NYLP: Welcome to the New York Launch Pod, a podcast on new startups, businesses, and openings in the New York City area. I’m Hal Coopersmith, and in this episode, we are heading up to the Bronx as we cover all the boroughs in New York City, and we are speaking to Ron Bergamini, the CEO of Action Environmental. Action Environmental built one of the most sophisticated recycling systems in the country, and we went to visit it. Here’s Ron Bergamini. What does this facility mean to you?
Ron: This is a very big part of our arsenal. It distinguishes us from other companies. Frankly, it’s a source of great pride for the company, and we view ourselves as part of the solution.
NYLP: Solution to what?
Ron: To recycling and more efficiency. It’s not just recycling. It’s efficiency.
NYLP: How much material is recycled here?
Ron: We run about 500 tons per day through the facility.
NYLP: 500 tons of recyclable material?
Ron: Yes, every day.
NYLP: But recycling is not an easy business, according to Ron.
Ron: This isn’t all glass that goes one place, all paper goes another place. It depends on the plastic. It depends on the paper. It depends on the buyer, and it changes. It’s constantly in a state of flux.
NYLP: In this episode, we go into the world of garbage all around New York City, why Action Environmental decided to build this facility, where all of New York City’s garbage goes, and more about recycling than you ever thought you would know. So let’s go to the interview. Stepping onto Launch Pod we have Ron Bergamini. He’s the CEO of Action Environmental Group. Welcome to the podcast, Ron.
Ron: Thank you. I’m happy to be here.
NYLP: So you are the CEO of Action Environmental Group and you have built this fantastic facility in the South Bronx. Can you tell us about it?
Ron: Sure. And of course, I had a lot help building it. It’s in-
NYLP: You didn’t build it yourself?
Ron: I did not build it myself, no. It’s actually located in a transfer station, and that’s where, when garbage is picked up on the streets, before going to its final destination, it stops at what’s called a transfer station, because that’s where you transfer the garbage from a packer truck to a bigger truck. And in this facility, we decided to build a recycling facility, and we decided to do it with technology that we haven’t seen in this area before. We’re one of the first to bring it to the tri-state area. It’s called optical sorting, and what we do there … the goal is to separate recycling materials from trash, particularly paper, cardboard, plastics. And then, the idea is you sell that to markets and what the optical sorter does … it can read the chemical composition of the materials, and through a series of air jets and laser beams, it actually separates even further, because the idea is if you have white paper, you want lots of white paper. If you have plastics, you just want lots of plastics. You want to keep them segregated, and we do that there.
NYLP: So it sounds very complicated, very sophisticated, and there’s a lot to unpack there. Why build this facility here in New York?
Ron: Okay, good question. Well, first off, different recycling facilities throughout the country will be different depending upon the makeup of the garbage. Now, you’re probably thinking, “All garbage is the same. It’s garbage,” but it really isn’t.
NYLP: I wasn’t thinking that.
Ron: You weren’t thinking that? I’ll bet a lot of people are. If you think about at your home, your garbage is one composition. With a business, it’s different, right? At home, you have a Tide bottle and things like that. At work, you have a lot of paper and a lot of cardboard. So we wanted to get the cardboard and the paper, because right now, that’s the most valuable part of the recycling market. Recycling markets change. Sometimes, they’re just like oil markets and commodity markets in general. So cardboard and paper is the most valuable. And I guess you’re wondering where it goes, ultimately.
NYLP: I was wondering that, but I was also wondering why cardboard and paper are so valuable.
Ron: Well, that’s … part of that answer is where it goes, and it goes primarily to companies in China. Why China? China has approximately 8% of the world’s forestry and about 18% of the world’s population. So what’s that tell you?
NYLP: It means they need some paper.
Ron: They need some paper. They need some fiber. So their appetite has essentially been insatiable over the last decade or so, as the Chinese economy grows. So who would’ve thought a business in New York City that picks up garbage pays so much attention to the Chinese economy? We do, and that’s why. And I bet you’re wondering what they do with all this paper and …
NYLP: I’m guessing that they print some documents and pack some Amazon boxes there.
