Biggest C&D Recycler: A True Star

Sure, the large, publicly owned waste haulers have developed a few C&D recycling plants nationwide, but overall their recovery rate for C&D waste is not very good, and their focus is on MSW rather than C&D.

Star Services Group Inc., through its various Delta operating subsidiaries, is different. The Pompano Beach, Fla.-based company is a publicly traded waste services provider with a main focus on C&D recycling and ancillary services.

Building On A C&D Cornerstone

Star Services was formed in February 1999 specializing in the collection, recycling and disposal of construction and demolition materials, as well as providing other solid waste collection and recycling services. In 2000 about 33% of its $24 million in revenues came from C&D recycling sites, which it owns or operates.

In 2001 those figures are projected to grow to $37 million, with 38% coming from C&D recycling operations. What is even more interesting, the company intends to continue to grow its C&D recycling business, which it sees as a profit opportunity. The goal is to be the biggest mixed C&D recycler in the country, and Delta is probably already there. In 2000 the company’s recycling sites processed 1.4 million cubic yards of mixed C&D waste.

Star currently either owns or manages 10 C&D debris-processing facilities, two “lakefill” operations and two waste collection and portable sanitation operations in South Florida. Star has more than 3,400 customers. Star Services is made up of 10 corporations, including a site development company, contaminated soil processor, portable toilet business, and a roll-off container service. It has more than 250 employees, half of whom work in Star’s C&D recycling subsidiaries, Delta Recycling. According to Patrick Marzano, president, it is anticipated that 38% of Star’s 2001 revenue will continue to come from the recycling operations, because of the number of facility acquisitions the company completed in 2000, as well as those it has identified for 2001. “It’s all part of Star’s aggressive growth plan in the C&D industry,” Marzano says.

“We believe that there is great potential and opportunities in C&D-related services in South Florida,” he says. “With the enormous growth that Florida has had in recent years, and will continue to have in coming years, C&D will remain a major part of the waste stream; couple this with the fact there has been a significant reduction in landfill capacity for C&D material in Florida. Thanks to our network of facilities spread throughout South Florida, we are in a position to benefit from both of these factors.”

Another way Delta supports its growth is that at least 25% of the C&D waste entering its facilities is delivered from its own roll-off container operations. “It gives us more control of our destiny. That percentage could go up depending on what is happening in the marketplace. The more facilities we add on, the shorter the distance to disposal, for us and for our customers. That means more pulls per vehicle, which makes us a lot more efficient,” Marzano says.

Star’s 10 C&D facilities stretch along about 100 miles of the populous east coast of South Florida, from West Palm Beach to south of Miami. They range in size from less than one acre to 60 acres, and are as individualistic as the areas they serve. However, there seems to be some general points of commonality between the sites, and that is no accident, according to Marzano. “We try to keep all the equipment and operations fairly uniform.”

Star’s method of operation is best exemplified by examining a typical facility, such as the company’s facility in Davie, near Fort Lauderdale. Material entering the recycling facility is inspected by a trained spotter who has passed a mandatory Florida Department of Environmental Protection (DEP) course on allowable materials. Yard waste (Florida’s 12-month growing season means a lot of vegetation) is sent in one direction to be sent through a grinder and a trommel for sizing to one half-inch as a mulch product.

Mixed C&D is directed to a concrete pad dubbed a “working face.” According to Frank Bermudez, manager of the Davie facility, about six people work on the concrete pad removing any garbage or other “unacceptables that might arrive mixed in with the C&D, such as large pieces of wood and other materials that could jam the picking line.” Composition of the incoming material is about 40% wood, 30% to 35% inerts, and 30% other material.

C&D waste to be processed is then loaded onto the sorting line. The first stop is an inclined screen to get the fines out. Two to three years ago the company had used trommels for that process. Phil Foreman, chief operating officer, says, “We found that with a trommel system we could process about 1,500 yards per day but the inclined screen allows us to process around 3,000 yards of debris in a day. Also, the trommels were more expensive to run. We were spending a lot of money on maintaining the screens, drum wheels, and feeders.” Those simple inclined screens are apparently giving a pretty good product.

