Put a Lid on It, Pal

Waste Management is fuming about an entrepreneur's efforts to cut garbage-hauling costs for small businesses

By way of example, Greg Davis gets up from the bar at the Irish House and walks into the alley. He examines the Dumpster and runs some numbers on a matchbook. Then he uses a pay phone to call one of several private companies that haul garbage on Miami Beach. Inside of five minutes, Davis concludes that he can lower the bar owner's monthly trash bill from $365 to $260, a 29 percent savings.

"Some people haven't looked at their garbage contract in ten years," Davis explains. "A lot of them didn't read it in the first place; they just signed on the dotted line. I act as a consultant. I look for inefficiencies. I try to renegotiate the service level, or if need be I renegotiate the whole contract. Whatever money I save the consumer, I take half."

That was the plan, anyway, when Davis and a partner started Savon Trash Services last summer. In itself, garbage brokering is nothing new: Large national chains like Kentucky Fried Chicken and Pep Boys hire outside consulting firms based in California, Texas, and New Jersey to manage and minimize their trash-hauling bills. But Davis noticed that no one was exploiting the concept locally, for small and midsize businesses. At the time he decided to become an entrepreneur, Davis was working as an account executive for Waste Management Inc. of Florida, getting, as he puts it, "vertical promotions and horizontal raises."

Davis's consulting clients -- the Delano, the Breakwater, the Boulevard Hotel -- have faded away since his former employer sued him in December. Waste Management, which controls approximately half the garbage market in Miami Beach, claims in its lawsuit that Davis walked off the job with secret customer lists and other proprietary information that now gives him "an unfair competitive advantage" in the refuse industry.

If you live in a house or small apartment building in Miami Beach, the city arranges to have your garbage carted off. But if you run a business, you have to pay one of five private garbage haulers to do the job. The service doesn't come cheap, and there's an additional expense: Besides paying the cost of garbage service, every nightclub, shop, and office must pay the city a twelve percent tax based on the hauling fees. This so-called franchise fee has crept upward from eight percent during the past six years. Miami's fee recently bounced from six to fifteen percent, and Fort Lauderdale's hovers at seventeen. Last year garbage companies in Miami Beach raked in $9.6 million; the city's slice was a tidy $1.2 million, according to accounting department records.

In seeking customers for Savon Trash Services, Greg Davis has preached a consumerist gospel whose principal refrain is this: Garbage haulers on the Beach charge exorbitant fees -- as much as 60 percent higher than in Miami and other cities. They get away with doing so because clients don't understand the complexities of the garbage business. For example, most restaurant owners are unaware that Broward County recently built a pair of giant trash incinerators that have decreased local disposal fees from $59 to as low as $38 per ton. Haulers' expenses are lower, yet the savings have never been passed on to consumers, Davis claims. Moreover, he says, it's in the interest of Miami Beach bureaucrats to preserve haulers' fat profit margins. The more money the haulers charge bars, restaurants, and hotels, the larger the city's twelve percent slice.

Miami Beach restricts the number of waste haulers to five licensed companies. On the surface this seems a sufficient number to ensure healthy competition and reasonable rates. In fact, Davis contends, the five companies have figured out that it's more profitable to quietly continue charging high fees rather than get into a bidding war for the other guy's clients.

The city's own sanitation director acknowledges that Davis isn't far off the mark. "If the customer isn't aware of how much service he needs, usually the hauler sells him a lot more than he really requires," says Robert E. Thomas. "If you don't know any better, the sky's the limit. If you had the same Dumpster being serviced by five different companies, each one would charge a different price.... If you had more vendors doing business, the price would go down. But revenues from the city's franchise fee would go down too."

Davis claims that Waste Management's lawsuit is nothing more than a ham-handed attempt to run him out of town. Before that, Davis says, Waste Management called and wrote his clients and scared them away by raising the prospect of being drawn into the lawsuit. In Davis's view, Savon Trash Services is a small threat to Waste Management's profits, but a larger overall threat: A critical mass of educated consumers might lead to a wholesale shakeup in the current economic milieu of Miami Beach -- a mess of disaffected clients, nasty bidding wars, even a significant expansion in the number of licensed haulers.

John D. Voigt, a lawyer representing Waste Management in its lawsuit, says the issue is much narrower: Davis is in violation of an employment agreement he signed in August 1995 that bars him from competing with Waste Management "directly or indirectly."

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