Ron: Amazon’s pretty good. For a while, they were using it to make paper towels, toilet paper, tissues, and presumably, they still do. But with the middle class in China, all of a sudden, you have 300 million people using a box of tissues every week. That’s a lot of tissues. Now, it’s not quite Amazon, it’s Alibaba, is the biggest company that they have. And most people know that’s China’s version of Amazon, more or less. So the cardboard is turned, once again, into cardboard so they can deliver packages.
NYLP: And so how much money are you making off of recycling? Is this a for-profit business, and this is what you’re doing it for? Or is it just kind of … you have … you’re collecting trash already, and this is a way to supplement the cost?
Ron: Yeah, I’d put it more in the category of a supplement, and the material has to go somewhere. When you think about it, we’re really a logistics company. We will move material from point A to point B. And ultimately, garbage has a cost to dispose of it. So by removing any commodity … but we’re talking about cardboard. Think about what you’re doing. You’re not only getting money from the cardboard, but you’re eliminating the cost of getting rid of it. And that’s really where the economic savings come from. The problem, of course, is that the market fluctuates so much. So at times, it’s pretty profitable. At times, it’s not. But we can’t tell our customers, “Oh, don’t recycle cardboard this month, and only recycle it next month.” So we try and work our way through the ups and downs of it.
NYLP: And are you storing the cardboard for the-
Ron: No. Well, actually, right now, the market’s pretty good. The last six, eight, nine months, it’s been pretty good. It’s not at its high right now, but we move about 4 to 500 tons per day of recycled material in the Bronx. That’s a lot of material. You can’t really store it more than a couple days, and we try not to keep it for any days. We want to move it out the same day it comes in. People have tried that in years past when the market really fell apart, and in 2008 … you remember 2008.
NYLP: Of course we do.
Ron: The credit markets froze, and as a consequence, cardboard stopped moving, and the price actually plummeted to zero for a few months.
NYLP: And you didn’t have the facility at this time?
Ron: We didn’t have the facility at that time, correct. We’ve had this facility since 2013.
NYLP: Where do New Yorkers’ trash go? Because we just put it in a bin, down a chute, on the street, and then we don’t know where it goes.
Ron: And that’s the way you like it, too. In effect, we want to be invisible to our customers. You want to put out the garbage at night, and you want it to be gone in the morning. But to answer your question, it’s in two parts. Residents, your garbage is picked up by the Department of Sanitation. Businesses are picked up by private haulers such as ourselves. So where does each of those components go? Pretty much the same place. For the most part, they wind up in landfills. Some in waste energy facilities, which used to be called incinerators. But now, we call them waste energy. And those landfills are, when it comes to residential waste, as far away as Virginia. Most of the commercial waste … and obviously, I can’t speak for all of it, just our portion of it … winds up in landfills in Pennsylvania, Eastern Pennsylvania.
NYLP: And why are there these two systems going on in New York?
Ron: Well, that’s a fair question. Like in a lot of cities, your taxes pay for services, including garbage disposal. And in New York, if you’re interested in a little bit of history, the problem in the 1870’s was horse manure all throughout the streets. That’s how people got around. So the city came up with the Department of Street Sweeping, and actually, Teddy Roosevelt was first offered the job as commissioner. But he turned it down. He became police commissioner, ultimately, as you probably know.
NYLP: And then became President.
Ron: He did become President. I heard that.
NYLP: Yeah.
Ron: Yes. Vice President first. So the city saw a need, and it picked up the material for residents. Businesses are different, and this is reasonably common throughout most of the country, that the private sector has to go to the private sector for the services.
NYLP: How does the Action Environmental Group recycling compare to other competitors that you have out there?
Ron: Well, we’re the largest private company in the city.
NYLP: The largest?
