Mutual Interest

Early- and mid-20th century diplomat Henry Stimson observed, “The only way to make a man trustworthy is to trust him.” It’s an approach that can bring rewards but that also carries grave risks (for business owners as well as diplomats).

 

Stimson’s observation provides a starting point to demolition contractors and scrap recyclers as they try to forge a working relationship that may last the length of a project or several decades.

 

Clear communication and trust are the two most commonly cited concepts mentioned by demolition contractors and recyclers when asked about important qualities that can help ensure that scrap from demolition projects is collected and processed smoothly.

 

Large-scale demolition projects in particular call for ongoing communication and a high degree of trust between the contractor and the recycler if both parties are going to look back after the task is over and feel satisfied that the job was done right.

 

THE GREEN LIGHT

On commercial and industrial demolition projects, there is little room for disagreement that revenue generated from metals pulled from the job site is a critical factor when estimating the project.

 

Sparking an Interest

Demolition contractors may find any number of objects or machines on an industrial property for which the intrinsic value can’t be known until some fairly specific research is conducted. Within that category falls emissions control equipment, notes Bruce Rogove of Metalico Recycalytics, Newark, N.J. Emission control equipment and systems, says Rogove, “in most cases will contain catalyst [that often] contains platinum group metals (PGMs).” PGMs commonly trade at a value higher than gold, and at all times in a price range that merits attention. Factories that have been idle a long time may not have such equipment, but “going forward, facilities that are being demolished have been operating in the ‘era of emission control’ that did not exist in the past. By necessity they will have had an emission control system,” says Rogove. Among the types of buildings often containing control systems with PGM catalyst material, Rogove lists bakeries, chemical plants, coffee roasting and other food processing plants, rug manufacturers, industrial paint spray booths, petroleum facilities, pharmaceutical industry facilities, power generating plants and printing and laminating operations.

In many cases, determining the volume and types of metal present in a structure can decide whether a project even gets a green light if scheduling a demolition is not considered urgent by the property owner. Even in cases where immediate demolition is necessary to make way for a new structure, a proper metals assessment remains crucial in the estimating and bidding process.

 

Demolition contractors will estimate a building’s scrap metal inventory before submitting a bid or quote. “The most important thing for a contractor to know on the metals side is the tonnage of carbon steel and the amount of nonferrous metals,” says Mark DeWitt, industrial division demolition manager with the Cherry Cos., Houston.

 

During what DeWitt calls the “takeoff” process, the contractor will take measurements to determine the amount of structural steel, piping and wiring and will conduct an inventory of how many tanks or other obsolete metal objects are on site.

 

Mike Ramun of Allied Erecting & Dismantling, Youngstown, Ohio, recommends that “the scrap recycler must visit the job site and see first-hand the material that will be coming off the site.  He must also fully understand what volumes of each type of material he can expect to be receiving and in what forms he will be receiving that material.”

 

Before the job starts, Ramun says, “The demo contractor should also be sure that each scrap dealer is aware that there is competition for the demo contractor’s business. This will help to ensure that the scrap recyclers’ offers are competitive.”

 

Volatile metals pricing can be a source of joy, sorrow or distrust on a demolition job. It can all depend on which direction the commodity markets move (in terms of joy and sorrow) and how clearly contractors and recyclers have communicated (in terms of distrust).

 

Pricing is commonly pegged to a published source such as American Metal Market, which provides a common benchmark but does not protect against volatility. “We work with formulas [based on published pricing] for a lot of demolition projects and with a lot of our industrial accounts,” notes Drew Lammers of scrap processor Cohen Brothers Inc., Middletown, Ohio.

 

Lammers, who is the current president of the National Demolition Association, spent more than two decades in the demolition industry before joining Cohen Brothers as a scrap buyer.

His dual perspective has allowed him to identify both best practices and potential problem areas in the demolition contractor-scrap recycler relationship.

 

David H. Griffin Jr., vice president of D.H. Griffin Wrecking, Greensboro, N.C., has a similar perspective. His family’s group of companies includes the operation of four scrap yards in addition to its demolition and construction contracting firms.

 

On pricing, Griffin says both demolition contractors and scrap recyclers can be tempted to play the market in the hope that prices will rise while a job is in progress. “If I’m betting that scrap prices will go up, on a large job that can be a $2 million gamble,” says Griffin. “I can be a hero or a goat in that scenario.”

