Waste Management, Inc. (WM) Earnings Call Transcript & Summary

We're ready for the next session. If everybody can take seat. It's a pleasure to have Waste Management here on the stage. We have Devina Rankin, who's the Chief Financial Officer, sitting right next to me; John Morris, who is the Chief Operating Officer. Welcome to balmy Las Vegas.

Balmy.

Well, you're coming from Houston. You have humidity. So I would have -- on a relative basis, this probably is actually not bad.

Not pleasant either.

Not pleasant. Actually, everybody keeps telling me it's a dry heat and I go, it's over 100. It's hot.

It seems like oven.

All right, I've been asking everybody this question because I think that this is a key issue when we start having conversations about tight labor markets and how do you retain people, and it's about culture. And it's one of those topics that I think it's hard to describe, but we have to figure out how to. So does Waste Management have a culture and how would you describe it? I remember Jim is back there somewhere listening to your answer.

Oh, well, he will like this answer. He's had a lot to do with it. We have a culture that I think many of us have enjoyed for over 20 years that I would say is familial. When we talk to people about the organization, that really is the word that comes across first. And then, of course, people talk about safety and execution. But when you think about Jim's tenure as CEO, and John and I have been part of the senior team and really enjoyed a focus on our responsibility to not just maintain our culture but build it from where we are today, our priority has been, and I think whether you're inside the organization or even outside, you hear WM talk a lot about people first now. And for us, people first means taking care of our team members. And when our team members feel cared for, they take care of the customers, they take care of our communities, and the entire network of stakeholders benefits. So really, things begin and end with People First, from a cultural perspective. And then there are other elements of our commitments and values that we talk about, and those are also key. But the one I think people really feel right now and that resonates most is People First. But whether it's safety, environment, customer inclusion and diversity, success with integrity, we are really focused on building a culture for WM, not just for today, but for the foreseeable future.

So how do you measure success about that then?

So many ways. The one that gets a lot of focus is retention and whether or not we're doing what we should on the front line in order to improve retention in drivers and technicians, that really is key. And I don't think it's a surprise or that we're unique that, that's a pressure point for us right now. We have to do a better job of retaining our folks, really differentiating WM as an employer of choice. And we're doing not just the table stakes, but looking for creative and adaptive ways to be sure that we're evolving as the workspace is evolving across North America. We're investing in training and upscaling. We've talked about the guild program and what we're doing so that our team members know that WM, Waste Management, is a place not just to have a job but to build a career. I think John and I are both good examples of that. Whether John is starting in a truck 30 years ago or me starting as a financial analyst 20 years ago, we've both seen this organization as a place that rewards people who work hard and are dedicated. And we want to replicate that for the men and women across the business.

So I'll share an anecdote with you and then ask the question. So 36 years ago, Don Slager started on the back of a truck as well and has just retired last Friday. He finished his last day riding that route in Chicago on a truck. Isn't that kind of cool?

Inspiring.

That's a good story.

That's kind of cool. So have you improved retention?

So from a year ago, our retention has not improved.

Well, what's behind that?

Well, so if you think about the depths of the pandemic, we really took phenomenal steps to take care of our people. And we guaranteed 40 hours of pay so that you would retain your pay, you would retain your benefits. We know that volumes are declining. But we're going to take care of you, and we want you to feel protected from a safety perspective, a psychological safety perspective, and know that you can take care of your home and your family. And so we saw tremendous benefits in retention a year ago. This labor market is a tight one and it's a tough one. And so we've seen some increases in turnover. Certainly, we see people motivated by pay, but that is not something that we're going to let stand in our way. But people are rethinking what they want to do and where they want to do it. And I think that we've seen some of the consequences of that. But it's really job one for us. We're working on it across the team.

I would say, Michael, one of the learnings certainly that came out of the pandemic was the expectations of the workforce that's coming into the industry is different now than it was. I think one of the things we're wrestling with how do you accommodate the needs and the desires of those coming into the industry versus the ones who have been here, like Devina, like myself, like Jim, like Don. And it's different, it's a different workforce coming in. And I think our teams are doing a lot of work to try and find a balance between how do we present an opportunity to that group, generally younger coming in, and meet whatever needs they have, still be able to run the business effectively and still obviously take care of those folks who are more tenured. And that is a work in progress for us.

Well -- and am I wrong? Because -- I mean it's the biggest company, sometimes big is a good thing. And on the other side of big is a challenging thing. So what is it, 48,000 employees? So 35,000 of those are drivers or mechanics?

Not quite that many, but yes.

Yes.

I mean the 30,000 number. And it's approximately probably a 10:1...

Frontline workers for sure.

What's that?

Front line. Certainly, that number.

Right. Front line. That's right. And kind of a 10:1 driver to mechanic or technician ratio. So -- but there's a hole in there age-wise, isn't there? But I mean there's a whole bunch of 45- to 60-year-olds and there's a gap. And we got to figure out because this group is aging out on you as an industry.

And I wouldn't say that it's a gap necessarily, but it's something that we are actively working to manage because we talked about the optimal work week. And we've talked about that from an efficiency perspective, overtime hour perspective. But we've also recognized that in attracting the next generation of workers, 55-hour work week isn't necessarily what they want. And so having a flexible work schedule that gives them 3 days off a week feels like a good thing. And so rebuilding how we market these roles is not just about the day-to-day work environment, the career-building opportunities. It's the cultural aspect that we started with. It's pulling all of those things together and saying, we have a lot to offer. It's a great place to be. And it's making sure we've talked, for years, about the fact that, that front end is where our safety issues are. That's -- if you're with us for over 1 to 2 years, your effectiveness rate...

You're incident reporting goes down a bit.

Absolutely. And that's the place we have to be focused, just -- it's making sure that when you come in, that you get a great experience in your first day, week, month, 6 months as being a part of a community that cares for you and wants to see you be a success.

So I always say I had a real job once when I came out of college. I worked at GE for 3 years, went through one of their famous training programs when it actually mattered and it made a difference at General Electric. It's about investing in people. There's lots of trade publications around training and safety and what have you. How would you rank WM, the industry? And where are you on a scale of 1 to 10, best-in-class training? Where we are and where we should -- and what can we do to get to best-in-class training?

So I would tell you, Michael, if you go back some years ago, I would tell you we were probably in the lower end of the scale, I think. So a lot of the investments we've made in the process that we put in place in the last handful of years, there are training center in Florida and Arizona, clearly, that's been a challenge getting people there, but we're starting to go back to that practice. And that's part of what Devina said is making sure the way people come into the company, their first week, their second week through training, through their 2 weeks of training at the training center, I'm talking about drivers and technicians. We're also using those training centers kind of as a grow-your-own facility, right? Where we're bringing folks in who have an interest in getting their CDL. So I feel really good about where we are today, but we've got some work to do. And again, it goes back to the expectations of a lot of the folks entering the company and entering the industry are different, and we need to make sure that we're presenting them with a -- not just a job, as Devina said, but also with a career path and show them that there's opportunities to progress for those of us who started as a staff accountant or on the back of a truck, right?

Well, and so you've all improved your customer retention meaningfully. It was low double digits. It's now upper singles. And I'm assuming that some of this training has positive repercussions around that because it leads to better service optimization and the consumer -- the customer is happy about what you're doing, blah-blah-blah. There's got to be a correlation to that.

I think that's one piece of it. The other that I know we'll talk about is technology, right? So service quality has always been a focus of this organization. I mean that's something that hasn't changed in my 20 years. We care about taking care of our customers. And we do a really good job of it. Can we do better? We can always do better. And this is an organization that's focused on continuous improvement. We always know that we can be better than we are today tomorrow, and we're going to do what we can to get there. But for us, the churn benefits that we're seeing from service quality are just one piece of the equation. We're also focused on differentiating ourselves as a service provider that cares about sustainability, that is putting technology in our customer's hands, that makes doing business with Waste Management easier. And those are all pieces of what's important to creating maximum customer lifetime value.

Okay. Well, so you've now helped me segue into my next piece, which was the sustainability question. Everybody is -- it's the flavor of the month as far as it's in everybody's lexicon and we're talking about it. But what's that mean when you sit here as WM and you talk about sustainability? And I'm not even speaking to you do the sustainability forum and you have for the last 10 or 12 years. I'm talking about the day-to-day operations. And is this now a defensible moat? Is it a point of differentiation? Is it, in fact, customers are saying, I need to know some data that you would ultimately call a sustainable data? Talk about that as part of the model.

Yes, there are a couple of pieces of this, and I'll go first, but I'll let John jump in. For us, I think what's most important is that it's never been a flavor-of-the-month conversation. It's embedded in who we are and what we do. I think it's genius that however many years ago, we coined Think Green. And for us, thinking green has always been a part of our DNA. And waste is not trash, waste is a resource. And we have to do what we can in order to maximize the value of that resource. I think the fact that our customers now demand this as well, that moat, that strategic advantage is stronger than it's ever been. And we've shown that in our national accounts business, which has grown unlike any other part of our business. And that's because we're giving those customers who care most and are most progressed in terms of advancing their sustainability platforms, we're giving them information data about their waste streams that's not available from others in the marketplace. That's valuable and that is distinguished, and that is something that we will continue to do and continue to advance. We're also walking the talk in terms of how we operate. So we have far and away the largest CNG network in our fleet in the business. Certainly took a little bit of a step back with the acquisition of ADS in terms of how broadscale that fleet presence is, that it's been...

Still in the 60s though.

So on a fleet -- on a routed basis, we're in the 70s. But total trucks were in the 50s.

Okay.

So -- but more work. Our journey there is not done. And at the same time, we're assessing what we can do as next-generation technologies emerge because we're committed to this for the long term.

So let's -- go ahead, you were going to say something.

No.

So let's talk about this digital and technology because that, again, everybody wants the corporations across the country, don't matter what industry, and all want to use that as part of -- we're embracing. How does that get defined in the garbage business? What's table stakes about technology or digital that's, one, this roomful of vendors ought to be hearing; and two, what are you doing?

