Workloads soaring particularly in London but margins still a far cry from previous boom.
We may not be back to the pre-2008 boom times, but demolition is nevertheless recovering steadily.
With the exceptions of Keltbray and Erith - who both reported substantial rises in turnover - most of the top 10 demolition contractors have posted similar revenue levels in this year’s table compared with a year ago. But that does not tell the full story.
“The sector is very busy again,” says National Federation of Demolition Contractors CEO Howard Button.
“But that brings its own problems. Nobody can get people or machines. The waiting time for orders on new equipment is running to months, which was the case a year ago.”
Capital growth eclipses regions
As with the wider industry, London is the dominant market. “Residential sites are providing a lot of work,” Mr Button says. “There is industrial work further out, on greenfield sites, but towards the North it is more patchy.”
Keltbray is the leading firm in the sector, with revenue passing the £200m mark in its last financial year. Around three-quarters of that comes from demolition, but the group’s other businesses - including rail and piling - play an important role in its offering.
Group managing director John Price says: “If you take Earl’s Court, a multi-phase, £40m job, we are using several of our businesses: demolition and asbestos removal, temporary works, and also rail because we need rail possessions given the site’s location.”
“Clients don’t want recycling on their sites, so a lot of our members have set up their own waste processing plants”
Howard Button, NFDC
Brown and Mason is less reliant on the London market, having built a reputation as a specialist in the petrochemicals and industrial sector.
Managing director Nick Brown says: “We have a couple of long-term power projects for E.ON - at Kings North Power station and on the Isle of Grain - which are worth £65m together. They involve total decommissioning and asbestos removal.”
The work is different from other areas of demolition, Mr Brown says. “The structures we work with are very heavy-duty steelwork. We have become the biggest supplier of demolition scrap in the UK, due to working in the industrial market.”
New ventures boost growth
Recycling has become a significant area of diversification for demolition companies.
“Clients don’t want recycling on their sites, so a lot of our members have set up their own waste processing plants,” Mr Button says. “Connolly, Coleman and 777 have diversified this way.”
He adds that clients increasingly want “a total clean-up, land assembly package - with the whole site ready to go”, which has encouraged some companies to move into remediation.
Looking ahead, Mr Button sees a growth in refurbishment. “We will see more soft strip, as clients want to revamp a building more quickly, particularly in offices and retail,” he says.
“That has big implications for the way our industry works; it means smaller machines and higher-skilled labour, as it is trickier to carry out demolition work in a live building.”
“Back then, 5-6 per cent was the norm; now it is more like 2 per cent”
Nick Brown, Brown and Mason
Staffing more generally is a concern, as workloads rise. “It is our single biggest problem,” Mr Brown says.
“It is hard to get interested, reliable people. We have recently employed a couple of safety managers who are ex-armed services. They have a very regimented approach, which suits the sector’s mentality.”
Keltbray has tried to improve staff retention with a more holistic approach to workers’ well-being.
“We have an in-house business called KML that monitors our own employees and even does work beyond Keltbray,” Mr Price says. “It is important to look at issues like health and fatigue, as well as safety on site.”
Still short of pre-recession
The demolition sector is recovering, but conditions are still a far cry from pre-recession. “Lead-ins are tight; there is no speculative demolition now,” Mr Button says. “Firms will get a call on Friday saying: ‘Can you start on Monday?’.”
Mr Brown says margins are nowhere near pre-2008 levels. “Back then, 5-6 per cent was the norm; now it is more like 2 per cent,” he says. He expects Brown and Mason to maintain turnover and profit at current levels.
Mr Price agrees the market is “challenging”, but believes 8 per cent growth is achievable for Keltbray next year. “We’ve just got to keep challenging ourselves,” he says.