Recent trucking statistics show that the shortage of over-the-road (OTR) truck drivers in the U.S. is at the highest level it has been in 15 years—a driver shortage mirrored in the waste collection industry.
According to a new report, "Recruiting Personnel for Solid Waste Collection Services," by the Solid Waste Association of North America’s (SWANA) Applied Research Foundation (ARF), causes for the driver shortage include an aging workforce, occupational danger, increased demand for trucking services because of industry growth and low participation of women in the industry.
The report estimates that about 1,000 women are employed in waste and recyclables collection, which equates to about 1 percent of the 116,000 sanitation workers in the U.S.
“This report highlights the potential for women to play an increasingly important role in the provision of solid waste collection services and the valuable benefits that these jobs offer—such as regular hours, no time away from home and the universal and permanent need for skilled employees in this industry,” says Jeremy O’Brien, SWANA’s director of applied research.
The report reviews several recruitment programs instituted by companies and organizations to attract new drivers. These programs include strategies such as training and working one-on-one with employees who are studying for the Commercial Driver’s License (CDL) exams, as well as paying for the costs of the exam. Another strategy is to target the hiring of persons who were formerly incarcerated.
The partners
Features - Cover Story
How Adrian Pasricha and Michael Castellarin have helped establish Clairvest as a leading private equity partner in the waste and environmental services sector.
The rapid pace of, and appetite for, merger and acquisition activity in the waste and environmental services sector has marked an era of consolidation that has helped define the industry. With more owners looking to buy and sell their businesses, private equity firms have increasingly flocked to enter the space thanks to the prospect of recurring recession-resistant revenue and enticing returns on capital.
Amid the competition, one firm that has helped establish itself as a fixture in the sector is Toronto-based Clairvest. Spearheaded by Michael Castellarin, managing director, and Adrian Pasricha, partner, the company has staked its claim as one of the firms of choice for waste operators in need of capital and investment expertise.
Opening the door to opportunity
According to Castellarin, he identified the waste sector as one ripe for investment 15 years ago when assessing potential avenues of opportunity for his firm. After making inroads in the field, Clairvest committed to its first partnership with West Babylon, New York-based Winters Bros.
“I identified the solid waste management industry as one in which industry players can benefit from high barriers to entry, fragmented customers, recurring revenue, attractive acquisition pipelines and strong margins and return on capital,” Castellarin says. “I began networking in the industry, and my connections at Comerica Bank introduced me to the Winters family, with whom Clairvest formed its first investment partnership in 2006. It’s worth noting we remain partners with both Comerica Bank and the Winters family today. Over time, Clairvest expanded its domain work beyond the solid waste management industry to encompass the environmental services sector, which for Clairvest, entails several industries of interest including organic waste management, hazardous and non-hazardous liquid waste management, environmental consulting, equipment rental, etc.”
Castellarin says that in the waste industry, Clairvest found a client base hungry for not only the capital resources the company possesses, but also the knowledge and experience the firm had to offer.
“Our objective is to work with owner operators and families to help them achieve their growth objectives. We identified the environmental sector as one with many founder- and family-owned companies to whom we could offer patient, knowledgeable equity capital and active support with projects such as debt financings, acquisition execution, greenfield developments, financial and operational reporting and building and preparing for an ultimate sale to a strategic buyer,” he says.
Pasricha acknowledges that the needs of every client vary. From a capital perspective, he says some owners are looking for an amount of liquidity to manage their net worth whereas others are strictly looking for growth capital. Others rely on the firm for its background in managing debt financing. From a knowledge and experience perspective, some companies want a private equity partner that can help with financial planning and forecasting for either organic growth investments or acquisitions, while others most need assistance with strategic planning.
For those contemplating a sale, Pasricha says business owners should weigh several factors when deciding whether it’s the right time to sell the business outright or retain equity.
