Minnesota county offers grants promoting deconstruction over demolition for older homes and apartments
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Hennepin County, Minnesota, has launched a new grant program aimed at keeping old building materials out of landfills, Finance & Commerce reports.
The program, which offers grants up to $5,000 per project to developers and homeowners for prioritizing deconstruction of old structures over demolition, is meant to help defer some of the cost associated with more nuanced and time-consuming deconstruction services.
To be eligible, the structure must be a home or apartment with up to four units built before 1950 and with a renovation area of at least 250 square feet. Moreover, six material types need to be removed to be reused and at least 550 pounds of wood must be salvaged from the project. All non-reusable building materials must be sent to a county-approved C&D recycler.
“Deconstruction involves carefully dismantling the building structure to preserve building materials so they can be reused,” Olivia Cashman, environmental protection specialist with Hennepin County Environment & Energy, told Finance & Commerce. The additional costs of deconstruction “make it a deterrent, so that is where the grant funds come in,” she continued.
The program, which has a $100,000 budget for 2020, has helped defer costs for 12 projects (mostly for home renovations) since being launched in February. Of these projects, six have already been completed. There are still $45,000 in funds available for the remainder of the year.
Cashman says that although no funding has been allocated yet, she hopes the county will be able to expand the program for 2021.
GFL reports that it will acquire WCA and its subsidiaries for an aggregate purchase price of $1.21 billion. The purchase price for the acquisition will be financed in part with the net proceeds of a private placement of $600 million of equity and through a combination of cash on hand and capacity under the company’s revolving credit facility.
Founded in 2000, WCA provides solid waste collection, transfer, disposal and recycling services across 11 states. WCA currently operates a network of solid waste assets, including 37 collection and hauling operations, 27 transfer stations, three material recovery facilities and 22 landfills supported by more than 1,000 collection vehicles. WCA has an established regional platform with a growing footprint across the Midwest and Southeast, including three key markets in Texas, Missouri and Florida. The company generates annualized revenue of approximately $400 million.
MIP II acquired WCA through a take-private transaction in 2012 and since has supported WCA’s growth and operational improvements. Over the course of MIP II’s ownership, WCA executed on a business plan including the strategic divestiture of noncore assets to allow redeployment of capital to accretive core market opportunities, completing more than 35 acquisitions during MIP II’s ownership.
WCA also has significantly increased its focus on ESG over MIP II’s ownership and published its first annual Sustainability Report in 2018 comprised of a plan including CNG fleet expansion, leachate management and other initiatives developed in conjunction with MIRA.
“During our approximately eight-year investment, WCA has grown to become one of the leading vertically integrated solid waste companies in the U.S.,” Karl Kuchel, CEO of Macquarie Infrastructure Partners, says. “Working alongside the management team at WCA, we are proud to have supported the company in its mission to provide safer, more efficient and sustainable environmental solutions to its more than 700,000 customers.”
“Today marks a new chapter and a continuation of WCA’s story of growth,” Bill Caesar, CEO of WCA, says. “Over MIP II’s ownership, WCA has grown significantly while also professionalizing the business, investing in people and systems to support our growth and to improve administrative and operational efficiency. I am very grateful to everyone in our WCA family and extraordinarily proud of the company that we have built together.”
According to GFL, the acquisition is expected to support the company’s continued organic growth by further extending its reach into new and adjacent markets and by forming a base to pursue synergistic tuck-in acquisitions. GFL expects that the acquisition will expand its U.S. footprint while creating an opportunity to realize meaningful synergies and free cash flow accretion.
Following completion of the acquisition of WCA and the divestiture assets from Waste Management and ADS, GFL will operate in nine provinces in Canada and in 27 states in the U.S.
“We continue to deliver on our goal of pursuing strategic and accretive acquisitions to grow our business. The WCA transaction, which we have been working on for over a year, is another example of this commitment. The high-quality, vertically integrated network of assets, together with our recently announced acquisition of certain divestiture assets resulting from the Waste Management and ADS transaction, will complement our existing footprint and provide us with the runway to further expand in the U.S. through tuck-in acquisitions and [will allow us to provide] our suite of environmental services solutions to new customers. We are excited to welcome almost 1,600 employees of WCA to the GFL family,” GFL founder and CEO Patrick Dovigi says.
