Hot topics: National Demolition Association leaders address issues facing their industry 2005.

What are the biggest issues facing the demolition industry? Construction & Demolition Recycling magazine Associate Publisher William Turley sat down with the members of the Executive Committee of the National Demolition Association late in 2004 to discuss this and other questions. The committee is made up of William Moore, Brandenburg Industrial Services, Chicago; R. David Loewendick Jr., S.G. Loewendick & Sons, Grove City, Ohio; Leonard Cherry, Cherry Demolition, Houston; Drew Lammers, King Wrecking, Cincinnati; Raymond Passeno, Bierlein Companies Inc., Midland, Mich.; and Michael Taylor, executive director of the association, based in Doylestown, Pa.

C&DR: So, what are the biggest issues facing the industry?

Moore: Regulation, especially recycling-wise and disposal.

Passeno: LEED programs that are coming in, they are affecting the industry. Asking us to recycle things there are no markets for. We try to tell them there is no market for it. Usually we are able to convince them.

Moore: Disposal issues usually mean cost and distance.

Taylor: Seven years ago, we surveyed the industry and asked what the biggest problem facing the industry was going to be. Bonding, insurance, raising capital were of course heard. But universally, the highest number of responses said managing their waste. They saw the landfill prices going up, and this pressure from government agencies to mandate recycling, including materials that can't be sold. The biggest problem remains what to do with the amount of material generated by the industry annually.

C&DR: Hasn't there been a response from the industry toward recycling?.

Taylor: Absolutely--a fantastic response. Sure, it was done for environmental protection, and for good PR, but they did it mainly because they could make money at it.

Moore: Even if you don't own a recycling plant, you can take a load of concrete to a crusher for anywhere from $10 to $ 50 [per container] versus $400 to a landfill.

Cherry: We get whiplashed. We get the state legislatures, through strong lobbying efforts from the natural aggregate or landfill concerns, that are attempting to limit the recycling opportunity by legislation. Then we get the bureaucrats pushing from the opposite direction, wanting to enforce additional recycling. Consequently, you find the recyclers and the demolition contractors stuck in the middle, getting squeezed by the legislation on one hand and the bureaucrats on the other.

C&DR: Other regulations? Safety?

Passeno: The safety regulations, for the most part, are pretty dear. What is difficult is NESHAP (National Emission Standard for Hazardous Air Pollutants) regulations and the way they are interpreted by different states. The OSHA regulations are pretty close state-to-state. When you come to the crushing, you can get a permit in some states in two days; other states it takes six months to get a permit for a portable crusher. To some regulators, that is no different than setting up a quarry. It's crazy. Then there is the lead paint issue on concrete. Some states say you can use it as road base, other states say you can't crush it at all. It's inconsistent.

C&DR: Is this something like the rules regarding abatement of asbestos consistent?

Passeno: There have always been gray areas in NESHAP. In the early 1990s, there were some attempts to clean that up, and it helped. Still, each state interprets them differently.

Moore: But we don't have the problem with safety that we do with environmental. (All agree). When they developed OSHA in 1970, they gave the states the choice of having it run by the federal government or the state could make their own plan. It is pretty uniform across the country.

Passeno: Some states take it farther than federal OSHA does. But most states don't have the departmental expertise to develop their own regulations, so for the most part the states take what the feds say. With OSHA, there is not much to solve. We are trying to meet with federal EPA and tell them that they have states out there that are using [their] regulations as a revenue stream. They are not following the law. In some states it may be one person in charge of the permit. That person may say, "The permit application you submit is incomplete, you have to give me this and this." You reply, "The law doesn't say I have to give you that." He says, "Well I am saying you have to give me that." They are making stuff up as they go.

C&DR: Are the waste franchises a problem?

Passeno: Depending on where you are in the country.

Loewendick: Franchises pop up sporadically. If tackled properly they can't enforce them anyway.

C&DR: Insurance?

Moore: It has gone up slightly in the past year. It is not a problem for the big contractors, [but] more of a problem for the small guys, and the guys who have a rash of claims. But then, they are always going to have those problems.

