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Wednesday, 15 July 2015 15:15

Waynesville wades into dumpster war

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fr dumpstersA dumpster war in Waynesville is heating up, and the town is firing back.

Undercut by competition from the private sector, Waynesville has lost a third of its dumpster customers over the past two years. Now, the town is retaliating by slashing its own rates by 25 percent in hopes of winning those customers back.

Competition in the dumpster business isn’t new. Take a gander at company logos on dumpsters around town and there’s nearly half a dozen players in the field, companies like Waste Pro, Consolidated Services and others.

But most of the town’s customers have been lost to one in particular: Republic Services, which Waynesville Public Services Director David Foster calls the “giant behemoth.”

Republic aggressively ramped up in the local scene a couple of years ago with rock-bottom introductory rates. 

“They had to get a toehold, and that’s the way they pilfered our customers,” Foster said.

The town has lost almost 50 dumpster customers over the past three years — a third of its total customer base. Now, the town is barely breaking even on its dumpster service.

“If the erosion of customers continued, it was on pace to be losing money in two more years. We couldn’t be self-sustaining anymore,” Foster said.

The town can’t afford to operate a dumpster service at a loss, but Foster doesn’t want to simply walk away from the dumpster business either.

The town is an equalizing force in the dumpster arena. Without the town, small companies would be hostage to the whims of the waste business, Foster said.

“Us being in the business absolutely stabilizes the market,” Foster said. “It is keeping the other dumpster service providers honest.”

He worries with the competition squeezed out, customers would have nowhere to turn and could be gouged.

Dumpster companies are also known to create cartels, he said, divvying up territory and pledging not to compete with each other to keep rates artificially high.

“They have the ability to make deals with each other, ‘Like I get this route, you get that route,’” Foster said.

Smaller, locally owned stores would be particularly vulnerable, Foster said. Corporate chains have bargaining power of volume. Burger King and McDonald’s negotiate dumpster contracts for all the stores in a large region. The “mom-and-pops” couldn’t get those same deals, Foster said.

“The only reason government exists is to bring parity in services that aren’t available otherwise,” Foster said. “That was my biggest reason for why we need to stay in the game.”

 

The tipping point

The dumpster game is all about critical mass. Dumpster haulers need enough customers on a route to cover the cost of the truck, the gas, the driver — and the per-ton cost of dumping their loads in a landfill at the end of the day. 

Customers with lighter trash — those that fill dumpsters with bubble-wrap packaging versus half-full iced-tea cups — are more profitable than heavy ones. But Republic has been “cherry picking” customers with lighter trash, Foster said, leaving the heavier customers for the town.

Private companies have the flexibility to give bargains to customers with lighter trash.

“They can cut deals like that all day, but we can’t and shouldn’t,” Foster said. As a public entity, Waynesville legally has to have a standard fee for all.

Foster said the rates Republic offers can fluctuate by up to 60 percent, offering unnaturally low rates to customers with lighter trash to top off their trucks.

 

A perfect storm

Waynesville is partly to blame for its dumpster dilemma.

The town hiked dumpster fees by 35 percent in 2012. 

Soon after, competition companies swept in with better pricing of their own — and town customers jumped ship in droves.

The town’s rate hike was well-intentioned. The town had bought two new commercial trash trucks for $375,000. 

The rate hike was supposed to offset the cost of the new trucks, plus a fleet of new dumpster boxes. But it was counterproductive, Foster said.

Instead of bringing in more with higher rates, the town lost customers and brought in even less.

“I have to admit, that was too much,” said Waynesville Alderman Gary Caldwell during a discussion of the dumpster issue at a town meeting. “We failed on that one. We’ve got new dumpsters and we got the trucks, but they aren’t being used. I feel like we need to go back down and be competitive.”

The town board had been watching the dumpster business shrink and wondering what to do about it since early last year. Foster inherited the conundrum when he came on board as public services director. The town board asked him to figure out a solution, which prompted a new pricing scheme aimed at wooing customers back.

“I ran the conceivable scenarios and did a profit analysis and said, ‘How much money do we want to make off these?’” Foster said. “It is not supposed to be a moneymaker. It is not a cash cow. We just want it to pay for itself.”

In the short run, lowering the rates will hurt the bottom line since the town’s remaining customers won’t be paying as much.

“We will take that initial hit, but if we gain back half of the customers we lost, we’ll be good,” Foster said.

The town had 148 customers in 2012. It now has just over 100.

Foster hopes customers will see the value of the town’s customer service. If your dumpster fills up too quickly during a big tourist weekend, or a parked car is blocking the dumpster when the truck comes to empty it, the town can swing back by again — unlike dumpster companies with out-of-town headquarters that swing through on set days only.

“My guys drive by there three times a week anyway,” Foster said. “You just call us.”

Town Manager Marcy Onieal hopes it will work.

“If in a year this doesn’t get our customers back, then we’ve got another problem,” Onieal said.

Editor’s note: Republic Services was asked for comment for this story several times but declined.

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