“It’s an important insight that each business owner’s situation is unique and what works for one will not work for all,” Pasricha says. “It’s also true that businesses grow in step functions: the organization and processes that get you from $10 million to $50 million in revenue are not the same ones that can normally get you to $200 million. I would say it makes more sense to bring on an equity partner like Clairvest when the entrepreneur can see an exciting and significant growth opportunity in front of him or her but is less clear on how to build the organization and raise the financing needed to get there. In our typical deal structure, our operating partners retain half or more of the equity in their companies, thereby giving them the opportunity to generate far more wealth for themselves in the future than via a 100 percent sale today. On the other hand, if the CEO does not have a clear vision for how to continue growing the company or would prefer to exit the business or retire in the near term, a 100 percent sale to maximize value probably is the right course of action.”
Michael Castellarin (left) and Adrian Pasricha
Inside the deals
In the decade and a half since Clairvest first partnered with Winter Bros., the company has steadily built a roster of customers in the waste industry. The company shows no signs of slowing, as it kicked off 2020 with a pair of high-profile deals.
Clairvest Group Inc. and Clairvest Equity Partners IV announced Jan. 2 that the group completed the sale of 100 percent of the interests in Clifton Park, New York-based County Waste of Virginia to Ontario, Canada-based GFL Environmental Inc. Clairvest made its initial investment in County Waste in 2013 following a prior partnership with the company’s management at Hudson Valley Waste Inc.
Then, on Jan. 20, Clairvest announced it led a $32 million minority growth equity financing in DTG Recycle, Mill Creek, Washington, in partnership with existing shareholders.
In both cases, management at County Waste and DTG opted to bring on an equity partner rather than sell 100 percent of the business outright.
Pasricha says that upon Clairvest partnering with County Waste in 2013, the company executed an aggressive acquisition strategy spearheaded by County Waste CEO Scott Earl and completed more than 60 follow-on acquisitions, growing revenue by over 400 percent and expanding market share across the company’s core markets.
“The key was Scott Earl’s identification of the Virginia and Pennsylvania markets as ones with fragmented operators, particularly in the subscription residential line of business, who could be acquired at attractive valuations (on a post-synergy basis),” Pasricha says. “Scott and his team also have a tried-and-true playbook for onboarding acquisitions on a very efficient timeline. Our role was to help where we were needed on certain deals and to actively work with Scott and Jerry [Cifor, a key advisor and board member to the company] to monitor the deal pipeline so that we could model capital needs to ensure County Waste had funds available to keep growing.”
Castellarin says that this growth trajectory helped make County Waste an attractive acquisition target for GFL, who started engaging with the company roughly a year and a half before closing to try and ascertain whether the two companies’ operations would mesh in the Mid-Atlantic region.
“[GFL’s] management team was focused on strategic growth, and County Waste of Virginia represented a materially sized company with a strong market position and attractive remaining growth opportunities. GFL’s management had the vision and conviction to offer County Waste’s equity holders a compelling valuation that reflected these attributes,” Castellarin says.
At the closing of the sale, Clairvest realized a multiple of capital of 3.6x and an internal rate of return (IRR) of 30 percent on its $48 million investment before considering a deferred contingent payment that is based on achieving certain corporate milestones, the company announced. The contingent payment, if earned, would bring the aggregate return on Clairvest’s investment to 4.6x.
Earl says that after working with Clairvest at Hudson Valley Waste Inc., which resulted in a successful sale to Waste Connections in 2011, he knew their team was the right one to help grow County Waste’s footprint.
“I decided to pursue the initial roll-up of the Virginia market on my own for a few years [at County Waste], but once I dove in and saw just how big the market opportunity was, I said, ‘We’re gonna need a bigger boat!’” Earl says. “I called up Michael [Castellarin] and told him it was time to get back in the water. … I wanted a partner who is responsive to my aggressive growth ambitions and one that can adapt to my style of planning and execution. Clairvest has always acted like they have been invited into the company, not like they own it. That was always very important to me—to still feel like I was the primary owner of the business despite having brought on an equity partner.”
Earl says that Clairvest ultimately helped the company forecast its growing business to ensure County Waste had the capital to pursue deals and executive organic growth strategies as they presented themselves. They also helped customize the company’s credit agreements and stepped in with the necessary capital when the company’s growth outpaced banks’ ability to lend.
