WMX Technologies Inc. History
Oak Brook, Illinois 60521
Telephone: (708) 572-8800
Fax: (708) 572-3094
Incorporated: 1968 as Waste Management, Inc.
Sales: $10.25 billion (1995)
Stock Exchanges: New York Chicago Frankfurt London Switzerland
SICs: 4941 Water Supply; 4952 Sewerage Systems; 4953 Refuse Systems; 6719 Holding Companies, Not Elsewhere Classified; 8711 Engineering Services
The mission of WMX Technologies, Inc. is to be the acknowledged worldwide leader in providing comprehensive environmental, waste management and related services of the highest quality to industry, government and consumers using state-of-the-art systems responsive to customer need, sound environmental policy and the highest standards of corporate citizenship. In fulfilling this mission, we shall provide a rewarding work environment for our people, cooperate with the relevant government agencies, and promote a spirit of partnership with the communities and enterprises we serve as we strive to be a responsible neighbor, while increasing shareholder value.
WMX Technologies Inc., a holding company, is a leading international provider of environmental and related services. In the mid-1990s it operated the world's foremost network of waste recycling, collection, processing, transfer, and disposal facilities. Through Waste Management, Inc., it was the leading recycler and manager of solid wastes in North America. Waste Management and Chemical Waste Management, Inc. were treating, storing, and disposing of chemical and hazardous wastes. Wheelabrator Technologies, Inc. was providing a wide array of environmental services, principally in converting trash to energy and developing clean air and water systems. Waste Management International plc was engaged in a wide range of solid- and hazardous-waste management and related environmental services worldwide. Rust International, Inc., was engaged in a variety of environmental, engineering, and industrial services.
Family Predecessors, 1894-1968
WMX Technologies derived from a family business started by Harm Huizenga, a Dutch immigrant who arrived in Chicago during the World's Fair of 1893 and began hauling garbage the following year at $1.25 a wagonload. His son Tom started buying into his father's business in the 1920s and, late in the decade, opened his own company, which he called Ace Scavenger Service. In the 1930s he formed, in partnership with other Dutch-Americans--many of them related to the Huizengas--Chicago and Suburban Disposal (C&S) to consolidate routes in the western suburbs of Cicero and Berwyn.
In the 1950s an expanded trust brought together five firms, including Ace, C&S, and Arrow Disposal. Dean Buntrock, a Huizenga son-in-law, joined Ace in 1956, which at the time had about 15 trucks and annual revenue of $750,000 a year. He subsequently took charge of two of the companies and expanded into Milwaukee with a third. In 1965 Arrow Disposal, and Buntrock personally, invested in a small but growingFlorida waste-disposal business operated by another relative, H. Wayne Huizenga.
Waste Management was formed in 1968 as a holding company to tie together the 20 or so family-controlled businesses engaged in the collection and disposal of solid waste. The process of consolidation was not completed, however, until 1971. Buntrock, Wayne Huizenga, and an employee, Larry Beck, emerged with the largest stakes in the new entity, which established its headquarters in Oak Brook, a Chicago suburb. Buntrock became chairman and president, Huizenga vicechairman, and Beck senior vice-president. (Beck and Huizenga retired in 1984; Huizenga subsequently bought a controlling interest in Blockbuster Entertainment Corp., which became the nation's largest video-rental chain.)
Company revenues rose from $5.7 million in 1968 to $10.4 million in 1970, while net income increased from $323,000 to $688,000 in that period. In June 1971 Waste Management made its first public offering of common stock, raising about $4 million. That year it had revenues of just under $17 million and a net income of $1.25 million, serving 14,000 industrial and commercial customers and 40,000 private householders in six states. Waste Management operated 200 trucks and maintained 13,000 waste-storage containers in 1971. It also operated 17 sanitary landfills in five states. In southern Florida, where the water table was too close to the surface to allow disposal of organic wastes in the ground, the company built the nation's first private solid-waste reduction center, a mill that reduced, after reclaiming metals and paper fibers, all garbage and trash into small particles suitable for spreading upon the surface without the necessity of cover.