So I kind of think of it in 2 ways, Michael. There's the kind of the customer-facing piece, right, the single pane of glass, how do customers transact? How do they want to transact? And giving them the ability to make that decision. So that's kind of the front of the curtain, if you will. But the heavier lift, I would argue, is really behind the curtain, right? It's connecting what the customer wants with where we need to be. And I think when you look at the investments, we didn't just start making investments in technology. This has been many years in the making, although we are accelerating in a bit now. We learned some valuable lessons out of COVID about kind of what was possible. So I think for me, from kind of a customer-facing standpoint, it's giving them the ability to transact how they want, when they want, make them be able to move through the organization without necessarily have to pick up the phone and do all the other things that have traditionally been the way we've done business. And then behind the curtain, if you will, is making sure that all those friction points, all those bottlenecks that exist can be solved through technology. So somebody says I want to switch my service day, they hit a button, and it shows up on the back end, and we're there to deliver it. And that's -- to me, that's the heavy lift. It's making it easy for the customer is one thing, but the real long pole in the tent is making sure that all the way through the system, that it gets to the service level.

And is there an AI opportunity?

Certainly, it's part of the equation currently, but I think it will advance that much further. What we have to do is effectively build the top technology to operationalize or automate what we've been doing in a more manual fashion. And those are the places that AI has been most effective.

I would tell you that some of that we're already doing. If you look at some of the advancements we've made in our recycling facilities we've talked about, the 4 or so, there's technology in those facilities that would fall under that category. I think if you look at the technology we've put on our trucks where we can take an image or a video capture of all of our commercial customers, and we're advancing that through pilot stage through residential. There's some learnings that have come out that we're going to be able to automate a lot of what was a manual process of looking for service increase or decrease, those kind of things, that's where I think we...

Right. Yes, well you start getting triggers. And so when you think about -- I mean, garbage is, when you're your size at $15 billion, $16 billion of revenues or $300 million of revenues, it's still millions of moving parts. So having an ability for all that to be pulled there, you can see things like the trigger is faster, if that's...

We're doing it with safety, too. I mean we've got the DriveCam technology. We're in the process of upgrading to the next generation. And that's an area where we are having success, by being able to use artificial intelligence to basically screen out what are the coachable events, what are the high-risk events and make sure their frontline folks who are busy doing their day job, have the ability to use that information and have meaningful conversations about improving safety as one example.

Right. And you catch the bad, fatal injury mistake before it ever happens because you've had that teachable moment.

Exactly, right.

Okay. Okay. So how does your capital spending as a company change in light of what we've just been talking about along the sustainability and the digital and the things you need? What -- and I know none of these are going to be surprises to this audience. But if you had a whiteboard and you said, I'd like this to look like x, like in the truck, what would be part of that message that's driven -- being driven by what you're spending?

Well, on the fleet side, which obviously is a big chunk of our kind of maintenance capital, every year, we've talked to a lot of the vendors and the OEMs about what our expectations are about making this technology part of the vehicle and not something that gets bolted on. And I know that's an easy ask and a heavy lift, especially when you have a chassis vendor, body vendor, a fuel vendor. But that's part of the expectation is integrating that technology that we need into the vehicle so that we're not bolting it in piece by piece. I mean, you get the camera of front loaders, it's been a long time since I dumped the can, but that can has gotten a lot more. There's a lot of stuff going on in there. And I think there's ways for us to get some of that technology that you get if you buy Honda Civic in those vehicles, to put it bluntly. And that's been the message is we don't want to bolt the stuff on, we know that's part of our bridge strategy, especially as we advance on some of these technology investments. But ultimately, we want to work with our partners to make sure that's part of the product that we're delivering.

Okay. So you brought up alternative fuel vehicles being that where you are in CNG. So you've made this big push and big bet. Does that mean you're not making any kind of a bet around battery electric? Or where are we? Like if you look out 10 years, are you still 70% CNG or now you're 50% CNG but you're 20% something else?

Well, I think the bet we made was a good one, Michael, way back when, when we started really on the West Coast probably 15 years ago, 17 years ago with LNG. And clearly, we continue to make those investments. And Devina referenced some of the statistics on where we were. And we're going to continue down that path. Now CNG is not -- you can't get it everywhere, and there's a lot of reasons, availability, size of site, economics, et cetera. But by and large, we are very pleased with what we've done on CNG. That said, if there is another technology, whether it's electric vehicles or whether it's hydrogen fuel cells, we have the ability to pivot out of our fleet strategy the same way we did from conventional diesel into CNG. And we have a handful of pilots. I want to say 5 or 6 pilots both with light-duty and heavy-duty vehicles and with some of the manufacturers. So we're going to see. And the thing that's interesting to me is the infrastructure question. I have no doubt that they're going to solve the weight and the capacity issue with the battery and they'll fix the range, and they'll be able to get the truck propelled. Let's just make that assumption. I think that will happen. The bigger issue to me is the infrastructure piece. What's the infrastructure need to look like to be able to support a fleet like ours of 20-plus thousand vehicles in all the different locations that we operate?

And we built our own infrastructure for the same solution on CNG. And so that infrastructure question is going to be key, because is it going to be something that we have to create on our own? Are there going to be platforms and networks that extend that next generation in a way that it's more available and accessible across the board?

So you are, on a relative basis, the most highly penetrated by multiples versus the peers. I don't think it's a criticism of the others, it's a little bit of where you physically are. I mean you have a much more urban model, and therefore, there was a lot more access to the source of the fuel and then whatever incremental investment you had to make to pull it. That's one of the interesting questions when you say infrastructure is can we, in fact, actually recharge all of the vehicles that are being proposed that are going to be in service in the time line at which they're talking period, passenger and commercial, let alone what the pool is to recharge the commercial side?

So obviously, the natural progression is going to be through light -- passenger vehicle is already here, but light-duty vehicles in our space, I think, is where we're going to go first, and we'll see some success there. The transition to a heavy-duty vehicle though is a much different burden on the infrastructure. To go to a site with 100-plus vehicles and be able to fuel them in the space that you have and still not losing anything in terms of asset efficiency or quality of service and reliability. I mean, those are a lot of questions that need be asked and answered.

Right. Right. Do you -- I mean I asked this question in the very first panel of the day, which was all about the alternative vehicles. So we did this top 10 and 10 thing on trends. In one of them I said was, in 10 years would it be at 50% of the fleet would be something else besides diesel, where 30% is CNG today? Is that -- do you think that's possible, knowing what you know about the various technologies that are out there, that 50% of the total fleet? So there's 115,000 garbage trucks sort of on a routed basis, could 50% of it be alternatives based on what you know?

I would tell you, Michael, I think the answer to that lies in some of this infrastructure question. I think if you use battery electric vehicles as an example, I think they're going to figure out they're making progress. I mean if you look at what happened with passenger cars, I mean, very prevalent now. I think they're going to figure out the technology on the battery side. They'll fix the weight issue. The answer to that question is going to be if they fix that, is where are you going to refuel? What's that infrastructure look like? What's the availability? Is it only going to be -- what's the grid look like? Are they going to be able to -- maybe in L.A. and New York they can do it, but maybe in small town and somewhere else, it's not going to be available. I think those are the questions that are going to lead to whether it's 50%.

I'm not sure in L.A. there are because they do rolling brownouts in California, they might not be able to.

Fair enough.

All right. Let's switch gears to recycling. So it's -- you're a big company, so you're a big recycler. There's a huge infrastructure of MRFs in place that are 15, 20 years old, no mistakes. I mean, this isn't -- nobody said they were designed to do something 20 years ago. There's a big investment that needs to be made to modernize. So where are we in that sort of modernization process where we started adopting the technology of the future, where I think big garbage is the solution to America will recycle? Talk about that, where are we because you all and by sheer size, lead the way on this, in my opinion.

So I think a few things. One, customer education is always going to be part of that solution and making sure that we save and recycle right, and it's making sure we educate our customer base to try and do as much as they can on their part, but that's not the only sole answer. I think the other piece of this is what Devina mentioned earlier about the labor pressure, right? And that's one area we're seeing the labor pressure. So the technology investment is improving quality, it's reducing cost and it's also solving the other problem, which is we don't have the same folks lined up around the block that want to come into those positions right now. So I think for us, we've got 4 or 5 sites now that kind of are of some future technology, if you will, we said the MRF of the future, we call it the MRF of the present now because it's here and it's running really well in Chicago, and that's part of the portfolio Brent and his team have got a capital plan laid out for Devina and I. And as these come up and cycle through, we're going to be putting the different technology in all those facilities. Now it varies a little bit, whether it's a 2,0000-ton-a-month facility or 5,000-ton-a-month facility, but there will be a technology solution in all those plant upgrades.

And for context, we've invested about $100 million annually for the last 4 years in upgrading our recycling technology, and there's more to come there. But we've done that and still managed our capital in our overall kind of plan of investment.

So you've been able to do that within the system -- in the balance of a normal capital cycle. And that expectation is to continue doing that.

Yes.

Is the technology interface with the customer beginning -- well, let me lead back into this. So 40, 30 some years ago, garbage gave up the education process. They got told they get a recycling , okay, so you added it. And here you are 30 years later -- almost 40 years later, and I think you're starting to take back the education from the consumer. Is it having an impact? Are we changing the contamination issue? Are they starting to better understand what's recycling versus diversion called recycling and so they're buying into the circular economy?

I think there were 2 things. One is education, but the second is rethinking the fee structure. And so when we make the consumer responsible for the quality of the material that they put in the green container, their action, they are incentivized by maintaining their own pocketbooks to take the right action. And so we've seen customers really take hold and responsibility for recycling right. They understand that if they don't do that, that there will be a financial consequence. And so we have seen contamination levels come down. I think that's been part of the key to delivering better quality on the back end. Where we still have to make the push from an education perspective, though, is on what we do with recycled content and making sure that people are incentivized to use that recycled content rather than virgin material in the things that they consume everyday.

Yes. So I've been a big believer that the people who actually make the packaging have to commit to a content issue. They can't just sign the America Recycles thing and say, we're in here, but not actually have content commitments.

Well, I think that's a good point, Michael. It's been one of the challenges as some of those suppliers go out and make their packaging, to use your example. They haven't talked to the industry or talked to us about, "Hey, this is what I'm trying to accomplish through my supply chain, how do I make sure this gets reintroduced?" A lot of times it's, "Hey, we have this package. We're going to hand it to you. And what are you going to do with it?" And under these circumstances, there's not much we can do with it. So I think getting to the front of that cycle and having that discussion on front end is part of that education process.

