The State of the Demolition Industry

The 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.

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September 23, 2020

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.”

This article originally ran in the Sept.-Oct. issue of Construction & Demolition Recycling. The author is the digital editor of Construction & Demolition Recycling and can be reached at kcunningham@gie.net.