Waste Management wasted no time expanding still further. In the first nine months of 1972 it gathered 133 other firms into its fold. These were local operations whose owners were allowed to continue as managers. By the end of the year the company was serving 60,000 industrial and commercial accounts and 600,000 households in 19 states and the Canadian province of Ontario. Revenues reached $82 million for the year, and net income $5.7 million. A second major stock offering during the year raised $25 million more, which, like the first infusion of funds, went to retire debt and to finance the purchase of equipment and disposal sites. With very few exceptions, Waste Management's acquisitions were paid for in stock rather than cash. No dividends were paid out at this time.
By the end of 1974 Waste Management had operations in 32 states and the District of Columbia. It owned 32 sanitary landfills and leased 21 others in 16 states and Ontario. Revenues that year came to $158 million, and net income to $9.3 million. Waste collection and storage services accounted for about 80 percent of revenues, and transfer and disposal services for the remainder.
As Waste Management expanded into international andliquid-waste operations, its revenues and income continued to increase rapidly. Between 1971 and 1980 Waste Management grew at a compounded annual average rate of 48 percent. The company began paying dividends in 1976 and never missed a quarter thereafter. In 1980, the year the company passed its main competitor, Browning-Ferris Industries Inc., in annual sales, it had revenues of $656 million and net income of $59 million. Its revenues reached $965 million in 1982, with net income of $106 million. By 1983 Waste Management's 4,200 trucks constituted the largest garbage fleet in the world.
Waste Management entered the international field in 1977, when it won a five-year, $242 million contract to dispose of the solid waste in Riyadh, the capital of oil-rich Saudi Arabia. In 1981 the company won similar contracts for Jeddah, Saudi Arabia's chief port, and Buenos Aires, Argentina. In the next few years it added Cordoba, Argentina; Caracas, Venezuela; and Brisbane, Australia to its list of overseas municipal clients. By 1989 the company had about 10 big landfills in Europe and through a subsidiary, Ocean Combustion Service, was burning toxic waste on incinerator ships plying the North Sea. By 1990 Waste Management International had operations in 23 countries.
Chemical and Hazardous Wastes
In 1976 the U.S. Congress passed two landmark acts for the definition, classification, and handling of chemical and hazardous wastes. When tough regulations implementing this legislation went into effect in November 1980, Waste Management was ready to serve manufacturers that had accumulated these wastes as a byproduct and were willing to pay as much as 35 times the rate for ordinary trash removal. The company already had eight disposal sites for this material, each with its own chemical laboratory to analyze and monitor incoming waste. Six of them were trenches or pits in soil considered so impermeable that liquids could not seep out and contaminate groundwater. Two were deep-well injection sites where liquid wastes were pumped into porous-rock formations far beneath the surface of the earth. One of these, near Emelle, Alabama, became, at 2,730 acres, the largest such site in the world.
By the early 1980s, Waste Management had become the largest hazardous-waste handler in the United States and the nation's largest handler of chemical wastes for private industry and the Department of Defense. Its chemical- and hazardous-waste operations were contributing close to $100 million to the company's revenues and more than one-fifth of profits.
In 1980 Congress passed "Superfund" legislation giving the Environmental Protection Agency authority and funds to clean up abandoned hazardous-waste sites deemed to be environmental or public-health problems. Waste Management, through its Chemical Waste Management subsidiary, received the EPA's first clean-up contract under Superfund, in Gary, Indiana, and later moved on to major work in Greensboro, North Carolina, and Seattle, and for the cleanup of contaminated materials from the Exxon Valdez tanker spill in Alaska.
Chemical Waste added low-level nuclear wastes to the materials it was equipped to dispose of by purchasing Chem-Nuclear Systems Inc. of Kirkland, Washington, in 1983. This gave Waste Management a nuclear-waste disposal facility in Barnwell, South Carolina--one of only two such sites in the nation&mdash well as two more chemical-waste sites. Additionally, a Denver Superfund project called on the company to transport and dispose of 500,000 tons of radium-contaminated soil and debris from 44 separate locations.