 

Whether “playing the market” or selling scrap quickly off of a job site, Griffin says trusting that a recycler is paying a fair price is crucial. “Some companies out there, like in any business, they’ll chase the best price,” he comments. “We’ll negotiate, but we also like to deal with people we know and who are honest—who will pay us promptly and who will get us trucks on time. As a demo company, we want to focus on getting the job done on time, so to have someone else focus on hauling the scrap out is a plus.”

 

KEEP IT MOVING

“Hauling the scrap out,” as Griffin says, is a key role of the recycler and one that can be more complicated than it sounds in that four-word phrase.

 

Getting the service aspects right can start with the layout of the job site. “We need to know where the holding area will be—where are they going to be laying down the scrap,” says Lammers.

 

Ramun mentions “defined entry/exit points on the site, work areas and restricted areas” as layout features that are important to cover.

 

Proper service also ties back in with how much scrap will be generated from the project and what types. “To serve a site properly, we need to know about how much scrap are they going to produce on a daily or weekly basis and whether it’s going to be, say, a 5-foot prepared product, a 5-foot unprepared product or a mix of different grades in one container,” says Lammers.

 

The project’s schedule can also be a critical piece of information. “A bridge might come down on a Saturday or Sunday, or there could be special requirements at night,” says Griffin. “Sometimes DOT [Department of Transportation] jobs like bridges are scheduled in off-peak hours.”

 

The variety of such information can be staggering, and channeling that information so that it reaches decision-makers is vital. “We ask the recycler to give us a single point of contact with whom we can stay in contact on a daily basis,” says DeWitt, “and we provide a single point of contact as well.”

 

Who those points of contact are can vary depending on the specific job. Griffin says “the site superintendent from the demolition company and then either the buyer or the person who does the dispatching at the scrap yard” are logical candidates.

 

Once such contacts are established, the volume of communication is likely to be high. “At big jobs, they’re talking every day or every couple of days,” says Griffin. “The demo contact can let the recycler know that a lot of plate and structural is about to be generated or that the work site is going to be active on Saturday,” he gives as examples.

 

“Everyone needs to understand that trucking or shipping materials off site is critical to keeping the job going,” says DeWitt. “Time is money.”

 

Having one person from each company on the job who get to know one other and talk regularly can also make it easier to address potential problems sooner rather than later.

 

No two demolition jobs and no two loads of demolition scrap are identical, which can itself be a source of tension. “Contractors don’t necessarily know the grades of material as well as recyclers, or they assume that everything they are shipping is perfect—and I was guilty of that too,” says Lammers.

 

Demolition contractors may send over a load of “clean sheet” steel scrap that is not quite so clean. “The sheet metal could have tar on it from the roof or insulation attached,” says Lammers. “You can’t send that to the steel mill as clean sheet, so it has to go through the shredder and it brings a different price. Recyclers know the grades and the specifications they have to produce.” Similarly, wood and concrete in a scrap container “can be an issue between the contractor and the recycler, because it brings price deductions,” says Lammers.

 

LONG-TERM OUTLOOKS

When demolition contractors work in their home town or market region, they will commonly work with a scrap company with which they have an established relationship.

 

When in a new regional market, the search process for a scrap recycler can start with that same company. “Some of the recyclers we use here in Houston are nationwide companies and they have facilities throughout the U.S.,” says DeWitt. “That can provide us with a personal introduction to the company through our contact here.”

 

Even a local contact at a non-national scrap company can be a good resource, says Lammers. “A lot of contractors look for recommendations from their hometown scrap dealer—I know I get calls like that,” he comments.

 

Trade groups and regular attendance at trade shows provides another path when approaching a new geographic market. D.H. Griffin Wrecking is a member of both ISRI (the Institute of Scrap Recycling Industries Inc.) and the National Demolition Association.

 

Griffin says both groups have helped his company know who to approach when they look for allies in a new market region. “Companies that are long-time members of those groups have been in business for awhile and have likely provided good service to stay in business that long,” he remarks.

 

A reputation for service and quality can let a company get its foot in the door and provide the basis for long-lasting relationships between contractors and recyclers. “Speaking for our company, we have multiple relationships with scrap companies that go back 20 years or even as long as 40 years,” says Griffin.

 

When he was a demo contractor, Lammers says his company worked closely with two recycling companies with facilities found in different sectors of his firm’s operating region. “Most demo contractors will stick with a scrap company that they have grown to trust and that has been good to them,” he states. “The key words are trust and reputation.”

 

Says DeWitt, “Over the years, we’ve built a lot of relationships with recyclers throughout the United States. If both parties do what they say they are going to do, then every project can be a win-win situation.”

 

The author is editor-in-chief of Recycling Today and can be contacted at btaylor@gie.net.