BY PORING OVER CLIENTS' TRASH,
By ROGER RICKLEFS
Staff Reporter of THE WALL STREET JOURNAL
May 1, 1996
At a quick glance, it's no business for the fainthearted.
It's called "waste accounting," and a big part of the work is
telling private garbage haulers, notorious in some places for
strong-arm practices, that you would like to monitor their
work, calculate any overcharges -- and reduce their revenue.
"At first, I was very apprehensive," says James H. Fitzgerald,
who founded Envirotron Ltd., a waste-accounting business,
five years ago in New York City. But he forged ahead,
discovered his fears were overblown and has developed a
rapidly growing business that operates mainly in New York
but also has clients in Chicago, Boston, Washington and
In the last few years, dozens of other small businesses across
the country have entered the field. They are growing because
businesses fear they are paying far too much to have their
garbage taken away, but don't know what to do about it.
The growth of recycling has awakened many businesses to
the huge potential savings from being savvy about trash.
Waste-accounting companies say corruption in the trash
business and intimidation by haulers have declined sharply in
certain cities and were never major problems in many others.
Naomi Replogle, vice president of MGM Services Inc.,
Houston, reports cheerily, "I haven't had a client killed yet."
MGM operates nationwide and has increased its staff to 50
members from 30 in the past year, Ms. Replogle adds. Client
savings from the service average 25% to 30%, Ms. Replogle
Some companies save even more. "I thought our [waste] costs
were outrageous," says Tom McDonald, an executive at Carol
Management Corp., a New York hotel concern. He asked Mr.
Fitzgerald's Envirotron to monitor the number of bags of
garbage that Carol Management's hotels in Manhattan
produced in a month. "Based on this, we cut our cost 50%,"
Mr. McDonald reports.
Envirotron's staff consists of Mr. Fitzgerald and one other
full-time employee; free-lance workers are hired on a
project-by-project basis. The company commonly charges a
monthly fee or 25% to 33% of the savings it produces for a
period of up to three years.
Haulers' charges are generally based on volume, but
Envirotron, like others in the field, does more than count
garbage bags to earn its fee. For example, Mr. Fitzgerald
checks compactor pressure gauges; they are sometimes set
lower than they should be, inflating the volume of garbage
and the cost to the client.
The entrepreneur says a tape measure comes in handy, too. A
simple measurement showed that one client's containers really
held only 1 1/2 yards instead of the 2 yards stated on the
labels. This discovery reduced the client's annual garbage bill
by $70,000, Mr. Fitzgerald says. "I was just thrilled when this
happened," he adds. "When I get into an interesting garbage
situation, I feel like a private investigator."
Indeed, he sometimes does undercover work. One current
client is a restaurant chain that believes it is being
overcharged and suspects that its managers have become
"too close" to the garbage carters, Mr. Fitzgerald says. He
hired a cab driver who gets off work at midnight to go to
the restaurants late at night and monitor the garbage that
employees had placed outside. Sure enough, this revealed
that one of the restaurants was paying double what it should
be paying, "to the tune of $200,000 a year," Mr. Fitzgerald
Most of the work is much more mundane. Smurfit Waste
Reduction Services, a unit of Jefferson Smurfit Corp., Clayton,
Mo., finds a computerized monitoring system helps guard
against excess usage as well as double billing. "The biggest
thing we find is that companies are being over serviced; we
can show them what they actually need," says Andrew M.
Waters, general manager of the unit. The operation, which
the paper producer started 18 months ago, has attracted
more than twice as much business as expected, Mr. Waters
As a growth field, waste accounting is attracting a diverse
group of entrepreneurs. The 31-year-
old Mr. Fitzgerald, who
was a humanities major at New York University, says he
stumbled on to the idea of Envirotron when he worked for a
hotel and found it was getting far more garbage collections
than it needed. Opportunity merged neatly with ambition: "I
come from no money, and I had been trying to start a small
business since I was 18," Mr. Fitzgerald recalls.
Elana Amsterdam, who is 28 years old, studied European
history at Columbia University and worked for a nonprofit
environmental organization. She started Ecosav Inc. in New
York three years ago. "We're garbage auditors," she says. But
like a number of businesses in the field, Ecosav combines
waste accounting with consulting on recycling.
New York's waste-accounting operations are confronting an
increasingly beleaguered -- and thus more compliant -- group
of haulers than was the case only a few years ago. Last year,
23 New York carting concerns were indicted for allegedly
running a cartel that inflated prices and controlled private
waste collection. At the same time, competition from national
waste-management concerns such as Browning-Ferris Industries
Inc., Houston, and WMX Technologies Inc., Oak Brook, Ill., is
"Carters really don't want to be reported to the Department of
Consumer Affairs, which could take away their licenses," Mr.
Fitzgerald notes. What's more, he says, they would much
rather lose some inflated revenue than "lose the whole
account to Browning-Ferris."