Waste Management acquired, in 1984, 60 percent of Service Corporation of America, the third-largest handler of solid and hazardous waste in the United States, for $220 million in cash. Among the facilities acquired were Waste Management's first hazardous-waste incinerator (in Chicago), a landfill for the disposal of PCBs in Model City, New York, and a double-lined hazardous-waste landfill in Fort Wayne, Indiana. The deal also added 21 landfills to Waste Management's existing 68.
Lawsuits, Fines, and Bad Publicity
A front-page New York Times article published on March 21, 1983, touched off, after 15 years of spectacular success, Waste Management's first crisis. It reported that the company had, within the last two years, been cited by state and federal authorities for violations at toxic-waste sites in at least seven states. Former employees charged that the company was responsible for illegal dumping of hazardous wastes at four separate sites. Waste Management also was accused of improperly attempting to influence the EPA and destroying or altering evidence of its violations. In the wake of these allegations, many shareholders dumped the stock, causing a loss of $860 million in the company's overall market value in just two days.
A number of these charges proved well-founded. Waste Management admitted to storing impermissible levels of PCBs at its Vickery, Ohio, site, where investigators found millions of gallons of toxic waste had seeped into the sandstone surrounding five of the deep wells on the property. The company paid $12.5 million in fines and promised to spend another $10 million to bring the site into compliance with regulations. In 1985 it paid out $600,000 for illegally storing PCBs at Emelle. Waste Management later paid fines of $9.25 million for violations at its Chicago hazardous-waste incinerator, which was shut down after a 1991 explosion and written off entirely in 1993.
Waste Management also was accused of a number of illegal business practices aimed at restraint of trade, including intimidating customers and harassing competitors. In 1988 it paid $2 million in fines for collusion to allocate garbage-collection territories in Toledo, Miami, and Fort Lauderdale. Two California company units pleaded guilty in 1990 to price-fixing charges and were fined $1.5 million. Company president Philip Rooney later said Waste Management's legal woes were an inevitable consequence of its size and its decentralized structure of formerly independent local operations.
Waste Management bounced back from these problems and continued to grow throughout the 1980s, earning $562 million in 1989 on revenues of $4.5 billion. Improving its image as well as exploring another possible pathway to profit, the company rapidly expanded its recycling of paper, glass, plastics, and metals. By 1990 its Recycle America subsidiary, formed in 1986, was the nation's largest recycler, with curbside pickup programs serving 1.2 million households.
By mid 1989 Waste Management was operating 123 landfills, of which 60 were undergoing expansion, and it had another 80 new landfills under development. With an estimated one-third of the nation's functioning 6,000 landfills nearing capacity and growing public opposition to new ones, Waste Management's plentiful supply of real estate gave the company what it perceived as great bargaining power. At the same time, because of growing public resistance to landfills, Waste Management saw future growth to come from dealing with waste at its source. In the early 1990s Buntrock traveled to big corporations, proposing to provide in-house management of all their waste problems. He signed contracts with Alcoa, Boeing, General Electric, General Motors, Du Pont, Hoechst Celanese, and Navistar International.
In 1993 Waste Management reorganized itself into a publicly traded holding company named WMX Technologies. As such, it held a controlling interest in four other publicly traded companies: Chemical Waste Management, Waste Management International, Wheelabrator Technologies, and Rust International, as well as full ownership of Waste Management of North America. This network was testimony to WMX's ambition to dominate every sphere of waste collection and disposal. Wheelabrator's major business in 1993, for example, was its 14 plants burning trash at high temperatures, generating electricity for six million people. (Chemical Waste also had three incineration sites where hazardous organic waste was being burned.) Rust International was one of the nation's leading environmental engineering and consulting firms as well as a leading design and construction company.
Downsizing in the 1990s
Ironically, because of WMX's great scope the consolidated company soon found it was engaged in ruinous competition with itself. For example, its customer base of 11 million homes enthusiastically supported recycling, which was removing 15 to 30 percent of the waste that once went to landfills. This meant less profit for WMX, because of the weak commodities market for recycled material. Trash-to-energy incineration also reduced the demand for landfill space, as did the weak economy of the early 1990s and, partly for this reason, an unexpected drop in the output of industrial wastes by big manufacturers. In 1993 WMX's revenues fell for the first time, and its profits declined by 47 percent. Worst hit was Chemical Waste, which took a $363-million writeoff because of deferrals in the disposal of hazardous waste. The value of WMX's common stock plunged from $17.5 billion to $12.6 billion in 1993. (Chemical Waste and Rust International ceased to be publicly traded companies when WMX bought their available shares during 1993-95.)
