An innovative approach to business alliances has helped Honc Destruction become the largest demolition contractor in southwest Florida.

When the company began in 2002, Honc Marine Contracting built seawalls for thousands of waterfront properties, especially in the Cape Coral and Fort Myers, Florida, areas.

“Seawalls are faster and easier to replace on vacant lots, and because many owners wanted new homes anyway, we decided to add demolition services in order to enhance our seawall business,” says David Mulicka, president of Honc Destruction, which today handles both commercial and residential demolition. “With the ability to use the same operators and equipment already needed to build a seawall at the same time, we could offer demolition services at a price and schedule that nobody else could match.”

Fast forward to 2015, another innovation to become more productive and efficient came to fruition. The result: Honc Recycling, a centrally located 6-acre construction debris transfer station site in Fort Myers. “Getting rid of the demolition debris is costly and time-consuming,” says Mulicka, “but I thought if we had our own recycling facility, our business model would take on an entirely different look. We now own a facility where we used to pay to dispose of our demolition debris.

“With the addition of top-of-the-line heavy equipment, we are now well positioned for continued growth and expansion,” he says.

WORKING TOGETHER

In the early 2000s, the Florida economy was booming and buyers had money to purchase older residences along the water. Tearing down existing structures and building new, often larger, homes was common.

“It was a good time to get in the demolition business,” Mulicka says. “Working with the seawall company gave us a huge pricing advantage. Some customers had hardly any net costs to their project or the demolition work.”

A few years later, the Great Recession hit southwest Florida especially hard. According to a Federal Reserve report published in 2012 titled “Survey of Consumer Finance,” a significant drop in Florida housing prices contributed to a 38.8 percent drop in median net worth between 2007 and 2010.

“We went through a very humbling downturn in the market,” Mulicka recalls. “Since we had the people and construction equipment to do both seawall renovation and demolition, we were able to endure.

“At the beginning of the recession, there were a lot of half-built houses,” he continues. “Unsafe structures, incomplete projects and code violations caught the attention of various government agencies and, before long, we had contracts to tear down many of them. That became a good source of revenue.”

Once the Florida economy improved, Honc Destruction was right back to demolishing residential structures for people who found the wrong house on the right location: They wanted the lot more than they wanted the house. Much of the company’s current business is focused on the Naples area, where there is almost no vacant property west of Highway 41.

“We now average demolishing one house every day,” Mulicka says. “Some of the homes we are tearing down in the Naples area range from 12,000 to 14,000 square feet, and are being replaced by homes that are even bigger and nicer.”

BIG BUSINESS

Honc Destruction is handling a variety of commercial and industrial demolition projects as well, contributing to their production of more than 1 million square feet of demolition projects each year. They include hospitals, schools, car dealerships, shopping malls, grocery stores, water treatment plants and all kinds of small businesses.

“Structural demolition is our bread and butter,” says Mulicka, “but at times we handle selective take-downs. We recently gutted the inside of a former Sears department store, including the interior slab, leaving only the exterior walls and the roof. The owner made it into a four-tenant building.”

On another job, the company took a 93,000-square-foot school and turned it into a vacant lot in less than three weeks. That’s typical of the fast service that Honc Destruction clients want these days.

“Since we are the front of the train on any redevelopment project, everyone wants us to get in and get out so they can get started rebuilding,” Mulicka says. “Working quickly is one of our selling points. We can typically save the customer days or weeks on their schedule because we have the resources and equipment to complete a job more efficiently and safely than others in our trade.”

A PLACE FOR C&D

One of the newest resources available to the company is the recycling facility for C&D materials. “Previously we had to haul what we tore down to 10 or 15 different places within our market areas in order to try to mitigate the hauling and disposal fees,” Mulicka says. “Logistically it was difficult at times.”

At the new centrally located facility, he says the plan is to recycle more than 80 percent of the materials the demolition company previously paid to get rid of. Recycling construction debris has received more attention in recent years as companies are adopting sustainability efforts and sending less debris to sanitary landfills.

Several major commodity buyers are customers of Honc Recycling, an increased source of income for the business that saves their clients money on their projects.

“Having our own recycling facility is a significant strategic advantage that allows us to be much faster and more productive because we no longer have to slow down and process and sort debris at the demolition site,” he says. “We can load out and haul it away immediately and get the property ready for whatever is going to take place next. All the sorting is now done at our recycling facility. This vertical integration and delivery of services has dramatically changed our demolition enterprise.”

