Van Weelden, Thomas H. 1955–

views updated

Thomas H. Van Weelden
1955–

Chairman, chief executive officer, and president, Allied Waste Industries

Nationality: American.

Born: 1955, in Chicago, Illinois.

Family: Son of Henry (an owner of a small commercial waste collection company) and name unknown.

Career: 1975–1992, hauling-company and landfill owner; Allied Waste, 1992, vice president of development; 1992–1997, president and COO; 1997–1998, CEO; 1998–1999, chairman and CEO; Allied Waste Industries, 1999–2001, chairman and CEO; 2001–, chairman, CEO, and president.

Address: Allied Waste Industries, 15880 North Greenway–Hayden Loop, Suite 100, Scottsdale, Arizona 85260-1649; http://www.alliedwaste.com.

■ Waste-industry executive Thomas H. Van Weelden helped to found the company that eventually became Allied Waste Industries when in January 1992 he became its vice president in charge of development. He was elected to its board of directors in March 1992 and was promoted to president and chief operating officer in December of the same year. Van Weelden served as chief executive officer of Allied Waste beginning in July 1997 and as chairman beginning in December 1998. Additionally, Van Weelden reassumed the position of president in October 2001. During his years of leadership, Van Weelden concentrated on making key acquisitions to strengthen the company's core assets—divesting the company of peripheral interests gained in the process—and expanding operating regions through internal growth and vertical integration. Van Weelden's actions steadily improved the strength of the company.

THE GARBAGE COMPANY

As of 2004 Allied Waste Industries was the second largest nonhazardous solid-waste management company in the United States (behind only Waste Management), with 2003 revenues of over $5.2 billion, assets of nearly $14 billion, and a workforce of approximately 29,000 employees. Headquartered in Scottsdale, Arizona, Allied Waste was serving approximately 10 million residential, industrial, and commercial customers in 118 major markets across 38 states.

Van Weelden operated Allied Waste as a vertically integrated company, providing key services in the interrelated areas of collection, transfer, disposal, and recycling, along with other support areas. Collection services represented about 62 percent of the business's revenues, disposal and transfer 31 percent, recycling 3 percent, and other support services 4 percent. Van Weelden was proud of the fact that the company did not deal in hazardous waste, medical waste, or waste-to-energy conversion, all noncore operations that Allied Waste eliminated through the end of the 1990s.

AREAS, REGIONS, DISTRICTS

In 2001 Van Weelden reorganized Allied Waste operations into four areas—Western, Central, Eastern, and Southern—and further divided those four areas into eight geographic operating regions. Such major reorganizations as engineered by Van Weelden helped tremendously to streamline the operations of the rapidly growing company. Reporting to the company's eight regions were 58 districts, each comprising specific local organizations of independent companies. By 2004 the company collected garbage through a network of 323 collection companies, 168 transfer stations, 169 active landfills, and 61 recycling facilities.

COLLECTION COMPANIES AND THEIR SERVICES

Residential, commercial, and industrial customers were all served by the network of collection companies set up by Van Weelden. Residential customers were served both on an individual basis and, more rarely, collectively through municipal contracts, while commercial and industrial customers received disposal services tailored to their needs at the local, regional, and national levels.

Allied Waste's transfer stations were a crucial link in the company's overall operations, as they maximized efficiency in disposing of waste to both landfills and recycling facilities. Allied Waste's countrywide sanitary landfills had average remaining lives of 40 years in 2004, and Van Weelden offered assurances that the company's waste management experts employed the most up-to-date methods in minimizing the effects on the environment produced by their landfills, all of which strictly adhered to federal, state, and local regulations. Allied Waste also ran customized programs for managing the disposal of special nonhazardous wastes.

The company's recycling facilities, meanwhile, provided handling and collection services as well as educational programs in some areas. The company annually recycled upward of 2.5 million tons of waste, including paper, glass, plastics, and construction debris. The educational programs set up by Van Weelden ensured that the latest recycling information would be circulated both within his organization and to customers.

GARBAGE IN THE BLOOD

Henry Van Weelden—Thomas's father—started a small commercial trash-collection company in Chicago, Illinois, in 1948. Thomas began working for his father at the age of fourteen, in 1969, and became a driver only two years later. Coming from a family of garbagemen, the younger Van Weelden saw a chance to make his own way in waste management when in 1975 he moved 120 miles south to Danville, Illinois, and bought a two-truck operation from a retiring owner. Van Weelden fondly remembers those early days of his career: starting trash collection at four o'clock in the morning, finishing at noon, showering and taking a nap, and then spending the rest of the day wearing a shirt and tie and looking for new customers. Van Weelden learned valuable lessons that he would make use of later in his career—generally about achieving goals, and specifically about gaining permission to build trash dumps while fighting local opposition.

In the early 1990s Van Weelden met Roger Ramsey, who was operating a small garbage collection company in Houston, Texas. In 1992 Van Weelden, Ramsey, and other operators merged into Allied Waste and placed the company's headquarters in the Phoenix, Arizona, area. Ramsey became Allied Waste's chairman. At this time the company was small compared to many other waste management companies in the country, such as Waste Management and Browning-Ferris Industries. In fact, on one financial report the company creatively listed the increasing values of life-insurance policies taken out on top executives among its assets.

CREATING OPTIMAL CONDITIONS

Van Weelden and Ramsey felt that their company could expand respectably if they adhered to some general growth guidelines. First, they would build an infrastructure capable of handling the entire process of collecting and disposing of trash—what Van Weelden called vertical integration. Second, they would decentralize management, providing experienced field personnel with the latitude to make decisions about collections, transfer, landfilling, and recycling. Third, both men felt that the company would benefit from internalization, specifically through owning all of its trucks and landfills.