Dovigi says he expects the integration of WCA’s business to go smoothly for the company.
“Our multidisciplinary integration team has a successful track record of integrating acquisitions like WCA and the Waste Management/ADS divestiture assets,” Dovigi adds. “We have been working on integration preparation of the divestiture assets since earlier this year, which has allowed us to significantly advance our integration plans. We are well-positioned to bring these operations and WCA on board.”
“Today’s announcement represents a key component of GFL’s acquisition plan, which will help further position the company for continued long-term success,” Scot French, co-governing partner of HPS, says. “We look forward to building on our now seven-year partnership with Patrick and his entire team as they continue to execute their growth strategy.”
The sale agreement is subject to customary closing conditions including regulatory approval and is expected to reach completion in the fourth quarter of 2020.
At Construction & Demolition Recycling, we’re always trying to take the temperature of the construction, demolition, recycling and waste markets to better understand where we are and where these sectors might be heading next.
Although change happens incrementally, it’s this slow evolution that allows these industries to meet the shifting demands of society.
At the beginning of the year, I wrote in my editor’s letter about how Laurence Fink, chairman and CEO of New York City-based investment firm BlackRock, issued a letter to both clients and CEOs stating that sustainability was going to be the new criteria for which companies would be judged in the coming years.
In this issue, we see several examples of how sustainability is not just an abstract talking point, but instead, something that is becoming baked into how companies do business.
In our cover story, Susan Angyal, regional CEO of North America for Environmental Resources Management (ERM), talks about how sustainability is the foundation on which all of its projects are built upon.
“We define our purpose as ‘shaping a sustainable future with the world’s leading organizations,’ which carries over to our tagline, ‘The Business of Sustainability,’” she says. “We operationalize these qualities by looking at all client engagements—including decommissioning, decontamination and demolition (DDD)—through the lens of sustainability. We are deliberate and purposeful in developing multifaceted solutions for our clients that address not only the conventional environmental and regulatory dimensions around a DDD project, but also bring complementary skills around both the social and governance elements, too.”
Angyal notes that this sustainability focus isn’t just lip service, it’s where ERM sees the biggest opportunities in the future, specifically with climate change and low-carbon initiatives prompting older power plants to be decommissioned.
And we don’t have to speculate on what this next generation of work might look like. In “Blackhawk down," we see what is possible when opportunity meets ingenuity thanks to North American Dismantling Corp.’s work converting a 100-year-old coal plant into a new 120,000-square-foot student center at Beloit College.
Want more evidence that sustainability is the next big thing? Read up regarding Republic Services’ blockbuster agreement to purchase 2,500 electric collection trucks from Phoenix-based manufacturer Nikola, making it the first waste company to commit to electrification on a large scale.
While the type of work, and how that work is done, may be changing in the C&D space due to innovation and social consciousness, it appears shifting priorities in favor of sustainability may end up creating new opportunities for both the contractors working on these projects and the recyclers tasked with diverting these materials from landfill.
The State of the Demolition Industry
Features - State of the Demolition industry
We polled the industry and spoke with a pair of demolition contractors who shared their thoughts on the current state of the business amidst routine challenges and a global pandemic.
Like many industries, the demolition sector is no stranger to adapting to change. This year more than ever, though, the changes have been universal thanks to the COVID-19 pandemic. At Construction & Demolition Recycling (C&DR) magazine, we want to share the impact those changes have had to both individual companies and the industry at large. Through the information we’ve gathered, we have put together the 2020 State of the Demolition Industry Report.
This report came together through several interviews and a C&DR survey of demolition professionals who work in the United States. The information paints a detailed picture of the current state of the industry as well as potential challenges that might be looming as business picks back up post-COVID-19.
COVID-19 impacts
While the COVID-19 pandemic isn’t the only factor impacting the demolition industry in 2020, it is safe to say that it has been the most substantial.
