The construction sector, like so many others, dealt with a sharp downturn in activity as COVID-19-related restrictions were introduced in March 2020. How the sector would rebound was a source of speculation throughout that spring and into the summer.
Benjamin Johnston, chief operating officer of New York-based small business financing firm Kapitus LLC, says contractors and subcontractors who serve the residential construction sector have shifted from seeking financing to survive to seeking financing to purchase materials and expand payroll because of a healthy volume of new business.
Although the Kapitus customer base consists of small business owners, the firm itself has provided more than $3 billion to some 50,000 small businesses since 2006. That total includes Paycheck Protection Program (PPP) loans tied to the government’s COVID-19 business relief efforts.
In an interview with Construction & Demolition Recycling, Johnston cites several factors—including the work-from-home trend—that are likely to keep residential housing spending lofty, providing work for contractors, C&D recyclers and demolition contractors in places where old buildings or dwellings will make way for new.
Construction & Demolition Recycling (CDR): What are the challenges facing residential construction businesses?
Benjamin Johnston (BJ): A year after the world shut down due to the COVID-19 pandemic, construction businesses continue to grapple with the fallout. While states have mostly lifted restrictions, demand surges in residential construction and supply chain disruptions have made certain materials scarce, creating long lead times and cost overruns, putting additional pressure on contractors trying to service their clients, pay their employees and still have something left for themselves.
As we near the end of the pandemic and one of the longest, coldest winters in recent memory, the PPP program may provide the relief many construction companies need to see them to the other side of this crisis.
CDR: What are some of the things residential construction companies need to be aware of if they received a PPP loan?
BJ: A second PPP draw is a great opportunity for construction companies that have seen a drop in business due to COVID-19 to stabilize their financial situation. The capital is intended to help business owners pay employees, pay outstanding rent and other bills, and invest in reopening and getting back to business. This is a five-year loan carrying a 1 percent interest rate, so it is some of the lowest cost financing small businesses will find.
Much, if not all, of the loan is likely to be forgiven just by paying bills and employees, so the program has tremendous benefits with limited downside. However, 60 percent of the forgivable amount must come from payroll, so if your business has reduced its staff significantly from pre-pandemic levels, not all of the loan may be forgiven.
CDR: How do you see the residential construction sector faring this year?
BJ: We at Kapitus are very bullish on the small business economy in 2021 and are especially bullish on the residential construction sector. During the pandemic, Americans spent considerably more time at home and invested heavily in new properties and home improvements. We expect this trend to continue in 2021 as many Americans continue to commute less and work and to better their homes and property. At Kapitus, construction is our largest and fastest growing industry sector. Over the past 15 years Kapitus has provided nearly $500 million in financing to approximately 8,000 contractors. Given the activity we are seeing the space today, we expect construction to be our largest sector again in 2021.
CDR: What are some actions businesses/contractors can take to make sure they’re on solid financial footing in 2021?
BJ: As businesses look to take advantage of the growth opportunities in the market, it is important that they not let their expenses get too far ahead of anticipated work. That being said, when a company needs capital to staff up and purchase equipment in order to add new jobs, it is important to have a financial partner who can supply needed capital quickly and dependably. If you anticipate the need for growth capital in the coming year, talk to your bank or to a small business finance company, like Kapitus, to determine what you qualify for and what products are right for you.
Improving safety in waste and recycling
When it comes to safety training and culture, focusing on the prevention of fatalities and serious injuries can yield the best results.
The waste and recycling industry has acknowledged for several years what national statistics have borne out: the occurrence of serious injury and fatality (SIF) accidents in the sector is out of proportion to its size.
Kristen Bell, a partner with Ojai, California-based Krause Bell Group, says companies like hers and the industry overall may not enjoy complete consensus on how to address the issue. She comments, however, “What we’ve learned through research is that if you want to prevent fatalities—and that’s usually the first goal—that requires a special focus on situations that lead to fatalities and life-altering incidents.”
Words and deeds
As the waste and recycling industry has produced materials and messaging to address workplace safety issues, the word “culture” has been applied generously to the list of factors that can create the needed improvements.
Bell says establishing a strong safety culture is a process that includes everyone—executives, site managers, employees and even customers and vendors.
“What’s not well understood is how each person connects to reducing risk in their organization or creating that culture. That can be difficult for people to understand,” she says.
The industrywide attention to safety has, fortunately, led to more frequent meetings devoted to the topic, says Bell. However, if employees at a facility “have a safety chat in the morning” and that is followed the rest of the day by talk of adhering to schedules and “how quickly can we get this material processed,” that second message is the one that employees will internalize, she says.
“There is a role for every single person in the organization to create a safe workplace,” says Bell. “Everyone is connected to it, even people outside the company.” That being said, executives may be in a position to influence safety in ways they do not always consider, Bell acknowledges.
