1501 Washington Street
Vision: To be recognized as the premier provider of environmental services and solutions.
Clean Harbors, Inc. is the largest hazardous waste clean-up firm in the United States. The company manages the treatment, storage, and disposal of chemicals, fuels, explosives, and industrial and household hazardous materials. Clean Harbors runs nine landfills, five incinerators, seven wastewater treatment plants, and a variety of other waste management facilities across North America. The company's services include materials recycling, lab chemical disposal, PCB disposal, site management, and laboratory packing and moving. Clean Harbors' customers include large and small oil, pharmaceutical, and chemical companies, technology and biotechnology firms, governments and government agencies, and schools and universities. The company does emergency work, such as responding to fuel spills, as well as ongoing site clean-up and hazardous materials management. The company began doing clean-up work in the Boston area and grew rapidly to cover the North American market. Clean Harbors made a significant acquisition in 2002, buying the chemical services division of the bankrupt Safety-Kleen Corporation, and thus transformed itself from a medium-sized company to a major player in the waste disposal industry.
Quick Growth in the 1980s
Clean Harbors, Inc. began in 1980 in suburban Boston, near the shores of the famously polluted Boston Harbor. Alan S. McKim, then only 24 years old, started the company with three friends and $13,000. The company's office was a trailer, and its facilities included little more than a truck that McKim and his fellows drove around the area, transporting, treating, and disposing of hazardous wastes. The company was no bigger than many local plumbing or yard care firms, yet within its first year it had landed one of the country's leading oil companies, Texaco, as a customer. At the end of its second year, Clean Harbors had revenue of $1.5 million and 18 employees. A year later, revenue had increased to $4.2 million, and the number of employees had grown to 34. Clean Harbors offered both emergency hazardous waste cleaning and ongoing management of hazardous material sites. In 1984, the company averted a potential oil spill by pumping more than 100,000 gallons of oil off the crippled tanker Eldia, which came to grief off Cape Cod in a snowstorm.
Clean Harbors also served many clients in the Boston corridor known as "Silicon Valley East" for its high concentration of high-tech and biotechnology companies. Handling of hazardous waste was a growing industry, as these many new high-tech companies contracted out their waste handling needs. Much hazardous waste produced on the East Coast had to be shipped down South to states that had disposal sites, and the collecting, packing, and tracking of such waste was a demanding job requiring specialized equipment and the ability to comply with complex federal and state regulations. Clean Harbors handled industrial waste that might contain any combination of thousands of chemicals. Waste such as mercury and PCBs had to be handled differently from industrial solvents or leaked gasoline, for example, as not every storage or disposal site accepted them. As more and more companies set up in the Boston area, Clean Harbors had a booming market. In 1985 it bought a solvent recovery plant and a transfer station in Braintree, Massachusetts, giving it more capacity to handle materials in its own facilities. By the mid-1980s, Clean Harbors was the largest so-called environmental services company on the East Coast. Sales rocketed from less than $5 million in 1983 to close to $50 million in 1986.
Becoming a Public Company in 1987
Clean Harbors grew very quickly through the 1980s, and it had taken out loans to finance its expansion. In 1986, founder McKim began receiving queries from parties interested in funding Clean Harbors. A venture capitalist asked if he would consider selling part of the company to raise money, while an investment banker asked if he would think about taking the company public. McKim considered both private placement and going public. By that time, Clean Harbors had more than $11 million in debt. McKim himself was personally liable for much of this. McKim was also interested in sharing profits with his employees by letting them own stock. McKim eventually decided to take both routes, first selling 18 percent of the company to Boston-area venture capitalists, and then taking Clean Harbors public. But the road to going public turned out to be bumpier than McKim expected.
