Health of M&A in U.S. waste management industry could depend on upcoming election results
Waste Expo Together online opening keynote, Waste Connections CEO Ron Mittelstaedt, talks about adapting to COVID-19 and why Trump's re-election is preferable
WasteExpo Together Online kicked off Tuesday, September 14th, with a keynote interview with Ron Mittlestaedt, Founder and Executive Chairman of Waste Connections. This opening interview was conducted by NWRA President and CEO Darrell Smith, and was followed by four days of sessions and speakers, all done virtually, and attended by recycling and waste management industry participants from around North America and internationally.
A general theme of this year's event, reflected in the opening remarks from Mittelstaedt and Smith, is the particular challenges of recycling and waste management currently, in the face of COVID-19.
"This has been the most intensive lobbying campaign that I've ever had to do -- to orchestrate things during COVID-19," said Mittelstaedt. "I think about how proud I am to be part of this industry, and that we have managed to not have a major crisis within the industry during all of this. One thing the country did not need was a waste crisis during the middle of the COVID crisis. With just a few minor hiccups, we have avoided that."
Mittlestaedt went on to talk about particular challenges Waste Connections has seen in 2020, including labour and contamination issues, and some of the ways they have adapted their business. He noted his pride in the extraordinary efforts of their frontline employees, who he referred to as heroes, their ongoing efforts with respect to safety for waste and recycling workers, as well as their developing policies on diversity in the workplace.
The road ahead
When asked about his expectations for what lies ahead, Mittlestaedt said it really depends on the upcoming election, at both the federal level and the Senate and House level.
"The reality is we projected four years ago that if president Trump was elected, there would be an acceleration of M&A (mergers & acquisitions) across the board, at the top of the industry and throughout the industry." He confirmed that they have had a record four years of M&A, adding that this has been the case not just in the waste management sector, but in many sectors.
"It's due to tax changes, interest rates, it's due to the GDP that the economy had pre-COVID, and it's due to the expensing of capital." He said that there is a host of factors that has driven this increased M&A for the industry and for Waste connections. "The reality is that if president Trump is re-elected, and depending on what happens in the House and Senate, if current regulations and tax regulations, monetary and fiscal policy stay the same, I think we will continue to see strong M&A for the next four years."
Mittlestaedt continued; "If Biden is elected, and again, depending on what happens in the House and the Senate, and he enacts the policies he has talked about, with tax increases, the elimination of capital gains taxes above certain income levels, and with a dramatic increase in the corporate tax rate, we are going to see a dramatic deceleration of M&A in our industry and in most industries. And so it really does come down a lot to the geopolitics that happen at a national level."
"Over the long term, I think we will continue to see M&A throughout sector, both of public companies acquiring private companies, and private companies acquiring other private companies, as well as a slow down in municipal governments exiting the business, or privatization efforts."
The other big change, he says, is that we're going to continue to see automation and technology accelerate through the industry. "You're going to see the evolution of electric trucks. You're going to see the evolution of more autonomous driving vehicles. I don't mean without a driver, but I mean with lane control and other features such as we have in cars today, and driver assisted devices that are not really in heavy-duty trucks today." He added that this kind of technology will be used by most in the industry very shortly, if not already, and it will help accident /injury frequency in the sector.
"Waste connections has been an M&A machine for 23 years, has had a booming last four years in M&A... and we're generally going to grow three, four or five percent through acquisitions in a year. I don't see that changing anytime soon," said Mittlestaedt. "Obviously as the company becomes larger, the M&A total as a percent is smaller, just mathematically, but we're still going to have a very active 2020, exceeding what we originally predicted for the year."
Participation in this year's Waste Expo together online virtual conference is free to pros in the international waste and recycling industry, and all sessions are recorded and available to registered participants. Visit the Waste Expo Together Online home page for more information on this year's conference, and to find recordings of all educational sessions.