FCC Environmental's CEO talks about the company's push to expand in the US

FCC Environmental Services’ history in the waste sector dates back more than 100 years. In 1911, Fomento de Costrucciones y Contratas, which is the Spanish-based predecessor to its current parent company, FCC Group, was hired to provide sewer cleaning and maintenance services in Barcelona.

A century later, FCC has grown into one of the world’s largest waste management and recycling companies, with more than 54,000 employees and a presence in over 35 countries.

While FCC has a rich waste history overseas, it didn’t enter the U.S. waste market until 2014 when it secured a contract for biosolids management in Houston. In September 2015, FCC was awarded a contract in Orange County, Florida, making it the first municipal solid waste (MSW) collection contract given to a Spanish company in the U.S. Since then, the company has slowly but steadily expanded its presence.

FCC Environmental Services CEO Inigo Sanz says the company, which has U.S. headquarters in Houston, made the move to set up shop in the states after careful analysis. According to Sanz, FCC has maintained this deliberate approach as the company has worked to expand its profile in North America.

“FCC holds an extensive fingerprint in Europe, with more than 100 years of experience servicing more than 60 million people,” Sanz says. “We believed that the U.S., the largest solid waste market in the world, could be a great opportunity for an experienced company like ours, but we believed that we should first learn about the market to determine where our company could make a difference. This is why during these last five years, we have been only growing organically and by carefully selecting which opportunities would make sense for our company.”

To date, the company has been awarded contracts in Texas, Florida and Nebraska to serve the solid waste needs of around 9 million Americans. This includes operations in several larger cities such as Houston; Dallas; Orlando, Lakeland, Palm Beach and Daytona Beach, Florida; and Omaha, Nebraska, amongst others. The company also operates two of the largest recycling facilities in the U.S. in Dallas and Houston.

Sanz says that once all of its recently awarded contracts in cities like Omaha and Palm Beach take effect, the company will have around 800 employees and a fleet of approximately 600 vehicles in the U.S.

While FCC has worked to expand its reach in the United States, Sanz says the company has been mindful to not make the same mistakes other foreign-born companies have when trying to enter the U.S. market.

“Most European companies have failed in the U.S. because they assume that Europe is way more advanced than the U.S. in the solid waste business and that everything that works there would automatically work here,” he says. “We think that this is a big mistake. We believe that the U.S. market is just different that the European one, worse in some aspects, much better in other ones. The different demographics, consumptions trends, weather and geography make it a totally different market than any other. We have tried to meld the best of both worlds to be able to create added value and innovation without forgetting all the singularities of the American market.”

Investments in recycling

In November 2015, the city of Dallas awarded FCC the contract for the design, construction and operation of a single-stream MRF to process the city’s recyclables.

Outfitted with the latest sorting and classification techniques, including optical sorters as well as gravimetric sorting machines all housed in a 60,000-square-foot building, the plant can handle more than 40 tons of single-stream material per hour. Van Dyk Recycling Solutions (VDRS), Stamford, Connecticut, supplied the single-stream sorting system for the MRF.

The site includes a 15,000-square-foot building that serves as the administrative and operations personnel offices. There also is an education center where FCC personnel teach and train the community of Dallas about the importance and benefits of recycling.

The facility, which began operations Jan. 1, 2017, was quickly recognized by the National Waste & Recycling Association (NWRA) as the Best Recycling Facility of 2017.

According to Sanz, the investments in this facility were born out of the company’s mission to make recycling a priority in the markets it serves.

“As many other companies in this business, we understand the value of being a vertically integrated company,” he says. “Recyclables are already a significant portion of the waste collected in the U.S. But we are also convinced that this portion will grow in the future, as it has been consistently growing over the last few years in the U.S. and in Europe, where right now some countries are reaching more than 65 percent of recyclable materials in the composition of the total solid waste collected tonnage. Our recycling contracts are all very long-term, and we believe this is the right bet for the future.”

Despite opening its Dallas facility just one year before China’s National Sword policy led to significantly diminished end markets for paper and plastic recyclables throughout the country, Sanz says the Dallas MRF has continued to be able to find homes for its materials.

“Fortunately, the Dallas area has a privileged location that’s surrounded by many paper mills and commodity buyers,” he says. “Prices are obviously not the same as the ones we saw a year and a half ago, but that has not affected our diversion goals, since we have always been able to sell all our materials without issue thanks to the better quality we’re able to produce compared to other companies.”

Following up on the success of its Dallas MRF, FCC opened its new Houston MRF in April of this year.

FCC’s MRF will process and market recyclables collected throughout Houston for at least the next 15 years. The company says the MRF will process 65,000 tons in its first 12 months and has a total processing capacity of 145,000 tons per year.

"We believed that the U.S., the largest solid waste market in the world, could be a great opportunity for an experienced company like ours.” –Inigo Sanz, CEO, FCC Environmental Services

Like its Dallas counterpart, the Houston MRF includes an education center designed to assist the city in meeting its sustainability goals by training kids and adults in the community on recycling best practices.

Sanz says that while the Dallas MRF helped set a precedent for the design and operation of the Houston MRF, the company’s overall global recycling footprint was also instrumental in helping the company construct a state-of-the-art facility for today’s market.

“Of course, every facility provides more experience and knowledge for the next one. FCC currently operates more than 200 recycling centers worldwide, and that is what is giving us the expertise to be able to propose better facilities and technology from year to year,” he says.

Onward and upward

The company has prioritized organic growth in its first five years in the U.S., but Sanz says that soon could be changing as FCC explores ways to potentially fast-track its growth.

“We are indeed starting to explore potential acquisitions,” Sanz says. “Any midsize company, roughly $10-200 million in annual sales, could be interesting for us—preferably located in the South, Southeast and Midwest. Companies vertically integrated with post-collection assets will also be preferable.”

Even though the M&A market in the waste sector has been stuck at an accelerated pace of consolidation, especially over the last several years, Sanz says this flurry of activity isn’t a deterrent for acquisitions as the company looks to grow.

“We don´t see market concentration as a problem, but more as an opportunity,” he says. “The reduction of the number of competitors is not bad for us. Plus, some of these potential mergers [we see pending] could imply the need to sell assets to be approved by the Department of Justice, which we also see as an opportunity for our company.”

Sanz says that as the company continues to look for opportunities to extend its service portfolio in the U.S., innovation and community relations are two key pillars the company is focused on.

“Our company has always been known for innovation and customer service,” Sanz says. “We have been the first company to introduce to market some of the most important innovations in the industry, such as automatic side loaders, clean fuel trucks, electric and hybrid vehicles, etc. [We also have] the most advanced and sustainable facilities from a post-collection point of view. But beyond that, I believe that it is key to understand this business as being a long-term partnership with our customers and the cities and counties we work in. We have been performing waste services for decades in cities throughout the world, [and we are constantly recognized for our service]. This is because we understand that the long-term relationship with any city is what we have to care about in our day-to-day business.”

When asked what FCC’s goals were moving forward, Sanz says that the company is looking to keep one eye on the future while staying committed to serving its new base of customers.

“We of course aim to be a relevant player in the U.S., as we are in all the other markets where we operate,” Sanz says. “But for us, it is more important to have sustainable growth, to increase our presence in the U.S. by satisfactorily servicing more Americans from year to year without compromising our service and our commitments with every community that we work for. That has been the key to our success in our more than 100 years of history.”

This article originally appeared in the October issue of Waste Today. The author is the editor of Waste Today and can be contacted at aredling@gie.net.