With work stoppages, delays and strict health and safety guidelines being put into place all across the country, the pandemic has had a large impact on the status of many projects, how quickly those projects could be completed and even how many employees were able to work on site.
Over 36 percent of survey participants say there were stoppages or delays between 1-2 months because of COVID-19, while 21 percent say stoppages or delays of 3-4 months have been experienced. However, 18 percent were fortunate to have no delays or stoppages. On the opposite end of the spectrum, about 18 percent of participants saw much longer delays of 5-6 months, and 6 percent said they have experienced delays or stoppages more than 8 months.
“We experienced delays in project mobilizations and releases of phased work through April and May on existing projects, in addition to a decrease in RFPs/client responsiveness through April,” Mark Klotzbach Jr., VP and owner of Stryker Demolition & Environmental Services LLC (Stryker DES), says. “We had a lot of discussions with our clients to determine a path forward on existing work—most of which revolved around our preparedness and response to the virus.”
When it comes to the impact of COVID on work backlogs, around 36 percent of participants say the pandemic had no impact, 30 percent say their backlog has been extended 1-2 months, 21 percent say backlog has been extended 3-4 months, and 12 percent say backlog has been extended 5-6 months.
Of course, keeping employees safe from the virus while working was a major priority for demolition businesses that remained in operation throughout the pandemic.
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“We certainly changed hotel room policy for jobs out of state, from two occupants in a hotel room to one,” Scott Knightly, president and founder of EnviroVantage says.
The New Hampshire-based company, which has projects across New England, says driving to and from sites has also changed, with fewer employees in each car. Plus, Knightly says the company staggers breaks on the job sites to prevent workers from congregating in groups.
“The quarantining is working, the face masks are working, taking the temperatures of workers is working,“ Knightly says. “Everybody’s aware [of the seriousness of taking precautions] and people are becoming more aware. The problem isn’t doing the work, it’s getting to and from work, the breaks, things like that.”
Klotzbach Jr. says he plans to keep all safety regulations in place as long as necessary for his employees’ best interest.
“Until the CDC releases information stating that masks, social distancing, and other practices to control the spread of the virus are no longer necessary, we will continue to implement these guidelines in our everyday operations,” Klotzbach says. “We will also continue with the reinforcement, as well as the communication, to our staff.”
According to our survey, only about 6 percent of companies shut down operations due to COVID. Fifteen percent said they reduced the number of workers on site, 72 percent increased social distancing, 64 percent offered more PPE, and 61 percent instituted more training and oversight.
Knightly says he believes all safety measures contractors are currently taking will remain in place until there is a vaccine.
Staying on schedule
As the world economy continues to change due to various factors, our survey shows that for many, there has been an increase in work in the past year. Nearly 25 percent say they increased the number of projects completed over the last 12 months by more than 15 percent compared to the year prior and 27 percent say they increased work by 5-14 percent more. Fifteen percent say work stayed the same, while 3 percent say work decreased less than 5 percent; 6 percent say work decreased between 5 and 14 percent; and 24 percent say work decreased by 15 percent or more.
However, going forward over the next 12 months, the answers were a bit more divided. More than 36 percent of participants say the number of projects completed will decrease in the upcoming year from the previous 12 months. More than 21 percent expect work to stay the same, and 42 percent say they will complete more projects in the next 12-month period than they have in the last 12 months.
“Frankly, it seems to be a moving target and it is really hard to predict how the rest of the year will look. Right now, we had some projects get put on hold, but we also had some new projects released that were a bit of a surprise,” Klotzbach Jr. says.
Klotzbach Jr. adds that for his Pennsylvania-based company, there is much uncertainty about the future, with the potential for more shutdowns as cases increase in certain parts of the country. However, he notes that he remains optimistic for the upcoming year.
Knightly says EnviroVantage remained open throughout the early shutdowns of 2020, although there were a few projects the company was working on that did ultimately shut down and require contingency plans
“We had a few job sites completely shut down, mainly because of the market,” Knightly says. “Because who wants to build a hotel right now? Commercial construction and office buildings may be dampened.”