In May 1994 Rooney announced plans to sell $1 billion of WMX's $19 billion in company assets over the next 18 to 24 months. It sold Rust International's hazardous-waste and nuclear-waste cleanup operations to OHM Corp. for stock valued at about $77.8 million and Rust's pulp-and-paper industrial-process engineering and construction division to Raytheon Co. for $118 million. Waste Management International took a $148-million writeoff in 1995 to dispose of operations and dismiss 300 workers. In 1996, however, WMX entered the New York City garbage business for the first time by buying ReSource NE, Inc., the city's largest recycling and waste-processing company. Rooney succeeded Buntrock as WMX's chief executive officer in June 1996.
WMX Technologies in 1995
WMX Technologies ended 1995 with revenue of $10.25 billion, up 7.3 percent from 1994, but net income, at $654.6 million, was down 15.7 percent for the year. Solid-waste management and related services (Waste Management) accounted for 53 percent of revenue during the year; international waste management and related services (Waste Management International) for 17 percent; trash-to-energy, waste treatment, air quality, and related services (Wheelabrator) for 14 percent; engineering, industrial and related services (Rust International) for 10 percent; and hazardous-waste management and related services (Chemical Waste Management) for six percent. The company operated 790 collection facilities with a fleet of 28,500 vehicles, 227 transfer stations, 208 material-recycling facilities, and 195 land disposal sites. It also had 16 trash-to-energy facilities and seven cogeneration and independent power plants in North America. In addition, it was operating 550 water, wastewater, and biosolid projects and had installed more than 12,000 industrial water-treatment systems worldwide. Engineers, scientists, and technical personnel were operating in 35 countries. Long-term debt was $6.42 billion at the end of the year.
Principal Subsidiaries: Chemical Waste Management, Inc.; Rust International Inc.; Waste Management, Inc.; Waste Management International plc; Wheelabrator Technologies Inc. Waste Management and Chemical Waste Management were wholly owned by WMX Technologies. The others were at least half-owned by WMX.
- Bonner, Raymond, "Giant Waste Company Accused of Illegal Acts," New York Times, March 21, 1983, pp. A1, D10.
- Bukro, Casey, "Piled-Up Expectations Squeeze Waste Behemoth," Chicago Tribune, May 16, 1994, Sec. 4, p. 3.
- Burck, Charles G., "There's Big Business in All That Garbage," Fortune, April 7, 1980, pp. 106-108, 110, 112.
- Chakravarty, Subrata N., "Dean Buntrock's Green Machine," Forbes, August 2, 1993, pp. 96-100.
- Ellis, James E., "Cleaning Up after Waste Management," Business Week, January 24, 1994, pp. 99, 102.
- Foley, Brian F., and Clarke, Philip R., III, "Waste Management, Inc.," Wall Street Transcript, December 24, 1973, pp. 35437-35440.
- Jacobson, Timothy C. Waste Management: An American Corporate Success Story. Washington, D.C.: Gateway Business Books, 1993.
- Lancaster, Ron, "Waste Management Says It Has Disposed of Most Problems, but Some Voice Doubts," Wall Street Journal, October 4, 1983, p. 60.
- Melcher, Richard A., "Back to the Nitty-Gritty," Business Week, June 17, 1996, pp. 76, 80.
- Morais, Richard J., "A Jagged Line, but the Direction Is Up," Forbes, October 24, 1994, pp. 54-55, 58.
- Powers, Mary B., "Rust Gets a New Shine," ENR, June 14, 1993, pp. 22-24, 26.
- Weiner, Steve, "Garbage In, Profits Out," Forbes, December 12, 1988, pp. 47, 50.
Source: International Directory of Company Histories, Vol. 17. St. James Press, 1997.comments powered by Disqus