Demolition contractors aren't sitting on a mountain of
unsold metal and while signs of a pickup in business are
beginning to emerge, on a flat hill an uptick doesn't
necessarily amount to much.
The demolition industry, which provides cut plate and
structural scrap and heavy melt to scrap processors and steel
mills, has hit bottom and is now beginning a slow rebound, but
the recovery is unlikely to be very dramatic, according to Drew
Lammers, vice president of the demolition arm of Cohen Brothers
Inc., a Middletown, Ohio-based scrap processor, and a past
president of the National Demolition Association (NDA). "It is
now starting a slow uptick, but that hill is very flat. It is a
The tight credit market means developers are having a hard
time getting money to tear down old buildings and construct new
facilities, so any material from demolished buildings is turned
around immediately. "We turn it over as soon we demolish it
because we build into our price the value of that scrap. (It)
is very important to cash flow and the overall bottom line to
the demolition contractor's business," Lammers said.
There is less demolition work being done today, but it is
strictly a consequence of the nation's slow economy, he said.
The credit market is tight and both commercial building and
housing developers are having a hard time getting the financing
to begin a new construction project.
One key to future increases in demolition activity is the
redevelopment of so-called brownfield sites, another industry
executive said. The abandoned or under-used industrial and
commercial facilities normally have some contamination from
past industrial use that must be treated, and in some instances
hauled to a hazardous waste disposal site, but they aren't
among the sites deemed Superfunds by the U.S. Environmental
Protection Agency (EPA), he said.
The cleanup of brownfield sites is largely regulated by
state environmental agencies in cooperation with the EPA. The
federal and state governments can provide technical help and
some funding to clean up designated sites, and sometimes can
provide tax incentives for a cleanup that isn't paid for
outright. Whatever the work to be done, it typically yields
scrap metals to be sold to recyclers and subsequently steel
mills or nonferrous smelters.
Much of the development work in cities often includes sites
already occupied by a building. That's where the demolition
contractor's role comes in. Some are hired to clear the
property down to dirt, while others might be gutting the
interior of an old factory that will be turned into housing or
a commercial facility like a department store. One prominent
example was the gutting of a building that was part of the
sprawling Bethlehem Steel Corp. plant in Bethlehem, Pa. It's
now a gambling casino.
Doylestown, Pa.-based NDA said a recent survey of its
members shows that many of them are optimistic for the
remainder of 2010. Nearly one-third of members said they expect
to tear down more buildings this year, while more than 25
percent see industry activity remaining the same as the
previous year. Only 19 percent said they expect their business
to decline this year.
"Our industry is populated in large part by entrepreneurs,"
Michael R. Taylor, NDA's executive director, said in a
statement. "While they are well acquainted with business
realities, they also tend to be optimistic and look for
opportunities even when the economy is so challenging."
As for scrap pricing, approximately one-third expect tags to
remain the same in 2010, nearly 30 percent expect prices to
increase and another third were either undecided or expecting
scrap prices to decline.
The NDA represents about 1,000 U.S. and Canadian companies
and many international firms involved in demolition work.
A major demolition job would be something like an auto
manufacturing plant, which might yield as much as 15,000 long
tons of structural scrap, steel siding and roofing, Lammers
said. Many of those jobs are finished now. The automakers have
torn down the buildings they wanted to tear down and have
either mothballed or are trying to sell off the others. If they
don't, they eventually will tear those down as well, he
There are plenty of big demolition projects, but the
contracts haven't yet been issued. "The big development
companies are not going to spend the money right now until
their bottom lines have improved and they are seeing good
positive cash flow," he said.
Still, scrapyards are seeing a steady flow of obsolete scrap
from wrecking jobs, Lammers said, noting that domestic
steelmakers are gobbling up the plate and structural scrap as
fast as they can.
These might not be the big demolition jobs like old sports
stadiums or aged auto plants, but scrapyards have varying
definitions of what constitutes a large demolition job.
A demolition project that yields 200 tons of plate and
structural scrap might be a big job for some scrap companies,
while others are looking for 1,000, 3,000 or 5,000 tons. There
is a demolition contractor in Columbus, Ohio, tearing down an
old Delphi Automotive LLP plant that has about 10,000 tons of
plate and structural scrap.
While the plate and structural scrap is readily sold to
domestic steel mills, the secondary grades like No. 1 heavy
melt or mixed scrap might be going overseas, particularly from
those areas close to export yards. "We don't do much in exports
because we still have many steel mills right around us,"
Some scrap also is bypassing the scrapyards entirely, he
said, noting that scrap brokers are dealing directly with
demolition contractors, telling them the length they want it
cut and letting them ship it from the demolition site directly
to the mills. MICHAEL MARLEY