Another of Ramsey's and Van Weelden's growth requirements was to stay away from hazardous waste and large, privatized municipal-collection contracts. Instead, they decided to concentrate on individual commercial and residential accounts, where rates could be raised without governmental approval. They estimated that they could raise rates by about 4 percent each year, assuming the company's growth to average 6 percent.

BUYING AND SELLING TRASH

By the end of 1995 Van Weelden and Ramsey had made more than 120 small acquisitions. By 1996 they were ready for a $1.5 billion acquisition—four times its size at the time—of the North American trash operations of Laidlaw. Following that purchase, they bought the municipal landfills of San Diego, California, for $184 million.

After the company was formed in 1992, it garnered about $35 million in annual revenues. By 1998 annual revenues had reached nearly $1.6 billion, and in 2003 revenues were in excess of $5.2 billion. Between 1993 and 2004 Weelden was directly or indirectly involved in securing 275 acquisitions, including 50 in the year 2000 alone.

BUYING BFI

The largest of Van Weelden's acquisitions occurred when Allied Waste bought larger rival Browning-Ferris Industries (BFI) in 1999 for $9.1 billion in cash, in a deal that brought together the second- and third-largest trash-hauling operations in North America. Van Weelden saw the new combination as smart merger of two companies whose respective operating bases had very little overlap. The deal enabled Allied Waste, which operated primarily in the Midwest and the Northeast, to expand into BFI's territory in the western United States, creating a national network of landfill, collection, transfer, and recycling concerns.

The new company, headed by Van Weelden as chairman and chief executive officer, was renamed Allied Waste Industries and was based in Scottsdale, Arizona. Van Weelden expected the combination of the companies to save more than $250 million yearly through the cutting of overhead costs. Van Weelden was able to substantially achieve those annual savings goals by June 30, 2000, when he had reduced the number of employees by about 2,900, closed 51 facilities, and instituted other cost-saving measures.

SELLING NONCORE BUSINESSES

To accompany these direct savings, Van Weelden pawned off nearly $1 billion in nonstrategic businesses. In April 2001 he sold the company's interests in three American Ref-Fuel operations, to American Ref-Fuel Company, and restructured relationships with its four remaining waste-conversion facilities so that Ref-Fuel could assume operational control. Van Weelden announced that the transactions completed the program that the company had initiated to divest itself of all noncore assets, which resulted in debt reduction of about $300 million and the freeing of about $130 million in committed letters of credit.

After a decade of running Allied Waste, Van Weelden had built a company that earned $5.6 billion in revenues in 2001. The company generated $1.9 billion in earnings before interest, taxes, depreciation, and amortization and had an operating margin of 34 percent—the highest in the industry.

LOCAL MANAGEMENT

Van Weelden was dedicated to the business principles used to successfully increase the breadth of Allied Waste. With customers all across the country, Van Weelden knew that garbage operations would necessarily differ on the west coast, in the middle of the country, and on the east coast. Thus, he placed local executives in charge of each particular region, giving them the responsibility to handle day-to-day decisions that would affect both employees and customers. Van Weelden found that such discretionary authority allowed the company to have the lowest sales, general, and administrative expenses as a percentage of revenues in the industry in 2001, at 7.5 percent. Most of Van Weelden's top personnel had worked in waste management for at least 25 years and were former owners and multiple-generation industry professionals—like him, they had gotten their starts hauling trash out of trucks.

INVESTMENT AND SUSTAINABLE BUSINESS

Van Weelden was able to consistently provide excellent service by regularly investing in equipment, technology, and training programs that maximized operational performance and minimized conditions that were hazardous for customers, employees, and the environment as a whole. Allied Waste provided ample company-wide resources, including technical support, recommended practices, direction in regulated areas, and the benefits of economies of scale.

On the negative side, Allied Waste held a large amount of debt, especially as a result of the BFI acquisition. Van Weelden did not consider this large amount a weakness, however, because his use of vertical integration facilitated better control of cash flow. He described this with a real-life garbage example: when Allied Waste invested money in the development of a landfill, they could be assured that ample garbage would be put into that landfill if they were operating waste collection in that area—thus, adequate revenue would be generated from the new expense. Van Weelden called such a scenario sustainable business.

In 2004 the activities directed by Van Weelden continued to generate a strong cash flow, along with a better stock price and volume statistics, for Allied Waste. Although the company had yet to experience the benefits of the economic recovery that began in 2003 (the waste-collection industry normally lags behind such recoveries), Van Weelden declared that the year resulted in the successful implementation of its financing plan, with strengthening of capital structure, increasing of liquidity, and improving of cash flow, including a $100 million reduction in interest for the following year. Since the acquisition of BFI, Allied Waste generated positive free-cash flow for nearly every financial quarter. Looking at 2004, Van Weelden continued to cut costs and improve the company's efficiency, even as it increased capital spending to drive future growth.

OTHER ACTIVITIES

Van Weelden was a member of the board of directors of the Environmental Research and Education Foundation, based in Alexandria, Virginia. Van Weelden kept Allied Waste active in the greater Phoenix area for over 10 years. He partnered a multiyear agreement beginning in 2003 with the National Hockey League's Phoenix Coyotes and Glendale Arena, a state-of-the-art entertainment facility, to provide exclusive waste-management services.

See also entry on Allied Waste Industries, Inc. in International Directory of Company Histories.