Ron: In New York City. Now, there’s one publicly traded company. They’re bigger than us, but they’re not bigger than us in New York City. So we pick up the most trash in the city, and consequently, we do the most recycling, for two reasons. One, we’re the largest company, but two, we have this recycling facility. And we’re the only facility in the city that has a transfer station and a recycling facility in the same physical structure, which gives us a leg up, because now, we can try and extract more material from more garbage.
NYLP: How much-
Ron: And that’s the goal.
NYLP: How much garbage do New Yorkers produce each day?
Ron: About 20,000 tons.
NYLP: What does that mean?
Ron: That means a lot of garbage.
NYLP: It means a lot of garbage, but visually, let’s say.
Ron: I do know the number for the whole city, which is about 20,000, which has actually gone down over the years. Garbage in general, throughout the city and the United States, has gone down due to recycling and packaging. People forget about the packaging side and how important that is in the life cycle.
NYLP: How did you become the largest company that’s picking up trash in New York City?
Ron: I’m a lawyer by background. A recovering lawyer, as us lawyers like to say, and we’re private equity owned. So that gives us access to capital, and we started the business … myself and Mike DiBella, we bought into the business, actually, in 2007, where it was a much smaller business.
NYLP: Right before that cardboard crash?
Ron: Correct. So our timing wasn’t so great in that respect, to be honest with you. But we did this … Our growth plan all along, and remains today, is to grow, of course, organically. Every business wants to grow organically to some extent.
NYLP: No pun intended for the garbage industry.
Ron: Correct, and also through acquisition. And that’s primarily how we’ve done it, by acquiring other companies both in New York City and then in New Jersey, with our other company, Interstate Waste Services. That’s the fastest way to grow. Some people call it rolling up an industry. We don’t really use that term, but that’s how we increase our market share.
NYLP: So you were a lawyer. And then, what attracted you to this industry?
Ron: Well, I needed something more prestigious.
NYLP: More prestigious than being a lawyer? What’s better than being a lawyer?
Ron: Garbage.
NYLP: Garbage, right. It’s one step up, at least one step up.
Ron: Right. Right. I considered used car salesman.
NYLP: Right.
Ron: But I thought garbage and, seriously, represented people in the industry and represented a company called Interstate Waste Services, which we now own, in the early 2000’s. And we sold that company in 2006 to another private equity firm, and my partner and I, Mike DiBella, decided, “Let’s get into New York City,” where this industry had traditionally been either very large businesses, Fortune 100 businesses,
NYLP: Like Waste Management?
Ron: Like Waste Management or mom-and-pop businesses. In New York City, you also had a history in the industry of price fixing and illegality, and Mayor Giuliani and Robert Morgenthau broke that up in the early ’80s so there was an opportunity, and we thought there was room for middle ground where you can have a company that maintains entrepreneurial values, but at the same time, brings needed sophistication to the business from proper governance to proper employee relations and better equipment and more capital. So that’s what we’ve been trying to do, and we continue to try and do that.
NYLP: And the last time I checked when I was doing research for this, there are about 300 plus commercial carting companies in New York City, licensed-
Ron: Well, yeah.
Ron: Not really.
NYLP: Not really?
Ron: No, because there are construction companies that do their own work. Say they come into your office and rip out the whole office, and then they remove that debris. So when you count those folks, the number’s a lot bigger. Actual companies that do what I suppose most of your listeners consider a traditional garbage company, is probably about 80, which is arguably too many. But it’s not the 300 number.
NYLP: How are your prices different than your competitors?
Ron: Well, I don’t know exactly. We certainly don’t look to be the cheapest. We don’t aspire to that. We aspire to dependability and reliability and offering a number of services. But New York City has what they call a rate cap in this industry, so you can only charge a certain number. So that means there’s not that big of a spread between competitors.
NYLP: And what are the additional services that you’re offering?
Ron: Well, chief among them is the recycling. So we can pick up your recycling, and we also pick up organic materials, composting. And we’ve been doing that for a number of years, and you may know that the city is moving fairly aggressively on mandating the separation of organic materials. And right now, about 2,500 businesses are subject to that, the stadiums and large hotels, or hotels and larger restaurants. So we’ve been doing this anyway, but that is yet another service.