Okay. So you all as a company have done a really good job of starting to dampen that volatility in your kind of 60-ish plus percent through the system, and it's just a natural contract renewal cycle, and you'll complete that. But are you introducing volatility on the other end by embracing the RINs? And just as recently as 2 weeks ago, the D3 RIN came down almost 20%. Now it's still at a really good high price, but on a relative basis, it's down. So is there -- should you be owning and developing these yourselves? Should this be outsourced and take a royalty? Or can you hedge it so you don't have to take the volatility? I get that you're managing your gases properly. That's not -- there's no question you're managing the gases because you're supposed to be doing this, right? And you're doing it willingly and with -- but can we take the volatility out?

I think what's important is that we look at this from a portfolio perspective and recognize that there are places we're doing this ourselves has made sense, and we've advanced that with 4 renewable energy facilities, and we have a 5th that we're constructing now. But we've also done it in a partnership way as well, and we've got about 14 or 15 where we've partnered with the third party. The volatility conversation is an interesting one for me because I can go into kind of the theory and say that this is a business that can absorb volatility. To me, I think we instead should talk about it as being sure that we participate in the upside. Hedging isn't, in my view, something that is all that effective in this environment. For us, it's about maximizing the environmental value of the landfill gas that we generate everyday. And we are committed to doing that, whether it be with our own resources or with third-party partnerships. Managing the volatility as we work our way through it is about making sure that we maximize our economic returns at the same time that we're advancing the environmental value.

I also think, Michael, it's important to know that over half of that CNG fleet is fueled through RNG. So over half of the CNG fleet is being fueled by either our or a third party's RNG. And I think that's important when we talk about the EPs closing the loop, I think that's another consideration. I mean, RINs are certainly a part of the formula, but there's other facets of this that are equally important when you look at.

Yes. Yes. I don't dispute any of that. And I think that's absolutely the right way to holistically to think about the whole thing. But it isn't -- Tencent moves $4.5 million of volatility and it moved $0.40 the other day. It wasn't a trivial move because everybody woke up and said, oops -- well, 2 things happened. They went oops on the RVO, but then the Supreme Court ruled that the small refiner exemptions are enforceable.

Some of it for us is looking at how we contract and sell the capacity that we have in our framework. And so while you'll see those flash changes, that doesn't fully impact us because of the way we contract to sell the capacity we manage.

Okay. I got 2 questions left and I'm 8 seconds into now. I'm over my time, so let's go fast, Michael. We're $70-plus oil. Are we seeing -- you have a nice little oil waste business. Are we seeing a recovery?

Yes, we're starting to see signs of the recovery, Michael. I think the good news is we're in some of the low-cost production areas, and I think that's where we want to be. So I think the tide is going to start to rise in those places earlier. It hasn't been meaningful yet, but we are starting to see some improvement there and I think we're in the right spot.

Okay. You kind of did a relatively big deal for you all last year. And how is that integration going, one? Two, what's the M&A environment look like right now?

So I'll take the first piece, Devina can touch the second one. It's gone really well. You've heard what we said on the call, we're very pleased with the acquisition. We've got a great business from Richard and his team. We got great people. And our motto from day 1 has been let's take care of the people that take care of the customer. This is the long game, and that's how we're doing this. And we are being very methodical about how we integrate as best as we can to integrate those folks into the organization, make sure we take good care of them. And we haven't been perfect, but I think we've done a pretty decent job of that. And so we're pleased with it. But I remind everybody the fact that we did the deal, it was done 8 months ago, it doesn't mean it's over. There's a lot of work being done. But to the credit of the field organization, I mean the corporate team did a great job. But right now, the heavy lifting is being done by the field with all the integrations you would imagine are happening, and we're very pleased with how that's gone and going.

And I've heard John's comment earlier, and I would echo the same. Things are busy. There's a lot of talk out there by small business owners who are thinking about whether or not this is the right exit point for them. So we're involved in all those conversations. We certainly have a different backdrop than we had before the Advanced Disposal acquisition in the eastern part of the U.S. But when you think about the scale of opportunities that still exist, we want to be sure that we're thinking about those places that we can grow inorganically as well with the small tuck-in acquisitions, and we're active in that way.

Okay. So you all started the year with prudently saying, hey, we might be a little slower just because we're going to make sure we do this right. But what I'm hearing is you're not sitting here, letting this opportunity pass you by if sellers are standing up raising their hands saying, hey, I want to walk.

Still focused on return on invested capital, though, so we're not going to do anything that feels kind of reactive to a market that's really hot. We're looking at all the right deals and part of the right conversations and the business development team is really busy. And we're engaged with them, making sure that we are being intentional about which deals we want to not pass us by.

Okay. Well, I think of the Advanced deal is almost like 5 years of tuck-ins just done in one fell swoop.

You can categorize it that way.

Yes. If not more.

Yes. Okay. Well, we're over our time. I've done this all morning. Thank you very much, both of you for spending it with me and enjoy the rest of Waste Stifel.

Thanks, Michael.

Thank you, Mike.

Kick the afternoon off again. So one of the things I've tried to do over the 9 years when we've had the Investor Summit is to pick topical panels. And so I put on a panel today that's called Environmental, Social, Governance, ESG. And we've been talking -- you've heard me talk about it all morning. What I thought was important was to bring together 2 subject matter experts around this and focus much more in-depth about it. I don't think this is just interesting dinner table conversation anymore. I think this is operating conditions that you have to live with in business broadly. It's not just about the environmental services industry, by the way and I think everybody has to think about this. And it's not a political statement. I think it's here to stay and we have to figure out how to run our companies. So with that, it's my pleasure to welcome Susan Robinson, who's the Senior Director of Sustainability at Waste Management. Everybody who's seen the Sustainability Forum or their CSRs or gone on their website, that's her. And then Mike Battles, who you met earlier, Chief Financial Officer, Clean Harbors. Mike's team at Clean Harbors, legally reports to him, handled the whole -- their CSR and they tackled their first one ever this last year, and it was a pretty comprehensive document. We teased a little bit about this on our company panel.

So what I'd like to do initially is well, I'm going to -- it's a step back. Can we define for this room, how -- what is it meant by when we say sustainability in the context, the way I just talked about it, this is here to stay, you got to figure out how to manage around it. What's the definition?

Okay. I'll start. You've started with the definition. And I think what's really interesting about it is that it's a concept that's evolved over time quite a bit. We started environmental reporting in the '90s, and it was data around the environment. And in the 2000s, we started talking about sustainability. And it was kind of that 3-legged stool, right? People plan a profit. We reported on -- we've developed some sustainability goals, mostly around the environment, and we reported a little on community and around people. But over the last decade or so, it's changed and what's asked for of us is to talk about all parts of our business. And it's the environmental, it's the social, it's the governance, those ESG metrics are really what we're being judged by. And we are expected to perform well on those metrics, and it touches every part of our business. And I think it's so interesting because it really -- you see the trends, and you see that those companies that do well with their environmental metrics. They do better financially, less volatility, tend to have higher shareholder value. And it makes sense. And this is why I kind of think back to my entire career, and I think if you are a well-run company, you have good employee relations and you have good community programs, probably going to be lower risk. And you're probably going to provide -- be a better service provider, better partner for your customers. So I think we all benefit from that. When you have happy employees, you have good relationships with your communities. You're going to probably have people who take care of the environment better, and that's really important. So it all fits together, it makes sense, and it's very comprehensive. It's starting from the federal government now. We've got the Biden administration paying attention to it. Our customers are paying attention to it. It is really an important piece of every part of our business now.

So Mike, from your perspective, because this was a fresh thing for you all. I mean, it's not that you didn't pay attention to it, but sort of defining it. Because I remember, I gave a presentation to your Board 3 years ago, and I said this is going to be something you're all going to have to do and I got lots of questions from board members about it. And here you are, 3 years later, you do have your CSR. But how is this working out from a standpoint of how you had to define it to figure out what you were going to do that it became part of day-to-day business operations?

So it started just as a data gathering exercise. And now it's more involved than that. Now it's -- as Susan said, it's part of our business model, it's in our incentive compensation plans. It's kind of how we measure ourselves, and it's the goals we set for ourselves in the sustainability report that kind of drive a lot of business decisions and kind of where we go from here. Because it used to be a check the box, yes, we do a few things, and we're pretty good about it. We refine motor oil, and that's great. And now it's much more than that. And now it's -- now we get questions from our employees, our customers, our investors, our stakeholders all around this area. And they really -- this is the first question they asked.

And would either of you say that this is not just the purview of public companies, that this is business -- this is part of the rules of business today?

Absolutely.

And for this room that may be part of a public or company or not, that's private, so what are the things that they need to understand that if they're not incorporating into their operating plan, their strategic plan would put them at a competitive advantage and a disadvantage?

Well, I kind of touch on what Mike started with in that it is -- there's a chicken and egg kind of dialogue, how ESG really meets our operations. And I really love thinking about it that way because we are reporting, we're providing information. We're being asked to provide information. And it's asking us to maybe look at things that we weren't doing before. And it can be really uncomfortable in that conversation. Internally, some of those conversations, we may not -- we may be asked to report on something that we haven't done before or that we haven't thought about. I'll give an example for us. Renewable, we don't use a lot of electricity. It's just not something we use a lot of. But it is something we report on, and it's our Scope 2 emissions. And it's in our reporting. And so all of a sudden, we realized we need to have a goal around this. And so we created a goal and now we created a program to reduce -- to use 100% renewable electricity in our operations. So that ESG focus, without that, it helps really drive that strategy in terms of kind of that transparency that we're being asked to report on to create those goals and those programs and then report on them and hold us accountable for it.

From your perspective, has this changed monthly operating reviews, quarterly business reviews, budgeting, strategic thinking?

Well, we always had safety as part of an S in the ESG. And every -- all 1,400 employees in an incentive compensation plan have S, have safety in their incentive, a material amount. So it's always been there, and it's always very -- a focus of ours. I'd say it's starting to get blended into where we make investments. Certainly, as we're going to budget 2022 here coming up this summer, it's going to be part of the conversation.

