Rock-solid performance

While many demolition firms were lamenting scrap prices in early 2015, those making a living recycling concrete and aggregates appear to be having little trouble finding work. Most of the companies ranking on Construction & Demolition Recycling’s (C&DR’s) 2015 list of the 20 Largest Recycled Aggregates Producers experienced double-digit growth in tonnage volumes from the previous version of the list published in 2013.

Those who reported tonnages for this list saw on average a 10.7 percent increase in volume in annual tonnages from 2012 to 2014, not as major of a jump in volumes experienced from 2010 to 2012 when volumes were up 20 percent; but it is certainly a positive sign and one that seems to be in line with other forecasts from the overall construction industry that also point to growth.

In its latest report, Raleigh, North Carolina-based research firm FMI forecasts total construction put in place (CPIP) for 2015 to grow 8 percent. This supports earlier FMI predictions that CPIP will top $1 trillion in 2015, something the market has not seen since 2008. “The positive news for the construction industry indicates that the economy is on track for a resilient recovery,” FMI says.

Those sentiments were echoed by Skokie, Illinois-based Portland Cement Association (PCA) Chief Economist Edward Sullivan, who predicted a 5 percent increase in overall construction activity each year through 2019 during his presentation to C&D World attendees in Nashville, Tennessee, in late March.

Click the image above to see the full list of the 2015 Largest Recycled Aggregates Producers

“I am among the most optimistic economists in the construction industry today,” Sullivan told attendees, while also noting he has a reputation for being a conservative construction economist.

PCA is seeing improvement in the cement and construction industries, job growth, consumer spending coming back, bottom lines of corporations improving and banks in stronger positions than they have been in recent years. A result of coming out of the recession, Sullivan said, is pent-up demand.

“You don’t need an economist to be optimistic, you see it in your day-to-day operations,” he said. “It’s a different game.”

Sullivan continued, “This is the first time in eight years that you’ve had residential, nonresidential and public all contributing to growth. In my industry when that happens, it is not unusual to see double-digit growth rates.”

Sullivan said the oil industry is one area where the association sees problems, yet of all nonresidential sectors, only “hospitals and institutions, religious and education” showed a decline in growth in 2014. In 2015, only the hospitals and institutions segment is expected to see a decline of approximately 1.8 percent, while all other areas will experience some growth, according to Sullivan. By 2016, he said, growth is expected in all categories.
 

Breaking in down

Recently released 2013 C&D debris generation volumes from the U.S. Environmental Protection Agency (EPA) indicate Portland cement concrete makes up the largest percentage of the C&D debris stream at 67 percent, followed by asphalt concrete, which makes up 18 percent. Portland cement concrete alone accounted for 352.9 million tons of material generated. Many millions of those tons are processed by the largest recycled aggregates producers in the country.

After comparing total tonnages of volume data received and calculating estimates based on that data, the list of the largest aggregates producers stayed largely among the same 20 companies, however, some newcomers to the list in 2015 include Ferma Corp., based in Mountain View, California, with 1 million tons; B&B Wrecking, Cleveland, reporting 500,000 tons; and Transcor Recycling of Tampa with 350,000 tons.

Ferma’s Jim Rawson isn’t surprised that his company made the list. “We are swamped,” he says. “We don’t see it slowing down.”

Rawson says buildings in California tend to have more concrete in them than other parts of the country because of the threat of seismic activity.

The heavy amount of concrete in construction could certainly explain why five of the largest recycled aggregates producers on the list are based in the Golden State.

Kroeker Inc., Demolition & Recycling Contractors, based in Fresno, California, took advantage of California’s dry conditions to continue processing material through the winter months.

“We didn’t have much wet weather so we were able to run more consistently without fighting the rain, mud or wet material,” says Jeff Kroeker, secretary/treasurer of Kroeker. “What little rain we did get did not affect our production rates as it has in years of ‘normal’ rain fall. This allowed the civil work to continue, which in turn kept the materials coming into and back out of the recycling yards.”

Kroeker also saw an uptick in business from 2012 to 2014, thanks in part to the weather. Recycled aggregates volumes increased by 510,000 tons from the 2012 estimate for the demolition and recycling firm to 1.34 million tons.

The highest ranked performer on the 2015 list, Independence Excavating, based in the Cleveland suburb of Valley View, Ohio, reported it processed for recycling 4 million tons of aggregates in 2014, a 14 percent increase from its reported volume of half a million tons in 2012. Cherry Crushed Concrete also recycled that many more tons, which for the Houston-based company was a 25 percent increase over its 2012 volumes.

Jay Smith, president of Las Vegas Paving, Las Vegas, No. 14 on our list, says he is happy to see business improving, although he says business is certainly not what is was a decade ago.

“In 2006, we were right at the peak of our activity, and things have kind of gone down since then,” he observes. “We bottomed out in 2013 and now it is on its way back up. We may not be what we were back [in 2006] in tons but we are there in money to date.”

At its 2006 peak, Smith says Las Vegas Paving employed about 1,400 people, and it dropped to about 500 during the worst of the recession. Las Vegas Paving now employs 1,000 workers. Inflation also has played a role in the business, Smith says. “We are doing more in dollars, but dollars don’t relate to tons,” he remarks.
 

A bright future

Signs of continued growth for recycled aggregates producers are many. For one, the PCA says it expects global cement consumption to grow throughout 2015 and continue throughout the next year, albeit at a slower rate than in the past.

A report released by the PCA indicates that cement consumption among developed economies increased by roughly 9.2 million metric tons in 2014, followed by another 9-million-ton increase in 2015.

“Most of the gains in developed world cement consumption is attributed to North America,” says PCA’s Sullivan. “With an expected growth of more than 7.4 million metric tons, the North American region is expected to continue to expand at a faster pace than most other developed countries due to continued national economic growth.”

As well, the most recent analysis of Labor Department data by the Associated General Contractors of America (AGC), Arlington, Virginia, for the month of May 2015 says construction firms added jobs in 40 states and the District of Columbia between May 2014 and May 2015 as well as in 28 states and D.C. between April 2015 and May 2015. AGC officials note that the mix of states adding and losing construction jobs continues to vary amid fluctuations in demand.

“Construction has outpaced the overall economy in adding workers nationally but the mix of states with construction job gains keeps changing,” says Ken Simonson, AGC’s chief economist. “The top 10 states for job gains from April to May had previously lagged in adding construction workers, while energy-producing and other states that had record construction employment a few months ago have slipped.”

California added more new construction jobs (46,600 jobs, 6.9 percent) between May 2014 and May 2015 than any other state. Other states adding a high number of new construction jobs for the past 12 months included Florida (28,200 jobs, 7.2 percent); Texas (20,300 jobs, 3.1 percent); Washington (18,100 jobs, 11.6 percent); and North Carolina (15,600 jobs, 8.8 percent). Idaho (11.8 percent, 4,200 jobs) added the highest percentage of new construction jobs during the past year, followed by Washington, Michigan and North Carolina.

The author is the editor of Construction & Demolition Recycling and can be contacted at ksmith@gie.net. Research assistance was provided by Brian Taylor, an editor with the Recycling Today Media Group.