Getting down and dirty across the Ditch

As he was making the long flight home from a business trip to Europe four years ago, an image Kim Ellis couldn't shake from his mind was that of a rabbit crouched in a hutch.

"It's been in there 10 years, then one night someone leaves the hutch door open, but it's sitting there the next morning because it looked out and thought 'I can't handle this'."

Cooped up himself in the aeroplane cabin, thousands of feet in the air, the managing director of Waste Management New Zealand was thinking about the future direction of his company which, for the first time, was presented with a wide open door into the Australian market.

Sister company Waste Management Inc's surprise sale of its 60 per cent shareholding meant for the first time Ellis could consider diversifying the company's earnings base by crossing the Tasman.

Ellis didn't want Waste Management to be that rabbit.

"I had a real fear the company and the board, who had for so long been focused on the New Zealand market, would fear the unknown."

Looking back, Ellis considers those days a watershed for the company, which has since nibbled its way out of the hutch with 15 small to medium-sized acquisitions in Brisbane, Melbourne, Queensland and Albury in New South Wales.

Adelaide has been its biggest and most exciting opportunity so far, where it opened a new landfill and transfer station at Inkerman, 85km north of Adelaide, last month.

The investment of almost $40 million gives it what Ellis calls two bites at the cherry - collecting the waste from its customers and disposing of it in its own facilities. Total investment in Australia to date sits around A$80 million ($88 million) and it's only now Ellis is starting to feel comfortable operating there.

"It feels like home now, it's just an extension of the New Zealand market - but we've only got a toe-hold."

The company which dominates New Zealand's waste collection industry is still a tiny player in the competitive Australian market, controlled by large European players including Collex, a subsidiary of French water company Veolia.

The hope is for a consolidation in Australia's industrial waste disposal if these players pull out - which would allow Waste Management to lift its presence there.

"It's a bit of a dream, we've just got to make sure we're in a strong position so if ever there are some changes we're in a position to take advantage of them."

In the past, Ellis has expressed personal frustration with the piecemeal, low-risk way the firm has been breaking into the Australian market.

"You could say it would be easier on the system to take on bigger companies, but they're just not available, so we've had to do it the hard way."

This year, the focus will be building its dry waste business in Victoria - Australia's top industrial centre - and Gladstone in Queensland.

Ellis also hopes to make an initial start in New South Wales.

The release of Waste Management's full-year financial results next week will show its progress towards its widely stated target of growing the contribution of its Australian operations from what has been 10 per cent to about 25 per cent of operating profit by the end of next year.

Until then, Ellis can't discuss the volume of waste going into the Adelaide landfill.

"The short answer is it looks OK, but I can't comment."

He is also working to lift the firm's presence across the Ditch, where it's known to institutional investors but is a virtual non-entity among private independent shareholders.

"We haven't had much of a profile in terms of big deals so they're not asking about us yet."

Getting on to the ASX 200 is a goal and, although it has the market capitalisation to qualify, its shares are not yet freely traded enough.

Realistically, this is going to take two to three years to build and Ellis is working to expand investment relations with retail brokers and the Australian financial media.

A recent decision to call it a day in China after three years of feeling out the market there was disappointing.

"We haven't found a way to operate there which is risk-free - everyone will laugh about that.

"We wanted to be operating there by now, it's all taken much longer than expected, and while it's tempting to keep going there, we are so short of resources in Australia it was hard to justify."

At the moment, about 70 per cent of Ellis's attention goes into growing the Australian business, where he spends two weeks in every month.

Until now, the company has been servicing its business in Australia by ferrying staff back and forth across the Tasman, but Ellis sees establishing a regional staff structure there as the key to maximising acquisition opportunities in the next few years.

"It's having people on the ground who can put their arms around things locally once we've found something, that's the key."

So far, recruiting hasn't been that easy. "Over there, we're not a preferred company to work for. We're a non-entity in a way. We work with the brands we buy so if we recruit somebody all they'll see is a grubby factory with a few trucks outside and they don't know who the firm is.

"That's part of a start-up problem, so we have to sell them the sizzle - the future."

So are there a lot of opportunities over there?

"It depends what day of the week you ask me. We start Monday with a bagful and then there are none left by Thursday. The answer is there are opportunities, you've just got to be patient and dig them out.

"We've got this ambition to grow the business but, ultimately, all that actually matters is delivering results on what we've actually got. It isn't growth for growth's sake and it isn't hell-for-leather growth. It's buy, consolidate and move on.

"Which is exactly what we've been doing in the New Zealand market for the past 20 years. It doesn't read like a ripping yarn - how to take over the Australian market. It's just a steady slog."

KIM ELLIS

Managing director, Waste Management New Zealand.

* Age: 54

* Born: Adelaide, Australia.

* BCA (1st hons economics) Victoria University.

* BE (1st hons chemical) Canterbury University.

Career path

* 1993-present - managing director, Waste Management New Zealand.

* 1991 - general manager, Southern Health District, BOP Area Health Board.

* 1983 -managing director Tullamore Group.

* 1980 - general manager, Safety Group, Wormald International.