riding the wave
Demolition contractors and construction and demolition (C&D) recyclers throughout the Midwest say that business is booming like never before.
Demolition contractors and construction and demolition (C&D) recyclers throughout the Midwest are riding a wave of strong business that shows no signs of slowing. This wave of positive momentum, which started to pick up steam in 2017, has manifested itself in opportunities just now coming to fruition.
Understanding the Uptick
While the C&D market has been showing signs of growth for several years, business began to pick up substantially during 2017. Jobs that were on the back-burner began to move forward in the early half of the year, which resulted in a steady stream of work. In addition, new opportunities in the demolition and C&D markets have been fanned by growth in the construction sector, which continues to be bullish and promote healthy volumes. “There remains a strong business climate for commercial and residential construction in this market. The C&D activity over the past few years, and especially here in 2018, has exceeded our expectations, and volumes are higher than anticipated,” Jason Haus, CEO of Dem-Con Cos. in Shakopee, Minnesota, says.
Looking at Commodity Pricing
An increase in jobs isn’t the only thing that has demo contractors and recyclers in the Midwest feeling positive. Strong commodity pricing has also helped businesses stay profitable. “What we saw in 2017 was the price of steel and scrap metal steadily rose from March through the summer,” says Brian Baumann, President of B&B Wrecking and Excavating a Cleveland, OH firm. “It fell back a bit in September and October, but we had a strong finish and finished December at the highest price of the year for scrap metal sales, and most steel mills in the Ohio Valley area were buying every month, so you could get sales off. Steel and copper prices have steadily risen, along with brass, which have all been up 10 to 15 percent.”
According to Bart Carmichael, president of Cleveland-based WasteTran Recycling Services, the commodity markets last year were strong overall but did face some challenges that temporarily hurt pricing. “The markets were definitely on the uptick midsummer last year, and then they did fall off,” he says. “China quit buying a lot of paper cardboard, and that affected that industry but also runs right down to us. Ferrous metals seemed to follow the same trend. It seemed like midsummer we were in a great position, and then as fall hit, China quit buying, and it went downhill a bit.”
The steady amount of employment opportunities throughout the Midwest has resulted in a worker shortage that is forcing businesses to rethink ways of attracting new talent.
Labor continues to be a struggle for a lot of facilities across the country. Unemployment in many midwest markets hovers around 2 percent, which makes it challenging to find labor as well as retain labor. The labor shortage has resulted in an increase in wages across most positions, which has added an additional cost to recycling. Recycling companies are much more willing to pay a little more to find qualified people who are motivated to do what they’re suppose to be doing, and paying at minimum scale simply doesn’t accomplish that.
Another factor in the hiring challenge is the unjustified negative stigma that comes with working as a “sorter” in the waste-recycling industry. With a limited hiring pool, workers often times seek out other employment options.
While the current rush of activity won’t last forever, it appears that the demolition and C&D recycling industry will remain strong for the foreseeable future.
“All indicators point to a strong 2018 and, likely, the next 18 months,” Haus says. “I don’t think we have enough information to look much beyond that. We have carryover from the 2017 season related to the storm damage that will add to the 2018 season; but, beyond that, it looks like construction will remain strong in this market for the foreseeable future.”
Credit: Construction and Demolition / March 2018 / cdrecycler.com