Fighting for dollars

After having made it through lackluster years from 2008 to 2010, most of the nation’s largest demolition firms are probably grateful to be reporting 2013 revenue figures that are stable or higher compared with 2011.

As characterized by outgoing National Demolition Association (NDA) Executive Director Michael Taylor, most of the demolition contractor member firms he hears from stayed busy throughout 2013 and into the first half of 2014.

“In mid-2013 things started to pick up dramatically,” says Taylor, “with lots of bidding activity, even in California where things had been slow for quite a while.”
 

Not entirely sunny

The upbeat mood continued into 2014 at the NDA’s Annual Convention in Las Vegas in February 2014, says Taylor. “All the iron [heavy equipment] on the floor of the convention was sold — companies were ready to invest in new iron to use on current projects and pending ones,” he comments.

That is not to say that demolition contractors have it easy, according to Taylor, with the most recent challenge being a slowdown in activity in the second half of 2014.

“It’s just slower than it was six months ago,” says Taylor, noting that the economy is still recovering from a major event in the form of the subprime mortgage crisis of 2008 and the recession that followed. “It takes 10 years, they say, to fully recover from an event like the Great Recession of 2009,” he states.

Click the image above to view the full list of the Largest Demolition Contractors.

Another prominent side effect of the recessionary years was the fierce increase in bidding for available work, with general contractors and startups entering the bidding mix as well as established contractors searching beyond their customary geographical regions.

More bidders for fewer jobs inevitably led to profit margin compression, says Taylor, a circumstance from which the industry is still trying to recover. “Margins remain tight and there are still some nondemolition entities bidding our work,” he comments.

Beyond project schedules that seem to gain and then lose momentum in turns, Taylor says a structural problem limiting the industry is an acute shortage of labor that may only get worse.

Taylor points to several factors that are causing the problem:

• the loss of skilled labor during the recession, with many equipment operators and drivers gravitating toward the oil and energy industries, which prospered through the recession;
• the aging of the workforce, with skilled equipment operators, project estimators and other professionals reaching retirement age; and
• enforcement activities aimed at the nation’s undocumented immigrants cutting into the available construction, demolition and truck driving labor force.
   

“We have not always done a good job recruiting middle management to the industry and we are also desperately in need of laborers, operators and truck drivers,” says Taylor.
 

Strength in numbers

In the most recent version of Construction & Demolition Recycling’s 20 Largest Demolition Contractors list, the company atop the list checks in with a figure that creates a dominant presence.

After the merger of the former LVI Services, New York, and Brea, California-based NCM (itself a product of a prior merger), the newly created NorthStar Services Group Inc. represents a consolidation of the companies that held the No. 1 and No. 2 spots on the 2011 list.

NorthStar, based in New York, reports 2013 revenue of $504 million, more than twice the revenue figure reported by the No. 2 company on our 2013 list, Brandenburg Industrial Service Co., Chicago.

Brandenburg is one of several companies on the list that has reported a revenue figure for 2013 that is larger than its 2011 figure. Its increase from $180 million to $193 million represents 7.2 percent growth in revenue.

The No. 3 company on the list, North Carolina’s D.H. Griffin Wrecking Co., experienced a smaller revenue increase in 2013 compared with 2011 at 1.8 percent.

Among the biggest upward movers on this year’s list is MCM Management Corp. of Bloomfield Hills, Michigan. The company’s $116 million reported revenue figure for 2013 is some 93 percent higher than its $60 million figure from 2011.

Another demo contractor demonstrating considerable increased activity in 2013 is Cherry Cos. of Houston. Its $94.5 million revenue figure for 2013 represents 49.3 percent growth in sales.

The 2014 list also contains new names, either from companies that have enjoyed enough growth to make the list or for whom we did not have reliable revenue figures allowing us to include them.

The companies holding the No. 11 and No. 12 slots on the 2013 version of the 20 Largest Demolition Contractors list are both new to the list: Precision Demolition LLC of Lewisville, Texas, and Adamo Group Inc. of Detroit.

The other addition to this year’s list is JW Demolition of Charlotte, North Carolina, with $19 million in 2013 revenue, which allowed it to place 19th on the list.
 

Fits and starts

As the NDA’s Taylor points out, the recovery from the recession of 2008 and 2009 has been unsteady and at times hesitant. If it does not in fact take a full 10 years to recover, to many business owners it will certainly feel like it, he says.

Taylor is retiring as the NDA’s executive director at the end of 2014, and leaves behind an industry sector that has bounced back admirably from the depths it had reached five years ago.

Nonetheless, executives and managers leading the 20 largest demolition firms as they try to work their way higher on our list will face challenges in the ensuing two years along with any opportunities for increased work.

The Associated General Contractors (AGC), Arlington, Virginia, is on the same page as Taylor regarding future difficulties in finding qualified people to perform the work.

The good news, says the AGC, is that the construction industry added 16,000 jobs in September 2014, and “the sector’s unemployment rate fell to 7 percent, the lowest rate for September in years,” the AGC announced in mid-October.

Stephen E. Sandherr, CEO of the AGC, also says, “The number of workers who said they looked for work in the past month and had last worked in construction fell to 604,000 in September. The last time the number of unemployed construction workers dropped that low was August 2007, a time when the construction industry was struggling with widespread worker shortages that prompted project delays and increased costs.”

He adds, however, “Labor shortages happen when a growing industry meets a stagnant pool of qualified workers. It is time to align our education and training systems with current economic conditions so more young people can benefit from the rebound in construction demand.”

The author is editor of Construction & Demolition Recycling and can be contacted at btaylor@gie.net.