“Clairvest has always acted like they have been invited to the company, not like they own it. That was always very important to me.” - County Waste CEO Scott Earl
It’s this ability to do what was necessary to drive the business forward that Earl says was instrumental to the partnership’s success, ultimately culminating in the sale to GFL, which Earl says was a natural fit.
“I see GFL as business builders, just as I have been in my career,” Earl says. “I felt that they were going to keep County Waste on an aggressive growth trajectory, and I liked that. They were willing to acknowledge the embedded opportunities we still had in front of us and compensate us accordingly.”
Dan Guimont, principal owner and president of DTG, says that like Earl, his partnership with Clairvest was born out of the realization that the company could use a private equity sponsor to achieve the ambitious growth targets he had set out for the company. After DTG CEO Tom Vaughn met with Castellarin at Waste Today’s Corporate Growth Conference in fall 2018, conversations eventually led to the two organizations forging a relationship that culminated in the minority growth equity financing deal.
“We have such a massive growth opportunity in front of us at DTG right now, there was never any consideration given to selling,” Guimont says. “During 2018 and 2019, we added a number of facilities organically and via acquisition, but did not want to slow down our growth, so we knew additional equity firepower would be required. We spoke to a limited number of capital providers, but the Clairvest team really spoke our language, so we felt confident they could hit the ground running. … Clairvest has been involved in multiple high-growth environmental companies, many of which were sold to strategic buyers. We are confident they will be able to support our aggressive growth targets and help us shape DTG into a strategic acquisition for a larger environmental company.”
Coming together
Although owners have unique needs that are dependent on their specific operation, Pasricha says that being able to forge a relationship with clients is the basis for a successful partnership.
“Most entrepreneurs and owners we meet are very concerned and focused on finding the right cultural and interpersonal fit and have an intuitive understanding of what that means for them and their company,” Pasricha says. “In our experience, entrepreneurs are tremendous at judging people and so they gain a solid understanding of us and whether we represent a good fit very quickly.”
Castellarin says that building this trust with a potential private equity firm requires due diligence, and that for those operators looking for the right partner, there is no substitute for spending time with the principals involved to become familiar with who they are and what they can provide.
“I think business owners should understand that while private equity firms may look the same on the outside, the people, history, work styles and culture, strategies and value-add approach can vary significantly. If, as an entrepreneur, you’re staying on to lead the business and effectively reinvesting most of your net worth in the company, you should spend as much time with a private equity firm as possible to ensure there is alignment on parameters that are most important to you before making a decision on who to partner with.”
The author is the editor of Waste Today and can be reached at aredling@gie.net.
Product Spotlight
Departments - Product Spotlight
New and updated products and technology for the waste industry.
Van Dyk Recycling Solutions, Norwalk, Connecticut, has introduced the RoBB-AQC, a new robotic sorter that is designed for improved quality control sorting. Developed by Dutch manufacturer Bollegraaf, the RoBB-AQC combines near-infrared detection with artificial intelligence-powered learning. Features of the sorter include:
can make up to 70 picks per minute
can sort intermittently or continuously, regardless of working conditions on-site
requires minimal supervision and little maintenance
can simultaneously sort up to four different materials per module
Epiroc, Broomfield, Colorado, has introduced My Epiroc, a new digital fleet management solution available on web and mobile devices with various features for increasing fleet efficiency and safety. Features of the platform include:
assists in increasing efficiency, improving uptime and maximizing workflow
helps users keep track of productivity with alerts and status updates
highlights actions that require immediate attention
securely stores data in an encrypted cloud environment
Kolberg-Pioneer Inc. (KPI), Yankton, South Dakota, announced it has added a two-deck, 4-by-7-foot prescreen option to its FT4250 mobile impactor plant. Features of the prescreen include:
allows producers to scalp the feed, crush the material and post-screen on one unit
maximizes scalping ability and minimizes the amount of undersized material passing through the chamber
reduces wear costs
increases the amount of final product by 30 percent
Finland-based Mantsinen has introduced the Mantsinen 140, a machine designed to work in limited spaces such as ports, pulp and steel mill feeding operations and terminal works. Features of the machine include:
turning wheels, which enable sideways movement and efficient use in limited space
a Hybrilift that makes it up to 50 percent more energy efficient
a machine room featuring a roof
transfers important machine and operational data to a cloud service, including information such as handled tons, hydraulic pressures, temperatures and electronic service follow-ups
Solid Waste and Recycling Conference with Trade Show, Bolton Landing, New York, NY Federation of Solid Waste Associations, https://conference.nyfederation.org/
May 18-19
2020 NRRA Northeast Recycling Conference and Expo, Manchester, New Hampshire, Northeast Resource Recovery Association, https://bit.ly/2T3sRoz
May 18-20
Re|focus Sustainability & Recycling Summit, Cincinnati, Plastics Industry Association, www.refocussummit.org/
With shredders playing an increasingly crucial part in waste management and recycling facility operations, operators need to ensure these assets deliver on performance. But for equipment that was once required simply to act as a heavy-duty workhorse, today’s shredders must now demonstrate far more sophisticated performance criteria if they are to provide a true return on investment.