NYLP: And will these businesses, now that you have this large recycling center, see the payoff through either a lower price or some other form of benefit? Or is this something, with this recycling center, that Action Environmental gets to have the benefit for?
Ron: Yeah, probably a little bit of both. A lot of businesses, particularly universities, hospitals, a lot of restaurants … I have this theory that people that go into the restaurant business also tend to be very environmentally sensitive. Again, no scientific support for that.
NYLP: It certainly seems like it’s a big trend in New York.
Ron: Right. So folks like to see that the material that they’re recycling is actually being recycled. People ask us that question all the time. “Does this really go somewhere else, or is this all going to the landfill?” So you’d be surprised. We have a lot of folks come and tour our facility. They like to see all the belts, the optical sorters I mentioned before, the 50 people ourselves from the neighborhood that are helping hand-separate the material. So I think that gives people a certain level of comfort.
NYLP: In terms of the way that recycling and composting is working right now, do you think it’s best to have a centralized facility, a big facility like yours in the Bronx or, let’s say, in a restaurant where you can compost? And I’ve seen maybe liquified compost in a smaller setting. Is it better to have it in a central facility or individually?
Ron: Well, I would answer that the way I used to answer questions when I was a lawyer. It depends.
NYLP: Well, you have a big facility, so I feel like you might be a little bit biased.
Ron: Well, we are a little bit biased.
NYLP: Right.
Ron: We do like to take it there.
NYLP: How much did your facility cost?
Ron: About $15 million.
NYLP: That’s expensive, right?
Ron: Right.
NYLP: That’s private equity right there.
Ron: Right. Now, we don’t, at that facility, take composting material. That’s just for the more traditional recyclables, as I mentioned earlier. New York City’s problem, no one will be surprised to know, is space, whether in the individual restaurant … have you been to a New York City kitchen, a restaurant kitchen?
NYLP: Right. Even in the open kitchens, you see it right there.
Ron: Right. You have to go outside to change your mind. Then, commercial real estate is pretty darn expensive, as you no doubt know and your listeners would know. So it becomes very hard, as a practical matter, to site a facility here in New York. So if you have the space and you can do anaerobic digestion, which I think is what you’re referring to, sure. We have customers that do that, and if that works best for them, great. Where that’s going in the future with New York City and the Department of Environmental Protection, I’m not really certain. The folks from the government would have a better handle on that.
NYLP: Walk us through the process of building this shiny, new, $15 million facility. Why’d you do it in 2013 or start to do it, and then-
Ron: Right. Right. We started a little earlier.
NYLP: Yeah.
Ron: Well, we have the transfer station in the Bronx. It’s an industrial neighborhood in the Bronx, 132nd Street, to be specific. And it had extra space in it. Despite my comment a few moments ago that there’s not enough space, we had a building with a little extra space. So how are we going to use that? We recognize that our customers had a lot of cardboard, so let’s have a system that can pull that cardboard out. So a few of the folks … not me, I’m not so much on the operational side of things … literally traveled around the world and went to a few facilities to see how other people did it and believe it or not, Manchester, England seemed to be about the closest to the garbage composition to New York City, and we saw how they did it. Picasso once said, “Great artists don’t copy art. They steal it.” So we essentially took some of those ideas, crafted them a little bit to make them our own, and put it together.
It took well over a year to do it. It’s tight, so we had a facility that used to have extra room and now, we don’t have any and I’d like you to come and see it one of these days, and I know you will.
NYLP: Yeah, we’ll be there.
Ron: Okay. And it’s the market meeting a need. There’s a lot of cardboard out there. Let’s pull it out. And that’s what the facility’s for.
NYLP: And how does it work? You mentioned lasers, conveyor belts … what’s the process?