For two of its sites, Delta recently received a permit to allow the fines to be used in restricted land use applications, providing a new market for a sometimes difficult-to-move item. Star believes these are the only such permits that have been issued in the State of Florida.

After screening, the material descends to a standard picking line where metals, cardboard, concrete, wood, and anything else for which a market has been found is recovered. As an example, some sites have on occasion pulled five-gallon buckets and similar plastics because a local plastics recycler has a use for that material.

After metals, two other products dominate recycled concrete and wood ground for boiler fuel. All of the C&D wood generated at Star’s facilities is ground and shipped to a cogeneration power facility. But unlike many other areas in the country, the demand for recycled concrete is not as great as on might expect. South Florida has a number of large-scale aggregate quarries that provide natural aggregates at cheap prices, so use of recycled concrete as road base is rare. The non-recyclable residue falls from the end of the picking line and gathered for transportation to a landfill.

Bermudez said his site had a residual rate of 14% to 20%. While the residual rate is as high as 25% by volume at some of Delta’s sites, by weight it is only a respectable 15% because it is made up of the light non-recyclables.

The recycling system Star uses is not spectacular, but works for Delta’s needs, COO Foreman says. “We looked at a number of different systems to process C&D. We analyzed the volume of recyclables that could be recovered, the related labor cost, and the cost of capital involved in the different systems. We believe that we came up with the most cost effective processing method to meet our needs. There are ways to get a bit more of the recyclables out, but they cost a disproportionate amount of money.”

It is an issue that extends into the company’s use of labor. “We are always balancing avoided disposal costs against the labor cost associated with picking the material,” says Foreman. “As an example, if we are paying 10 pickers $6 an hour, and the residue disposal cost is $20 per ton, then those employees would have to pick out three tons of recyclable material per hour.”

Delta has chosen to use regular employees over temporary services for all positions, including the picking line. “We have had both,” says Foreman.

“It’s a little bit cheaper with temporary services, but we use our own employees who we can train to do the job on the equipment from both an operational and safety aspect. We think we are better off having our own employees. You can develop your own people.”

Because of its uniform equipment policy, Delta has developed solid and uniform deals with its suppliers. Most of the screens and picking lines are built by Powerscreen of Florida, the trommels for mulch production are from Powerscreen (now part of Terex), the horizontal grinders from CBI, the mobile equipment is from Caterpillar, and the trucks from Mack. Especially for the latter two, Delta tries to keep its equipment fairly new in order to improve efficiencies and to maintain a high resale value.

Playing By The Rules

Delta Recycling is very conscientious when it comes to environmental compliance and doing the right thing by its customers and employees. Star is subject to extensive and evolving environmental laws and regulations. Every possible permit that is needed is kept up to date; County solid waste permits, State solid waste permits, State MRF permits, Water Management District permits, U.S. Army Corp of Engineers Dredge and Fill permits, recovered materials dealer permits, some hazardous waste permits, standard occupational licenses in each municipality, plus the monthly operating reports required by the state DEP and county environmental department. It is an almost dizzying array of paperwork.

Tom Roberts, senior vice president in charge of environmental compliance, says, “The company feels the permits are necessary to protect our environment and human health. It is also extremely important to help the industry and keep the ‘bad actors’ out. In any business there are people who play by the rules and others who will use shortcuts to get around the protective regulations. There are people out there who don’t go through all the red tape and expense of being in compliance with rules. They just go out there with a truck and a roll-off container and say they are recycling, but are not. We would like to see a more level playing field.”

Roberts, who is president of the Florida Recyclers Coalition Inc., and vice president of the Construction Materials Recycling Association, adds, “There should be more government incentives created to increase Florida’s recycling rates and help save natural resources. The Florida legislature, in numerous bills, has said it favors recycling over disposal. We would like to see the state create some type of monetary incentives for recycling, maybe tax breaks on businesses, grants for purchasing equipment for large recyclers, low-interest loan availability. Most importantly, there should be a disadvantage on disposal, but not on recycling. Demand incentives could be accomplished by the state. In their bid packets, they could stipulate that the material, such as mulch and aggregates for roadsides, should be composed of recycled materials.”

For counties of more than 50,000 people Florida currently has a voluntary mandate to recycle 30% of their waste stream. The onus is on the municipality, but there are no teeth in the law and the local governments can pretty much ignore it. In addition, of that 30% only half of that number counted can come from C&D sites, so there is not much incentive for the municipalities to promote C&D recycling.

Fostering End Markets

That doesn’t mean C&D recycling isn’t economically feasible or advantageous today in South Florida. Standard markets for most of the basics, according to Roberts, usually are good, although he would like to see more opportunities for end user products, such as for wood/plastic paper and aggregates.

Star Services is making a product that few, if any other C&D recyclers in the U.S. do-terra firma. “Land,” Marzano says, “especially that zoned for industrial use, is very expensive at the southern end of the Sunshine State.” With this in mind, the company has two “lakefill” (really borrow pits) operations going where recovered concrete and other dirt generated at the sites are pushed into the water in order to make land again. It’s a replacement plan. As that type of material was there to begin with, the lakefill is the ultimate form of recycling. In addition, it pays off for the local government authority, which is getting more land to add to the tax rolls. It also provides an outlet for the recycled concrete when there is little other market.

But the bread-and-butter product for the recycling facilities is mulch and cogeneration fuel, and lots of it. One interesting argument Delta Recycling has heard is whether burning recycled wood as cogeneration fuel is recycling. Roberts argues it is. “It is going to take some fuel to operate those burn plants. Why not recovered wood from C&D? If they use wood chips, then they are reusing rather than depleting other unused natural resources. If they weren’t burning wood chips, they would be burning fossil fuels or something else. Recycling and reuse of solid waste is always better than disposal. We must preserve our precious natural resources.”

Tipping fees charged at Star’s facilities ranging from $7 to $12 a cubic yard. Those amounts should go up in coming years, according to Marzano.

Thanks to tougher landfill regulations, there are but 90 C&D landfills left in Florida, compared to 300 in 1974. Most of the remaining sites are in the northern part of the state. “Tipping fees haven’t gone up much in the past three years, but they have gone up,” he says.

Straight reuse of wood is a market the company has tried, with little success. It is hot and humid in south Florida and most leftover construction wood warps, especially if it is wet.

Set For The Future

“Star Services wants to be a one-stop shop for contractors and for developers in its market area,” Roberts says. “Through its various companies it can provide a builder site development services, recycle any demolition debris from the site, provide portable toilets and storage containers to the site, place roll-off containers to remove construction waste, and bring in topsoil, mulch and other landscaping products in the final stages. So while C&D recycling is the company’s major focus, diversification is a part of its plans and actions. In fact, Star is set up to remove the MSW from a location once it is completed.”

Recently, Star Services received a multi-million-dollar line of credit, and sold 1.8 million shares of its stock to private investors. The company, which made several acquisitions in the past two years, plans on using the capital to make more acquisitions.

“In the past everything we used for acquisitions came from either our own cash flow or an initial private placement of Star,” says Marzano. “Now we are in a better position to aggressively pursue all options. As a public company since July 7, 1999, Star can offer stock as part of any transaction,” he adds.

In Florida, three big waste hauling companies dominate the solid waste field: Waste Management, Allied/BFI, and Republic. None focus on C&D as Star does. “The big ones are good companies, but they don’t specialize in the C&D business like we do,” says COO Foreman. “They direct most of their energy toward municipal waste contracts and commercial collection. We can and do focus on the needs of the C&D customer base.” Marzano adds, “We view the big public companies at one level, we are in the middle and also public, then there are 15 smaller operations spread throughout our four-county area. We feel that our size is our edge; we can offer the personalized service the large companies can’t, but we are not a small company operating just one facility where there is no depth. Our networking of facilities allows us to accommodate major waste generators as well as our own in-house operations and smaller companies.”

Marzano admits that 2000, with all its acquisitions, was a difficult year for the company. For example, there were the headaches of making sure all the new sites were permitted properly. “That slowed us down and added expenses,” he says. “But all of this will be behind us in 2001. We have great facilities in great locations, a tremendous management team, and a growing market. Star’s primary objective is to become one of the leading companies in the environmental service industry in the Eastern United States. All the factors are there for us to be successful and to dominate market share in the future.” C&D