On the way back?

Departments - Editor’s Focus

July 13, 2020

As exhausting as the nonstop coverage of COVID-19 can be, how the C&D recycling sector bounces back from the drastically diminished incoming volumes many markets saw in Q2 is wholly dependent on how the virus affects construction and demolition activity in Q3 and beyond.

In an Associated Builders & Contractors (ABC) report released July 2, ABC Chief Economist Anirban Basu noted that the construction industry added 591,000 jobs between May and June. This recovery represented a rehiring of 56 percent of the jobs lost since the pandemic started.

Although Basu points to such indicators as positives, he notes that there is still a high degree of uncertainty in making prognostications about the coming months.

“Since the pandemic devastated the economy, most economists have been predicting a V-shaped recovery,” Basu says. “To date, this has proven correct. While recovery is likely to become more erratic during the months ahead due to a number of factors (including the reemergence of rapid COVID-19 spread), recent employment, unemployment, residential building permits and retail sales data all highlight the potential of the U.S. economy to experience a rapid rebound in economic activity as 2021 approaches.”

“However, even if the broader U.S. economy continues to rebound in 2020, construction is less likely to experience a smooth recovery,” Basu continued. “The recession, while brief, wreaked havoc on the economic fundamentals of a number of key segments of the construction market, including office, retail and hotel construction. Moreover, state and local government finances have become increasingly fragile, putting both operational and capital spending at risk.”

The rebound in the construction sector signaled by the rehiring of over half the jobs lost since early March is similarly reflected in volumes coming into C&D recycling facilities. On the Construction & Demolition Recycling Association’s (CDRA’s) May 29 conference call with recyclers throughout the U.S., many participants acknowledged that tonnages were down between 50 and 80 percent from the previous year. However, on the association’s June 26 call, recyclers reported that incoming tonnages of mixed C&D improved notably, despite still being down approximately 25 to 35 percent from the prior year.

So, what type of activity might we expect for the rest of 2020?

In a recent survey of over 630 construction firms conducted by the Associated General Contractors of America (AGC), 42 percent of respondents said they did not expect demand to recover to normal levels for at least four months, with most firms expecting a recovery to take longer than six months.

With COVID concerns appearing to present major challenges in the commercial sector for the foreseeable future, infrastructure legislation could be the shot in the arm needed to jump-start building initiatives throughout the country. As the 2020 election nears, it will bear watching if Democrats and Republicans can come together for bipartisan legislation that can get Americans back to work and C&D recycling volumes back to something at least close to normal.