Ron: So material comes in. It’s dumped on the floor, and the first question is, “Can we run this through our system?” So if it’s pure garbage, it’s a Chinatown route with lots of restaurants, you’re not going to be able to recycle anything from there, so that goes in one direction. When you have a load that’s mixed cardboard, paper, and some garbage, now, that’s ready for our facility. And first, it goes through a series of conveyor belts. It’s put on conveyor belts, and there’s some bag ripping done, because a lot of material that you see on the sidewalks are in bags, so the bags have to be ripped.
NYLP: Ripped from plastic bags?
Ron: The plastic bags, right. Plastic’s sort of the enemy. And it goes through conveyor belts, and there are people pulling some of the more obvious materials out. And then, we have four optical sorters throughout the system which just does an even better job and a faster job than humans could do. But make no mistake, there’s humans involved. There are each … we have two shifts, and each run with about 40 people on them. And they’re simply … picture a conveyor belt and folks looking over it, and depending upon where they are in the system, they’re pulling newspaper out of it, for example. They’re pulling white paper out of it and putting it on a different belt and then, ultimately, it goes to an end point, and that’s where it’s baled.
NYLP: And we’re talking about paper and cardboard here. There’s no plastic or glass?
Ron: No, there is, but it’s primarily paper and cardboard.
NYLP: And plastic, I understand, is very hard to recycle.
Ron: Plastic is hard to recycle. It’s hard both to gather it and then hard to actually recycle it. Now, plastic water bottles is one thing. That’s easier, and there’s a lot of value there. But plastic bags become far more difficult.
NYLP: And you’re recycling plastic, as well?
Ron: We do. It’s … you don’t get as much. It’s light, but yes. We absolutely do.
NYLP: And this is the New York Launch Pod. You have some great relationship, it seems like, with the New York Mets and the New York Yankees. So every listener probably is going to be interested in those relationships, if they’re a baseball fan.
Ron: Yes, and the Rangers and the Knicks, as well. They’re good customers of ours. We’re proud to be associated with all the sports teams. We’re fans as well as vendors for them, and you will see our cans out at the ballparks. Hopefully, you’ll see them in the playoffs, as well.
NYLP: Go to the ballparks. You’ll see an Action Environmental trash can.
Ron: Yes.
NYLP: And you’ll see those trucks pick up the trash.
Ron: Yeah, you probably won’t see the trucks, because they don’t come during the game.
NYLP: Right.
Ron: But you’ll certainly see the cans.
NYLP: After the game.
Ron: A little bit after the game.
NYLP: How did you establish those relationships?
Ron: In our acquisitions in 2007, we purchased the New York City hauling assets of Waste Management, and they had those relationships. So we just managed to maintain them. They’re important relationships to us.
NYLP: What are the challenges of carting an entire stadium’s worth of trash?
Ron: Well, the front of the house.
NYLP: Front of the house?
Ron: Yeah. The back of the house is pretty easy, but in the front of the house, where you have different receptacles for different materials, you might be surprised, but everybody doesn’t follow those rules as well as we’d like.
NYLP: And what does front of the house mean for-
Ron: Where the fans are, so the can that’s marked plastic, people will throw half a hot dog in. The can that’s marked food, people will throw a bottle in.
NYLP: So everyone who’s listening should put their-
Ron: They should pay a little bit more attention to where they’re throwing things.
NYLP: Pay a little bit more attention.
Ron: Yes.
NYLP: It’ll make your job easier.
Ron: It will.
NYLP: It’ll make the environment better.
Ron: Correct.
NYLP: This is a great place to wrap up the episode. Ron Bergamini, how do people find out more about you and Action Environmental?
Ron: Well, Google. You can go to our website, actioncarting.com, and we’re iws.com, if you happen to be in New Jersey. And then, Google will find out some more information about us.
NYLP: Well, Ron, thank you very much for stepping onto the New York Launch Pod and sharing your time with us.
Ron: My pleasure. Thank you for having me.
NYLP: And if you want to learn more about the New York Launch Pod you can visit nylaunchpod.com for transcripts, including this episode. And you can follow us on social media @NYLaunchPod.
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