Ultimate magazine theme for WordPress.

Corporate Growth Conference 2021: The State of the U.S. Economy and How It Affects Waste

From the disruptions caused by COVID-19 to new leadership in Washington, the U.S. economy has changed significantly in the past year and a half. While many industries have learned to ad -t to what has been coined as the “new normal”, challenges such as supply chain disruptions and inflation have caused unprecedented setbacks to day-to-day operations.

At Waste Today’s Corporate Growth Conference held in Chicago on November 4th, renowned industry analyst Michael E. Hoffman gave an overview of how these macroeconomic factors have translated into specific effects on the waste and environmental services sectors.


US inflation rates recently hit a three-decade high, with consumer prices (CPI) up 6.2 percent in October year over year. Although these price spikes are expected to continue along with increasing demand for core products, Hoffman expressed a positive outlook on the waste industry’s ability to overcome cost increases.

“So the condition of the garbage is [actually] really good now. Is there any inflation in the market? Absolutely. Can industry price through inflation? Absolutely, ”said Hoffmann. “I think garbage can become expensive due to inflation. It’s about conviction as an operator, not [whether] you can do it or not. Actually, [we’ve] seen through the third quarter earnings season which h -pened above all. And even where it doesn’t seem like it h -pened that effectively, it clearly h -pened. [Companies] I just had to increase the pace. ”

Given the waste industry’s affinity for inflation, which Hoffman said supports a better core and reported price, fiscal 2022 (FY22) sales are expected to benefit more from inflation than cost increases. In addition, an average CPI growth of 4.4 percent is expected for FY21 compared to an original expectation of 2 percent.


In terms of volume, Hoffman said the industry consistently reported better-than-expected numbers throughout the third quarter.

The original forecast for fiscal year 21 has a volume of 0.5 to 2.50 percent. However, it was reported that volumes in the first half of 2021 (1H21) were 135 basis points (bp) better than the average volume growth in February of the fiscal year of 1.4 percent.

While the pace is expected to slow down 2H21, Hoffman predicts it will still be above the industry’s long-term growth rate of 1 percent.

“Year-to-year comparisons are a little meaningless because of the weirdness of last year, but you can see the patterns,” he said. “Negative in Q1, really high in Q2, and then everyone thought we’d settle into a normal somewhere in between.” [Q1] and [Q2], and we ended up doing better. Why? Because we’ve all found opportunities to get in the car, get out, and go somewhere, and pretty much every time we do that we create a trash event. ”

These volume trends were supported by new company formation and an above-average merger and acquisition (M&A) cycle, noted Hoffman.

“There are clear indications of start-ups, and with this start-up there are also existing commercial businesses that are starting to see positive service intervals. So both of them are measured in terms of volume when you look at it from a reporting standpoint, ”Hoffman said.

As for M&A, Hoffman said this cycle is the strongest he has ever seen. “If everyone closes everything they think they can, I think we’re going to spend $ 3 billion [by the] public company this year. The high in 2019 was $ 2.7 billion. So we saw a 10 percent increase, and that was the high point of four years in a row of above-average trends after the 2017 tax change, which helped accelerate it. “


A major topic of conversation in Hoffman’s “Economic Update” session was how supply chain disruptions have impacted solid waste operations.

Regarding the current shortage of microcontrollers, Hoffman said that the c -acity to meet demand is unlikely to be caught up before 2H22, and it will not be before 2H23 for the backlog to return to “normal”.

“How did we get here? Two things h -pened. We all went to work from home, so there was this massive computer purchase as a kind of increasing volume pressure on the need for chips. And then two, events h -pened. When the economy started to recover and automobile production started again and there is still that demand and that new source of demand at a higher level that put the microcontroller under pressure, “Hoffman said.

“[We also] There was a fire in J -an that destroyed 5 percent of the world’s c -acity to manufacture these products, and in February there were the Texas storms that halted chip manufacturing in that market for about three weeks. “

Given the circumstances, Hoffman encouraged those on the equipment side of waste transportation to be aware of current waiting times.

“Next year is sold out – one year… to get a truck. You should be thinking about your 2023 order now or you won’t have trucks or whatever you order that have microcontrollers, ”he said.

Comments are closed.

%d bloggers like this: