Resourceful approach

Bob Cappadona has worked in the recycling industry since he graduated from the University of Massachusetts Lowell in the late 1980s. He started at a small high-grade paper recycling plant as the facility manager. Regarding his initial exposure to the recycling industry, he says, “I was fascinated by the environmental benefits from the reduction within the total waste stream.”

Approximately a decade later, Cappadona began his career at Casella Waste Systems Inc., headquartered in Rutland, Vermont. That’s when he says his “real industry education” began.

Casella is a regional, vertically integrated solid waste, recycling and resource management services company serving residential, commercial, municipal and industrial customers. The company provides solid waste collection and disposal, transfer, recycling and organics services in Vermont, New Hampshire, New York, Massachusetts, Maine and Pennsylvania.

Cappadona says the company’s culture is unique. “In my 25 years here, John Casella and leadership around the organization have always focused on and exemplified our core values: trust, integrity, teamwork, service, respect and continuous improvement. Everyone’s voice is heard and encouraged at all levels of the company. And this type of behavior internally is practiced externally with our customer base,” he says. “Many of our customers have conveyed their appreciation of the ‘straight-forward’ approach of many of our Resource Solutions we provide as an organization.”

The Resource Solutions model the company offers also sets it apart, Cappadona says. “Doug Casella started the company in 1975 with a single truck, and recycling was always in the forefront.” He adds that “extracting resources from the waste stream has always been Casella’s focus.”

As the vice president of Casella Resource Solutions, Cappadona oversees operations for the company’s 17 material recovery facilities (MRFs) in Maine, Massachusetts, New Hampshire, New York and Vermont.

In the following interview, Cappadona shares more about how recycling fits into Casella’s overall services and the issues affecting the industry.

Recycling Today (RT): How does recycling fit into Casella’s overall business?

Bob Cappadona (BC): Casella is a fully integrated organization providing services such as collection, disposal and recycling. Further, extracting materials from the waste stream and creating new resources has always been a large part of the Casella overall Resource Solutions piece. Since that first truck, it’s been a huge part of overall business as we have been able to provide our customers the recycling expertise and advice from a sales, operation, design or commodity movement [perspective].

RT: What is the company’s philosophy when it comes to recycling?

BC: From a commodity standpoint, we strive to reduce recycling commodity volatility risk while generating acceptable returns and make it a “win-win” situation for our customers and the company. We have accomplished this with our Sustainability Recycling Adjustment (SRA) fee and with our third-party contract structure.

From an operations standpoint, it’s safety, quality and productivity—in that order. We want our employees to go home safely to their families and we understand operationally producing high-end finished products opens many markets, while designing, maintaining and investing in equipment leads to effective productivity.

RT: What are the biggest issues facing recycling in your opinion? How is Casella working to address these issues?

BC: Just recently, clearly it was the National Sword initiative in China. Over the last few years, this is where the SRA and our operational approach served us well. The ongoing continuous improvement initiative has been addressing the contamination within the stream.

To [further] help address this [contamination], over the past several years, we have implemented formal audit programs at each of our MRFs so our customers have a good understanding of their inbound product mix and how they can improve. This has proven to be very popular with our partners as they can focus on certain items from a community education standpoint.

RT: What technology holds the most promise for improved recovery and quality at MRFs? What kind of technological investments has Casella made?

BC: Casella has always invested in our recycling infrastructure as each year we invest significantly to not only replace aging equipment but also implement new technology that will advance efficiencies and quality.

What technology holds the most promise? The easy answer is all of them. Sometimes we get caught up on one piece of technological advancement, when actually because of the never-ending change of the inbound stream, it’s the design and flow of the processing system and where within the processing system we place the equipment advancement.

Optical sorting and robotic technology continue to advance, and no doubt they contribute to recovery and quality at our MRFs, but it’s the combination of advanced technology and operational expertise that contribute to the overall success at a MRF.

RT: How have Casella’s contracts with municipalities evolved? What are the most prevalent trends you see when it comes to contracting for recycling services?

BC: Over the last several years, we have continued to focus on partnering with our municipal customers to increase education related to the overall stream and contamination. While there is room for continued improvement, we have seen meaningful improvement in the quality of the inbound stream. At the same time, we have taken a lot of risk out of the business by addressing our contract structure with our municipal customers. In a down recycling commodity market, we are generally able to push the risk back to the customer, where the stream is generated, through higher tipping fees or lower rebates. Similarly, as recycling commodity values improve, we share in the upside benefits of a stronger market with our municipal customers.

RT: When did Casella Waste Systems first begin using its SRA fee and why was it introduced? What effects has the SRA had on your business?

BC: We first introduced the SRA fee in 2015, which was a mechanism to mitigate recycling commodity risk on our intercompany volumes that are processed at our recycling facilities. We educated our customers on the SRA, and it has been well-adopted. In late 2017, when China launched National Sword, our customers were accustomed to how the fee floats up and down on their invoices based on market conditions. The program worked well through that period and continues [to work well] today.

We realize that recycling must be both environmentally and economically sustainable, and the SRA fee helps us to achieve this and meet the sustainability needs of our customers.

RT: How has Casella Waste Systems benefited from the increased value of recyclables in the last year? Do you think a correction could be coming for some secondary commodities?

BC: As commodity values have increased, our floating SRA fee for our collection customers has decreased, allowing us to share the increased recycling value back with our customers. This fee moves almost dollar for dollar, so we haven’t generated any additional profits in this part of our business.

For our third-party customers at the MRFs, with higher commodity prices, we have stepped into rebate positions with most of our customers, which is allowing us to share some of this higher value while generating additional profit.

One universal thing I have learned over the years when it comes to commodity prices is that they are hard to predict, and more important than predicting the future is building a sustainable business model and risk mitigation programs. We want recycling to work in all commodity markets.

RT: Acquisitions have played significant a role in the company’s growth. What can we expect to see from Casella this year?

BC: We have been able to grow the overall business meaningfully over the past few years, both organically and through acquisition. We continue to see a strong acquisition pipeline, and we are positioned well to continue to execute against our growth strategy. I am excited that this not only provides an opportunity to grow our traditional solid waste business but also our Resource Solutions operations, including recycling.

Bob Cappadona is vice president of Casella 0Resource Solutions at Casella Waste Systems Inc., www.casella.com.