Deconstructing profits prove worthy
by Mike Breslin

Demolition is all about speed, safety and maximizing the use of equipment to level a structure and remove the debris from the site as cost efficiently as possible – recycling scrap metal, wood, or concrete is often a secondary consideration and much is dumped in landfills.

Conversely, deconstruction or hand-dismantling involves the slower, meticulous process of tearing down a building to maximize material recovery for recycling or reuse. With new home construction and the remodeling business in the dumps, dismantling and the sales of recovered building materials is holding its own, even prospering in many areas of the country.

Gary Delp, the owner of Heritage Timber in Missoula, Montana, has been dismantling buildings for 15 years and has removed buildings as large as 50,000 sq. ft. Delp said, “Over last year we’ve had a 10 to 15 percent increase in our business.”

Brian Alferman, a board member of the Building Materials Reuse Association, and the associate director of Habitat for Humanity’s ReStore in Kansas City, said, “We are in a very low period of deconstruction right now. In fact, we have only deconstructed one house this year – last year and the year before we were doing about 25 a year. This economy and the housing market specifically have taken a toll on our deconstruction opportunities.”

Reclaiming old growth wood is highly competitive simply because it has become very profitable. Venerable grains are highly prized and in strong demand by architects, decorators and builders for their aesthetic qualities they bring to projects. As the supply of treasured beams and boards become scarcer, prices are climbing. “There’s been a general trend in the kind of materials we deal with, including antique lumber and large timers, where there’s been greater value placed on them by high-end home builders, homeowners trying to make more sustainable choices, and even commercial builders. All of a sudden the material is more valuable,” said Delp.

For the first job Heritage did, Delp didn’t have to buy the building. He tore it down and sold the materials. “But if I were looking at the same job today there’s a good chance I would have to pay for the building. Back then my wholesale price for timbers was $.50 a board foot. My wholesale price for timbers now is $2.00 a foot.”

Generally speaking, older wood with aged patina and a distressed look is much more expensive than new wood. In Heritage’s market, the most in demand wood is Douglas Fir due to the rich brown color it gains with age. “There’s no way to compare the price of new wood to 80 to 100 hundred year old timbers that have rich, dark color because you can’t buy it new.”

Of course, not all wood coming out of a deconstruction is that desirable. “Newer lumber out of an older building is cheaper than new wood by anywhere from 10 to 50 percent, depending on condition,” said Delp.

Roof-down deconstruction requires heavy manual labor supplemented by articulating cranes, forklifts, power saws and pneumatic de-nailers. Heritage processes material on-site, which involves de-nailing, cutting off split ends, recording inventory, unitizing by grade and wrapping and banding for shipment. “We’re getting more into retail because the mark-up is better. On big jobs, it used get loaded onto trucks and go directly to whoever was buying it,” said Delp.

There’s more in old buildings than wood, however: “If the fixtures are in some way unique, or antique, or just cool, we store and sell them. Otherwise we donate them to our local reuse center. I think dismantling could be a growth industry,” said Delp. Many building codes are ambiguous about using reclaimed wood. In theory, each piece of used wood should be inspected by a lumber grader, but in most cases it’s not enforced. Heritage sells scrap metal, I-beams as structural steel and sprinkler pipe is recycled by a company that makes cattle feeders.

“For now, most of the money we make is with the decorative wood. Whether or not that continues would have a big impact on our business. A year ago we hired a marketing manager and that’s where our growth is coming from. We are creating opportunities to develop our relationships with different owners of larger industrial buildings,” Delp concluded.

For materials that cannot be easily monetized, many dismantlers and homeowners sell or donate to the growing number of material reuse retailers, or donate to non-profits like ReStores, the retail recycling arm of Habitat for Humanity. Founded in 1976 by Millard and Linda Fuller, Habitat has built over 300,000 houses around the world for 1.5 million people. By using volunteer labor and donations of money and materials, it builds and rehabilitates houses for partnering families. In addition to a down payment and monthly mortgage payments, homeowners invest sweat equity in their house and the houses of others. Houses are sold to partners at no profit and financed with affordable loans. Mortgage payments are used to build more houses.

In 2008, Habitat built 5,495 houses in the United States, all made with new materials, but the recycled building materials, appliances and fixtures sold at ReStores make an important contribution to the overall objective – raising money to build new houses and supplying new materials for projects. In doing so, ReStore has grown to become by far the largest North American retailer of used building materials. From the first store in Winnipeg in 1994, Habitat affiliates now have 550 United States outlets and 50 in Canada. And, it’s growing. Between January 2008 and May 2009, 53 new Restores stores were opened. The majority of ReStores report that 85 percent of inventory is used building materials. All ReStores are local affiliates of Habitat for Humanity, are not-for profit, and are open to the public with all proceeds going to Habitat.

Mark Little, manager of support services for ReStore in Lexington, Kentucky, provided insight into a typical mid-sized operation. “We have two locations, one of 6,000 square feet and another of 9,000. We sell furniture, home accessories, building materials and appliances. Anything that can be used to build, remodel or decorate a home.”

Lexington builds about 20 new homes every year, all of new materials, but also has an active deconstruction program that supplies a large portion of Restore inventory. If a property owner is demolishing or remodeling a home, Restore dismantles and takes the material away, salvaging from 75 to 85 percent of the structure for resale and reuse. For kitchen or bath remodels, it takes out cabinets, appliance and fixtures, usually in a half-day or day. An entire structure takes four to six weeks. Generally, they do not charge for kitchen and bath salvage, but for a full structure hand-dismantle they submit a bid and charge. ReStore encourages prospects to get comparative estimates from demolition companies and for-profit dismantlers to establish fair value for a possible charitable tax deduction. That’s because there is a conflict of interest for ReStore to value a donation as well as receive it. Otherwise, they provide the building owner with a list of materials salvaged and the deduction can be based on the actual sales price of the items as they occur, which may be of greater value than an estimate.

ReStore’s estimate includes staff labor and disposal costs for the unsalvageable. It does not charge for volunteers who may work on a deconstruction. “In the span of a year we generally deconstruct 10 to 12 full structures, but we are averaging 4 projects or more per month when you include kitchen and bath removals, “said Little.

Prices at the Lexington outlets for used and new materials, appliances and fixtures are pegged at 50 percent of retail, or lower depending on condition. Donations of new items comprise approximately 15 percent of inventory. “Local retailers don’t have the red tape to donate new items that the big box retailers have, but Lowe’s donates materials and appliances on a national scale and has been one the bigger partners for Habitat,” Little mentioned.

ReStore looks for higher value on some goods, 100 year old barn wood for example. “We still want to go lower than fair market value because we want to be competitive and want people to get a bargain here,” Little added.