Bell offers as an example hiring for an operations or facility management position and not asking about the candidate’s safety qualifications or intentions to emphasize safety. “One of the most important decisions an executive or manager can make relative to safety is who they hire—it’s crucial,” says Bell, who indicates Krause Bell has performed pro bono work for ISRI pertaining to its Circle of Safety Excellence program, which recognizes member companies for outstanding commitment to the safety of their employees.
The company that hires a manager who is an excellent safety leader is likely also to be happy with that person’s leadership in general, according to research conducted by Krause Bell. It doesn’t always work the other way around, however.
“The same type of employee who feels safe and supported by his or her leaders also coincides with the type who will put his or her best effort forward, and the business will thrive,” says Bell. She adds, “That’s important. Being reassured that the effort that goes into safety improvement will benefit the business in general is a big deal. [That happens] through culture.”
The profit motive is far from the only one, however, that will cause employees to pay close attention to avoiding SIF accidents.
A clear motive
Awards and other forms of recognition often are part of corporate and organization safety programs, and some choose to reinforce or incentivize this with a financial reward.
When it comes to the recognition aspect, Bell says her company indeed views it as helpful to recognize good safety practices and track records, “especially when people go out of their way to do the right thing.”
As far as financial incentives, Bell says, “They are very, very tricky.” She continues, “You could easily incentivize the wrong behavior, and you shouldn’t have to pay people or bribe people to work safely.”
Rather, Bell says of employees at all levels, “We’re already motivated to protect ourselves and each other. We want to protect people and keep them from being injured. If nothing else, we’re going to keep people whole and alive and not having a life-altering injury.”
With that motivation being essentially intrinsic, Bell says her firm’s experience is that incentives such as gift cards or raffle contents are “not really necessary and can be harmful.”
Budgets and attention may be better off focused on consistent messaging that builds a safety culture from top to bottom. “Every minute of every day is sending a message about safety,” says Bell. “We want to develop great awareness of the impact of our messages on people, and how they’re hearing [these messages].”
For executives and managers, “It means we’re creating culture every time we’re interacting with someone,” Bell continues. “It’s kind of daunting as a leader. The implication is we have immense power, and we may not realize how we’re affecting people.”
Communication within an organization on safety or any other topic is not a one-way street. While company leaders can endorse a safety message, they cannot create a culture alone.
Feedback loop
In the waste and recycling sector, associations including NWRA, SWANA and ISRI all produce and distribute materials made available to member companies and organizations. Posting and distributing such materials, however, may only be a half measure.
“Our experience is [employers] are sending plenty of that material out, but there needs to be more listening,” states Bell.
Her advice to executives and facility operators is to be more in tune with what the company’s workforce is communicating: “Focus more on what you’re hearing from other people; focus on getting messages percolating up from your workforce. It will help improve your safety and your culture.”
The importance of listening extends to daily or weekly safety meetings, says Bell. “You want to have a safety meeting that is a conversation. Ideally, you won’t be waiting until the end for questions. You’d be formatting it as a dialogue.”
Most Krause Bell clients are holding such meetings “every single day and before every big task,” says Bell.
Managers who are seeking out and hearing safety concerns may be more likely to keep the topic in mind during their own workday. The attention to safety may then more easily extend beyond a facility’s workforce and to regular facility visitors.
Says Bell, “Every interaction you have with a delivery driver or a customer is an opportunity to influence them. What do they see at the gate? What do they hear from the person at the [scale house] booth? For a vendor, it can be what is in the contract [that they pay attention to]. Every interaction is a chance to influence.”
Underlying the cultural aspects, Bell says companies need to be keenly aware of just where the SIF risks lie. “A really great place to start is with senior leaders asking the question: How much exposure to SIFs do we have?”
This can be especially crucial when looking from the vantage point of employees “who are just starting out,” says Bell. “On our website, visitors can download a book chapter on that topic.”
Despite efforts to make workplace safety a focus in recent years, national workplace SIF statistics have too often demonstrated the waste and recycling sectors remain a dangerous place to work. Pointing to the oil and gas industry as one example, Bell adds, “The good news is, other industries have paved the way toward better safety; we can apply what we’ve learned.”
This article originally appeared in the April issue of Waste Today. The author is a senior editor with the Recycling Today Media Group and can be contacted at btaylor@gie.net.
Idaho recycling company finds reuse opportunities for yard and construction waste
Tree Top Recycling collects green materials such as lumber, scrap wood and tree branches to be used for landscape materials and the generation of clean electricity.
Boise, Idaho-based Tree Top Recycling has been making the most out of housing growth opportunities in the Treasure Valley by turning an increased amount of yard and construction waste into usable products.
As reported by KTVB, the company has been collecting materials such as lumber, pallets, scrap wood, trees, branches, bushes, grass leaves, and dirt—just to name a few. Dustin Downs, the owner of Tree Top Recycling, says the company will take almost anything organic, just not metal or concrete.
