Wrecking and Demolition Work

SIC 1795

Industry report:

This category covers special contractors that primarily wreck and demolish buildings and other structures, except marine property. They may or may not sell material salvaged from demolition sites. Businesses that do marine wrecking are in SIC 4499: Water Transportation Services, Not Elsewhere Classified.

Despite opposite objectives, wrecking firms are grouped in the larger trade construction industry. This placement is due to the similar physical and economic nature of demolition and construction work; they use many of the same tools, and the former activity often precedes the latter.

The wrecking and demolition industry is grouped into two sections: building and nonbuilding demolition. The first category demolishes houses, commercial establishments, and office buildings, while the latter removes highways, streets, and other noninhabitable construction projects. Companies in the industry may specialize in a specific type of wrecking and demolition. For example, some firms concentrate on demolishing small single-family homes.

According to industry reports, roughly 4,100 firms operated in this industry in 2010. These companies employed over 37,000 workers and secured more than $4.4 billion in sales. Many of the firms were small, family-owned companies that had been in business for a generation or more. About 75 percent of firms had fewer than 10 employees. General contractors did about 20 percent of all demolition work.

Before the 1930s, buildings were usually demolished by hand tools, which could take many months for an average-sized building. Newer building techniques developed in the early twentieth century gave rise to larger, sturdier buildings. This development, coupled with methods developed in post-World War II Britain to clear building debris, brought new demolition techniques. Because so much of London had been bombed, civilian and army units were mobilized to help clear the destroyed buildings. The need to clear large sections of rubble and debris eventually led to quicker and more large-scale building removal techniques.

Another effect of World War II on the wrecking industry was a U.S. construction boom in the prosperous years afterward. The returning troops, a population shift away from urban and industrial areas, and a baby boom led to severe housing shortages in many parts of the country. It also was necessary to clear older sections of cities to make room for new apartments and houses. The 1960s push toward urban renewal also played a role in the development of the industry. The idea began in the 1930s, when the Roosevelt administration tried to improve living conditions in poor urban areas where old tenements housed people in crowded, unsanitary conditions. In 1937, the U.S. Housing Authority, the forerunner of the Department of Housing and Urban Development (HUD), began to clear large tracts of slums and erect federally subsidized housing. More wrecking and demolition firms set up shop to meet the higher demand. Urban renewal continued to affect the demographics of American cities well into the 1970s.

The decline of American manufacturing since the 1970s showed in the number of related edifices torn down in 1987--15 percent were former industrial buildings. The next largest group was commercial structures, such as stores and restaurants, which made up 12.4 percent of the buildings demolished. Office buildings were next, with 10.1 percent of the total, followed by single-family homes at 5.8 percent. The rest of the structures torn down by the industry in 1987 were, in descending order, highways and streets, blast furnaces, petroleum refineries or other heavy industrial complexes, hospitals and other institutional buildings, apartment buildings, and warehouses.

Various demolition methods, ranging from the traditional wrecking ball to explosives, were often used in conjunction up until the 1990s. While they often receive widespread media coverage, implosions account for less than one percent of all demolition work. By the late 2000s, the wrecking ball had largely given way in demolition projects to controlled demolition--the taking down of a building in a manner that allowed debris to be controlled by the demolition contractor. The modern, high-powered excavator with a specialized attachment was the cheapest, safest, most efficient way to demolish a smaller building. Some in the industry called for distinguishing between "demolition," which indicates complete annihilation, and "deconstruction," which places more emphasis on the fact that some materials will be reused.

Another trend in the industry in the late 2000s was its reduced use of landfills in favor of recycling. California had the greatest amount of recycling activity, followed by Florida, New Jersey, Texas, Minnesota, Washington, and Illinois. In 2008, the State of Florida passed the Energy, Climate Change and Economic Security Act, which required the state to reach a 75 percent recycling by 2020, the highest of any state. All state agencies, schools, multifamily housing units, and hospitals are required to participate. In addition, all unlined construction and demolition debris landfills must develop a materials recovery facility. In 2008, the National Demolition Association announced an inaugural International Symposium on the State of C&D (Construction & Demolition) Recycling, held in fall 2009. The symposium was the first of its kind.

In 2010, the Occupational Safety and Health Administration (OSHA) altered its penalty policy for safety violations to increase fines. Perhaps the most important change was that OSHA stipulated a fine of up to $70,000 for repeat offenders of safety violations. A single serious offense can be charged up to $7,000. In addition, the look-back time to be considered a repeat offender increased from three years to five years. In general, the industry anticipated a much stricter environment of enforcement/penalty by OSHA in the early 2010s.

Like many businesses in the United States in the late 2000s, wrecking and demolition contractors were dealing with the effects of a down economy. Because building and redevelopment projects had come to a screeching halt, demolition companies lacked work. In addition, prices for the scrap metal that demolition companies sold once the structures were dismantled were low. For example, general scrap metal was selling for about $130 per net ton in early 2009, down from 2008's summer price of $350; prime scrap metal was going for $200, as compared to $700 in 2008. As a result, demolition and wrecking companies were charging more for their services, which, because of the lack of jobs, was a tricky business. According to a January 2009 Medill Report article, "Now more than ever, demolition companies are finding themselves with bigger losses and fewer jobs."

By mid-2010, scrap prices had rebounded to about $350 per ton, and some jobs were coming on line from the funds apportioned by the American Recovery and Reinvestment Act of 2009, which distributed the $787 billion into the U.S. economy, much of it to improve the country's infrastructure. However, state and local government spending, as well as commercial spending, remained sluggish.

The wrecking and demolition industry is composed of two segments. Large heavy contractors, such as the Walsh Group Limited, of Chicago, Illinois, with revenues of $3.6 billion in 2008, have integrated demolition services within their highly diversified portfolio of services. However, many demolition companies are much smaller enterprises, dedicated solely to demolition, removal, and recycling. According to Construction & Demolition Recycling, some of the top demolition companies in the United States in the late 2000s were Brandenburg Industrial Service Co., headquartered in Chicago (estimated revenues of $160 million; 500 employees); D.H. Griffin Wrecking Co. Inc., headquartered in Greensboro, North Carolina ($145 million; 450 employees); CST Environmental Inc., headquartered in Brea, California ($104 million; 600 employees); and MCM Mgmt. Corp., headquartered in Bloomfield Hills Michigan ($91 million; 400 employees).

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