So I actually think in the United States -- Canada and the United States, that we're actually doing a pretty good -- specifically public companies and even private -- bigger privates. The S and G, we do a pretty good job on. There's tweaking around the edges. And I think of S as community giving, safety training and then diversity within the workforce. And then on the governance side, it's senior leadership and Board of Directors, compensation, diversity. And all in all, I think there's been a lot of attention on that for 20-plus years. And the better run private companies do it as well. What I have a sense of is that most of the dialogue from the customer side, it's more about E. They're going to ask you more E-related questions, mostly because I think that's what the mainstream media tends to talk about the most, which is ultimately, it gets deployment, even though I think you have to have a circular conversation around air, water and land. Is that an accurate perception? So as we're sharing with this room and they're coming away going, what were the takeaways for them? And when they go back and have a conversation with their employees or their bosses, the E part of this is -- if you haven't caught up with S and the G, which, by the way, you better, then the E part is the place where we have least invested as far as data gathering, information transparency, and everybody needs to think about that. Is that a -- am I serving that right?

I guess, I'd say we are in the environmental services business. So it's natural that we would be asked to report on our -- the impact on the environment. And it's interesting because I think, to your point, we report a lot of data. And sometimes, though, it's not easy to find in our reporting. Just by nature of -- in different questionnaires we provide, and they don't all ask the same thing. So sometimes you have to go look in different places. But what's interesting about it is it really does bring that focus. And I think to your point, we are starting to understand how to use the ESG reporting to drive things at the company, and it's become more apparent in how we're reporting. So a couple of examples. One, we have emissions that we create through the operations that we have in our business, and we've always reported those quite frankly. I don't think there's probably much that we haven't reported, but we are now being asked to have goals and to specifically set goals to reduce those emissions and to track that -- with time lines to track that progress over time. So that's really key. But the other aspect, I would say, that I think I'm more aware of is that our customers are also not going [indiscernible]. Our customers also have -- we're providing services to our customers to help them reduce their emissions, and that's very important to them, and we now understand how important our services are to our customers. So it's kind of a 2-sided coin that we have tracked our improvements of our own operations, and we also make sure that we're understanding how important those services are to our customers for their own scope 1 emissions often.

Right. So I'm coming back to you with the same question, to answer this question, but to comment on this. I actually think this industry -- so industrial waste, solid waste, the waste industry could have one of the most significant influences on scope 3, which is vendor, suppliers, it's all those. Because you'll start influencing their behavior about things you need to be doing -- that you need to happen.

Absolutely.

Would you -- is that -- do you think there's...

We are -- at Clean Harbors, we are our customer's sustainability solutions because the alternative for the waste that we're dealing with and in Susan's world as well is in the environment. And so we are -- I mean, it's to say that you see an incinerator or a landfill both hazardous or nonhazardous, you don't think green. But it's actually the greenest solution that you can have for the waste that were being generated. And so it really is -- we really are feel like this is the end game, and this is that -- we provide a valuable service for our customers. And we just need to get more credit for it.

So this is a little bit nuts and bolts. You're a huge company. You're a big company, lots of the smaller companies may be sitting out here. Is this within the scope of somebody's corporate structure that they should be able to do this? This isn't -- you've got to reinvent a whole finance department's like infrastructure to do this?

As I said before, Mike, it was an unfunded mandate, and we had to do with a team that we had. The good news is the data was there. But to Susan's point, unit of measure was a challenge, trying to get all in one place, trying to organize it and make sure that we were complying the SASB standards was the hard part. But the data was there. It just takes time, and we started this process kind of last February, and we worked through all during the pandemic and issued it about a year later.

And as you come through -- because you now are on your third CSR, I think.

We've been doing it for over a decade.

Well, I -- okay.

But full ESG is what you're...

Let's call it, the real high-quality ones probably the last 3 years.

Got that pretty good.

That's an insult.

I've done a lot of CSRs. It's not that they were bad. It's just I think they've only -- the real substance in all of them have been showing up like the last 3 years. But I'm assuming the incrementals are a heck of a lot easier at this point.

They are getting easier, but I would say we have a lot of reporting we do that build into it, CDP, Dow Jones, et cetera. We are being asked so many more questions. I wish I could tell you it was getting easier. We actually have a team of 4 folks working on it. And we reach all parts of the company. We have probably 100 different people who are subject matter experts feeding into the process. And I keep thinking every year, it's going to get easier. We say that every year, next year will be easier. This year, we're adding a data center site on our ESG hub, which we created, which we thought would make things easier. And now we have to update it, too. So there's just so much information and so much that people are looking for from us, that it's kind of expanding exponentially at the same time.

Yes. Yes, I get that part of it. We don't actually have -- nobody is -- well, SASB, I think has, and I think GFI has, but so far, nobody sort of said, "Okay, we're going to pick those 2, and that's it." And so then everybody -- somebody else comes up with, "I don't know, I have this angle on this." But I'm trying not to scare the heck out of all this room that they need to go ahead and make this investment because this is a competitive moat. Yes? I mean -- am I...

I'm think it's must-have. I'm saying it's a must-have, I'm not sure it's a moat or not, it's a must-have. Because we are getting questions -- the reason why we had to do it, we were getting so many questions that we couldn't answer, we had to kind of pull something together.

And not just investors, this is you're getting questions...

From employees and in customers. The most impact, I think, so far, has been on our employees. And we're doing recruiting. I mean people just really reacted to it and being part of a -- trying to bring to light all the good things we do. It's a really great story.

Okay. So if we're back to sharing with the room and giving them sort of insights on what to tackle, what would be the minimums that you would say, recognizing the variety of sizes of companies that might be sitting in here? What are things that are maybe it's not an easy win, but it's a win that you got to go for?

Well, I'm going to start with, I think, a fundamental point that it doesn't matter what size you are, whether you're public or private, your leadership has to make it happen. And having that leadership support and directive at the top is the most important thing that you have. From there, I mean, we operated with 1 person and a handful of support people for years and years and years. I think using those frameworks you allude to, you can start with TCFD and create a TCFD report and put that on your website. You could use one of the GRI, SASB frameworks. I saw a really nice report that was 12 pages long. Touched on key points. It doesn't have to be 150-page document, especially to start with.

So I didn't actually read all 150 pages, I did read on it, 50 pages, to the section that I was supposed to check. It's a lot of information. I have to admit. Mike, from your standpoint, is -- because you didn't essentially start from scratch. What are some of those baseline things that people should realize you can do this? These are...

To Susan's point, start from leadership and Alan is very supportive of trying to put it together and put together to help me post, put together the time line. But really, what do you have? Because you have a lot of data already. You just don't know it. And is it safety? Is it compliance? Is it Scope 1 usage? I mean, you can get your arms around some of those pretty easily. And once you do that, start there. I mean, I don't think you have to be a team of 4 full time. I think you can do it with on the cheap and just to have something. And then you just start building from there. I think you start building from there. Because then you start seeing the positive. Now it gets more and more embraced by the whole organization.

So how would you measure some of that impact on the organization? What -- you've made comments -- both of you have made comments about employee reactions. But what are some of the -- some tangible things you could point to that this might have taken a lot of work, but this had a real benefit. Look what happened.

Yes. I love the fact we've tried to, every year, make the rounds, talking to different parts of the organization about our sustainability report. And what it includes and the energy around it is so exciting. And it really builds throughout the organization, and people are really proud of it. They share it with their customers. They make sure their employees read it and really helps drive, I think, the culture within the company.

I would say that from an investor base, we get a lot more interest over the past 6 months than we have ever. And that could be just changing tides, but it used to be an international focus and now it's everybody.

Everybody. Yes. And internationally, as you both appreciate, you can go into an investor meeting, and there will be an ESG professional as well as the fundamental owner. In the U.S., they're still blended together. But there's no question, it's on the list from...

Absolutely.

Have you seen impacts in the financial markets from a standpoint of lending, like are banks asking questions when you're sitting here doing refinancings that have ESG underpinnings to it? Or is that a knock-on consequence?

I mean, I think it's -- we haven't done a lot of refinancing in the past year, too. We did them all, as you know, a couple of years ago, Michael. And but I think that people are trying to pitch us kind of green bonds and those types of investment vehicles that give us maybe 0.25 point of benefit and those are out there.

We're actually spending more and more time with our treasury department than we have in the past. Really a lot of interest there. And there is certainly a growing amount of knowledge and interest from those institutions as well.

And then when you walk into M&A situations, is this becoming an area of due diligence that helps determine whether there's a business risk or not a business risk?

I mean we do a thoughtful and detailed diligence exercise. I think that ESG is going to be just part of that conversation.

So again, as small businesses who might be considering selling, they have to -- this is back to -- essentially, this is back to a data gathering issue, which you probably have, but getting it, putting it in a place that it's palatable, usable, and then keeping it current. And...

That's right.

How the -- of the customer base, particularly on the commercial side, because I would think the commercial side probably drives this more impactfully. It just as -- have a little more muscle to them -- to do this as opposed at the individual consumer level. Can you really point to we won business because we're doing these things?

I actually think I can't personally, but I know our national accounts team is probably the most engaged with what we're doing, working with their customers on our ESG services. They are extremely -- they value it very much. Many of them have reports they're doing for their own goals that they have. So working with a company like ours that can provide those services and then provide them information that's critical as well as a lot of our municipalities, increasing number of our municipalities have sustainability goals, and it's important to them to be working with companies that not only provides the services, but then can provide them the information as well.

So this is showing up in bid proposals, like 20 years ago, they were asking for recycling or what's your CNG fleet or whatever the requirements, some of these things are starting to show up in bid proposals?

Yes.

In the industrial markets, is that happening?

Yes. I can't point to a customer who won or lost because of our ESG focus. But it's being asked. In fact, that we have the data and we can point them to a report, and we can answer their questions is helpful.

Yes. No. I think I've heard, certainly, it's one of many things that is requested of us, but growing in importance.

But it's not, I mean -- and this is where I'm saying and opened up with this room, I don't think this has a fad. I think that this is going to become part of business language that's -- and there's an expectation of substance behind it.

That's right. I agree with that.

I do think that the substance issue is going to run through -- it's going to get silly up here and find a level and come back to something that makes sense.

Just like any regulation like Sarbanes-Oxley or other things like that, it becomes a big deal, people get compliant and it becomes less of a deal.

You all did a really big acquisition in the last year. Did -- in a justice process, did any of this come up in their review process?

No, I wasn't involved to know if it was or not. But certainly, now we're incorporating all -- we incorporate into our reporting now, with that acquisition, so it will play out into our results in the future.