Here are 10 things to consider when thinking about purchasing a new shredder.
1. Define your input materials
The first component of finding the right shredder for your needs is considering the specifics of the materials you wish to shred. Assess the type and bulk density of the waste you’re handling, as well as any likely variation in this specification and the preferred in-feed method for loading the shredder. These factors will influence everything from the drive power and the the chamber dimensions to the cutter capabilities and the height of the machine. It’s also important to define the likely volume of input materials that need to be processed and at what pace, as this will shape the shredder’s throughput criteria.
As difficult as it can be to predict the future—and you don’t want to invest in too large a machine unnecessarily—it is crucial to forecast for what your needs will entail down the road. Very few organizations remain stagnant, so purchasing a shredder with additional capacity for increased volumes is often helpful, as is a shredder’s flexibility in handling different input materials with quick and simple reconfigurations. A mobile shredder will offer even further flexibility if it can be relocated around a site with ease.
2. Define the output specification
Operators must be clear on exactly what the shredder’s job will be before purchase.
Some facilities invest in shredding machinery purely to reduce the size of the bulky materials they no longer have use for and/or find difficult to store, in which case output fraction is not such a priority. Others are driven by increasing compliance requirements, which means output performance matters far more. Then there are organizations with extremely defined specifications to satisfy. If a plant is manufacturing a waste to energy fuel such as solid recovered fuel (SRF) for example, a clear calorific value and homogeneous particle size of less than 2 inches is typically desired. It is therefore important to look for a shredder with an ability to achieve the desired output specification. In an ideal world, the machine should be flexible to evolve alongside the operator’s changing needs, too. Often, this is possible thanks to just a simple screen swap.
3. Ask application-specific questions
Next, operators should ask detailed, application-specific questions to shredder manufacturers to understand the machine’s true performance capabilities. Things to consider include:
Confidential document shredders benefit from a low-speed, high-torque design, as they can shred classified material to an agreed specification without destroying the material fiber, which helps downstream recycling.
If shredding organic waste and packaging, operators should look for purposefully designed sealing systems that will protect the machine’s gearbox and bearings from this potentially aggressive material.
E-scrap shredders must have an ability to liberate the various high-value composite materials “locked” in redundant electrical equipment and appliances, as well as a built-in resistance to foreign objects or unshreddables that could otherwise lead to costly downtime.
4. Stipulate safety criteria
Waste companies know industrial shredding has the potential to be a hazardous exercise, which is why manufacturers have worked to ensure equipment safety through more conscientious design.
Maintenance tasks that minimize operators’ exposure to the inner workings of the shredder, proactive diagnostic control panels that prevent the need for machine entry, and foreign object protection mechanisms that ensure equipment auto-stops when processing an unshreddable item have heightened equipment safety in recent years. Still, engineering innovation is driving even more safety benefits.
For example, low-noise shredders help protect against prolonged exposure to noise. Additionally, machines can now feature UV, infrared, heat and spark detectors to help prevent fires. Ergonomic design is even being prioritized so that personnel can service and maintain equipment quickly, safely and in an upright position without the need to hunch or over-stretch, which can lead to injury.