Taylor: Many demolition contractors can't compete because the workers' compensation rates are often higher than they should be, based upon the industry as whole. Big accidents are rare, and fatalities are rare. We do have the normal construction accidents, falls, hit by, struck by. The workers' compensation rates in some states do not reflect the reality of the industry's actual work experience.

Cherry: That is only applicable in about a third of the states. The majority of states now use the construction codes for &construction. That means if I am demolishing a building, the workers' comp code for that application is the code for construction. Those other states are truly doing a disservice to the contractors in our industry within those states because the rates are so high that there are only a few companies bidding on the work, it raises prices. It encourages out-of-state bidders. Consequently, the out-of-state contractor can use workers' comp at a lower price.

C&DR: What is the situation on contractors who do substandard work?

Moore: I think among this group in this room the jobs we bid, the customers aren't the type who would hire that type of contractor. They would set the pre-qualifications so they don't get those kinds of people.

Taylor: The association is always interested in maintaining the quality of the industry's work. We are always trying to educate the clients and our members in knowing the type of work you are doing. The industry is concerned about quality control. But you are always going to get those guys running ahead of their money.

Loewendick: They are largely unregulated because they are in and out so quick and no one keeps track of them. They are working in places where they are not readily seen.

Cherry: That is the advantage of our trade association. Not only to educate our members to help bring the industry as a whole to a higher standard, but also to educate the general contractors and the public as to the services our industry is providing, so they can make educated decisions.

C&DR: Are reverse auctions still affecting the industry?

Loewendick: We see them more and more. I think they do a disservice to the customer. Basically they are shopping online. How low can you go? People get caught up in there, and end up getting the job. They might have been cut out of an extra $100,000 to do the job properly and begin to look for shortcuts.

Passeno: A national purchasing organization has come out and said, 'Reverse auctions are not appropriate to buy construction and demolition type of work.' At some point you can only go so low, and then you have to start cutting scope. Someone ends up winning these bids and has to cut quality. We have seen some of the owners that have used them in the past are shying away from them now.

Taylor: Even the federal government is moving away from low bidding, and looking to pre-qualify people. There is still going to be a low bidder because the law requires that.

The problems are from the guy with a couple of pick-up trucks and the backhoe, who might go in and do half the house and disappear. They give the industry a bad name.

Moore: Or he starts up again next year or week, under a new name. One way we have suggested to customers to get quality contractors is to include a liquidated damages clause of at least $2,500 per day in the contract, or something similar.

C&DR: Self-demolition?

Moore: We see it mostly in interior demolition. It is easier work to do, they have the guys to do it. In Chicago we see the carpenter's apprentice at $14 an hour doing it, rather than laborers at $27.

Lammers: A disadvantage we have is that when we bid to the GCs they get to see our number, they already have a number on it. They think, 'If I want to do it, it will cost me this. If they do it, it will cost me this.' They get to see our numbers and [it is] not a fair situation for us. We actually tell our contractors, send us your bid, we want to see your bid, too.

Moore: There are certain contractors we don't bid to. We tell them, 'Why, you are just going to do it yourself.'

Passeno: After you get burned a couple of times, you provide numbers then find out they did themselves, the next time they call you, you pass. Sometimes we get asked to bid, as we ask for the spec. If it is a simple interior gut, they are going to do it themselves, for the most part. If it's a multi-story on a tight time frame, they probably are not going to bite that off.

Loewendick: Since the price of scrap has gone up, we have seen a few times where the owners are trying to take down their own facilities just to get the metal. Sometimes they make a big mess to where it becomes a Superfund site, and we have been called in to fix the mess. They have just thrown the asbestos on the ground, stuff like that.

Taylor: We like to believe we can do it cheaper than the GCs because we know how to do it, we have trained people, and the equipment. The change in the association is to say to the general contractors, if you are going to do demolition, join the National Demolition Association. We think we can show you how to do this a cost-effective manner, and maybe convince them to use a regular demolition contractor.