Once the collected materials are screened, they are sent into a grinder to be shredded. Even if there are nails in recycled wood, for a small cost, Tree Top will take it.
“We just pull out the metal and then we take the metal to a recycling center, so even the trash we pull out, we recycle in some way,” Downs told KTVB.
The green materials are then broken down to become landscape materials, like bark, topsoil, or mulch, and even cattle bedding. The materials are also used to generate clean electricity.
“The amount of homes being built, the amount of people coming in, if I can make a dent in saving some of that material and reusing it, that's fantastic,” he said.
Downs added, his small fee is less than what the landfill charges to dump garden waste.
“You can even go to the landfills too, they're too full I mean they have a chart of expected growth, and lately it’s been astronomical, because of our growth,” he said.
Since taking over the 25-year-old recycling company created by his father eight years ago, Downs said he has seen nothing but growth and increased demand from customers.
“With the influx of people coming in, everyone is wanting to do this, I know I'm a business owner but it’s good for everyone and it helps, we are making money but also saving the environment, and on Earth Day it can’t be better than that,” he said.
Photo courtesy Volvo
Volvo Construction Equipment expands parts distribution network in US
The company says the investment boosts Volvo’s commitment to being the No. 1 uptime provider for construction equipment in North America.
Volvo Construction Equipment has announced that it completed a 75,000-square-foot expansion of its Reno, Nevada, regional parts distribution center.
According to a news release from Volvo, with North American headquarters in Shippensburg, Pennsylvania, the expansion increases floor space by 125 percent and brings parts closer to construction equipment customers with increased delivery times and reduced shipping costs. A new Dedicated Delivery Service (DDS) now operates out of Reno as an exclusive carrier to expedite overnight shipments to western U.S. dealers, arriving at dealer branches by as early as 4 a.m. the next day, according to the company.
As a result of the expansion, Volvo says that ground orders for California and the Pacific Northwest are arriving two days faster compared with shipping from the Volvo Group’s central distribution center in Byhalia, Mississippi.
“Through substantial investments, we expanded our Reno facility and refined workflows to extend this strong level of service and support to another Volvo Group brand, Volvo Construction Equipment,” says Bob Hochwarth, vice president of Volvo Group Service Market Logistics for North America.
The regional distribution center offers additional benefits:
inventory of critical machine parts on the shelf in Reno for overnight shipping;
parts order cut-off time extended to 4 p.m. PST; and
cost savings to customers because more deliveries can ship via ground versus air.
“By pooling the resources of the Volvo Group, these improvements to our North American logistics network increase efficiency and provide faster response times,” says Stephen Roy, president of Region North America, Volvo CE. “Our commitment is to ensure we support machine uptime for our West Coast customers and moving parts closer to where they do business is one of the major steps.”
The expansion follows the opening of the Toronto Distribution Center in 2019. The Volvo Group parts distribution network spans eight locations in the U.S. and Canada.
Metso Outotec Corp., Helsinki, has released its Lokotrack e-Power range of mobile crushing and screening equipment. The new Lokotrack e-Power range includes 15 crushers and six screens. The complete new lineup can be viewed online.
“We introduced the first Lokotrack E-models already 35 years ago, so we are one of the pioneers in this field,” says Kimmo Anttila, vice president Lokotrack solutions at Metso Outotec. “During the past couple of years the demand for hybrid solutions has really taken off as environmental regulations have become increasingly stringent in more countries. In fact, sales of the Lokotrack E-models have doubled in five years, and we expect the trend to accelerate.”
According to a news release from Metso Outotec, the Lokotrack e-Power range is an important factor in realizing the goals of the company’s Planet Positive initiative. With Planet Positive, Metso Outotec is committed to limiting global warming to 1.5 degrees Celsius. Aggregate crushing is very energy-intensive; Metso Outotec reports that the annual CO2 emissions of Lokotrack equipment are 20,000 tons lower compared with the situation before 2010 models.
According to Metso Outotec’s website, the new Lokotrack machines offer hybrid low-emission diesel and electric power for savings and sustainability benefits.
“Lokotrack design principles are simple: optimize the operating costs, capacity and end-product quality of the customer application. We give consideration to the total fuel consumption, including the engine and driveline technologies, but also to other factors, such as the unit transportation weight and the engine stand-by function,” Anttila says. “Additionally, we have reduced the hydraulic oil and lubricant volumes by more than half to further ease the environmental burden. Based on our data, a Lokotrack unit uses as much as 80 percent less oils compared to our previous models and compared to many other brands on the market. Naturally, the hybrid driveline reduces the need for oils and lubricants even further.
He concludes, “A diesel and hybrid offering complete each other; in remote locations where power grid is not available, a diesel driveline is still the only viable solution. We are investing heavily in development of sustainable technologies. Lokotrack is robust, energy efficient and highly mobile—and it meets the versatile needs of customers today and tomorrow.”