The weekend of March 13-15 saw the onset of sweeping changes in the United States. Coincidentally or otherwise, shortly after Tom Hanks and a National Basketball Association player were diagnosed with the coronavirus, state governments began or expanded the widespread rollout of personal distancing measures, shelter-in-place orders and other restrictions.
Since that time, an increasing number of U.S. workplaces, including construction and demolition job sites, have been shut down or businesses have been forced to drastically change the way they conduct business.
The sudden downshift in construction, demolition and land clearing activity has yielded a predictable downturn in the amount of wood scrap generated for processing and recycling. The result is that the scrap wood market has entered a state of petrification that recyclers hope will be a brief phenomenon that will not lead to long-lasting financial hardship.
The great slowdown
When state governments began ordering or strongly recommending social distancing and shelter-in-place measures, initial guidance was sometimes lacking as to what activities were considered essential.
Companies that accept and process mixed C&D materials, green waste and land clearing debris thus had to gauge not only whether their facilities had the green light to stay open, but also, how many of their customers were likely to be up and running.
In the second half of March, federal agencies began issuing guidelines and delineating essential versus non-essential classifications, but in most cases, these were interpreted and enforced differently at the state or even county and municipal level.
The combination of restrictions and confusion led to a rapidly dwindling supply for many C&D materials recyclers—if they were able to stay open at all.
A survey conducted in late March and early April by Construction & Demolition Recycling magazine found slightly more than 30 percent of respondents reported having one or more of their facilities either ordered closed by state officials or voluntarily closed as an operational decision.
More than 60 percent of respondents to the same survey said their inbound flow of C&D material had been either severely or moderately affected, and some 32 percent of companies had already laid off some employees, with another 21 percent saying layoffs were being considered.
On the East Coast, Ray Kvedaras of Cooper Recycling in Brooklyn, New York, says that the state “has imposed a ban on non-essential construction, so all demo has stopped, and any allowable construction is at a crawl.” Adds Kvedaras, who was contacted in mid-April, “There is very little wood waste; overall, we’re down 80 percent.”
From the West Coast, Michael Gross of San Jose, California-based Zanker Recycling paints a mid-April picture that is nearly as gloomy. “The state of California has listed us as an essential business, thus we have remained open,” says Gross. “Unfortunately, most construction projects are not considered essential, and accordingly, have stopped. We are experiencing a 60 percent decline in tonnages since March 15. Wood waste has been hit especially hard since it is the primary waste material generated in construction projects.”
In the Midwest, Jason Haus of Shakopee, Minnesota-based Dem-Con reports his company has been less impacted, although he acknowledges the Gopher State’s winter season meant wood scrap volumes were already low heading into April.
“Our operations were deemed by the state as an essential service, so we have continued to operate,” says Haus. “Volumes have decreased slightly, but we have been in the winter road restriction time frame [and], comparably to last year, we are on track.”
Essential, but in need of a rebound
The notion of what industries are essential versus non-essential is destined to play a role not only in the generation and processing of scrap wood, but also in the health of its end markets.
On the generation side, slowdowns in construction and demolition have varied widely from state to state. A window into those differences has been provided by Atlanta-based construction site camera monitoring service, OxBlue.
In early April, the firm released its March summary of construction activity (and slowdowns) based on the aggregated surveillance footage at job sites in all 50 states.
The OxBlue findings indicate Cooper Recycling’s dilemma in New York is indeed based on a severe construction slowdown in the Empire State and several others nearby. The monitoring firm’s analysis for March found construction had been most severely curtailed in three eastern states—Massachusetts, New York and Pennsylvania—along with Michigan and Washington.
California was in a “moderate decline in activity” category, while Minnesota was in a broad swathe of Great Plains and Rocky Mountain states that showed few signs of job site shutdowns. The Deep South and Texas, likewise, had not shut down construction activity to a large degree, according to OxBlue.
As of mid-April, states had begun forming loose coalitions in an effort to reopen workplace and commercial activities, with pacts forming in the Pacific Coast, New York City tri-state and Great Lakes regions.
Recyclers will again be keeping a close eye on how their region or state handles construction and demolition activity. Predicts Gross, “We believe that our industry will bounce back swiftly, since future construction projects are scheduled two to four years out.”
For wood recyclers who create mulch, they also will be on the lookout for where landscaping falls on the spectrum of what is essential.
The Fairfax, Virginia-based National Association of Landscape Professionals (NALP) has been tracking state-by-state guidelines on where its industry stands, according to a late March online article from Lawn & Landscape magazine.
The NALP says the Department of Homeland Security has included landscape services as essential in its revised, “Guidance on the Essential Critical Infrastructure Workforce: Ensuring Community and National Resilience in COVID-19 Response Version 2.0.” According to the NALP, landscaping is listed in the Public Works and Infrastructure Support Services section of DHS’s “Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19,” and thus the sector is on the Cybersecurity and Infrastructure Security Agency critical workers list.
Nonetheless, the NALP has maintained a list of all 50 states on its website to provide updates on how state regulators are handling landscaping activities.
In California, “The landscaping industry was not [initially] deemed an essential business and thus shut down most operations,” says Gross. “Mulch markets are at 25 percent of normal for this time of the year. However, we will be ready when the COVID-19 restrictions are lifted.”
Scrap wood’s other large market, as a fuel, has remained essential but continues to face challenges of its own.
Forward fuel strategy
Energy consumption patterns have shifted during the COVID-19 restriction era with considerable declines in personal and leisure transportation and in some industrial sectors.
Wood recyclers say as of mid-April, the markets for their wood fuel products have not been greatly impacted. The trouble they see on the horizon, however, hinges on the likelihood of an overall energy and fuel glut that will have ripple effects.
“There are two reachable wood fuel markets in our area, and they haven’t changed since March,” says Kvedaras. He adds, however, “with the current low energy prices, I can assume they’re struggling.”
Haus sees the same storm clouds on the horizon. “The biggest impact we have is the cost of natural gas. The wood boilers have the ability to switch to natural gas, and the prices have been cheap for that fuel lately; thus, a slower demand in the wood market.”
Oil and natural gas prices began a rapid plunge when COVID-19 emerged in January in the People’s Republic of China, the home of the world’s second-largest economy. Those prices continued a downward trajectory as the virus affected European and then North American economies.
An April 1 write-up by S&P Global Platts pointed to “U.S. onshore prices [for natural gas that] have dipped to multi-year lows.” Adds the commodities information service, “Prices for liquid natural gas, also in oversupply, have been scraping new lows.”
Ideally, sustainability goals and the comfort of many boiler and heating system operators with wood fuel will keep the market viable.
Paper mills remain a loyal consumer of wood-based fuels, with the Washington-based American Forest & Paper Association (AF&PA) finding as of 2015 that “on average, about 66 percent of the energy used at AF&PA member pulp and paper mills is generated from carbon-neutral biomass, which is made from manufacturing residuals that do not end up in finished products, including spent pulping liquors, bark, wood, wood scraps, wood byproducts and process residuals.”
As the traditionally busy late spring and early summer season sets in for wood recyclers, these professionals have plenty to worry about, but potentially, much to be optimistic about. As has become the case in 2020, both the concerns and the hopes of the industry are dependent on the management of COVID-19.
In the ideal scenario, the March and April restrictions give way to a more active economy, producing supplies of scrap wood and stable end markets. How this happens may differ from region to region and state by state, with business owners and managers likely to be tested along the way.