Another benefit, according to Mulicka, is having better control of the process. “With our own people working in both demolition and recycling, we set the schedule, use our own trucks to haul debris and sort material in a very organized manner. Overall, it has made it much easier for our team to manage the logistics of our business.”

Demolition is all about safely getting rid of what you are supposed to and protecting everything else, says Mulicka. “Having the right plan and the right people on the crews makes a big difference, and so does having the right equipment.”

In 2011, as the volume of work was increasing, Honc needed to rent additional excavators. Mulicka and his team decided to give the Doosan brand a try.

THE NEED FOR SPEED

“We had no specific plan on renting a Doosan unit the first time that we tried one, but when I saw what that machine could do compared to other equipment we were using, I knew the next excavator I needed to purchase was a Doosan machine,” he says. “It turned out to be a very wise choice.”

The company purchased a pair of Doosan excavators from Synergy Equipment/Bobcat of Fort Myers in 2014, a Doosan DX300LC-3 crawler excavator, and a slightly smaller DX225LC-3 crawler excavator, both equipped with severe-duty buckets, optional two-way auxiliary hydraulics and clamps.

“They quickly became the operators’ favorites in the fleet, thanks to a winning combination of power, speed, ease of maintenance and comfort,” Mulicka says. “When I first compared the DX300LC-3 with a similar model of another brand that I already owned, my other excavator was not even close in power and speed. In fact, when I had three of my original machines working together, the DX300LC-3 outperformed the other two combined.”

Not only can the Doosan crawler excavators handle the daily demolition business, it makes sound financial sense as well, according to Mulicka.

“Both the DX300LC-3 and DX225LC-3 use about 15 to 20 percent less fuel than a similar machine of another brand,” he says. “That makes a significant impact on operating costs. Plus, the financing terms offered by Doosan are very easy to work with. Dollar for dollar, Doosan excavators are probably the best machines for the price that I have ever seen.”

The company was so impressed with the performance of its crawler excavators that it added a DX140LC-3 excavator with rubber tracks and hydraulic clamp to its fleet. “Our relationship with our sales agent, Mike Clementi, and the rest of the sales, rental and service team at Synergy Equipment, make Doosan construction equipment and Bobcat compact equipment the right machines for our business,” says Mulicka.

Speaking of Bobcat equipment, a pair of compact Bobcat machines handles the tighter areas. A T750 compact track loader with a bucket, an industrial grapple and root grapple collects debris, while a sweeper attachment helps clean up job sites. A Zero Tail Swing E35 compact excavator and hydraulic breaker attachment are used for selective demolition inside buildings.

With the construction business rebounding around southwest Florida, Honc Destruction is well positioned to provide the answer buyers expect to hear when they ask: “How fast can you clear my property?”

This article was submitted by Two Rivers Marketing, Des Moines, Iowa, on behalf of Doosan Infracore Construction Equipment America, West Fargo, North Dakota.

The spring of 2013 started a new chapter for the state of Illinois’ infrastructure, one that would combine convenience and safety for drivers as well as job creation for residents. With the hopes of driving economic prosperity throughout the area, the first phase’s scope of work was to complete the primary interchange connections between the Tri-State Tollway (Interstate 294) to I-57 in Chicago.

Before the project was underway, I-294 and I-57 represented one of only two locations in the country where two interstates met without connecting to each other. The Tri-State Tollway is also considered to be one of the most heavily travelled highways in the country. Before construction began on the project, travelers had to use the nearby I-80 interchange, making an indirect connection. This made it difficult on different communities throughout the area, but primarily the neighborhoods of Harvey, Markham, Dixmoor and Posen.

The goal of the $719 million project was to alleviate congestion on local routes, stimulate economic development and improve overall transportation throughout south Chicago. Many others benefitted from the project, which finished phase one in the fall of 2014.

PROJECT SCOPE

The project itself called for demolishing and replacing I-57 northbound and southbound over I-294. Approaching the overpass, I-57 was also widened to accommodate the traffic movements of the interchange. The new interchange through the Tri-State Tollway is completely electronic with the I-Pass and offers zero cash lanes, making it much quicker to get through without needing to stop and pay. It will be the Tollway’s first interstate-to-interstate interchange that is entirely electronic.

The initial phase of the I-294/I-57 project created and sustained an estimated 3,300 jobs with more than 140 companies receiving contracts for the project. One of the primary contractors on the job was K-Five Construction Corp. of Lemont, Illinois.

