The state of the demolition industry today mirrors Wall Street and Main Street, in that there are the haves and the have nots
By Herb Duane
The big nationwide contractors and large regional contractors seem to be doing very well. In this category I would put such contactors as Brandenburg, Chicago; NCM Demolition; LVI Services, Dore & Associates, Michigan; National Savage & Service, Indiana; MCM Management, Michigan; Cleveland Wrecking; URS Engineering; Bierlein Industrial Services, Michigan, D.H. Griffin; Penhall; NASDI; North American Dismantling, Michigan; Cherry Demolition, Texas; Costello Dismantling, Mass.; TRC Environmen-tal; Grant MacKay, Utah. There are several more firms that probably should be mentioned. All in all there are probably about 200 good-sized firms in the United States that are financial responsible to do what large demolition projects are available.
The “have not” firms are those that do around $1 million to $2 million annually or less, and do most of their work for general contractors. Doing work for the GCs is difficult because a lot of the time the GC is not getting enough money for the work and have to take it out on their subcontractors, maybe some buyback charges or holding up payments. Most GC jobs end up as auctions anyway, and that is not the most pleasant part of the demolition business.
To be a player in today’s demolition market a company should have $10 million in liability insurance, at least $5 million in bonding capacity and $1 million in liquid assets. With this behind it, a company has a shot. Without it, the firm will be in for a struggle.
What has kept a lot of small contractors alive these past few years has been the scrap metal market. Scrap is instant cash flow. A company does not have to wait 60, 90 or 120 days for an invoice to be paid. Unfortunately, as I write this, the steel has dropped $100/gross ton and copper has dropped $1/lb. If the scrap mart collapses it will mean disaster to all contractors, but especially the smaller companies that don’t have that cushion to help them absorb the changed conditions.
Where is the Work?
The money work has been power plants, shopping centers, bridges, colleges and universities, center city demolition and auto plants, to name a few categories.
Here are a few projects:
Unfortunately, the demolition industry can be a corrupt business. In my column I can’t escape writing about corrupt demolition practices. You have kick-backs, one contractor wearing a wire for the FBI, a large recycling and demolition firm indicted for alleged illegal dumping of material, firms scamming customers, one large national demolition contractor being far from transparent in its third quarter report to stockholders. The following is a sampling of these practices.
First prize this year should go to Nick Mazzocchi, former owner of Mazzocchi Demolition, New Jersey’s largest demolition contractor. In a Newark, N.J., courtroom in September, 2011, Mazzocchi testified under oath “that you cannot get a contract with local governments in New Jersey unless you first pay a bribe of make a political contribution.” Is this an indictment of all New Jersey demolition contractors to justify his own corrupt practices?
During the corruption trial of former Newark Deputy Mayor Ronald Salahuddin, FBI surveillance tapes revealed that Mazzocchi gave a $5,000 donation to Newark Now, the non-profit founded by Mayor Cory Booker. Salahuddin told Mazzocchi the donation was requested by Booker’s former Chief of Staff Pablo Fonseca, and would result in city contracts for Mazzocchi. Salahuddin was found guilty as a result of Mazzocchi. While he was making these pay offs to New Jersey politicians he sold his company to LVI for around $30 million. Who says “crime doesn’t pay?” If you want to read more about Mazzocchi go to www.google.com and type in Nick Mazzocchi, you’ll find yourself with hours of reading.
I would award second prize to Dominick Mazza, owner of Mazza & Sons, Tinton Falls, N.J. According to the indictment: “A central New York farmer, a New Jersey demolition company, its owner and two other men dumped 30,000 tons of asbestos-contaminated construction debris on farmland near New York’s Mohawk River in 2006,” federal prosecutors said in June 2011. The conspirators planned to continue dumping pulverized refuse in wetlands and the river’s flood plain over five years using a fake state permit, authorities said. The indictment unsealed named 60-year-old company owner Dominick Mazza, and 59-year-old farm owner Cross Nicastro II of Frankfort, N.Y. Also charged were 69-year-old Julius DeSimone of Rome, N.Y, and 54-year-old Donald Torriero of Wellington, Fla.
The men were arrested. Prosecutors said DeSimone managed excavation and dumping at the site, and Torriero fabricated and transmitted the fake permit. Nicastro pleaded not guilty in court and was released. The others entered similar pleas.
Earlier this year, Eagle Recycling of North Bergen, N.J., pleaded guilty to conspiracy in the case and agreed to pay $500,000 and comply with environmental laws. It was accused of producing many of the truckloads of debris dumped on 1.3 acres on the 28-acre farm in Frankfort.
A waste trucking broker, Jonathan Deck, pleaded guilty in 2009 and awaits sentencing. He could face up to five years depending on his cooperation with authorities. Prosecutors said once the group learned they were under investigation, they began concealing, altering and destroying documents sought in grand jury subpoenas. The indictment also charges conspiracy to violate Superfund laws and to commit wire fraud.