Okay. So it's not clear whether in a Hart-Scott review or what have you that they've started adding this in any of the conversation or a disclosure issue or anything?

No. No, other than like -- I'm not aware of that. I do know, though, that certainly some of the things that are important for us from an ESG perspective are things that were important in that acquisition of safety, for example.

Right, right. Yes. Okay. So back to vendors very quickly, can you give examples, either of you, where you have actually turned around and said: "All right, we need something to change at the vendor level in order for us to make goals," and have sort of shared that at the vendor level and then seen the response?

Yes. I'll start with, certainly, I'll just add a little color there that our supply chain team has just been phenomenal in really creating a whole vendor process. Scorecard requirements, policies, et cetera. And we really saw that come to fruition last year when we were approached to join the Association of Plastic Recyclers Demand Champion Program to grow the use of post-consumer plastic in carts, in our recycling carts. We worked very closely with our purchasing department, and they really drove that process through, all the way through. Creating now, we have a policy to be buying carts with post-consumer content as well as our uniforms now have post-consumer PET content in them. So it -- they have a whole system for building it into contracts and questionnaires and making sure that you pointed out earlier that in a little different way that our ESG policies are carrying into our vendors, our suppliers' business, making their operations better as well.

And so I'd love to hear what Clean Harbors is doing -- that thing, but I think that's I call that impact, and I'll come back to that in a second.

Yes. So I think that we have the policies in place to do it and try to enforce it. We haven't gotten there yet. We just started this. I think we put policies in place to try to talk to our vendors and have a more thoughtful conversation about that. Supply chain, as you know, Michael, has been strained over the past 6 months, and that's been the priority.

Right. Well, and is it even feasible to think about lots of your suppliers use lots of transportation, and therefore, back to this story of closing the loop on your recycled oil business, where you could influence them to start, and meaning, if they're not using yours, at least they're committing to that they're using recycled oil in their transportation fleets. I mean, is that even a plausible option?

Absolutely. Absolutely.

So I have -- my side of the world is doing sell-side research and working with professional investors. I think, ultimately, the model is getting to a place where what's your -- as a corporation, what's your impact? It's sort of -- you think the pyramid you're sitting up and that spreading effect. And what I'm hearing from you is through the purchasing side, and it's early days for you, it's actually somewhat in practice, that this is here to stay. You are going to force impact down into the model. And it's -- so it starts with employees and it goes into your stakeholders and shareholders, and stakeholders or vendors and suppliers and customers and it works into it. How do you get the consumer packaging world to commit to content then?

Wow.

You're the world's largest recycler, or in North America, you are the largest recycler. How do you get content commitment?

So we've been working -- we do a lot of policy work, and we're engaged in a lot of organizations with the packaging industry. We talk a lot about that. And we understand some of the limitations that they have. But quite frankly, we've so far said, probably the best way to go about doing this is legislation. Post-consumer content legislation. Once you add supply to the system, it needs a place to go. And so our sense is you really need that regulatory pull to be able to have them participate. There's a lot more to it. We understand, but really primarily, that's one way that we can really probably make an impact over time.

And we talked about this earlier today, Mike, about the used oil business and the closed loop. And humorously, we both looked at each other and said, "You've been asking me this question for 5 years, Michael." But here we are, and this is -- this, to me, is glass, steel and aluminum cans and used oil can be stepped on forever.

That's right.

Now there's no economic value in glass, but steel and aluminum cans, there's clear economic value. There's clear economic value in used oil.

Absolutely.

And yet your single largest collection customer does not buy the oil back. And so as -- you got the DOE study, the federal government has now said, this is a viable industry. What else is needed?

I mean I think that it's really just -- we have to step the conversation from the purchasing agent to the sustainability leader. And that is really where the conversation has been heading. The purchasing agent is concerned about going from a known brand versus a kind of a no-name brand. Even though the quality is there, to your point earlier, the pricing is certainly there. I mean, that's there. It's just it's hard to walk away from that. And so now we're having a conversation with a higher level employee and that now is moving forward.

Okay.

Because they're looking for sustainability solutions. They're trying to improve their scores as well. They're kind of running out of ideas. And so they've done this -- companies like Waste Management has been doing it for a long time. And so they got to think of what -- how they improve upon this. And I think we refine motor oils, is a great way to go.

Right. Right. Okay. So could semi put Susan on spot, you're not the purchasing person, but do you all use refined oil in your trucks?

I don't know the answer to that. I know we do -- we have a lot of recycling of oil that we do. Absolutely.

Right. Yes. But it's -- and the garbage industry is a huge consumer of lubricants. And it would seem like a natural to be able to walk into a residential bid and go and, "Oh, by the way, not only are they CNG, but all the oils and lubricants are recycled?"

Yes. It's a great story.

Again, it's sort of a competitive advantage. All right. I hope from your all standpoint, this is not going anywhere. This is here. It's going to stay in my opinion. I think that's what you heard from -- and I get it, big Waste Management, lots of employees, huge budget, $15 billion in revenues, $3.5 billion of revenues. But this -- I think this matters if you're $1 million in revenues or you're $15 billion, I don't -- and I'm not making a political statement. I think this is here to stay as part of how we're going to do business and you got to figure out how to measure it and provide information and then you got to figure out how to have impact. Thank you, both.

Okay. Thank you.

Michael, thanks for having us.

We're at the last panel. So it is my pleasure to welcome up onto the stage Jim Fish, who is the CEO of Waste Management.

And we're -- this conversation this afternoon with Jim is not about Waste Management, particularly, in deep. It's more about strategy, vision, looking at the industry, sharing with us some of your thoughts as you're managing the biggest company in the business. But it is -- in November, it will be 5 years. Sort of when I wrote it down on a piece of paper I was putting the question, I'm like, "Wow, it has. It's been 5 years, went like that." So I'd be fascinated to hear from you, as you look back over that 5 years and went, well, I didn't expect that yes, that did what I thought it did and what should I had been able to get so far. We've got to work on this. What are some of those observations?

I think the -- well, first of all, the piece that I expected was that the industry continues to be a solid industry. I think we get -- sometimes we get unfairly stigmatized. I spoke at a -- I remember, before COVID, I spoke at a National Geographic conference. And one of the people in the audience said, "So how can your industry and you, as a company, consider yourselves to be sustainable and really be ESG-focused when you're the biggest -- Waste Management, specifically, the biggest landfill company in North America?" And I said, well, 2 things. First of all, we're also the biggest recycler in North America. But I said how much of the -- we bring 110 million-ish tons a year in our landfills. How much of that do you think Waste Management brings in? And the answer is 0. I mean, okay, a couple of tons here from a hauling company or 2, but basically 0. It's all from you. And so -- and what we're trying to do is do the best -- we're trying to create the best solution as has been done for 100 years. This is a model, it's been around for 100 years. We're actually about to celebrate our 50th as a public company, along with 2 other companies. I guess that's my trivia question for you. What 2 other companies, Fortune 200s, are having their 50th anniversary this year?

This year?

Yes.

So 1971, Fortune 200. I couldn't even guess.

Starbucks and Southwest Airlines.

No kidding?

Yes. So -- so I feel like really...

Starbucks really surprises me. I -- wait, that's not 50-year-old. Really?

Yes. 50s -- 50 year old. But -- so in any event, look, that has not surprised me. I expect the industry will continue to be around for another 100 years because that collection and then post collection. And the post-collection components will change, they have changed and they'll continue to change, meaning where it goes. I mean it can go for landfilling. It can go for traditional recycling. It can go to mass burn. It can go to a number of places. But -- so that changes. But the model itself is such a powerful model, and that hasn't surprised me. There's been a couple of things that have surprised me. I'm a little surprised, honestly, in the last 1.5 years, how much pressure there is, social pressure there is on companies to make a statement about some of these social issues. And I talked to a friend of mine from graduate school who happens to run one of the biggest tech companies in the world, and he said, "I'm not the fourth branch of government. I don't feel the need to comment on every social issue that comes across the ticker. I think our actions when it comes to things like inclusion and diversity are much more meaningful than what I say -- and by the way, probably alienate half my customer base by saying it." So that's been a little bit surprising to me, honestly. I wasn't anticipating that, not that anybody was anticipating some of the events of the last 18 months.

Well, and when you're faced -- because you tend to do a fair amount of media. When you're faced with somebody positing that question, how do you turn that question back around so they realize that you're not the fourth branch of government?

I have used that. That's plagiarizing because that was his, but I've used that. Look, I'm not the fourth branch of government. I'm not here to -- what I'm here to represent are constituents, which are really just our employees, our customers, our communities, our shareholders and -- I call it the voiceless constituent, which is the environment. And those are my constituents. I'm not here to represent the United States of America or Canada or any of these countries that we're in. I'm here to represent those 5 constituents.

Got it. So within the context of the business, have you seen in that 5 years operating changes that have really shifted the paradigm around competitive advantage?

Yes, I think so. I mean I -- and I've heard a lot of your speakers talk about some things today. I would -- there's a big change coming with respect to labor. And John and Devina talked a lot about some of the changes in our model with respect to technology, and we can certainly talk about that. But look, I would tell you that this change that's taking place with labor is -- part of it is short term, part of it's just our emergence from COVID. But I think part of it is long term. You know our daughters, and Nicole posed a question to me the other day that really kind of took me back a little bit. She said, "Dad, nobody at our school -- everybody" -- she just graduated as a senior, so she's -- all these kids are talking about what they're going to do, where they're going to go to college or what they're going to do when they come out, maybe they're talking about some type of trade school. She said, nobody talks about driving a truck. Nobody -- and she's not going to a ritzy high school. She's going to a downtown high school. It's a very diverse high school. And she said, nobody talks about coming out and driving a truck, not just a trash truck, any kind of truck. If you ask...

Yes. Yes, consumers and millennials don't want to drive for a living.

Right. So I think there is a huge evolution taking place. We think it can be an advantage for us. But there's a huge evolution taking place right now with respect to labor. And at the same time, we're seeing -- and part of it is a result of that, seeing inflation. You can talk -- I've spent a ton of time reading over the past couple of months about M2 and M2 has done this. More than any other time in history, money supply is doing this versus post World War II versus post World War I versus 1970s, the money supply is up. I think I read it was up 23% year-over-year. And the velocity of money and then output, all of those things that I haven't really thought about since graduate school. But all of those things create a model for inflation. I mean if you think about output, output is greatly constrained right now because of supply chain. Supply chains are massively constrained.