5. Think about the environment
Attitudes towards recycling and waste management differ significantly across the U.S. That’s why operators must prioritize their own performance criteria when investing in fit-for-purpose shredders.
This is why a number of modern machines are driven by energy-efficient electric motors composed of synchronous drives instead of diesel hydraulic drives. Not only does such technology represent far less of a fire risk, it translates to reduced energy consumption. There seems little point of transforming trash into a renewable fossil fuel substitute if the cost of the manufacturing process is harmful to the environment.
Pursuing more “green” machines also makes commercial sense, as energy-hungry shredders don’t just have a detrimental carbon impact—they can prove costly in terms of fuel consumption, too. This can limit a machine’s possible ROI.
6. Test the shredder
Identify reputable shredder manufacturers who can supply individual pieces of machinery, as well as those that can help design, source and install an entire recycling or waste management system. Whether an operator needs a complex plant or a simple waste processing line, true shredding experts will be able to help map out a turnkey solution for maximum efficiency.
Also, operators shouldn’t just trust suppliers at face value. Seeing is believing, so those involved with purchasing should speak to existing customers, and better still, request a site visit to witness a working demonstration of the equipment. The best trial of a chosen shredder requires using one’s own materials. This can offer evidence on whether the shredder can truly deliver on any promises made.
7. New vs. used
Many industrial shredders are built to last, which means that while a machine may have reached the end of its useful life in one facility, it could still have years of operational potential with another organization. This presents an attractive investment option for many businesses, especially those who can procure a high-performance used shredder for a fraction of the cost of new technology.
Some manufacturers offer shredder rebuild services, too, which can give the operator greater peace of mind regarding the ongoing condition of the equipment.
8. Other considerations
Of course, the shredder needs to fulfill the performance criteria set out for it, but wider due diligence is also important.
Users should ask the manufacturer about typical service intervals and to what extent they are likely to affect uptime, for example. Labor-intensive maintenance tasks can soon cause operational disruption, which isn’t just inconvenient, it costs money, restricts the payback period of the shredder and could even put operators’ health and safety at risk.
Think also about factors such as the cost of spare and wear parts, typical wear rates, and the availability of these crucial components. Again, this will all impact future uptime statistics and influence the shredder’s lifetime running costs.
Some suppliers take aftersales support very seriously, which means long-term ROI is far more likely. Others don’t think much beyond the initial sale of the machine, which can leave operators feeling isolated when it comes to refresher training or future process optimization.
In short, users should look for a shredder specialist that prioritizes a long-term partnership approach.
9. Ask for a project plan
While some facilities can be flexible in their lead times for a new shredder, others have to work to strict project plans. So, whether a machine is replacing incumbent technology and downtime cannot be afforded, or the commissioning timeframes risk jeopardizing the likelihood of a new plant coming online, operators should talk to the supplier about next steps and key production deadlines.
Shredders are commonly engineered to order, so a rapid turnaround is probably not possible. But a serious and engaged supplier will respect the project criteria and do what they can to keep the installation moving while communicating with the operator every step of the way.
10. Do the math
The business case for an investment in new equipment will almost always come down to the numbers. The price tag matters, of course, although different financing routes can make things more affordable for organizations that need to spread the cost. However, other metrics are also important. Calculate ongoing wear costs, as this will rapidly inflate the financial impact of the investment. Users should also think about power consumption—some electric-driven machines are now so energy-efficient that fuel savings alone accelerates the payback period. Then there’s the possible revenue that can be generated from the sale of cleanly segregated recycled products, so include these projections, too.
If there is doubt regarding the business case of investing in a machine, operators can ask the shredder supplier to help plot this out, as this exercise should be straightforward for them.
Bernhard Martinz is the president at UNTHA America. He can be contacted at bernhard.martinz@untha-america.com.
North America’s largest waste haulers stretch from coast to coast, generating tens of billions of dollars in revenue and employing hundreds of thousands of employees. View More
Adam Redling
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