My first newspaper job at the Fort Launderdale Sun-Sentinel back in 1982 taught me how the private garbage business works. It’s the same for municipalities across the country.
Firms such as Waste Management land a municipal garbage contract that calls for raising rates a little bit each year, recession or not. The cities let themselves get locked in, and Grass Valley (which approved a 3 percent hike on Tuesday night) is just the latest case in point. The council goes along and there are rarely enough “community watchdogs” to call it out when the deal is being negotiated. (Waste Management advertises in all the local papers, and the garbage business is “boring” and “complicated” for them to write about).
The firms work the p.r., too. In the season premier of CBS’ “Undercover boss,” the president of Waste Management worked alongside his staff, for example. “We’re green” is often the mantra for local communities.
It’s a good business model, that’s for sure.
Here’s what stock analysts are saying about Waste Management.
“The private carting industry is highly lucrative, especially for Waste Management, with $8.8 billion in sales during the first nine months of 2009. The company’s strong cash flow (though it carries a debt load of $8.2 billion) allows it to pay a $1.16 per-share dividend, up from $0.75 in 2004, according to Morningstar analyst Bradley Meeks,” as investor site Minyanville reports.
“Meeks recently raised his fair value estimate for Waste Management shares to $34. Wall Street analysts expect the company to report earnings of $0.48 per share next week.”
If the county winds up outsourcing the McCourtney Road Transfer Station to a private firm, let’s hope it uses the recession to strike a contract that’s beneficial for its residents.
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