FINN Corporation

Cutting landfill costs - not capabilities

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Courtesy of Courtesy of FINN Corporation

The garbage business is generally a good indicator of the economy’s strength. And while the bad news is that waste tonnage is down at most landfills, the good news is that there is a bottom. Most of the drop is due to a slumping construction industry, compounded by less consumer buying. But the garbage business—like taxes and death—is relatively constant. Some landfills are fortunate enough to have a stable income and, in fact, some municipal landfills derive much of their revenue from property assessments, whereby revenue is fixed regardless of tonnage. But most facilities, to be sure, are feeling the pinch. There are two ways to survive during recessionary times: Decrease costs or increase revenue. With landfill tonnage rates down 10%–20% or more, most landfill managers are looking for ways to do both, with the best results directed toward cutting costs. In the remainder of this article, as we look at ways to cut operating costs, we’ll discuss some workable compromises between what we want to do…and what we have to do.

Finances May Limit Choices

When I was in high school I had an old Jeep. For anyone who cares to know, it was a 1949 Willys CJ3A. Sometimes it would start, and sometimes it wouldn’t. One cold morning as I was cranking on the starter, my grandfather, an old equipment operator and mechanic, suggested I give it a shot of ether. “Not too much,” he said, “just a shot…and only when it won’t start with the normal way.” So I tried it. Wow! This was ether stuff was great, the miracle cure for a sick engine. So every morning thereafter, when the old Jeep wouldn’t start right off the bat, I’d give it a shot of ether. And as time went on, it required a somewhat bigger shot than it had the previous morning. Finally it seemed that old Jeep reached a point where it would only run on ether—at least until it got good and warmed up. That went on for a few short months, until finally I saved enough money to rebuild the carburetor, to grind the valves, and to get that old Jeep to a point where it would start like it was supposed to—with just a couple of pumps and a bit of choke when it was cold. Hmm, I wonder if its rapid decline in performance those last few months was somehow related to my overuse of ether. Looking back, of course, one might say, “In the long run, it would have been best to simply perform the carburetor and engine work rather than use all that ether.” True enough, except for one small issue: I couldn’t afford the $250 necessary for the carburetor rebuild and valve job…but I could swing $1 a week for a can of ether. I was caught between what I wanted to do and what I had to do. As with most things related to my grandfather, there was lesson in that story: Sometimes your first choice isn’t the best choice, because sometimes you don’t have a choice. I needed to get back and forth to school. That old Jeep was my only outfit and starting it with ether was my only option. There are plenty of landfills in which a new liner is needed, an area is scheduled for closure and one or more machines must be repaired, rebuilt, or replaced…but limited finances mean limited choices. As a result, we often have to shift our business model from what we’d like to do…to what we have to do, and an ever-increasing number of landfill owners and operators are finding themselves caught in that double bind.

Cutting Costs

The primary option for a struggling budget is to cut costs. You know: Fill the gap, plug the leak, trim the fat and stop the bleeding. Without question, cutting costs is the most effective way to balance the books, but it just sounds so painful. And it typically is, because it usually means delaying such vital investments as equipment repair or liner construction. But sometimes, bolstering short-term cash flow by cutting costs through such delays is simply a matter of working smarter with what you already have. Yes, I know, we’ve all been trained to use the Net Present Value approach when making economic decisions—that in the long-run NPV is the answer. But when budgets are tight, short-term cash flow becomes the top name on your dance card. When it’s a choice between gutting your operation or borrowing blindly against the future, maybe you need to consider a third choice: Re-evaluate the operation, see what’s working and what isn’t, then redirect your effort to save money through greater efficiency and improved performance. Then, once the operation is running as lean as possible, you move back to long-range planning.

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