Waste Disposal Giant Republic Services Is No Closer To A Deal With Teamsters Union — Do Investors Even Care?
One man’s trash, another man’s $75B treasure. Republic ServicesRSG might be America’s second-largest waste disposal business, but that all hinges on its employees showing up for work.
In recent weeks, that hasn’t been the case. Negotiations between Republic and the Teamsters union, which represents over 8K of the company’s trash collectors, fell through. And with that, so too did the pickups for trash on curbs across the country.
Republic serviceless: The Teamsters claim that Republic engaged in “illegal union-busting tactics” and refused to bargain with members at its Boston-area chapter. As a result, workers across the country have walked off the job. And with the strike heading strong in its second week, the cost is piling up for Republic — like the trash on the curb.
- Teamsters now have over 2K workers striking across states like Massachusetts, Washington, and Illinois — and the strike is expanding.
- As negotiations continue, Republic has been relying on temporary workers to fill the demand, but acknowledges that they’re operating at reduced service levels.
Trouble in Trashadise
Those reduced service levels could be a problem, particularly if they violate the company’s contracts with local governments — which have been moved to action by incensed constituents, many of whom have been lugging their own trash. It could be a real threat for the firm, particularly as the strike drags on.
- As a result, three Boston-area municipalities have sent the firm “non-performance notices”, while other local governments nationwide are considering similar measures because of the “public health issue.”
- A deal might not necessarily be close either, as a mediation session failed to yield a deal — Republic Services sued Teamsters, who reportedly “refused” to return to mediation on Friday.
Taking out the trash: Being the ‘second-largest waste disposal business’ doesn’t matter much when your operations are stunted. To that end, investors might be cavalier about the impacts if such a strike were to continue. Year-to-date,RSG is up 20%, with little decline since the strike started Jul. 1.
What else is on the curb? To that end, $RSG’s closest competitor, Waste ManagementWM constitutes a more attractive, safer bet. Especially since, aside from its more desirable valuation and dividend yield, decisionmakers might be forced to consider alternatives if the strike doesn’t end soon.