Mazza & Sons, Inc. is owned and operated by Dominick and James Mazza. Both have expertise in the demolition and recycling business for more than 45 years. Over this time, Mazza & Sons has grown to a 60-employee company. Mazza recently ranked No. 50 in Waste Age magazine Top 100 Players in the waste industry. Founded in 1964, Mazza & Sons operates a Class A & B NJDEP-approved, 55-acre recycling facility located in Tinton Falls, N.J. Mazza now recycles scrap metal (ferrous and non-ferrous), concrete and brick aggregate, wood, tires, asphalt shingles, plastic, vinyl and sheetrock. How stupid can you be to risk all this? In the demolition business today there are too many computer programs and eyes watching everyone’s business to get a way with corrupt practices. People will turn you in at the drop of a hat.
Third prize should go to Donna Caceci-Sinisgalli, Rochester, N.Y. Donna Caceci-Sinisgalli was picked up in June 2011 by the city’s Office of Public Integrity and taken to Brighton Town court for arraignment, where she arrived in the back of a patrol car. According to investigators, she was treasurer of Sinisgalli Corporation, a demolition and excavation contractor based in Brighton which has done millions of dollars in contracted work with the City of Rochester. Caceci is charged with insurance fraud, falsifying business records, workers compensation fraud and grand larceny. All are felonies.
The corporation had also been charged. Court documents state Caceci-Sinisgalli’s husband, Louis Sinisgalli, was company president. After her court appearance in Brighton, Caceci-Sinisgalli was taken to city court where she faces additional fraud charges. “Our intention, if in fact the accusations are true, to make sure those people are held responsible at some point, and it doesn’t happen again,” said David Moore, director of the Office of Public Integrity.
According to police reports, Sinisgalli Corporation demolished dozens of homes in the city that contained asbestos. However, the company never paid for workers compensation insurance to cover the hazardous materials removal. As a result, the company paid $75,767 less in insurance premiums. Caceci-Sinsigalli’s arrest comes more than two years after federal, state and local agents raided the Sinisgalli’s home in Pittsford after suspecting the company in a bid-rigging scheme involving city demolition contracts. They removed boxes of company records, but also discovered more than $827,000 in cash in the house.
Louis Sinisgalli has been implicated in federal court papers of tax evasion and improperly disposing of asbestos. However, he has never been formally charged, in part because he is said to be gravely ill after suffering a stroke last fall. The mayor says the arrest should put on notice companies that do business with the city. I doubt that it will. Someone always steps into the breach to continue the practice.
It is really a shame, but I could go on and go about corrupt practices and people in the demolition industry. People are going to accuse me of degrading the industry that has given me a living. I’m not degrading the industry. It is the bad apples among us who are degrading it. What I’m trying to point out is you are not going to get away with corrupt practices and it is not worth trying to do them.
A Port Arthur, Texas, refinery claims it has failed to receive more than $300,000 from the company to which it sold scrap metal. The Premcor Refining Group, doing business as Valero Port Arthur Refinery, filed a lawsuit last October in Jefferson County District Court against Demrex Industrial Services, Jason Goldberg and Barry Portnoy.
In its complaint, Premcor Refining Group alleges it agreed to sell the defendants scrap metal in April, May and June following the demolition of a six-drum coker unit at Premcor’s Port Arthur facility. In their agreement with Premcor, the defendants promised to pay the company $324,831.10 for the metal, according to the complaint.
Premcor delivered the metal to the defendants and has sent invoices requesting payment for the metal, but has not yet received the full amount of money it is owed, the suit states. “Defendants promised to pay Plaintiff for the goods described, but although often requested to do so, Defendants have failed and refused, and still fail and refuse, to pay the amount due on the account,” the complaint says.
Premcor alleges breach of contract and conversion against the defendants. It seeks actual damages, plus loss of contractual profits, incidental damages, out-of-pocket expenses, attorneys’ fees, pre- and post-judgment interest, damages, lost profits and punitive and exemplary damages.
Michael K. Eaves of Calvert, Eaves, Clarke and Stelly in Beaumont will be representing it. Judge Donald Floyd, 172nd District Court, has been assigned to the case (Case No. E191-273). In the past few years, this company has had several lawsuits filed against it. One concerning the scraping of railroad cars, the Operating Engineers, and others. For a run down, go to www.google.com and type in Demrex Industrial Services.
In November, The Dayton Daily News reported details concerning an ex-felon being sued and investigated for his handling of asbestos and demolition contracts in Dayton. The Daily News follow-up investigation found Alex Penland’s AR Environmental Inc. misrepresented his company’s work history in documents filed with the city and appears to have done little demolition work before earning large demolition contracts from Dayton.