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Employee retention and hiring
When it comes to hiring, the respondents of our survey were fairly split. Just over 25 percent of respondents said both full- and part-time workers increased over the last year, more than a quarter said the number of full- and part-time workers decreased over the last year, and 45 percent say the number of employees remained consistent.
For Knightly, he says layoffs weren’t something EnviroVantage had to think about during the pandemic. He says there were people on each site dedicated to cleaning, so other employees could safely continue their work. He adds that EnviroVantage does a large amount of federal and military work, which has remained steady over the last few months, keeping employees busy.
It doesn’t appear, according to our survey, that layoffs are in the plans for many companies either over the next 12 months. About 85 percent of participants say they’ll either keep the same number of employees or hire more. While just 15 percent say a decrease in employees is in their future plans.
While COVID-19 has prompted many companies to send corporate employees to work from home as on-site workers continue to report to the job, Knightly says that isn’t something he imagines will last forever.
“One thing that I see from my standpoint, and people that I’ve talked to in the industry see, is that people still need socialization,” Knightly says. “You can’t work from your basement forever; it’s a big problem and you don’t know what people’s home lives are like.”
Keeping open lines of communication with employees regarding ongoing work, how the company planned to take care of them and plans for the future were essential in keeping things running well over the last 6 months, Knightly says.
“Your employees are your biggest asset, so you have to protect them,” he adds.
Past and future investments
The slowdown of work for many businesses has impacted financials. That means some companies are having to rethink plans for the near- and long-term future to make sure the best decisions are made with respect to the changes over the first half of the year.
When it comes to investing in equipment, about 58 percent of our survey participants say they’ve remained steady over the last year in that area, while 24 percent have scaled back on equipment investments and 18 percent are investing more.
Looking towards the future, about 39 percent plan to invest more in equipment over the next year. Just 21 percent plan to invest less and the other 39 percent plan to keep investments steady.
With the impact of the last year on the economy as a whole, and on the demolition sector specifically, investment activity is something that bears watching in the coming months.
“When there is any level of uncertainty, particularly when talking about our client base halting funding on demolition projects, there needs to be modifications made with regards to capital expenditures,” Klotzbach Jr. says. “We became much more cautious on capital expenditures. However, due to so many travel restrictions, our travel budget was indirectly reduced as well as our corporate marketing activities.”
The author is the digital editor of Construction & Demolition Recycling and can be reached at kcunningham@gie.net.
Relieving the risk
Features - Equipment Rental
Equipment providers utilize new approaches to handle a pick up in rental activity during the COVID-19 pandemic.
As the construction and demolition (C&D) industry braves the effects of the coronavirus pandemic, equipment rental providers have had to implement major changes to their operations in order to meet new demands.
“We’re definitely seeing a change in patterns with COVID-19 and customers,” says DeWayne Searcy, chief information officer and vice president of sales administration for Cowin Equipment Co., Birmingham, Alabama. “From a rental perspective, we’re finding customers preferring to rent than buy equipment right now.”
According to Searcy, there are two main reasons contractors are pursuing rentals rather than buying: risk aversion and the uncertainty of what 2021 will bring.
“When renting equipment, the rental company carries those risks,” he says. “We have the risk of providing all of this equipment, and as a customer, you can just rent it at a certain rate and then when you’re done with it, you can return it. So, you minimize your risk and you minimize any uncertainty if the downturn gets any worse than it is now—you don’t have a several hundred thousand dollar piece of machinery sitting in your yard, it’s sitting in our yard.”
“[Renting] is a perfect solution for someone who’s unsure of the future and really wants to conserve their cash,” he adds.
TACKLING THE DEMAND
As an online marketplace that connects buyers and sellers through equipment inventory listings, Norfolk, Virginia-based Equipment Trader emphasizes the importance of having a strong online presence when approaching rental operations during the COVID-19 pandemic.
“When COVID-19 hit, we worked really hard to create resources that supported dealers in making that transition to a socially distanced and virtually focused rental and buying experience,” says Paige Bouma, executive vice president of sales and operations for Equipment Trader. “So, rentals have become more and more popular across a lot of our sites.”
To help encourage dealers to create a virtual dialogue with customers, Equipment Trader added new options to its website, including video tours and a “Make an Offer” option to directly connect interested buyers with the dealership.