McKim laid plans in the spring of 1987 to take Clean Harbors public in the early fall. This was a period of enormous growth on Wall Street, as measured by the Dow Jones Industrial Average, which went from 1,896 in December 1986 to 2,722 at the end of August 1987. The felicitous bull market seemed to promise good things for Clean Harbors' initial public offering (IPO). The company hoped to sell 1.5 million shares for $15 each, to bring in as much as $22.5 million. But the process of auditing the company before the IPO dragged on for longer than expected. One problem was that Clean Harbors had made some acquisitions within the last three years, but spun them off immediately. Although Clean Harbors no longer owned these companies, it still had to provide thorough paperwork for them. As adequate records had not been kept, the auditors had to painstakingly reconstruct the needed documents. The price Clean Harbors paid to its auditor, Arthur Anderson & Co., became vexingly steep. McKim considered changing his strategy and bringing the company public in London instead of on the NASDAQ because suddenly much of Clean Harbors' financial information was out in the open for competitors to read.
Finally all of the paperwork was ready, and Clean Harbors filed with the Securities and Exchange Commission (SEC) on September 30, to bring off the IPO within the next 45 days. McKim began touring the country to interest investors in the stock. But Clean Harbors' timing was poor. On October 19, 1987, the stock market slid, an enormous "correction" to the bull market memorialized as Meltdown Monday. From an August high of close to 3,000, the Dow Jones Industrial Average fell to 1,739. Clean Harbors' underwriters were nervous about the IPO, and discussed postponing the offering or canceling it. Ultimately, Clean Harbors and its underwriters decided to go ahead with the IPO, but to offer one million shares instead of 1.5 million, and at $9 instead of $15. This would bring in only $9 million instead of the hoped-for $22 million. The company went public on the NASDAQ on November 24. Clearly, the company would have made much more money if it had debuted before the fateful Monday. Yet six months later, Clean Harbors' stock had risen from $9 to more than $15. The company then made a secondary offering later in 1987, and that year paid off some $12 million in debt. Founder Alan McKim retained about 60 percent ownership of Clean Harbors.
Diversification in the 1990s
Clean Harbors was somewhat stymied in its attempts to expand within its home state of Massachusetts, but it made key acquisitions in other parts of the country. It had attempted to add an incinerator to its waste disposal site in Braintree, and spent $15 million over four years in the late 1980s and early 1990s in its bid to get the local government to approve the addition. Massachusetts was supposed to follow federal regulations ordering it to deal with its own hazardous waste instead of shipping it out of state, but because of a lack of facilities, Massachusetts was unable to comply. Yet siting a new incinerator in such a densely populated area as Braintree was contentious if not impossible. Clean Harbors' incinerator permit was denied in 1991, and it later purchased incinerators in Texas, Utah, Nebraska, and in Ontario and Quebec. It bought the Nebraska incinerator in 1995, a new and state-of-the-art facility formerly owned by the Ecova Corp. The Kimball, Nebraska incinerator was the only hazardous waste incinerator in the United States that was allowed to "de-list" its ash. That meant that it was so efficient at destroying hazardous materials that the ash remaining from the incineration was not considered hazardous in itself.
Clean Harbors was well known for its emergency response work. It was considered one of the leading companies in this field. It cleaned up large oil spills in Narragansett Bay in Rhode Island and in the Delaware River in 1990. Taking care of leaking tankers or wrecked trains could be lucrative business, though it could also cause the company problems if it took workers away from ongoing projects. Although such jobs could provide a windfall for Clean Harbors and put it in the public eye, for long-term growth, the company needed to focus on day-to-day waste management and environmental services work. The company set up several new divisions in the 1980s and 1990s to focus on specific service areas. In 1986 Clean Harbors formed Clean Pack, which focused on collecting, packing, and disposing of chemicals, mainly from laboratories. Clean Pack's customers included schools and universities, industrial laboratories, and local communities with household hazardous wastes. Clean Pack at first focused on the Boston area and the East Coast, but later expanded into the South and West. In 1998, Clean Harbors initiated another division, Clean Harbors Industrial Services. This division offered a variety of cleaning and maintenance services, including chemical cleaning, vacuuming, steam cleaning, and hydroblasting. The company also created an information management services subsidiary, marketing Clean Harbors' considerable expertise in the complex data collection, tracking, and archiving that its industry required.
