Waste Management's Evolution: Why the Trash Collector is Betting on Gardening
If Waste Management's (WM) evolution from basic trash collector wasn't already evident with its continued investments in rubbish-to-energy ventures, it's latest acquisition of an organic lawn and garden products company should end the debate. Waste Management has figured out that its financial future hinges on solving two issues simultaneously: Making the most of limited landfill space and diversifying its revenue source.
Waste Management announced this week it acquired a majority equity interest in Garick, a company that turns organic waste into products like mulch, compost and playground turf. Garick has more than 1 million tons of processing capacity, perhaps the most important part of the acquisition, aside from the company's existing products.
Waste Management's organic recycling business is seen as a growth area for the company. And this acquisition, as Waste Management hints in its announcement, could lead to an expansion of composting and bagging facilities. In short, businesses and residential areas will likely see new services aimed at collecting their organic waste. One possible avenue is to convince large commercial ventures, like food wholesalers, to pay for expanded organic recycling. Not every food companies will jump on board, but as landfills become tighter, municipalities will likely place more restrictions on what can be thrown away.
It's a substantial revenue-generating opportunity. North America generates more than 80 million tons of organic waste -- that's food, yard and wood waste -- every year. In the U.S., about one-third of municipal waste is organic, according to Waste Management. About 65 percent of yard waste and 2.5 percent of food waste collected in the U.S. is diverted from the landfill. Waste Management wants to capture and capitalize on the rest.
Some of Waste Management's other recent organic materials ventures:
- Invested in Harvest Power to expand processing facilities and develop anaerobic digestion technology to accelerate the decomposition of materials that may produce renewable energy;
- Invested in Terrabon, a company that also has received backing from oil refiner Valero Energy (VLO) and is trying to make commercially viable green gasoline from organic waste.
- Along with venture capital firms, Waste Management invested $51.5 million in Enerkem, a Canadian company that turns municipal solid waste, construction wood and agricultural residue into gas that can be refined into ethanol.
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