Beecher man turned single garbage route into $8.4 billion business

2014-06-08T05:00:00Z 2014-06-09T14:16:26Z Beecher man turned single garbage route into $8.4 billion businessJoseph S. Pete, (219) 933-3316

A south suburban man had been hauling garbage for a few years in the early 1970s when he decided to strike out on his own. 

Beecher resident Richard Van Hattem bought his first company – acquiring one garbage truck and a single route where he picked up trash from restaurants, hotels and office buildings in the Chicago Loop. He loaded and hauled off reams of paper, tons of pop cans and a lot of leftover food.

His only goal at the time was to get off the truck. Van Hattem, who is an assistant secretary and treasurer for Faith Church in Dyer, was hoping for a cushy office gig where he would oversee drivers.

But Van Hattem dreamed up innovations, such as establishing a transfer station so his garbage trucks would not waste so much time driving out to the dump, and recycling discarded business documents and selling them to paper mills. He bought out competitor after competitor, taking over smaller companies when their owners decided it was time to retire or sell.

After a merger and then an acquisition, Van Hattem helped establish Republic Services, a national waste disposal business that earned $8.4 billion in revenue last year. He was one of the founders of the second-largest trash collection company in the country.

He never really got off the truck, at least not until his company went national and he spent more of his time in corporate offices. But when Van Hattem was still running National Scavenger Service, one of Chicago's largest independent haulers until he merged it with Allied Waste in 1992, he would still jump on a route anytime one of his drivers called in sick or went out of vacation. He ran a multimillion-dollar company with 120 employees and 30 trucks, and still filled in when needed.

An industry pioneer

The 44-year veteran of the trash business was recently inducted into the National Waste & Recycling Hall of Fame. Van Hattem was recognized for pioneering ideas that help trash haulers be more efficient and cost-competitive, which have since been embraced across the industry.

"Republic Services would not be the company it is today without Rich," said Republic Services President and CEO Don Slager. "Not just for the financial assets brought to the company through National Scavenger Service, but for his vision and the leadership model Rich inspired in all of us. Future generations will point to Rich as one of several individuals who enabled the modern waste industry’s growth and rise to a position of strength."

The National Waste & Recycling Association credits Van Hattem, who retired in 2009, with helping give rise to the modern waste industry. The industry group says he used his one-truck operation as a proving ground for pioneering ideas and recognized early on that transfer stations were more efficient, an idea that eventually would be copied throughout the industry.

"The waste and recycling industry stands on the shoulders of giants like Rich Van Hattem, whose contributions have influenced waste collection, recycling and industry innovation in the United States for decades and will continue to do so for decades to come," said Sharon H. Kneiss, President and CEO of the National Waste & Recycling Association.

Van Hattem, a South Side Chicago native, has lived in south suburbs such as Lansing for most of his life. He has been actively involved in the community, serving on the boards of Roseland Christian School and Providence Life Services chain of elder care communities.

Looking for efficiency

When Van Hattem was getting started in 1972, he did everything himself; he drove the truck, dumped the garbage and took care of the business end. Opportunities arose to take over new commercial routes downtown.

Eventually, he landed big accounts from the University of Chicago Medical Center and the Chicago Board of Trade. He diversified into the container rental business, hauling off all the waste at construction and demolition sites. By the late 1970s, the business grew to about 10 trucks.

As the company got bigger, Van Hattem started to notice a problem. The landfills were filling in. People did not want them anywhere near their neighborhoods, and the landfills started moving further and further away from downtown.

A driver would pick up trash from dumpsters in the Loop and then have to drive 13 or 14 miles to the nearest dump. The diesel-fueled garbage trucks were not really designed for that sort of highway travel.

So Van Hattem invested about $400,000 to build a transfer station west of the Loop. The garbage trucks hauled their loads to the facility, which were packed into semi-trailer trucks and driven off the dumps.

The semi-trailers could carry two to three times as much waste to the dump in a single trip, and the garbage trucks were able to pick up seven or eight more loads in the time they saved. The whole operation became more efficient – so efficient that his competitors became his customers, coming to rely on National Scavenger Service to ferry the trash to the dump.

"It saved a ton, maybe 70 to 80 percent," he said. "It wasn't just fuel savings. It's easier on the drivers – the semi-truck driver could focus on that all day long while the garbage man picked up garbage. I was always looking for efficiency and always told my people to figure out how they could do something better today."

As they unloaded 800 tons of trash a day at the waste transfer station, it became apparent it was not all just rotting food and discarded packaging. Van Hattem realized they could sort out all the paper and sell it to paper mills, and remove the pop cans and sell them to Alcoa and other aluminum smelters.

Recycling opened up new revenue streams, and also helped land the new business from corporate clients that valued such social responsibility.

Eventually, National Scavenger Service grew to the point where Van Hattem didn't think it could get any bigger if it stayed independently owned. He wanted to take the company public, but instead ended up merging with Allied Waste Industries.

He helped the new company identify markets where consolidation could bring more efficiency. Allied usually bought out the biggest waste collection business in a city first, and then saw who else would be willing to sell.

"If you've got a lot of competitors working in the same market, there can be a lot of overlap," he said. "By consolidating, you can eliminate those redundancies and reduce the cost of collection. Competition can be good, but too much of it is just not efficient."

Allied spread to 42 states. Van Hattem did not realize how big it had gotten until he was at an industry golf outing in Chicago and a colleague came up and asked to shake his hand because he had never shaken the hand of someone who owns a billion dollars.

Van Hattem was not actually a billionaire, but his company has surpassed a billion dollars a year in revenue. He served in a number of executive positions with the company, including vice president of operations, vice president and regional vice president.

He faced challenges in the new roles, such as adjusting to the residential pickup side of the business. Cities and towns typically hire waste collection contractors every few years, and eight or 10 drivers often depend on getting the contract reviewed. Residential customers also are more likely to complain than business people, who better understand that things can go wrong from time to time and they are still getting a great service for how little they pay.

"It's amazing to think about how reasonable the cost of garage service is," he said. "You can put out 40 pounds of trash that will get picked up by a $300,000 truck that's being driven by a driver who's making $80,000 or $90,000 a year. Yet you're only paying $4 or $5 for them to take it and dump it. A Federal Express package would cost you $11 or $12. It costs less to get your garbage picked up than it does to send a piece of mail."

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