Since the start of the pandemic and subsequent lockdown restrictions, Equipment Trader reports its search impressions have increased 5.5 times per rental listing, vehicle description page (VDP) views have increased 5.4 times, and email connections have increased 9.5 times per rental listing.
In order for rental companies to efficiently handle the sudden pick up in activity, Bouma says her biggest piece of advice is to keep inventory listings up to date online.
“One of the main questions we get from consumers is if a unit is still available,” she says. “There’s nothing like a bad experience of going to the dealership or contacting the dealership and saying, ‘Hey, I found this listing on your website and it’s exactly what I’m looking for,’ only to find out it’s not even available anymore.”
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In addition, Bouma encourages dealers to ensure they are supporting a safe rental experience for their employees and customers by requiring appointments for inspections and test drives.
“Talk about some of things that you’re doing as a dealership to make a renter feel comfortable,” she says. “We really encourage dealers to be sharing the special things that they’re doing in order to keep their customers safe and their employees safe.”
For example, Stamford, Connecticut-based United Rentals has provided its COVID-19-related information on its website. The online resource features the company’s latest safety policies and procedures, including its newly introduced drive-up service and equipment cleaning practices.
BENEFITS OF RENTING
With the effects of the pandemic likely to impact the C&D industry for the foreseeable future, renting equipment can pose several benefits over the long term for dealers.
“A big takeaway is in the long term, rentals are going to be a lot of the times more profitable than sales,” says Bouma. According to the Rental Equipment Register, after renting out a piece of equipment for many years, and then finally selling it used, that unit will oftentimes generate as much as two to three times higher profit margins than if the machine had been sold new.
When offering rentals, an equipment dealership is also making an investment in future revenue streams that have the potential to earn incredibly high returns.
“It expands our dealerships’ reach quite a bit by offering rentals because you can serve customers you may not have been able to serve previously [if you were only selling equipment],” Bouma says.
For customers, renting can also be a cost-effective way for them to get their job done due to lessened service costs.
“It gives renters the tools that they need without that upfront cost of purchasing the unit, but it also allows them to not have to spend money on maintenance or repairing their own machinery,” says Bouma.
She adds, “You can also boost your business by supporting different jobs that you may not have been able to do previously due to a lack of equipment. By renting, you can expand your business by offering more services because you can rent out the equipment as needed.”
Bouma says there are two factors consumers can consider when torn between buying and renting equipment—the frequency of use and the state of the economy.
“Equipment should be used 60 to 70 percent of the time to be worth purchasing,” she says. “If the equipment is being used less than 60 to 70 percent of the time, renting may be a more economical option for the business.”
In addition, Bouma says if there’s uncertainty in the market like there is now, it could be best to rent rather than investing in a machine due to unforeseen shakeups in work that could be on the horizon.
BEST PRACTICES
To help contractors make the best decisions when considering a new piece of equipment to rent, Bouma has a few recommendations.
Most importantly, Bouma stresses the importance of understanding the type of job the contractor needs to complete. Before shopping around, contractors should make note of the project scope and timeline to decide what equipment is needed to complete the task.
Once the consumer determines the necessary equipment, they can find out what rental options are available to them.
“Knowing a rental dealer has a good reputation can give you greater confidence in renting equipment from the dealership, so take steps to research the dealer,” Equipment Trader says. “Ask around, look them up online, conduct a business background check and confirm their ownership of the equipment. Being able to rely on the dealer is an important consideration when renting equipment.”
When a rental unit has been chosen, Bouma urges consumers to ensure the quality of the machine by requesting an inspection to learn its history.
“Be sure to examine the machine at every level, including mechanical, hydraulic, structural, in-cab, fluids, exhaust and tire/track components,” she says.
A potential customer will also want to understand how the equipment has been used and cared for in the past. Equipment Trader suggests consumers ask for the equipment’s maintenance schedule and possibly repair records to ensure that they’re getting a machine that is well cared for and that will deliver the performance they expect.
The author is the assistant editor for Construction & Demolition Recycling magazine and can be reached at hrischar@gie.net.