A Major Acquisition in the 2000s
Clean Harbors was actively involved in cleaning up the destroyed World Trade Towers in New York City after the terrorist attacks of September 11, 2001. The company also was hired to manage hazardous or potentially hazardous waste at the offices of NBC in New York after a letter containing anthrax was received there. By that time, the company had evolved a highly sophisticated information and data management capacity to go with its physical waste handling ability. Clean Harbors used a satellite tracking system to record the movements of its waste hauling fleet and high-speed Internet connections at its mobile command centers. Its fleet of vehicles had grown to 650 trucks, and its customer web site offered online quotes for transportation costs and online Department of Transportation regulatory forms. While leading the hazardous waste disposal industry in its region, Clean Harbors had become one of the top 50 waste hauling and disposal companies nationwide.
Whereas Clean Harbors made its mark by dealing with hazardous materials, many much larger companies dominated the general (hazardous and nonhazardous) waste hauling industry. The top player in the United States was Waste Management, Inc., with more than $11 billion in revenue in 2002, while 28 other companies had revenue of $50 million or more. The fifth-ranked company in the waste hauling and disposal industry was Safety-Kleen Corporation, with 2002 revenue of more than $870 million. Safety-Kleen, however, had declared bankruptcy in June 2000 and was operating under Chapter 11 while it resolved financial discrepancies in its 1997, 1998, and 1999 financial statements. Safety-Kleen decided to sell its chemical services division in 2002, a division that included four hazardous waste incinerators, six wastewater treatment plants, nine landfills, and some 90 individual parcels of real estate, spread across the United States, Canada, and Mexico. Clean Harbors put in a bid for the division.
The merger with Safety-Kleen's unit would triple Clean Harbors' size and make it the largest company in the U.S. hazardous waste niche. The company bid $46.3 million for the division. The deal was enormously complicated. Safety-Kleen's problems included allegations of fraud and ongoing litigation involving so-called Superfund hazardous waste sites. Clean Harbors was offering to swallow up a company more than twice its size, and it needed to procure financing from various sources. The other bidder (through its Onyx subsidiary) for Safety-Kleen's assets was a company 50 times the size of Clean Harbors, the international water company Vivendi. Clean Harbors put together the transaction using the small Boston legal firm that had first incorporated the company back in 1980, while Safety-Kleen relied on one of the nation's largest and most prestigious law firms. The other bidder, Onyx, also had high-powered legal representation. But Clean Harbors and its lawyers persevered, wading through contracts, sorting out what exactly Safety-Kleen owned, and talking to workers in the field who could accurately assess the state of some of the Safety-Kleen division's assets. A bankruptcy judge finally approved Clean Harbors' offer in late 2002. The newly enlarged Clean Harbors expected to have annual revenue in the area of $750 million, and to call almost half of the Fortune 500 list of top companies its customers. Clean Harbors became the single largest hazardous waste disposal company in the United States, and moved up to the 15th largest company in the waste industry overall.
But revenue for 2003 was less than expected, at around $600 million. The company suffered a net loss of $17.6 million. Clean Harbors explained that it failed to meet the higher expected revenue figure quoted when it acquired the Safety-Kleen division simply because much of the math was based on estimates, and the estimates were off. Nevertheless, investor disappointment sent Clean Harbors' stock price way down. It dropped by almost 40 percent over 2003, and in mid-2004 groups of shareholders filed suit against the company. The suits alleged Clean Harbors had not been fully forthcoming about some of the problems with the Safety-Kleen acquisition. The lawsuits were dismissed in 2004. By that time, Clean Harbors appeared to be recovering from the shock of digesting such a large acquisition. It claimed its fourth quarter of 2004 was its best ever, and the company finished the year with a 5 percent increase in revenue over the year previous, to $643.2 million, and net income of $2.6 million. The company also did well into 2005. Its first quarter revenue grew twice as much as anticipated, and the company expected sales and earnings to do well for the year.
Principal Divisions: Technical Services; Clean Pack; Site Services; Industrial Services; Apollo Onsite Services; Clean Harbors Training Services; Service Chemical.
Principal Competitors: Onyx North America Corporation; OHM Corporation; Waste Management, Inc.