On-line Resources - Compactor Management Company

Online Resources

Using Technology To Fit High Collection Costs

High costs are rampant in today’s economy. We all face this problem in our businesses and share the task of searching for ways to reduce costs. An often overlooked cost is garbage removal. It’s a necessary expense for something that we want to just go away. As garbage franchise agreements are renewed costs for service will climb even more. The reality is, we can do something about the cost, and in many cases, reduce it significantly. The Bay Area faces unique challenges because most cities and districts have franchised garbage haulers. A result of those “franchises” is a built-in cost escalator allowing haulers to raise rates based on cost-of-living increases built into contracts. In some cases, cities may even allow haulers to recover extraordinary operating costs in addition to normal annual increases. As contracts come up for renewal, some collection contracts will spiral out of control and the cost will be passed on to you. In Castro Valley for example, according to the RHO, members have reported garbage collection rate increases of over 100%. This mix of conditions creates real financial and operational challenges for rental operators in the bay area

How to Fight Back Against High Garbage Removal Costs

You can fight back by using garbage/trash compactors. An apartment, small business, restaurant, hospital, or any company generating garbage/trash can reduce removal costs by using this type of technology. A garbage compactor is generally an electric/hydraulic device that compresses loose garbage within a container. The force generated by the compactor ram typically reduces the loose garbage by four (4) times (or more) of its original loose volume. When volume is reduced through compaction, your hauler does not have to “dump” your garbage as frequently. To compensate for his reduced revenue, he will increase the hauling fee typically by two (2) times the loose rate. The bonus for you is your garbage is being compacted at a ratio of 4 to 1 or more, resulting in at least a 50% cost reduction to remove your garbage.

When Should You Consider Compaction

A removal cost of $1,800 per month is a realistic level to consider compaction. Your gross savings will be at least $900 per month. That equates to $10,800 annualized gross savings! After deducting an estimated $160.00 per month for depreciation, you would still save $8,880.00 to your owners’ bottom line. Naturally, the higher your removal cost, the greater the potential savings.

If your complex meets or exceeds the aforementioned removal cost criteria, contact a reputable company that markets, installs, and services garbage/trash compactors.

A reputable compactor company should:

Meet with you at your complex
Survey your current garbage/trash removal system
Suggest a compaction system to best suit your needs
Provide a “no-cost” survey of your current volume and expense
Include a statement with the estimated savings and a quotation covering the proposed system cost.
A comprehensive proposal should provide you with the information you need to make an informed decision.

Timing Is Important

There is a bonus to pursuing acquisition and implementation of a system by the end of 2009. The 2008 Stimulus Package has been extended and allows a 50% bonus depreciation for equipment purchased or leased in 2009. That bonus can provide a welcome added write-off for the tax year.

Summary:

Compactor technology has been utilized for decades to reduce hauling costs. It works, is reliable, and does more than reduce hauling costs. Other advantages include a cleaner disposal area, discourages “scavengers”, extends pavement life (fewer hauls by heavy garbage trucks), and reduces rodent problems.

The best part of using a compactor system is you can usually pay for the equipment with a portion of your savings. You may also lease or rent the system without a large cash outlay. In either case, savings can be realized with a carefully planned and installed compaction system.

For further information you can contact Compactor Management Company at 510-623-2323 or their Sales Consultant, Toni Lucio at 510-623-2331 to arrange a “no cost ” survey. www.compactormc.com.