Company representatives spoke with Monroe City Council this week, outlining several proposed changes to the existing contract.
Waste Management once again is asking the City of Monroe to renegotiate its contract with the company to offset recycling costs and ensure safer working conditions for trash collectors.
Company representatives spoke with the council during Monday’s work session, outlining several proposed changes to the existing contract they say will benefit their employees and their bottom line but likely at an additional cost to the city and its residents.
The trash hauler originally attempted to renegotiate the recycling portion of the five-year contract shortly after it was approved in 2018. Company public sector representative Patrick Greve used the same reasoning as was presented nearly two years ago when revisiting the topic Monday, citing rising recycling costs due to China’s ban on recycled paper and mixed plastics and asking the city to take on at least a portion of those additional costs.
“At the end of 2017, start of 2018, while this community was in the throes of putting in place its new contract, China — which was one of the largest consumers of recycled material from around the globe — closed its borders to the import of recycled materials,” Greve said. “So the United States, Europe, and a number of other countries had to find different outlets for their material. It really changed the dynamic of the pricing, what somebody was willing to pay for a bale of recycled material, because of the glut volume that was put onto the market.”
Greve added that this sharp decrease in profit margin wasn’t something anybody was predicting at the time.
“A lot of the assumptions that we used when we priced your contract and figured out ‘OK, what’s going to be our profit margin, what’s going to be our return on our capital’ all of those assumptions kind of went out the window when this happened,” he said. “We found ourselves in a situation where our cost model was upside down. It stayed that way for a prolonged period of time, (but) it’s ticked up a bit … We are seeing signs of life in the market, but all the projections are those days of $120 per bale of recycled material are probably a long ways off …”
To address the safety of their workers, Waste Management is proposing converting the city’s refuse contract from an unlimited pickup to automated collection, where each household would be provided, at a cost, one 96-gallon trash cart.
To address bulk items, residents would request an unlimited pickup when necessary. While it ultimately would depend on how the contract was negotiated, Greve says city residents likely would be allotted one unlimited pickup per month. Should a resident need an additional unlimited pickup, it can be requested at an additional fee.
Waste Management representative Brian Conaway explained that automated collection is much safer for the company’s employees because they don’t have to leave their vehicle to collect the trash receptacles. He explained that the industry as a whole is trying to get away from manual collection as a way to combat distracted driving.
“Many instances, people run into the back of our trucks without even touching the brakes,” Conaway said. “We are trying to improve our ability to keep our employees, and to help them extend their careers …”
When pressed by the council to provide ways in which these adjustments to the existing deal would benefit residents, Greve and Conaway pointed to the improved aesthetics of uniform trash receptacles. Greve added that Waste Management would be willing to discuss including a revenue- sharing formula in a revised contract to offset the cost sharing.
Councilman Brian Lamour asked Greve if there would be any discount to the city or its residents if they agreed to “go down” from unlimited to the automated collection.
“You have capital costs with the carts,” Greve responded. “You have this issue with the recycling to consider … Just being totally transparent, it probably would not net out to savings because of the capital cost and the issue with the recycling market …
“I just want to be totally transparent. Just knowing the size of your community, and the capital costs, there would probably be an increase in the charge to go to that type of service.”
The city is under no obligation to restructure the contract, which runs through June 2023. City Manager Vincent Pastue said that the city’s current refuse millage essentially covers the cost of the existing deal.
Councilman Andrew Felder raised the strongest opposition to modifying the contract, saying that while the city wants to be “team players,” the increased costs associated with Waste Management’s proposals would be a “hard sell to our residents.”
“I think the reason we find ourselves here at this table is because we have a sweetheart deal, and because Waste Management has some seller’s remorse,” Felder said. “… Now, I am sympathetic, but at the same time it seems like we’re being approached and the proposal is ‘We want to increase your costs and decrease your service … And by the way there are going to be variable costs as well.’ So I’m sympathetic, and we do want to work with you because we understand these costs are increasing for you whether or not they’re increasing for us. But it’s certainly a hard sell for us to make that to our residents, who already in their minds paid for this …”
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