- Waste Management (WM) released its third quarter earnings this week which showed a 5.6% increase in revenue, 4.7% increase in core price and a 1.6% increase in volumes compared to Q3 2015.
- Part of WM's success this quarter was driven by a 13.6% increase in average commodity prices at the company's recycling facilities, Steiner said during the earnings call. While WM notes it is about 80-85% through restructuring recycling contracts, COO Jim Trevathan said WM "absolutely will never" go back to the old style of doing business in recycling "as long as I'm breathing."
- Steiner also discussed how new housing starts directly create strong business opportunities for WM, yet there's been a lack of labor supply to meet the housing demand since 2009. "Everybody talks about closing the income gap by raising the minimum wage. I say close the income gap by raising the minimum level of training. If we can train people to be mechanics, drivers, skilled tradesmen, the jobs are out there," Steiner said to Bloomberg.
Waste Management has had a touchy relationship with recycling this year as commodity prices have left business operations unpredictable. In April, the company told CNBC that it closed 21% of its recycling facilities with no intentions to open new ones, and in August the company participated in a webinar during which representatives suggested moving away from weight-based recycling goals and only recycling a select group of materials.
While it's promising that Waste Management saw such a significant increase in commodity prices for recyclables this quarter, Trevathan was careful to note that due to the volatile nature of such prices, he doesn't want WM to fall into a trap by going back to old recycling operations. However, as commodity prices rise, it is assumed that municipalities will eventually be faced with the opportunity to recycle for much less cost as the prices will cover the cost of processing. While WM doesn't want to "declare victory" with commodity prices, it will need to be careful of competition that is bound to rise among other companies.
The deficit of trained workers throughout the waste and construction industries is not a new problem, however Steiner's suggestion to increase minimum training as opposed to minimum wage is an interesting solution. The waste industry has been combating an industrywide driver shortage this entire year, and while more companies are working to recruit demographics like women and veterans, the ATA has said that an estimated 890,000 new hires will be needed over the next decade across all industries.