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Progressive Waste Solutions LTD (PWS) was founded in 2001 and its headquarters can be located in Vaughan, Canada serves as a vertically integrated Waste Management organization. Its main purpose within the industry is to collect and dispose of commercial, industrial, municipal and residential non-hazardous waste. Previously operating as IESI-BFC LTD, PWS incorporated back in May 2009 which proved to be a positive step into its plan of vertical integration. Looking to further integrate its assets and increase internalization of waste, PWS merged with Waste Services INC.
In July 2010 IESI-BFC LTD rebranded itself when it merged with its wholly owned subsidiary, Progressive Waste Solutions LTD in May 2011. Under brands like BFI Canada and Waste Services INC, PWS serves the Canadian provinces: British Columbia, Alberta, Manitoba, Ontario and Quebec. On the other hand, the IESI brand serves 10 states in PWS’s other two geographical segments (the South & Northeast US).
Not only has PWS expanded its customer base through 19 acquisitions it also plans on focusing on optimizing efficiency with greater control over the supply chain.
To further understand PWS’s business segmentations the organization divides its operations into these 4 categories: •Waste Collection – Households, businesses and institutions fill containers with solid waste which is collected on a weekly basis. •Transfer Services – Local vehicles deliver waste among the 67 transfer stations, which are hubs between collections and material recovery, landfills and disposal sites. •Recycling Services & Material Recovery – Certain recyclable materials such as cardboard, glass, plastic containers for example are collected and advertised to post-consumer mills as commodities.
•Disposal Services and Gas to Energy Facilities – non-recyclable waste enters among the 30 internal landfill sites to be concealed underground by various liners and clay. At the end of the day their core business lies in transfers, collections, and disposals of waste. Acquiring key channels both upstream and downstream along the supply chain provides PWS with the elasticity to raise profit margins in a competitive marketplace. In the long-term, PWS will continue to develop recycling services and waste to energy facilities. According to Progressive Waste Solutions Ltd at JPMorgan Diversified Industries Conference – Final (2012), “Progressive is one of the largest — third largest, I believe, solid waste company in North America with a unique business model focused on urban markets and a highly cash generative business model as well.” (p.1).
PWS uses the following strategies as strengths within their industry: •Sales and Marketing – Not only does PWS vertically integrate their firm, they also vertically structure their sales force. Having a sales team within a district which reports to a sales manager who then reports to a district manager. •Supply Chain – Waste travels from collection operations to transfer stations. Depending on the type of waste or recycled materials received, PWS will allocate the load to a material recovery facility, a recycling facility or a landfill for commodity extraction. •Equipment – Over its history, PWS acquired the resources it needed to compete in the marketplace. Throughout North American PWS boasts 115 collection operations, 63 transfer stations, 30 landfills and 46 material recovery facilities. •Operators – Staff of 7,000 + trained employees promote PWS the flexibility to internalize volumes and not depend on third parties. One quarter of PWS’s staff is covered by a collective bargaining agreement; overall the firm maintains positive labor relationship with staff and union.
•Brand Equity – Serving customers year after year requires strong relationships. Since most of PWS’s residential customers transpire from municipal contracts, the firm focuses on satisfying needs through superiority and dependability. According to Q3 2012 Progressive Waste Solutions Ltd Earnings Conference Call – Final (2012), “We will work hard to retain our customer base and asset density on all of our collection routes. To that end we are continually refining the sales program in our regional field operations to provide more tools and training for effective execution in today’s economic environment.” (p.1).
PWS faces multiple barriers in regards to Government Regulations within their industry: For the better part of 50 years and counting legislation has restricted the actions of many Waste Management organizations. Back in 1976 the Environmental Protection Agency passed the Resource Conservation Act which regulates the handling, transportation and disposal of hazardous and non-hazardous waste. They also applied the Clean Air Act in 1970 which targeted landfills and incinerators. It doesn’t stop there; organizations are all closely monitored and are given specific detailed instructions on how to run a landfill. Operating firms need to attain a permit based on the plant size and technology used to operate a waste to energy facility. Many states have been advised on a waste volume reduction which will continue into the future.
There has also been talk surrounding future legislation that would prohibit interstate transportation and disposal of waste. These barriers and outlays have provoked many organizations to redirect focus on recycling operations; EPA estimates a growing demand for recycling will occur over time. According to Progressive Waste Solutions Ltd at Credit Suisse Global Services Conference – Final (2012), “We look first at our corporate development opportunities. Our acquisition program will remain active. We continue to have a solid pipeline of target in and contiguous to our existing markets, and we have a disciplined and rigorous process for evaluating all of these opportunities.” (p.1). PWS uses the following drivers as opportunities within their industry: •Population Growth & Demand for Construction – As occupancy increases within a geographic location so too does the amount of waste produced from consumers.
