The 1998 Waste Management Annual Report recognized these changes away from competition. John Drury, WMI's CEO, reports that "the merger gave us increased strength in every major North American market." The 10-K report responds to the monopolistic concern by stating that "the waste industry is still highly competitive despite the recent consolidations in the industry." Don't you believe it. The competition has been greatly reduced. Otherwise WMI could never have raised tipping fees so drastically.
The huge tipping fee increase impacts small competitors whom WMI and BFI have been trying to eliminate for years. Smaller competitors takeovers are a major part of the growth and monopoly policies of the company. The company expects to takeover companies with $800 million of revenues this year. 1997 and 1998 acquisitions were $1.1 Billion each year. Given that the company's sales were only $12 Billion in 1998, acquisitions the last three years increase the company sales over over 30%. Soon one can expect little more in the industry than the two giants. Then if these companies can topple the competition of municipalities in waste collection, monopoly will become total reality until the public demands public regulation of the industry! One can see how important privatization is to bring about growth and total monopoly!
Another way to measure the lack of competition is to look at the profit margins of the company. Again WMI brashly states its margin goals! (They probably do this since the old WMX had such profit problems in recent years.) The 1998 Annual Report (p. 4) writes of its operating strategy: "The soundness of the operating strategy is reflected in our operating margins, which improved from 13.9% in 1997 to 19.8% in 1998, with the fourth quarter 1998 operating margin at 24.4%. Most companies only dream of a 25% operating margin! When you raise tipping fees astronomically for 13% of your landfill customers, your margins and your profits also increase! Long range the company forcasts the future as follows: "Our goals reelect our commitment to growth, as we target long-range performance that will provide sustained revenue growth of 10% to 13% per year, EBIT margins of 30% or greater, and earnings per share growth of 18% to 20% per year."
Solid Waste Online (SWO) provides examples of on spot-market disposal increases around the country as follows. In Pennsylvania the 13 company landfills rose an average of more than 40% to $33.62 per ton on March 1, 1999. Some rates doubled. In Virginia Brambles increased from $13.58 to $25 and Charles City from $17.19 to $25. WMI's Whellabrator incinerators in Massachusetts, according to two haulers, rose sharply to $80 per ton from the high $50s. SWO reported that the company said it based its decision to boost prices at any given location on a number of factors, including the availability of other disposal options and supply and demand." Since competitors are disappearing like a wildfire, one can understand how WMI can use the options factor in its pricing!
In summary, Waste Management is moving in a more corrupt way than ever as it eliminates competition by forcing small competitors to sell out because of the exorbitant tipping fees and gain monopoly conditions through consolidation of large competitors and through the goal of eliminating municipal competition in the next ten years!
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