The Illinois Tollway and Illinois Department of Transportation (IDOT) awarded K-Five a $22 million contract in spring 2013 to work on the project. With a background in highway construction and pavement rehabilitation for governmental agencies, K-Five is one of the region’s largest asphalt and concrete paving contractors. The fourth generation family owned contractor does the bulk of its work in the public sector. Operating six asphalt plants and numerous portable concrete plant facilities has enabled the company to establish a solid reputation in Illinois and northwest Indiana.

The company of 300-plus was responsible for widening and reconstruction along I-57, which K-Five finished in October 2014. To build and add new ramps, K-Five needed to first demolish the concrete before building the ramps at 147th Street down from the overpass onto I-57. They tore up the concrete using their RX6 breaker from Chicago Pneumatic (CP), which would prove to have a major presence on the job site.

HARD HITTERS

Dean Serna, shop foreman at K-Five Construction, says the crew was pleased with the breaker’s performance. “We have had different breakers in our lineup, but those hit the hardest and tore up the concrete with ease.”

The RX6 breaker is one of six light hydraulic breakers in the CP lineup, which also offers medium and heavy-duty breakers. Featuring an impact rate at 530 to 1,200 blows per minute (bpm), the RX6 fits in the 4- to 9-ton carrier class with a service weight of 600 pounds.

“The RX6 was demolishing concrete at a rapid pace, and we made great progress with the breaker. Anything that can help speed up production, especially on a bigger project is a great tool to have at our disposal,” says Serna.

The RX6 features a recoil absorbing concept and a polyurethane insulated breaker box system designed to keep noise to a minimum. To speed up productivity, CP breakers feature an auto lube system, eliminating the need for manual greasing of the bushings.

“This job required K-Five to break up a lot of concrete, so they were looking for a new breaker to go along with three other manufactured breakers they had before the project started,” says Jeff Zawaski, outside salesman at Blue Island Equipment, based in Homer Glen, Illinois, K-Five’s dealer in the region. “We introduced the Chicago Pneumatic RX6 to them and ran them side by side with their other breakers. Within a week, K-Five gave us a purchase order for them.”

While the primary project to build the interchange connections are complete, it is still a work in progress. By the year 2024, Illinois expects to add the remaining ramps to complete the interchange.

As part of the Congestion Relief Program, the central Tri-State Tollway between 95th Street and Balmoral Avenue as well as the Edens Spur will be rebuilt. The area could be widened to five lanes in each direction, along with wider shoulders for buses and active traffic management features.

While it is a lengthy process, the culmination of each phase will have profound effects throughout the area and the communities. It is planned as a win-win for the state of Illinois.

This story was submitted by Chicago Pneumatic, Independence, Ohio. More information is available at www.cp.com.

As of mid-February 2016, investors and economists were professing high levels of concern on several fronts and only restrained optimism. Fitting into the general mood was the status of copper pricing, which has fallen from its high of $4.58 per pound in February 2011 to slightly more than $2.00 per pound in mid-February.

Steadily falling copper pricing has presented one ongoing challenge for nonferrous scrap recyclers in the past two years, but a more worrisome aspect of the current market has been the curtailing of supply.

Even if the scrap harvested from demolition projects makes it to a smaller dealer’s location, that dealer may opt to hold onto it and wait for the price of copper to rebound before reselling it. However, any brass fixture, copper wire or copper tubing scrap that makes it across a scale and into the wider market will be appreciated in a hungry market.

Looking forward through 2016, red metal scrap sellers, processors and buyers will all be watching economic conditions and specific copper industry conditions around the world to try to determine whether either higher pricing or more robust scrap flows may yet bring some good cheer later in the year.

MATERIAL ISSUES

Quarterly and annual financial reports filed by publicly traded companies can help provide a snapshot of the decline in nonferrous scrap flows in 2015. These volume drops can be attributed in part to a decline in copper pricing that has slowed the flow of red metal scrap across scales.

The figures and accompanying statements issued by the public companies throughout 2015 and early 2016 repeat some common refrains:

• As part of the announcement covering the financial results for its first quarter of fiscal 2016, which ended Nov. 30, 2015, Irving, Texas-based Commercial Metals Co. (CMC) made reference to its nonferrous scrap operations. “During the first quarter of fiscal 2016, average nonferrous volumes declined 12 percent,” stated the company, which also noted that its “nonferrous metal margins were compressed by 22 percent relative to the corresponding period” in late 2014.
• In mid-November 2015, Sims Metal Management, based in Sydney and New York, issued a profit warning for its upcoming quarterly results and the first half of its 2016 fiscal year (covering the second half of calendar year 2015). Regarding its decline in scrap flows (both ferrous and nonferrous), the CEO and chief financial officer of Sims reported, “As a consequence of lower commodity prices, intake volumes for the first four months of the first half of fiscal year 2016 [covering July through October 2015] fell 26 percent versus the corresponding period [in the previous year].”
• Steelmaker Nucor Corp., Charlotte, North Carolina, which also owns Cincinnati-based scrap processing and trading firm The David J. Joseph Co., also issued an earnings performance warning for its quarter ending Dec. 31, 2015. The company did not specifically refer to volumes in its warning, instead stating, “We expect lower performance in the raw materials segment due to lower scrap and metallic commodity prices at our scrap processing businesses.”
• Fort Wayne, Indiana-based steelmaker Steel Dynamics Inc. (SDI), which includes scrap processing firm OmniSource Corp. in its portfolio, joined the other firms in warning of disappointing results in the final quarter of 2015. Regarding its ferrous and nonferrous metals recycling operations, SDI stated, “Financial results are expected to decline to a loss position for the fourth quarter 2015, based on lower shipments and metal spread compression.”

Managers of family owned scrap companies contacted by Recycling Today (sister publication to Construction & Demolition Recycling) report nearly identical conditions, with recyclers from different regions of the country all seeing similar volume reductions.

When scrap generators and smaller dealers hold onto supply, it is most often with the hope that prices will rise, in part in response to the newly created shortage of material.

For prices to rise in a sustained way, however, demand for red metal scrap will have to at least be stable and ideally gain momentum. In the broader picture, the supply of mined copper will likewise have to become tighter relative to global consumption and demand.

Whether that is in the cards is difficult to say. Domestically, the U.S. economy may prove to be a stable source of copper consumption and red metal scrap demand, although it appears red metal scrap consumption figures will be down in 2015. On the international front, the forecasts for China in particular are highly skeptical.

ON THE HOME FRONT

In 2014, wire rod mills, brass mills and other red metals producers combined to consume 945,000 metric tons of copper-bearing scrap, according to data gathered by the United States Geological Survey (USGS), Reston, Virginia.

In the first nine months of 2015 (the most recent time period for which data is available), these domestic consumers had melted 669,000 metric tons of scrap, putting them on pace to consume an estimated 891,000 metric tons by the end of the year.

That 5.7 percent decrease may partially be the result of a lack of scrap availability. Although China is buying less red metal scrap from the U.S. than it had been in earlier years, the dwindling supply of scrap has caused consumers around the world to consider their alternatives.

While U.S. copper and brass mills and refineries used 5.7 percent less scrap in 2015, they actually increased their consumption of refined copper, according to USGS data.

Based on the pattern in the first nine months of the year, domestic mills and refineries were likely to consume 1.89 million metric tons of refined copper in 2015, signaling a 7.4 percent increase compared to the 1.76 million metric tons consumed in 2014.

U.S. wire rod mills likely will increase their refined copper consumption by 8.1 percent while refined copper intake by brass mills will tick upward by 7.2 percent.

Overall production figures at such facilities have enjoyed relative stability in the U.S. in 2014 and 2015, as the nation’s automotive and construction sectors have enjoyed steady sales and moderate growth, respectively.

In the construction sector, Ken Simonson, chief economist, Associated General Contractors (AGC), Arlington, Virginia, reported in the first quarter of 2016 that “every type of construction has outperformed its 2014 pace through the first 11 months of 2015.”

Private residential spending increased 10.8 percent over the 12-month period from December 2014 to November 2015, while private nonresidential construction spending rose 13.6 percent during that timeframe.

The consumption of building wire globally, which was 1.03 million tons in 2014 according to the CDA, has a long way to go to reach the figure of 1.7 million tons attained in 2005. While a U.S. construction rebound may be helpful in seeing that number climb back up, when it comes to building booms and copper wire demand this century, activity in China will likely drive the copper market in 2016.

THE OUTSIDE WORLD

Economists venturing into the forecasting realm for 2016 have uniformly pointed to China and its ability to maintain gross domestic product (GDP) growth as a key to determining how commodity prices will trend in the coming year.

When China’s secondary nonferrous metals industry gathered in Ningbo, China, in November 2015, for the annual convention of the China Nonferrous Metals Industry Association (CNIA) and its Recycling Metal Branch (CMRA), the impact of China’s “new normal” economy was a repeated reference point by speakers who took the podium.

