On the northeast edge of the San Fernando Valley lies a hole in the ground that makes the Rose Bowl look downright Lilliputian.
Filling the 22 million cubic yards of air space, equal to about 20 of the Pasadena arenas, give or take a couple, will keep Greg Loughnane and his staff busy for the next 10 years.
Driving his sky-blue Ford Explorer along the rim of the Bradley Landfill and Recycling Center, he looks 70 feet down where garbage trucks and bulldozers maneuver a multi-ton mound of Los Angeles trash like so many ants scurrying around a beetle carcass.
"The smell isn't that bad from up here," said Loughnane, who is president of the landfill and recycling center that takes in 7,000 tons of garbage a day.
For such companies as Waste Management Inc., the nation's largest solid waste company and the owner of the Bradley facility, the smell is still that of money, but the scent is growing more faint than in years past when the landfill industry reeked of the stuff.
Increasingly scarce dump space in Los Angeles would seem to lead to riches for those in the business, but the weak economy, increased regulation and recycling, and the onset of landfill alternatives--such as hauling garbage out to the hinterlands--are working to trim once-fat profit margins for the capital-intensive business. While not long ago state and industry officials were trumpeting the onset of a "dump crisis" in Los Angeles, the county may actually face a landfill surplus in the not-too-distant future, driving down the tipping fees that landfills charge to take a ton of garbage.
That's bad news for owners and operators of private dumps, which take in more than half of the county's 40,000 tons of trash a day. They range in size from the family-run Palmdale Disposal Co. to multinational corporations such as Waste Management, which, along with running 133 landfills in the United States and Canada, has interests in every aspect of disposal, including trash hauling, recycling, hazardous waste and trash-to-energy plants.
"It doesn't work as well as it used to," said Tag Watson, a spokesman for Laidlaw Waste Management, Inc., which operates the Chiquita Canyon Landfill in the Santa Clarita Valley. Profits from landfills have "diminished quite significantly" in the last five years, Watson said, because stringent environmental regulations add to landfill costs.
Phil Arklin, who 23 years ago founded Palmdale Disposal with his two brothers and an REO Speedwagon utility truck, said "it's hard to raise your prices as fast as they make up the new laws."
In Los Angeles County, the average tipping fee is $21.42 a ton, a state survey showed. But among private facilities, the fee is higher, with Bradley charging $33.80 a ton, while dumps in outlying areas, such as Palmdale Disposal and Chiquita Canyon, charge $30 and between $25 and $20 a ton, respectively.
But at the same time, both public and private dumps now must pay for high-tech liners, extensive recovery systems for the toxic methane gas given off by rotting garbage and trust funds to cover the cost of closing a landfill once its full. Federal laws also make dump owners pay for any cleanup that may be required for 30 years after the landfill closes.
"Twenty years ago, you or I could just dig a hole in the ground and put garbage in it," Watson said. "But now it's become a real scientific industry."
Waste Management, for example, has spent $35 million over the last five years on new liners and gas recovery systems at the Bradley site. It purchased the site for $60 million in 1986.
For his relatively small operation, taking in 700 tons a day from the Antelope Valley, Arklin said he has set aside $2 million in a trust fund for post-closure cleanup costs.
Analysts see another long-term shift in the industry that will cut into profits: reduced volume because of recycling and reuse of materials. "We think landfill volumes are going to be under pressure for a number of years," said Mari Bari, an analyst at New York-based Mabon Securities Corp.
Forty-three states, including California, have laws requiring cities to reduce the amount of trash going to landfills, Bari said. Many communities, such as Santa Clarita, use incentives to encourage residents and businesses to recycle and reduce waste, reducing landfill volumes by 25% to 30%.
In California, environmental regulations and heightened public distrust of landfills make trying to get permits to build a dump expensive, time consuming and uncertain.
Earlier this month, Waste Management abandoned plans to build a 6,500-acre dump at the mouth of the Ojai Valley in Ventura County after spending eight years and $13 million trying to win a permit. Torrance-based BKK Corp. has had plans to construct a landfill in Elsmere Canyon, near Santa Clarita, for nearly seven years, and still has not gotten so far as having an environmental impact report.