Population growth increases the construction of new homes, which drives waste collection projects significantly. •Industrial Production – The results from producing more industrial goods is the consequence of industrial waste. Often this waste is hazardous and requires extensive expenses to dispose of properly. •Per Capita Disposal Income – It’s been identified that developed nations produce more waste than undeveloped nations. As income increases, so does purchasing power, which produces waste from that additional consumption. •Demand of Recycled Commodities – Recycling facilities offer added benefits by recovering resources from the waste to sell as a commodity. It’s been estimated that moving forward the demand for recycled commodities is expected to increase.
•Price of Crude Oil – Waste Management transportation carries very heft expenses from start to finish. While organizations have some freedom to increase load sizes of their vehicles, many are still bound by the fuel costs and therefore the price of crude oil. According to Q3 2013 Progressive Waste Solutions Ltd Earnings Conference Call – Final (2013), “We delayed the scheduled purchase of several new diesel trucks in certain markets this year so that we could change and invest in CNG-powered vehicles instead. This will reduce our vehicle operating costs and increase our productivity in the future, both key to enhancing our competitive position long term.” (p.1). PWS faces competition threats within their industry:
It has been identified that the Waste Management industry is moderately concentrated and expects similar consideration going forward. On either side of collections and disposal, Waste Management and Republic Services make up nearly half of the U.S market and are in direct competition with oligopolies. To measure success or failure within this industry is determined by economies of scale of an organization. Smaller organizations that are highly specialized in a specific field tend to be success like: Stericycle and their niche in medical waste and Convanta and their niche in waste to energy. For the most part larger more established organizations like PWS usually hold their own within the market but the amount of surging smaller firms has opened the eyes of many market players like Veolia Environment and Clean Harbors.
According to Progressive Waste Solutions Ltd at RBC Global Industrials Conference – Final (2011), “One dynamic of course is the economic conditions that are out there today. People are concerned about how are they going to create value in their assets over the next few years assuming that we either have a flat economic environment or marginally accretive economic environment. What we’re seeing today is the waste stream is changing, it’s evolving. So we just we’ve done a lot of work in that area. We’re finding, for example, most people are suggesting, even in a relatively flat environment, that volumes will increase on a collection basis about 4.3% over the next eight years roughly, seven to eight years, on a year-over-year basis.” (p.1).
PWS operates within the Waste Management industry of the industrial goods subdivision. Organizations within the business can either collect non-hazardous waste, hazardous waste and recyclable materials or operate disposal facilities including waste to energy plants, solid waste landfills and compost dumps. PWS happens to combine both aspects in their intent to vertically integrate their organization within the Waste Management Industry. PWS remains a major market player for good reason; they understand their identity and remain competitive.
PWS has the following list of SWOT analysis findings as they pertain to their firm and among other firms operating within the Waste Management Industry:
•Continued acquisitions will reinforce network of collections and create unity.
•Rising GDP in North American continues to support longevity of the firm’s purposes.
•Vertical integration of all segments within the supply chain promotes efficiencies and boundary development.
•Possible recession in the economy could affect margins.
•Acquisitions may slash profit and not recognize returns.
•Considerable indebtedness could damage financial position.
•Vertical integrations & acquisitions.
•Crowded urban markets.
•Growth within Northeast & South U.S as well as Canada.
•Operations subject to migratory and parameter fluctuations.
•Revenues fluctuate with commodity prices.
•Future acquisitions may increase capital requirements.
Progressive Waste Solutions Ltd at Credit Suisse Global Services Conference – Final. (03/13/2012). Fair Disclosure Wire (Quarterly Earnings Reports). Progressive Waste Solutions Ltd at JPMorgan Diversified Industries Conference – Final. (06/05/2012). Fair Disclosure Wire (Quarterly Earnings Reports). Progressive Waste Solutions Ltd at RBC Global Industrials Conference – Final. (09/20/2011). Fair Disclosure Wire (Quarterly Earnings Reports). Q3 2012 Progressive Waste Solutions Ltd Earnings Conference Call – Final. (10/26/2012). Fair Disclosure Wire (Quarterly Earnings Reports). Q3 2013 Progressive Waste Solutions Ltd Earnings Conference Call – Final. (10/24/2013). Fair Disclosure Wire (Quarterly Earnings Reports).
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