Representatives of the CNIA and CMRA warned that the “new normal” economy of China likely means an end to rapidly growing metals production capacity. Ren Xudong, executive vice president of the CNIA, portrayed a mixture of good and bad conditions for nonferrous metals producers.

Many of the base metal sectors, Ren said, have an excess capacity issue and “prices are in a downturn both at home and abroad.”

Figures for secondary metals production in China for the first nine months in 2015 showed aluminum output up 5.5 percent and lead up by 15 percent. By contrast, secondary copper production had dropped by 7.1 percent, according to Ren.

The figures likely reflect the health of the Chinese automotive industry, which consumes aluminum as well as lead in the form of lead-acid batteries, versus its building industry, where less copper and brass have been needed.

Wang Jiwei, vice president and secretary general of the CMRA, said the “new normal” of slower economic growth in China made 2015 a difficult year for producers, with “capacity rates of some enterprises [being] less than 50 percent.”

During China’s 12th Five Year Plan era from 2011 to 2015, major investments in nonferrous production created facilities capable of producing up to 750,000 tons per year of copper or lead in one place.

The five-year timeframe also will have witnessed China having brought in some 33 million tons of imported nonferrous scrap, according to Wang.

USGS figures, obtained by the U.S. Census Bureau, show China’s demand for copper-bearing scrap from the U.S. having fallen significantly in 2015.

China imported 727,000 metric tons of copper-bearing scrap in 2014 and the nation was on pace to import 674,000 metric tons in 2015, representing a 7.3 percent drop.

The ability of copper and brass producers in China to maintain similar buying volumes in 2016 will depend largely on whether the nation’s leaders can successfully maintain GDP growth without relying on as many major massive infrastructure products or the propping up of bloated state-owned enterprises.

For scrap recyclers, the events in China are just one of many factors that will affect how much red metal crosses their scales in 2016 and what price range they can expect.

The author is an editor with the Recycling Today Media Group and can be contacted at btaylor@gie.net.

Has construction gone into neutral while waiting for a green light, or is the industry about to reverse direction? That question has gained urgency as the broader economy experiences increasing turmoil while doubts spread regarding the sustainability of recent construction growth.

Construction spending figures from the U.S. Census Bureau illustrate the ambiguous evidence. For 2015 as a whole, value put in place—spending on projects that were already under way or broke ground during the year—topped 2014 totals by a healthy 10.5 percent. The upturn was well distributed among major segments, with private residential spending up 12.6 percent, private nonresidential spending up 12 percent and public construction up 5.6 percent.

However, recent numbers are much less impressive. Private nonresidential spending has fluctuated in a narrow range since May 2015; the December 2015 total was the lowest since April 2015 at a seasonally adjusted annual rate. (Seasonal adjustment is a statistical technique for removing the influence of recurring patterns such as holiday- or weather-related variations. Annual rate means the monthly total has been multiplied by 12 to allow easy comparison to full-year totals.) Similarly, the December 2015 total for public construction was virtually the same as in May 2015, and was nearly 3 percent below the peak reached in August 2015. Private multifamily construction shrank 8 percent from its all-time high in September 2015 to December 2015. Only new single-family construction has continued to expand consistently, rising for the ninth consecutive month in December 2015.

DIM MANUFACTURING OUTLOOK

The most notable downturn occurred in manufacturing construction. Spending skyrocketed 44 percent for 2015 as a whole. But after setting records in each of the first five months of the year, spending plunged 13 percent from May to December. The growth was propelled by huge petrochemical and fertilizer projects, natural gas liquefaction and export facilities and assembly and parts plants for cars, trucks, aircraft and other transportation equipment.

Many of those projects will continue to build out in 2016, but there has been a dearth of new plant announcements in the last several months. Meanwhile, many categories of manufacturers are struggling with weak foreign demand or stronger import competition as the dollar appreciates against trading partners’ currencies. And domestic demand for oilfield, mining, agricultural and other equipment has shriveled, further dimming the outlook for manufacturing construction.

Warehouse construction is another niche with doubtful prospects. Spending on “general commercial” warehouses, as distinguished from self-storage units, more than doubled from December 2012 to December 2014 but has been nearly flat since then. It appears that the massive building program undertaken by Amazon and other Internet retailers has largely been completed, and there will not be as many new warehouses in the near future. (One exception may be in Colorado, where marijuana growers have reportedly snapped up all available space.)