And probably well into '22.

Exactly. So all of that is a little bit of a perfect storm for inflation. Some of inflation is related to this emergence from COVID. But some of it is more structural.

Well, but we've also had 10 years of substandard and prior -- of which then, prior to that, we had 40 years of it was 4%.

Right. Exactly, yes.

So there's some middle ground between 1 and 4 that we ought to -- we should be living in.

So I think that's -- I don't know whether I answered your question very well, but I do believe that labor is kind of evolutionary right now. I think it's going to change our industry. One of the things that we're doing from a strategic standpoint at WM is trying to become less labor-intensive. You've seen it. You've been to our MRF in Chicago. It is less labor intensive than a traditional...

But it's virtually labor-free, I mean, relatively.

But I think all of the -- whether it is using technology. I heard John talking about it with Republic. I mean everybody is either looking to write a check for technology, and part of that is to become less labor-intensive, or just saying, you know what, I'm not going to write that check, and I'm going to move to the exit side.

So -- and at a very, very high level, if you're sitting here and you're segmenting population basis demographically and X-generation and baby boomers are 2/3 of your frontline workforce and the generation right behind it, which is millennials, aren't really interested in driving, I mean it can't be automation. I mean I don't -- I can't possibly envision a 24-ton garbage truck going down a residential street without a person in it.

I mean maybe 20 years from now. I don't think it's going to happen -- it's not going to happen in the next 5. I don't know how long I'm going to be here, but it's not going to be -- I'm not going to be here to see a material percentage of our fleet be autonomous.

And I don't think there's anything out there that disintermediates the way garbage has taken off the curve or the loading dock.

No, I think that's right. I think that's right. So -- But there are other positions that do naturally lend themselves to technology. So it may not be a driver. And so we're going to see wage inflation, but there are positions that lend themselves to -- look, Amazon is not that different from a trash collection company. It's just that they're dropping off packages. We're picking up trash or recyclables. But it's all logistics. And if you look at Amazon's model, they don't -- they don't have -- all of their functions on the dispatch side are all automated. If you look at Amazon from a customer experience perspective, you can't call Amazon.

Yes. No, it's impossible to talk to Amazon. Yes, it's all gotten electronic, yes.

I think -- and by the way, this isn't leading towards a big layoff on our part. I've said when I started the position, never going to do another indiscriminate layoff of people. They're very damaging to the organization. However, we have 30% turnover in some of those jobs. Let's use attrition.

Right. So use the natural attrition and then -- and so -- okay. So the other major subject, and we're going to hit a bunch of sort of high-level topics. Sustainability, we've talked about sustainability all day today. You all have walked the talk with both your own actions within your reporting, your sustainability forum, but let's take this up from just Waste Management and talk about the table stakes of what this means running businesses in America. And then some of what what's the leadership aspect of a Waste Management's influence, the impact that you can bring from -- and again, not just the system that you pooled 700 people together in Phoenix when we're allowed to go to Phoenix, but more importantly, changing people's behaviors, other businesses behaviors. Where are we in that? And where do you see that going?

Well, look, first thing I would say, Michael, is I would argue that this industry is the most sustainable industry on Planet Earth. If it weren't for this industry -- you've probably been to India. I mean have you seen a landfill in India?

Yes. Yes. No. Yes, I have.

I flew over a landfill in China. John Morris and I flew over a landfill in China that they were interested in us purchasing from them. We obviously decided not to do it. But -- and part of the reason we decided not to do it is because we're at 2,000 feet and you could smell this landfill as if you were sitting on the workplace. It was horrible. I mean this industry in the United States, in Canada, in North America, I would argue, has done a better job of keeping us clean than any other industry. Now can we do more? Absolutely. And I think you're seeing the industry move towards taking that post collection piece and segment it. I heard John also talk about -- his team talked about the fact that there were -- that we possess a lot of materials. So what's the best thing we can do with those materials? I would tell you that a lot of the plastic that comes into our landfills, there's a better use for it. And so let's figure that out. Plastic doesn't decompose, or if it does, it's not going to be in our lifetime. So -- and Tara told me that upwards of 90% of the plastic that ultimately makes its way to WM goes to a landfill as opposed to -- the remainder probably goes to one of Brent's recycle plants, but 90% of it ultimately gets buried. It doesn't create any gas so that we benefit from our RNG plants. It basically sits there. And if there's a better value for it, that, by the way, is also better from a renewable standpoint, then let's figure it out. And I think we're doing a lot to try and figure that out.

And to be clear, 1s and 2s, and Region #2s are getting out of the waste stream. This is the 3s through 7s.

There still is room to get the 1s and 2s that HCP natural, that kind of stuff out of the waste stream. But you're right, that's -- a lot of it is coming to us. And certainly in today's recycling climate, we do well with that. But there's a lot of plastic that gets into a landfill. In fact, I'm leaving here and going to Seattle to sit down with Kevin Johnson and talk about Starbucks and talk about, look, what's the -- can we bring a better solution to Starbucks. And by the way, he called me, I didn't call him. He wants to know. So...

And do you think -- I've asked this several times today. How do you get the content commitment? I mean at the end of the day, to get to practically talk about what you're doing because you're not -- I mean, I don't believe for a minute you as Waste Management, I bet Worthing Jackman would say this. I think Jon Vander Ark would say. You don't actually care where you do with it once you've collected it as long as you get paid a reasonable return.

That's right.

Right?

And that would mean I'm agnostic about the environment, and I'm not. So you're right. I mean if -- but what I've said many times about sustainability is it has to be both environmentally and economically green. You said that earlier. And so you're right, though. I really don't -- if I was agnostic about the environment, I don't care whether it goes to a landfill or whether it goes to a recycle plant, wherever I earn the greatest returns. Because I'm not agnostic about the environment, I'll say if the returns are equal, I'll take it in the recycling plant all day long. And by the way, the returns aren't necessarily equal. I mean our return on invested capital at our recycle plants is better than our landfill.

Right. And I start with the -- I actually would have started with the premise that environment was first and foremost. So this was the agnostic about what you do with it is you'll do whatever ABC future solution, if there's a solution to capturing the organics and you've -- I'm stealing your -- paraphrasing you, it's got to work, it's got to be scalable and it has to be economical. And so far, there isn't many things that get close to all 3 of those.

Well, we've been talking to a lot of petrochemical companies. I mean the big guys. I mean, Tara and I have spent some time talking to ExxonMobil and LyondellBasell and Dow Chemical. And they're all coming to us because we have -- we, as an industry, and we as a company, have the material.

Yes, you control the supply.

But there is a difference between a chemical process and a mechanical process. And one of the big differences that tends to get overlooked by those guys, those guys being the ExxonMobils, is that they need a very clean stream to do a pyrolysis process, for example. I'd much rather do a mechanical process. First of all, the plant is a lot less expensive than building a chemical plant. And secondly, I don't need to have -- I can have somewhat of a heterogeneous product. I don't have to have a very clean 99% pure plastics product coming in because that then implies that I'm going to have to do a lot of sorting to get to that. I can do it but then I'm going to pass that through to you as the consumer. And if you're PepsiCo and you want to use recycled material in your Pepsi bottles and now all of a sudden the cost of recycled is 3x the cost of virgin, you're going to say, look, I want to be sustainable, but I can't charge my shareholders 3x.

Right, right. And nobody really has truly cracked. Is there a legitimate willingness to pay.

Nobody's cracked...

There's a perception is -- yes.

That's right. But I think we're moving in that direction.

Okay. So you've brought up Tara's name several times. It's -- the reference is Tara Hemmer. Tara was Senior Vice President of ops at the northern region? Southern region?

She head the south. And then we just changed it to east and west.

So this is a very talented executive. I described her to somebody else as a shiny dime. So you took her out of this really cool operating role and gave her this role. What is the role and what is it that -- why that level of an executive in that role?

Well, first of all, if we're going to say that sustainability is truly part of our definition, if sustainability defines who WM is in part at least, then we need to have somebody at least represented at the senior executive level within sustainability. We did make it a meaty position. It's not just, look, we want you to manage the office recycling program. I mean we want her to manage things like organics, things like these next-generation technologies. So she works with Chuck Boettcher, Steven Hamaker and that team. Those guys are looking for those technologies and then Tara is ultimately the user. When Steven goes and finds...

So she's the commercialization of it.

She's the commercialization of it. So when Steven and Chuck find it, as they're doing with some of these mechanical processes, then she ends up being their primary customer, ultimately. We've given her Brent Bell and the recycling team and because she has operations experience. So we made it a much meatier job than just you're going to manage a couple of things, and we're going to give you kind of this ill-defined job, which is called Senior VP of Sustainability.

Right. So how is her success measured?

Well, so it's a good question. And I would tell you, she actually isn't even in the job yet. So we're going to come up with the answer to that next time.

Okay. Well soon, though, isn't it? It's like this month? Or next month?

Yes, July 1.

Yes, July 1. Yes, so okay. It's a...

We got to figure that out.

Okay. Tara. So PFAS. This is not going away. This is a real live issue. We had a whole panel up here that at least got on the table that there are viable solutions on how to manage this...

Exciting. Super exciting, talking about PFAS.

Yes. I try to make it exciting. What do you all think? Did we make it exciting? They're all still here. They're awake. So it wasn't that...

I know it's important, but it just feels like a boring topic to me.

Well, it's a boring topic in the sense of it's got to be dealt with. And maybe...

Sorry. I'm screwing up here.

No, no, no. But maybe, in fact, by that answer, you've put it in perspective.

I think it's important. I do, absolutely. It's a big opportunity for us.

Well, that's really where I was going is this -- I think this is a revenue source.

Absolutely.

And I think more importantly, you're the solution. You're part of the solution.

Yes. So that is something that I'm kidding when I say it's boring. Look, it's a critical topic for us to really pay close attention to. We think it's -- to your point, there certainly will be a cost impact depending on what EPA does. But I believe there's a far greater revenue opportunity for us than just a cost impact for us. And so we think it's somewhere in the neighborhood of 5 billion-ish, could be higher than that over a period of...

Addressable market just to...