The City of Dayton gave more than $1.2 million in demolition contracts to the five-time felon in 2009 and 2010, then continued paying him after local environmental officials warned the city his company had demolished vacant buildings without properly removing cancer-causing asbestos, a Dayton Daily News investigation found.
Now the city could face steep fines because of shoddy work done by Alex Penland’s Cincinnati-based company, which also may have exposed residents to health risks.
Dayton approved the contract without checking into his work history and reporters have dug into this story to find out exactly what work the company said it performed and how this was found to be incorrect. The story says contractors face few criminal background checks in Ohio.
In September 2011, Engineering-News Record listed North American Site Development, Inc. (NASDI), a wholly-owned subsidiary of Great Lake Dock & Dredge, as the seventh largest demolition contractor in the U.S. with sales of $60,million, an increase of 28% over the previous year.
The Great Lakes financial statement ended September 30, 2011, stated: “The demolition segment generated operating income of $1.2 million and an operating loss of $5.9 million for the three and nine months ended September 30, 2011, respectively, compared to operating income of $0.3 million and an operating loss of $1.1 million for the same periods of 2010. Gross profit margin in the demolition segment was 15.8% and 2.2% for the three and nine months ended September 30, 2011 compared to gross profit margin of 8% and 7.4% for the three and nine months ended September 30, 2010, respectively.”
The above is a curious statement they made in their disclosure. The demolition segment also recognized $1.6 million of additional legal and consulting expenses in the nine months ended September 30, 2011, relating to the subpoenas received in April 2011, which impacted the segment’s operating income.
This subpoena announcement is very interesting and nothing is transparent about the situation. The company should be more forthcoming on the subject to stockholders. One thing I’ve learned over the past year is one of the best ways to run a scam is to give a fake resume. No one seems to check a resume, and the bigger the employment claims, the less likely it seems it will be checked.
This past summer one of the European demolition websites ran a story stating the United Nations was looking for a demolition consultant in Haiti with an e-mail address of whom to contact. I contacted them and they got back to me. We exchanged e-mail and set a time for a phone interview. Before the interview took place I received an e-mail stating, “We have decided to go with senior demolition expertise, and will keep your resume on file.” I e-mailed back and asked, “What is senior demolition expertise?” They never answered.
A week or so later I read on the Institute of Demolition Engineers website that a certain member of the Institute I know was retained by the UN. They had a glowing story of the event and how the demolition expert was scheduled to show up September 12 for the assignment. Two days before he was supposed to show up he notified them he would not be able to take the assignment.
I happened to have a copy of this person’s resume and I called a lot of people mentioned in the resume for verification and about 90% of the resume was bogus. He used the same resume to get into the Institute of Demolition Engineers, and they didn’t check any in the resume either. You might say the motto of the story is the bigger the lie, the more people will believe you.
This is getting too depressing. I better quit while I’m ahead.
Herb Duane is a long-time demolition contractor who is also an international demolition consultant. He founded the National Association of Demolition Contractors (now National Demolition Association), and has a regular column and breaking news regarding the demolition industry at www.demolitionforum.com. He is also a Fellow of the Institute of Demolition Engineers, London, England. Herb Duane can be contacted through his web site www.demolitionexpert.com.
Inspector General: The EPA Allowed Unsafe Handling of Asbestos
Editor’s Note: This was submitted by colleague Herb Duane. The Environmental Protection Agency has allowed the use of unapproved methods to demolish buildings containing asbestos, threatening public health and possibly violating worker safety rules, the EPA’s inspector general has concluded.
In an “early warning report” to EPA Administrator Lisa Jackson that speaks to the urgency of the matter, Inspector General Arthur A. Elkins Jr. noted that asbestos is a human carcinogen “with no safe level of exposure.”
Nonetheless, Elkins found, the agency allowed its own employees and contract workers to be exposed to the toxic, fire-resistant mineral—widely used in buildings after World War II—during tests in Texas and Arkansas in 2006 and 2007.
Elkins said his office’s preliminary research showed the unsafe demolition methods—designed to save time and money—have been used more recently at the Hanford Superfund Site near Richland, Wash., a former Department of Energy nuclear weapons production site, and are under consideration at a DOE-owned uranium enrichment facility in Paducah, Ky.
The EPA should “immediately and clearly communicate” to its various offices that only approved methods should be used during the demolition of asbestos-containing buildings, the IG said. The agency should retract all approvals, such as the one given at Hanford, that deviate from long-established practices designed to protect workers and the public from microscopic asbestos fibers, which can lodge in the lungs and cause cancer and other serious diseases, Elkins wrote.
