to some other material, would be viable [have changed]. There is so much pressure on consumer packaged goods companies, on plastic manufactures, on retailers to manage their plastic packaging, that they have demonstrated a willingness to continue to spend more money to take care of that, rather than face potential backlash of being a guy that put the straw in the turtle's nose. They don't want that.
We've got all this ocean plastic now; we've got plastic that formerly went to China backing up in the United States. We've got this PFAS thing going on at the landfills as discussed earlier. The waste industry is not responsible for the generation of any of that. We have been an important part in managing its end of life if it gets to us. The plastic in the ocean didn't come from a landfill. It never got there.
Caesar sees a scenario in which generators of large amounts of packaging find a way to recover value from that material as "the preferred medium" and is optimistic about the potential for a wave of new "chemical recycling" concepts. Last month, it was announced that Caesar had joined the board of Agilyx, a company focused on recycling polystyrene waste.
Before plastic, it felt like food waste was the hot topic a couple years ago. What starts to make the math work for food waste coming out of landfills, particularly in your type of markets?
Caesar notes he was an early advisor for the national nonprofit ReFED and goes on to discuss upstream solutions that generally have a higher financial and environmental value as compared to focusing on smaller amounts of wasted food at the residential or commercial level.
While Caesar recognizes those generators may eventually be a necessary focus, he said food waste is not a notable factor in odor issues at his landfills and is currently being managed properly – albeit in a different way than some in the organics world might prefer.
Food waste in my landfills generates methane, which, unmanaged, would be a problem. But we have to manage it — it's in the permit. In Houston, for example, we have a partner that takes that methane. They collect it, clean it up, put it right back into the pipeline and sell it as a clean natural gas. We have other locations where we're generating electric power. So the food waste in the landfill ... to me, of all the food waste problems, I'm not that worried about that. Because it actually is, over time, becoming a source of beneficial reuse. The landfill gas has value.
I hear that from other landfill companies as well. Compost and anaerobic digestion companies tell me otherwise.
CAESAR: When the value of your compost becomes equivalent to the value of an electron, give me a call. Until then, I have a hard time believing that I'm better off pulling all that material out of the landfill and giving it to you to toss in windrows and then sell for three bucks a bag ... I don't see how the math works. There are clearly compost companies that make it work. Not as many in Texas as in California and Massachusetts.
During his WasteExpo session, Caesar mentioned how weather events – such as the 2016 Tax Day flood in Houston – have been a tough experience for WCA employees that were forced out of their homes. In recent years, as described by CFO Dianna Cervantes, company preparedness plans have paid off for events such as Hurricane Harvey in 2017.
Thinking about climate change risks, do you see more events like that coming? Is this a factor that could begin to raise insurance premiums?
CAESAR: [During Harvey,] we had virtually no damage to equipment or sites. Like [Dianna] said, it's because with hurricanes you typically have a little bit of notice. It's not like an earthquake. So we got our trucks out of harm's way. Our operating sites, for the most part, are not in places that are likely to flood.
So from an insurance perspective, I lost a [large plastic] cover on a C&D landfill in Florida. If you see it let me know; it's no longer at the landfill. We had an insurance claim on that, which was meaningful. That was not an inexpensive piece of plastic. I haven't seen that flow through my insurance yet. So in terms of damage from natural disaster, calamity, I haven't seen that, because I haven't really experienced it.
Caesar notes comments made by others during the CFO panel about how climate change is becoming a greater factor in their risk assessments and says he is being pragmatic about WCA's exposure.
I am not worried about losing Houston into Galveston Bay. Maybe I should be, but at this point I'm not. My operations in Florida are not on the coast. I'm not worried about Oklahoma falling into a giant sink hole. So from a climate change perspective, to me, it's more about weather change and unpredictability of weather than it is about rising water levels.
Because weather changes will make labor tougher — if it's hotter, colder or wetter?
CAESAR: Absolutely. Any kind of disruption to a normal day is a source of pain and a source of cost. So that's probably my biggest concern today when I think about climate change. There are certainly industries that are going to benefit and ones that are going to get hurt. We have the potential for more leachate as a result of more rain. I put that in the category of normal types of problems.
The idea of a carbon tax has been floated recently and appears to be on the radars of major publicly-traded companies as something they're tracking. You also mentioned it in a Waste Today interview. If and when that happens, is it a threat to business, or can you adapt?
CAESAR: I think it would be both a threat and an opportunity, because I may be in a position to offset other people's carbon expenses. Landfill gas is one of them, where I'm able to use something. I have lots of buffer land around landfills, I could start planting trees. There may be opportunities for me to leverage our real estate assets in a way that would enable other industries that are heavy generators of carbon to offset some of that.
I don't worry too much about our own generation. We have trucks that have emissions and that's all controlled. I have landfills that have emissions, but once they reach a certain size, we put well fields in there and try to manage that.
It'll be interesting to see how that plays out. I don't expect anything to come too quickly, but I think it's a place we'll wind up in eventually. Carbon is part of our air and our water, our natural resources, and they need to be priced when entities consume more than their fair share – whether those be industrial entities or otherwise. Right now, we have folks who are able to exploit the price inequality on those very real social assets, and I think that will correct itself over time. It's like pricing for water. Water used to be free. It's not free everywhere now. It will catch up with carbon generation, too.
What's coming next for WCA?
CAESAR: We're doing well, we're continuing to grow, and I'm looking forward to the next phase.
We went from a company that I think had fairly significant operational challenges and asset challenges to one where I don't worry about the trash getting picked up every day. I don't worry about my trucks falling apart. I don't worry about my landfills not being taken care of.
Fixing those things is relatively easy. The hard thing, which is what you see the publicly-traded companies struggling with now, is "we're good — how do we get to be better?" That's where you're squeezing out bits of improvement that take a lot of time and effort. I think it's much easier to go from struggling to good than it is to go from good to great.
So if you're at good now, you've still got to get to great?
CAESAR: I do. That's the harder part. Of the two, this has been the easier part. I didn't have to do anything new or come up with some unique way of running routes, picking up trash and managing a landfill. Those were all known things. We just didn't do all of them very well everywhere we operated.
Getting to great — the path isn't as clear, and there will be fits and starts, and not everything you try will work. But at the end of the day, it's certainly a worthwhile pursuit.