Just -- yes, I mean the overall market might be 20 billion. We think, for us, it might be 5 billion. It might be bigger than that. I mean if I think about our landfill share, we're 110 million tons out of 250 million tons, whatever the number is. So we've got whatever that percentage is...

If you use EREF'S number, it's...

35%, 40%. So I think it's possible that similar to coal combustion residuals. I mean there's -- we're the biggest landfill guy out there. And this feels like a big opportunity for us, particularly at Subtitle D. I think assuming that all these 2,500 sites right now in 49 states that everything is going to get dug up and go to a Subtitle C is probably not realistic, any more than it was the coal company...

I don't think it's a hazardous substance, or not a hazardous waste. So -- which means it can end up in...

We think it's a big opportunity. And I'm kidding with you when I say it's a boring topic. It's -- it is a huge opportunity for us.

And whether it's -- you're an intermediate solution, it's the intermediate solution is going to be for probably 20 years.

For sure.

Right. It's -- even if at some point, they do have to finally figure out how to destroy it, I don't think they have a destruction solution that's next 5 years. I think it's a while given that these are for other chemicals.

Right. That's absolutely right.

Okay. That's clear. So we're checking the box. Garbage is a [indiscernible] in PFAS, you're part of the solution. Do the municipalities understand you're part of the solution?

It's a good question. I don't know that they -- we've been involved with them talking about these subjects for quite some time. And so I think they do, particularly those -- those more sophisticated municipalities. So I would say the answer is generally yes. They do understand that we're part of the solution.

And therefore, the natural thing is close the loop with the publicly owned treatment works and they'll handle your leachate, you'll handle the sludges and the whole thing is self-contained. That's an oversimplified solution.

In theory. Yes, in theory, that's the way it works.

Okay. Environmental justice. So this is a tough topic, right, because it's emotional and out of the box. But I think it's important to get out there, the industry has been behaving, I think, in a manner that's very consistent with where the talking points are for a long time. But what do you need -- so you're sitting here on this stage and government's listening. What do you need from government so that you can address what it is their concerns are and do the right thing by stakeholders, including the community, so stakeholders are broad. What do you need for them to be that responsible party on the other side of we're doing something environment -- so the EJ.

I mean look, we've had dialogue on this topic for a decade. There's a little bit of irony in the fact that all of these companies now are coming out in the last -- I mentioned at the beginning of this conversation that there's this push for companies to make a statement about social issues. I can only speak for us. But we've been focused on this, whether it's environmental justice or whether it's inclusion and diversity. Pick the topic, we've been focused on this for at least 5 years. And honestly, it's quite a bit longer than that on many of these topics. I think the answer to your question about what do we need is we need a partner in this. There's a couple of components to environmental justice. One of them is a people component. I mean you hear us talk about people all the time. But part of this is not just -- I mean people tend to think about environmental justice as being the positioning of your assets and how do -- where does -- is the landfill sitting in a lower income neighborhood? Or are your hauling companies all located in these lower income neighborhoods? But part of it is a people aspect. And I think there's a huge positive spend to be put on it. Tamla, who you've had up on stage before, Tamla has been focused very much on how do we take our position and leverage it within these lower-income communities. So for example, we're going into -- in Houston, Texas, Mayor Turner is very excited about this. Tamla has spent some time with the mayor and focused on going to some of these intercity high schools, where the graduation rate is abysmally low. This isn't memorial high school in the neighborhood that I live in. This is a lower income -- and by the way, Texas doesn't have great graduation rates for period, but particularly as you think about these public schools. And so going into these public schools and saying, look, your options are not great. We're here to tell you, you do have options. We're here to tell you that if you get your high school diploma, by the way, only 60% of you are going to get your high school diploma from this school. 40% of you will either drop out or simply not complete your diploma, and but get your diploma and then we will create a job for you. It might be a facility that we build in your neighborhood that is not just a hauling company. Maybe it's an autonomous -- or we've talked about these remote operations of heavy equipment. And so we're continuing to test that. But I can visualize a day where we operate our heavy equipment from a remote center. Instead of it being in ritzy Scottsdale, Arizona, how about we put it in an intercity location and we go to a high school in that intercity location and say, we've got a brand-new facility. We've got 250 jobs there, and they're high-paying jobs, you have to get your high school diploma, but we create an avenue for you to come out. And by the way, maybe you move from that job into a route manager job, or maybe you move into a district manager job, it's an avenue out of the inner city. And today, their avenues are limited. So I personally think that if you think about the people aspect of environmental justice, there's a huge people aspect to it. It's not just asset.

Well, then you've tackled labor from a different angle because now you have an employee who, once they're in and they're in for more than a year and you've retained them, maybe they're not sitting there managing a joystick and moving a piece of it, but they do get -- you give them their CDL license or you send them to a technician school, and that's -- what I'm hearing is a pathway to how do I get somebody in the door initially. Just to get them in...

By the way, Michael, that's -- we talked about how autonomy is probably 20 years down the road. Remote operations of heavy equipment is here today. I mean look, Caterpillar has been doing it at their mine sites in Chile and Australia for quite some time. They were very excited to partner with us when we talk to them about doing it with remote operations of heavy equipment at our landfills. And so that's not something that's 25 years away. That's here now. And when you think about our average heavy equipment operator, 52 years old, 52 years old. I mean 10 years from now, in theory...

You've got a...

We've got a major problem, a replacement problem. But where we have a very small beta test center, the people that are doing the best are the 25-year olds that are used to playing Fortnite, and that's kind of what it's like.

Right. Right. Okay. And that's the group that you have in Colorado.

Right, exactly.

Okay. Switching gears. Alternative fueled vehicles. So we've talked about that topic all day today. I made a claim that I think in 10 years, the industry, which is 30% converted to something besides diesel as an industry, will be at 50%. You're at 60-some -- 70% of routed fleet. And Devina said 50% of total trucks, which means all the service vehicles and what have you are still ICE engines. You made a big bet in CNG. But does that not -- so there's a couple of questions. Is battery electric plausible in your mindset as you sit there and not that you're not doing anything because you're so heavily invested in CNG. But is battery electric plausible?

I think John probably answered this question better than I'm going to answer it, but because I watched what he said and he was absolutely right. So I told him I was going to steal from him. But look, I think it's plausible. I think he was right, though, the -- it's really about the infrastructure. I think the battery technology, as he said, they've worked it out with automobiles. It's going to take a little while. We'll get to light trucks and then the heavy equipment. But -- but the heavy truck, the problem is, right now, is the weight of the vehicle. You concede, I don't know, 30% of the vehicle in battery weight, they'll figure that out. The range is -- he talks about us visiting the site where they showed us a truck that's actually running around Manhattan. But it's only got a 40-mile range -- yes, yes. It's got a 40-mile range, and some of our trucks are driving 150 miles a day. So they've got to figure that out. But the infrastructure, to Devina's point, was really the big -- that's the big question is, can -- and maybe we do what she said about CNG is we build our own infrastructure. You said we made a big bet. Yes, I guess we did. But honestly, all we did was choose whether we're -- we got to replace 10% of our fleet every year anyway. So the bet was really the infrastructure piece that we chose to build and the delta between an old diesel vehicle, an old-style diesel vehicle and a new style CNG. That's the only bet we made because we're going to have to replace the fleet anyway.

Right, right. Well, and to be fair, in your context, you've got enough data post warranty to realize there was a second bite at the apple, and then you accelerated the pace of those, too, because it's all maintenance...

Look, I would tell you, and if it is a bet, I'm happy with it. I mean it's been -- we're -- it's saving us $120 million a year versus diesel. And as you know, those -- once diesel went to the -- to kind of the newer engine with the revised emissions, our maintenance -- we don't have that same maintenance burden. So our maintenance cost is significantly lower because fuel is kind of decoupled natural gas and oil have decoupled in terms of price, natural gas has been down for a long time and continues to stay down. And when you look at these -- the fact that we're basically self-sufficient in the United States when it comes to natural gas with the Marcellus and some of these big gas plays, the price of natural gas has stayed at a point where we're saving $120 million, which is about $1.50 per gallon.

And so we -- this morning, we opened up with having a conversation about this, and we had Johann Kirchhoff, which is the [indiscernible] and they -- so they're -- he's a big believer that fuel cell has a role in this, which is hydrogen. And I think Europe is making a real bet on hydrogen. The economics of hydrogen aren't there yet. But is it going to be a combination of multiple things? Or are we really having a conversation when we look out over the next 10 to 15 years, it's diesel, CNG and it's probably battery.

Yes. I mean I think it's probably going to be a combination for -- at least for the foreseeable future. I'm the wrong guy to comment on those technologies because I just don't know -- I mean we all know a lot about electric because it's in the automobile industry. I don't know a heck of a lot about hydrogen fuel cell, but I do believe it will be viable at some point. I think it's going to be a combination for a while. The nice thing for us is that we can pivot pretty quickly. And so if all of a sudden tomorrow morning, we found out that, wow, hydrogen fuel cell is viable for our fleet. We can make a decision probably within a few months to shift our purchase, just as we did with CNG, from 90% CNG, 10% diesel to 90% fuel cell and 10% diesel or 10% CNG.

All right. Next topic is about recycling. We did a recycling panel today talking about sort of the modernization in technology. But my higher-level question is back to you all control the trash at the loading dock in the curb, whether it's on a recycled truck or whether it's on a garbage truck, it's -- you control it. So I believe big garbage is the savior of recycling in this country, that you will lead the way, a path to it. And I'm curious from a standpoint of your own leadership as Waste Management, the biggest player in it, what needs to happen for that to be assured? What do you all need to do? Or what has to happen around you to assure that recycling survives, it makes -- it's a viable...

I think we already had our big final exam on that. I think the final exam was 2 or 3 years ago and...

National Sword.

And it was as bad as it could get. And the industry chose to not exit it. So the industry said, look, it's customers asked us to do it, our communities and our partners asked us to recycle so we will continue to do it. And now those of us that have stayed in the business, which is the lion's share have benefited handsomely, I think the industry has, as I said early on, the industry is the most, in my opinion, the most sustainable business out there. We're the ones that developed this single stream process. It's always been kind of a dual team -- dual stream self sort thing over in Europe. I don't think, by the way, we ever go back to that year.

No, no, no. Too much safety issues.

