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Special Report (Enterprise) Companies -- MAKING MARKETS
THE AUDITOR IN YOUR DUMPSTER
James H. Fitzgerald, a three-time entrepreneurial failure, finally found his calling in the worst room in Manhattan's elegant Omni Berkshire Place. He was hired to comb the garbage room for proof the hotel was paying for pickups of phantom trash. It was. "Our carter was taking us to the cleaners," says Howard Halverson, head of housekeeping.
The next step was either heroic or naive in a city where prosecutors say the mob controlled the carting industry. Fitzgerald, a fresh New York University graduate, persuaded the hauler to cut the $139,000 bill in half.
LONG HAUL. The success in 1991 was a springboard into dozens of other dumpsters from a Bronx variety store to White Castle restaurants in Chicago, cutting bills by millions. With a typical fee of 33% of the gap between the old and new bills for one to three years, it's no wonder why, at 31, he wears sleek suits and houses two employees high above Gucci on Fifth Avenue. His trash auditing company, Envirotron, expects to double its revenues this year, to $1 million. Although much of that is hauling fees passed from clients to carters, Fitzgerald still pockets a six-digit salary.
But it has been a long haul--and not for lack of a market: 250,000 city businesses pay among the highest rates anywhere, totaling more than $1 billion a year. Although what Fitzgerald calls "waste accountants" have helped level costs nationwide for a decade, only three are located in the city.
The problem was fear. "I'd call companies, and they'd say, `Are you crazy?"' He caught the drift when a burly man stopped him on his way out of a new client and snarled: "I'd hate to see you in the back of a garbage truck."
Change began in 1994, when Browning-Ferris brought competition to New York. Then, last summer, state prosecutors indicted 23 haulers for overcharging hundreds of millions of dollars annually. Companies, emboldened and angry, called in the trash police to weigh bids. "The fear factor plunged," says Jennifer Kohn, director of consumer advocacy for the city's elected watchdog. So did prices.
If the indictments unravel, Kohn says, "the fear factor will shoot right back up." Which is why Fitzgerald follows his favorite entrepreneurial tenet and keeps his feet on the ground, well aware that this venture could land where his other three ended up and this one began: in the dumpster.By I. Jeanne Dugan in New York