The IG’s finding means the EPA is “finally shutting down an experiment that was based on shoddy science,” said Jim Hecker, a lawyer at Public Justice, a public-interest law firm whose criticism dissuaded the EPA from using the shortcut at an abandoned motel in Fort Worth, Texas, in 2004. “For over seven years, [some EPA officials] have been pushing an asbestos removal method that endangers people and doesn’t work.”
The IG’s report “means the alternative method is now dead,” Hecker said. “It’s been exposed for what it is, which is a dangerous method.”
Under a 1973 EPA rule, asbestos must be removed by specially trained technicians in protective gear before buildings are demolished, and meticulous efforts must be made to contain the fibers so they don’t leave the work site and threaten the public.
Beginning in 1999, the inspector general found, the EPA began studying alternative methods that were quicker and cheaper. During tests in Fort Worth and at Fort Chaffee, Ark., a former Army base, workers were given permission to circumvent the 1973 rule and demolish buildings with asbestos still in them, “potentially releasing asbestos fibers into the environment and endangering public health,” Elkins wrote.
The buildings were hosed down prior to demolition, but there is no evidence this lessened the danger. The IG found: there were “demonstrated asbestos fiber releases” at both sites. In Fort Worth, where the test was performed on the office of an abandoned apartment complex, “people were living right across the street,” Hecker said. “That was the one that really ticked us off.”
Public Justice and an environmental group, the Natural Resources Defense Council, sought to expose the EPA’s own doubts about the so-called wet method of asbestos removal by filing a Freedom of Information Act request with the agency in June 2010. Unhappy with the EPA’s response, the groups sued earlier this year. Last month they obtained more than 26,000 pages of documents, one of which shows that respiratory protection requirements for workers weren’t met and warning signs weren’t posted, as required by the Occupational Safety and Health Administration.
An OSHA spokesman declined to comment.
Terry Lynch, international vice president of the International Association of Heat and Frost Insulators and Allied Workers union, said the EPA developed the unapproved demolition technique “to cut corners and save money” on urban renewal projects. An EPA document summarizing one of the Fort Chaffee tests concluded that the approved asbestos removal method was nearly twice as expensive as the wet method.
This is an interesting story for me. In the fall of 2008 I was hired by the EPA to sit on a Pier Review Panel, in Cincinnati, to evaluate a new proposed regulation to allow the demolition of buildings that contained non-friable asbestos without removing the asbestos. The panel consisted of five people. Four were involved with asbestos removal, health specialists, etc. I was the only demolition contractor.
As mentioned in the article, they demolished two structures using the new proposed mentioned one in Texas and one in Arkansas. They showed us how they did it, and what they proposed.
The proposed regulation required the following procedures:
I told them this proposed regulation wouldn’t work. It wouldn’t cut the cost of demolition it would greatly increase the demolition cost. It is cheaper and quicker to remove the non-friable asbestos prior to demolition.
They spent more than a $1 million to develop this new proposed regulation and method with the experimental demolition. I told them all they had to do was interview about 10 demolition contractors and outline the proposal and they could have saved all that money. I doubt there going to ask me back again. It is amazing the amount of money government wastes, but I guess we all know that.
McGraw Hill’s Engineering News Record recently came out with its list of the top 20 Demolition Contractors in the U.S. Here is the list:
Penhall Company $158,000,000
Brandenburg Industrial Services $132,600,000
NCM Demolition $124,700,000
LVI Services $102,700,000
D.H, Griffin Wrecking $99,000,000
Bierlein Demolition & Dismantling $74,200,000
NASDI, LLC $60,000,000
North American Dismantling Corp. $37,700,000
Cleveland Wrecking Company $34,300,000
Cherry Demolition $28,100,000
Testa Corp. $25,300,000
Louisiana Chemical & Dismantling $25,200,000
Envirocon , Inc. $23,400,000
Midwest Steel Company $23,200,000
O’Rourke Wrecking Company $20,200,000
DRC Emergency Services $18,100.000
R. Baker & Sons $15,000,000
Durr Heavy Construction $14,500,000
L.M Sessler Excavating & Wrecking $12,200,000
Break Through Enterprises $12,000,000
It is an interesting list. There are several I have never heard of, such as Break Through Enterprises; couldn’t even find a website for them. Durr Heavy Construction can be found at www.durrhc.com, they do a lot more than demolition such as utility work and paving. DRC Emergency Servicescan be found at www.drcusa.com. According to its website, the company is currently doing work in Haiti.
I would think there are probably a lot more demolition contractors that do more $12 million per year. One that comes to mind is MCM Management, Mich. It has 6 million square ft of auto plants under contract to demolish. Grant MacKay, it has around $8 million demolition under contract in New Zealand not to mention its stateside work.
There are a lot of demolition contractors in the country that don’t make much noise but do quite well. It’s a fun business.