In this exclusive interview with Portable Plants, National Demolition Association (NDA) President Chris Godek, the owner of New England Yankee Construction, and Executive Director Jeff Lambert share their insights on the market, how their members adjusted throughout the year and what to expect in the months to come.
Infrastructure
As the topic of infrastructure increasingly gains momentum on both sides of the political aisle, how would the passage of any potential infrastructure funding impact your members and the industry as a whole?
Godek: Well, anything that’s going to put more money into our industry – be it directly into demolition work or into infrastructure work, bridge work, highway work – is going to be beneficial to our industry. A stronger economy means more work, and it helps us. Anything that generates work that a lot of our members perform means the trickle down will generate a lot of work for our industry.
We find ourselves in these untenable times where we have to be nimble and do things a little differently than we have done. What was good for yesterday or last month isn’t necessarily what’s good for tomorrow.
But any infrastructure spending would be a boon to our industry, whether there are contracts awarded to us directly as contractors, or we feel the effects through the trickle-down.
Lambert: We did a member survey, and about half the respondents indicated that they do state and federal work, specifically on infrastructure – bridges, heavy highway work, work on pipelines, power plants, coal plants. So if a bill does pass – and there’s some debate over whether or not that would happen – it would certainly benefit those members and benefit the industry.
Our main concern is with tax revenues both at the state and local [levels], expecting that pool to dry up and, in turn, local projects drying up. We think that if an infrastructure bill does pass, it would offset the work that many of our members had slated on their backlogs for the end of the year that now look like they might be drying up.
We’re looking forward to hopefully something to happen before the election but, as you know, in an election year, the chances of it passing prior to [are] a toss-up right now.
Coronavirus response
As it pertains to the coronavirus, how is the current economic environment among NDA members? What are some of the challenges they still face, and what are some reasons for optimism going forward?
Godek: The main effect for our members was state shutdowns. If you happen to live in a state where your work was deemed nonessential, you couldn’t work. That’s one of the big changes right now.
What we’re seeing now is a lot of the work we had on backlog that was supposed to start now still has to start. And the work that was shut down because of COVID-19 has to get done now, too. So we’re just seeing a whole different set of pressure.
[The] labor shortage has always been a great pressure for our industry. We’re feeling the hit of that right now. That’s sort of the same-old-song type of thing; we’ve been experiencing a labor shortage and labor issues, and COVID-19 is just exacerbating that.
When you talk to a lot of our membership, it’s not so much ‘hey, it’s this new thing we’re dealing with.’ Instead, it’s ‘it’s just made this old thing a lot more tender to deal with.’
Lambert: Only 17 percent of our members laid off or furloughed workers during the deepest part of the crisis while 72 percent have not reduced their labor. So that was sort of a silver lining for us. But there’s still a worker shortage out there. Now, as companies are ramping back up, they’re looking to fill those slots. In some locales, there isn’t the workforce there.
In terms of backlog, the survey indicated close to 17 percent have not been affected, but 55 percent say projects are on hold one to three months or canceled. What we’re seeing is the backlog is shrinking from an industry-high of nine months down to four and five months.
Long-term, work is going strong right now and things are picking back up. We’re seeing through the fall people will be working through their backlog. We we would anticipate a dip in the fourth quarter and the first quarter of next year.
Market impact
By market segment, are any areas of the industry faring particularly better or worse than others?
Godek: Definitely. Those of us that perform work in the environmental remediation field, that group seemed to not stop and actually picked up work. We’ve seen a lot of members that perform remediation work being involved in COVID-19 cleanups and sanitizing. That segment has been doing very well.
With heavy highway, I think they had a little bit of a stutter, but I haven’t really heard of anybody completely shut down with no backlog. I think everybody has been pretty busy.
One of the things to remember in our industry is we work with respirators and PPE (personal protective equipment) day in and day out. So for us to acquiesce to the guidelines and added restrictions of COVID-19 was a little easier task than some of your regular trades.
The group that probably performed the best out of us is environmental remediation. We have members that are cleaning buses and hospitals, so we’ve been able to find our way through this luckily.
Lambert: Some of our members are horizontal in the industry, so they do total demolition; they do interior, but also some of them do recycling and have recycling facilities.
Obviously, the tax finances have been shrinking with many local governments pushing off projects in the long-term. We think our members that rely on state and local contracts will be the hardest hit and need to start planning now for an eventual downturn in [the fourth quarter]. Demand for new construction will be meaningfully dampened by the empty storefronts and office suites left in the pandemic’s initial wake.
But if there’s one thing about the demolition industry, it’s that our members are resilient, they’re resourceful and they’re creative. We’re hearing stories of members doing remediation on buses [and] cleanups at hospitals, so they’re re-tooling and finding new work that way.
How the industry has united
Have you seen or heard of any positive or uplifting stories among National Demolition Association members during the last few months?
Godek: Today, you’re finding that our members are on the jobsite from the beginning to the end. It used to be we would come in, do demolition and leave the site. Now, they’re holding onto us for as long as they can. As Jeff said, we’ve learned to use our market horizontally. We encompass as much as we can on the project. We kind of have that get-it-done feeling; we do dangerous work safely.
So there have been some feel-good stories – the decontamination of buses and hospitals and the fact we’ve been able to keep employees working through tenuous times.
Back before there was the extra stimulus money for unemployment, we had to keep people working and we figured out ways to do that. There were times when we left guys working in the shop, and it’s a hit, but I think those are some of the unsung stories.
Our industry, as a whole, though we like to brag to each other about how great we are, I don’t think we tell everybody else about the genuine people we are. Those are the real feel-good stories that everybody figured out a way to keep their business going and, more importantly, how to keep their employees safe and working.
Lambert: I also see a positive, uplifting side of this with safety protocols. Almost 90 percent of our members implemented daily toolbox talks, specifically addressing COVID-19, and 100 percent adopted a COVID-19 exposure prevention, preparedness and response plan. So in terms of safety, the forward-thinking and proactive approach to this within the industry has been very uplifting and shows the care our industry has for its employees.
Industry outlook
The first half-plus of 2020 was an unpredictable and challenging time for the construction industry as a whole. What’s your outlook for the rest of this year, and even into early 2021?
Godek: There are going to be changes in the work that we do, there’s no doubt. Class A office space may be a thing of the past. You’re not going to want to try to shove as many people in a space as you can and worry that you may lose half your workforce overnight.
We realize how fragile our supply chain is. With manufacturing and warehousing, I think we’re going to see a lot more money put into that sort of work, where we have more materials built, made and warehoused in the U.S. so they’re available to us. And the same for manufacturing.
Infrastructure is going to be a big deal. It’s one of those things where if we’re going to spend money, why not fix up your own house a little bit?
It remains to be seen what happens to the storefront-type of buildings and the large box stores. They seem to be weathering the storm right now, but again, it remains to be seen.
If I was betting, I’d be betting on manufacturing and warehousing right now as becoming the next bigger markets. And then, to a certain degree, the housing market.
Lambert: There are reasons for optimism. The demolition industry is one segment of the economy that could emerge stronger from this pandemic.
Our members are resilient and always have been. They’re resourceful. Our survey told us that members staggered work, took temperatures on-site, shut down projects and then made plans to get back up and running.
So there is good reason to be optimistic as we go forward, and hopefully we see some larger-scale projects through infrastructure.
I know just anecdotally that all of our members are full steam ahead right now. Everybody’s on the jobsites [and] everybody’s back to work, so hopefully that continues here in the near-term and through the long-term.