Well, too much safety. There's a lot of capital invested in it. I mean you have these trucks that have multiple compartments. 1 compartment fills up with cardboard and the other compartment is empty and you still got to go to the recycling plant. So -- But I do think there's an evolution taking place within recycling. I think the industry recognizes that. We certainly do. We're -- as we just discussed, I mean there's a much lower labor burden there at Chicago than there is at a traditional plant. So I think you'll see us make a decision to ultimately replace when we have to replace those plants. And the equipment has, I don't know, a 10-year life to it. And so when it comes up for renewal, let's replace it with a lower labor burden type of equipment. And that's what you're seeing at Raleigh, at Chicago, at Salt Lake City, and you'll continue to see that. And it's -- and one of our strategies is to have a lower labor cost. Not everybody can afford to do that. I'd like to -- that enables me to potentially get a bigger size of the pie.

And so as you've -- go to talk to Starbucks, what is the message you have to deliver to him for them to meet some of their early-stage and long-term sustainability goals and as it links back around to this recycling conversation.

But look, I think a lot -- whether it's Kevin or whether it's Indra a couple of years ago or recently in our Sustainability Forum, Doug McMillon, they all want us to provide the solution. And our point back to them is, look, we can recycle every single Aquafina bottle and Pepsi Bottle, Mountain Dew bottle. We can figure out a way to do that, but it's going to be very costly. And you, by the way, it's really a demand question. It's not a supply question. We've got tons of supply. The supply is never ending. The question is what's the demand on the backside. And if you're not going to choose to use more recycled content, then why do I want to recycle every one of your Pepsi bottles? So I think what Kevin is going to say tomorrow is I'd like to be able to say that whatever the number is, 100% of the material coming out of a Starbucks, the cups, the straws, the lids, all of that is...

Can be circular?

Is circular. I think that's what he likes...

And so keep it at that level. Be circular.

Right. So how can we do that together? And I think part of the answer is, look, we're investing in a company that can take that material and turn it into a roofing board. And by the way, we can turn it into a roofing board and it is fully sustainable. It's stronger than traditional roofing board. And by the way, you can use it on -- I think Starbucks is building -- I forget what the number is, but I think he said they're building every -- it's in hours, not in days, a new Starbucks around the world. And so every -- I don't know, every 16 hours, they're building a new Starbucks, something like that. And -- that's not in the U.S. That's...

Worldwide.

So I'm sure a lot of them are in China and India and places like that. But how cool is that to be able to say our lids and our cups and our straws are all going into a material that's helping to build part of this Starbucks. So that's what we'll talk about, in part, tomorrow is how do we help you become a full 360?

And do they understand that they have to make legitimate content commitments?

Absolutely. I mean -- and that's part of the discussion when I sat down with Indra 4 years ago, and she asked that exact question. How can you recycle every Pepsi, Mountain Dew, Aquafina bottle? And I said probably, we can probably figure a way. Brent Bell can figure out just about anything and probably figure that out, but I guarantee you his follow-up is going to be, yes, but she has to buy more of the material out of the back end of the plant. And so I think they understand that at this point.

Why haven't they?

Well, I think part of it is because we've been easy on them. We haven't required it. I mean we haven't said, look, you -- we've been willing -- by the way, the ebbs and flows in recycling, in part are due to the microeconomic equation. I mean when you look at -- it doesn't take an economist from MIT to figure out that when supply stays static or continues to increase and demand is lower, as we saw with the Chinese move, what's going to happen to price? It's going to go down. And so we need somebody on the back end, whether it's Pepsi or Coke or Starbucks, whoever it is, to make up for that. They need to buy that material on the back end. And then they can make the claim that they're sustainable.

Because of the 170-some companies that have signed the America Recycles Pledge. So far, I have -- if I've done -- our research is right, none of them have truly committed to content.

I think that's -- I don't know for a fact, so I shouldn't say I know that...

But and even if it's only 10% of them, it's still a paltry number. And it's all about content. And they're not willing. Nobody is willing to take the risk of I'll be the first mover, and I've got to pass the price increase through and then I'm going to lose market share.

And it's ultimately going to fall to the consumer. I mean, if you look at inflation today, I mean, and that's a form of inflation. It's not being -- it's being absorbed by us, but then we pass it along.

Yes, absolutely.

And no different than any of these consumer product companies. I mean, Procter & Gamble. I mean, they're certainly seeing inflation in the cost of their materials but it's just showing up in my Head and Shoulders bottle.

Right. Right. Okay. Last couple of questions as we come to the end. You've got your crystal ball, you get to sort of sit here and prognosticate of. What are key things that you could see, if you looked at a 5- and a 10-year window, that will change versus must change? So there's a likely to change versus the must change...

Well, we talked about labor, and I think labor is the one that I seem to be most focused on today, but labor will change. It will change. I think Nicole is right. I mean when she says, nobody at the high school is talking about driving a truck, I don't -- I think that's actually kind of a leading indicator. I mean she's 18. And we've talked about the fact that millennials and Gen Z don't want to drive trucks. But to some extent, we've kind of kicked the can down the road a little bit. Now all of a sudden, we're seeing pretty significant labor inflation. We're seeing -- I have a company in my neighborhood that sends a note around that says, sorry, we couldn't get to your house, but -- and they've been under a lot of pressure, but -- and we're hearing that across North America. I mean, everywhere. By the way, it's not just our industry. And so now we're starting to see competition from Amazon, from UPS, from FedEx. So I think you're going to see a long-term dearth in terms of labor. And so we've got to figure out a path to make us more labor-efficient. One of the things we're doing is changing the model. You've heard us talk about on earnings calls, we're changing the model from a 5-day work week to a 4-day work week. And what we've found is that those generations that I just talked about, actually like the 4-day work week. They like having 3 days off. It may -- so we've talked about it as going from a 55-hour 5 11s to 4 12s. They don't want to work 4 14s. And in many cases, they can't work 4 14s, but what we're seeing is a huge uptick in efficiency. John and I talk about this all the time, that we think moving to 4 12s not only is a good decision, a people-first decision, but it also helps us retain those drivers that don't want to work 55 hours a week. It's different in my generation. And my generation said, "Yes, I'll take every hour I can get up to DOT limits." Not anymore.

No. No. What about immigration reform, though? Is that a critical story? We have to get this right.

I think immigration reform is long overdue. I wish Washington -- I said this and got in trouble for saying it 2 years ago. But I wish Washington could get their act together. I used a 4-letter word. But I wish Washington, on so many fronts, I wish Washington could get their act together. But certainly immigration reform. Everything is political these days. It drives me insane. There's -- could anybody just take an approach that one of us in the room would take, which is a kind of a layman's approach as opposed to a politician's approach. I do think immigration reform is important. And I think -- but it's got to be well thought out. It can't just be what we're seeing today. Opening up the borders and just saying, come on over, that's not immigration reform. Nor is saying you can't ever come here. I mean it's got to be somewhere in the middle, and it's got to be well thought out. But today, I just feel like Washington is so bogged down in extreme politics that immigration reform is going to have to take somebody that can come in and break through that. I always thought Ronald Reagan was a great President. He was able to do some of that. He was able to reach across the aisle to the Tip O'Neills of the world to get something done.

Right. Yes. No, the art of compromise seems to be lost. But capital is portable. Data is portable. Labor is not portable, certainly in this hemisphere. And yet there's a huge part of the population from hemispherically that needs work, and I think would do some of these jobs and we don't have access to it.

And I think part of this, too, the only thing I agree with just about everything that John said in your last panel, except for one thing, and that he said that the population continues to grow. And if you look at what the demographers are saying, it's not that. I mean, somebody wrote the -- I forgot who wrote the book, The Population Bomb, 40 years ago or 50 years ago. That's not what's happening. If you look at China, if you look at India. India is a different story. But China -- Japan, at the current rate, the last Japanese person will die in 300 years. I mean their population is doing this. China's 1-child policy, almost impossible to reverse that. And the U.S., we're not replacing our population. That's the secret behind immigration. That's why Europe is allowing so much immigration because a maternity ward in Italy is empty, a maternity ward in Stockholm is empty. So in order to replace their population, replace their tax base, they have to do it through immigration. And that's part of what we're going to have to do, too. Let's do it in a smart way.

Okay. Last question. What's the last book you read?

Well, so the last book I read was actually a book about Hawaii, but -- and it was an interesting book about -- it was a mystery book called Hawaii. But a lot of it is, while it's technically fiction, there's a lot of...

It was a good nonfiction historian.

So -- and then recently, I read -- I don't normally read fiction, but I read a book about ultimately, what happens with China, and it's written by an admiral and a guy that has some Department of Defense. It's called 2034, and it's actually about it's a little bit sobering, but it's about a war between China and the United States over Taiwan and what happens when that happens, and it ultimately turns into a nuclear war. And it's a bit scary, you hope that it never happens, but I think as opposed to focusing on appeasements, I think we need to focus on taking a pretty strong stance with a country, China, that ultimately -- in 1998, everybody said China is moving to a democracy. Now it almost looks like it's moved towards almost a Stalinist-type society. So we need to make sure that -- it's not to say that we want to alienate China, but boy, we better make sure that we're treating them as we should and not let them kind of run over the rest of the world. This book kind of says, if they do run over the rest of the world, you could be in a really bad scenario. So that's actually the last book I read.

Okay. And then -- not that you have time to binge watch, but what did you last binge watch?

So Yellowstone, and you know we have a place up in Wyoming, my mom is from Wyoming. So I like that show a lot. Weren't they supposed to come out with the next...

Final season is somewhere around the corner.

It must be coming out. I think they're dragging their feet just to get people excited about it. That's the last show I binge watched.

All right. Last question is this -- and nobody has been to the movies, but you at least can watch first-run movies now on Netflix or HBO Max, what have you. So what was your last movie?

So last time, we had to move -- Tracy and I and the girls, we had to move into a rental house because our house got damaged pretty significantly by broken pipes during the freeze. So we moved -- and so last night, Nicole and I sat there and watched The Shooter...

Oh, yes, yes.

It's a remake of the Mark Wahlberg, when he was in the movie now, I think he's the producer. It was good. It was good.

All right. Very good. Well, we're at the end of -- actually, we've run over. I've done that all day long. Thank you so much for finishing the day with us.

That was fun. Thanks for having me.

We really do appreciate it.

You bet.

Thank you.

Yes. Good stuff.