SILVER LINING

The retail sector continues to struggle. In January 2016, Walmart announced it would close 154 U.S. stores; Macy’s and several other chains also shut stores or closed completely. Nevertheless, the sector offers some opportunities for demolition and recycling as new tenants take over and remodel space abandoned by earlier occupants. More so than in the past, retailers—notably grocery stores—are locating on the first or second floor of multistory apartment, office and hotel buildings rather than in standalone structures.

One of the fastest-growing categories for the past several years was lodging. Hotel and motel construction increased 31 percent in 2015. But this segment also flattened out in second half of the year. There are still reportedly large numbers of projects and rooms that are expected to break ground or be renovated in the next 12 months. But the key metric for many hotel investors, called revenue per available room or RevPAR, has recently turned negative compared to the same week a year ago after steady 5 to 10 percent yearly growth. That suggests many markets may have reached saturation.

On a more positive note, private office construction climbed 26 percent in 2015 to the highest level since 2008. Numerous skyscrapers and corporate office complexes are under way or will soon break ground in a variety of locations, including Seattle, San Francisco, Silicon Valley, Los Angeles, suburban Dallas, New York and Boston. Many companies are replacing or adapting older buildings in city centers, generating considerable demand for demolition and recycling. Suburban office parks, formerly the heart of new office construction, are generally languishing with high vacancy rates, but some of these are being repurposed to add hotels, shopping and entertaining, and sometimes housing.

POSITIVE DIRECTION

Private hospital construction turned positive in 2015 after years of decline. Hospitals now face competition from independent urgent-care centers, outpatient surgical facilities and primary-care clinics in retail locations. Uncertainty over the implications of the Affordable Care Act for hospital utilization and reimbursement rates also may have held down construction spending. Compared to a few years ago, hospitals admit fewer patients overnight and discharge them earlier, to their own homes and separate rehabilitation facilities. Thus, new hospitals are likely to have fewer patient recovery rooms and relatively more space devoted to treatment and diagnostic facilities.

The outlook appears at least moderately favorable for the three categories that account for nearly two-thirds of public construction: highway and street, educational, and other transportation (transit, airports, ports and passenger rail facilities) sectors. Highways, transit and Amtrak received a boost in December 2015 when President Obama signed the first long-term (five-year) federal-aid funding bill in more than a decade.

The legislation not only provides much-needed continuity for the programs but modestly increases federal money for all three types of transportation construction. In addition, in the past few years more than a dozen states have passed fuel-tax increases or other measures to fund their highway construction programs.

Several major airports are undergoing modernization and expansion, among them Dallas-Fort Worth, Los Angeles, Salt Lake City and Tampa, plus plans for projects at O’Hare and LaGuardia. All of these will entail demolition recycling. However, ongoing Congressional refusal to raise or replace the gas tax as the mainstay of federal funding means further increases in highway and transit dollars are likely to be small at best.

A MIXED BAG

Both public and private spending on higher education construction reached record levels in 2015, aided more by capital campaigns than any restoration of public funding. But college and university enrollment has been falling for three years in a row, as the pool of high school graduates shrinks and an improved job market leads both high school seniors and older workers to seek employment instead of more schooling. Some colleges are closing their doors or curbing investment in facilities as a consequence.

Enrollments also have been slipping or level in prekindergarten through high school in many parts of the country as the birth rate and immigration both have declined. Furthermore, more children are enrolling in urban traditional and charter public schools that may have spare capacity or may be in converted buildings. These locations generate demand for renovation and temporary construction to a greater extent than the past model of “more children equals more housing in new suburbs equals new schools.”

The most promising sector for construction in 2016 appears to be residential. Multifamily construction (almost entirely rental units, with very few condos or co-ops outside of Florida and New York) has increased at double-digit year-over-year rates since September 2011, although growth has decelerated in 2015.

Rental growth and occupancy rates still seem to be holding up enough to spur more construction in 2016. Single-family homebuilding and new and existing home sales have been trending upward, albeit irregularly. Existing home sales and—probably to a lesser extent—new multi- and single-family construction generate demand for residential remodeling and additions.

Putting all the pieces back together, it is likely that 2016 will be another positive year for all three construction segments. Residential construction spending should record spending growth of 8 to 10 percent. Private nonresidential spending will do nearly as well overall, with strength in office, electric power, pipeline and hospital construction offsetting weakness in manufacturing, retail, warehouse and lodging segments. Public construction will grow moderately. These numbers augur well for both construction and demolition recycling. However, if U.S. economic growth stalls, all categories of construction may cool rapidly as well.

Ken Simonson is chief economist of the Associated General Contractors of America, Arlington, Virginia.