March/April 2015
The Cherry Cos.’
diversification, its focus on the well-being of its work force, and the Houston
area’s growth have all contributed to its continued success, the Cherry
brothers say.
By Theodore Fischer
Construction
& Demolition Recycling ranks the Houston-based Cherry Cos. as one of the
five largest demolition companies in the United States, with $94.5 million in
demolition revenue in 2013. But the family-run business has evolved over more
than 60 years, adding new ventures and spinning off older ones, making
recycling a bigger and bigger part of its operations. “Today we’re a recycling
company that does demolition,” says Leonard Cherry. He and his brother Rick own
and lead the management team of the business their parents, Barbara and Carl
Cherry, founded in 1952.
Like many successful enterprises, Cherry once
reached—and then recovered from—the brink of disaster, the brothers say. The
firm began as literally a mom-and-pop house-moving operation. “Mom did the books,
and Dad provided the physical labor,” Leonard Cherry says. The equipment
consisted of surplus World War II-era military trucks, homemade dollies, and
carrying beams made from wooden timbers, he recalls.
By the early 1980s, house-moving wasn’t generating
enough revenue to support the founders and their four sons, who had all joined
the company. “We found that only one out of every 20 houses is actually
movable, and the other 19 were being demolished. So we thought, ‘Demolition
can’t be that hard,’ and we began bidding [for jobs in] demolition,” Leonard
says. After the Cherry sons lost money on their first two demolition jobs,
their father informed them that if they lost any more money, the company would
be broke. “Thank God we made $100 on our third job, and our demolition side of
the business continued to grow from there,” Leonard says.
The demolition work began with residential
properties and evolved into light commercial and, eventually, heavy commercial
demolition. In the early 1990s, Cherry moved into industrial dismantling and
then environmental remediation, mainly asbestos abatement. “Each application or
growth division was tied to something we already did,” Leonard says.
Also in the early ’90s, when Cherry was
performing the majority of its demolition work in the greater Houston area, it
was generating massive volumes of concrete and asphalt. The company leaders saw
another opportunity and opened their first construction and demolition
materials recycling yard in 1994. In 1999, to reduce the cost of transporting
recyclables to a central location, they introduced portable crushing. More
recycling facilities came in the late ’90s, and in 2001 Cherry Cos. launched
its road removal and stabilized materials divisions.
Today Cherry is licensed to operate in 28
states. Its 267 full-time employees work in eight divisions that provide
demolition, deconstruction, dismantling, and recycling services. Of its 10
locations within the greater Houston area, five are scrap processing
facilities.
The Daily Grind
On
the recycling side, the largest part of the business by both value and volume
is concrete aggregate. Cherry’s five stationary plants and two mobile plants
combined process between 8,000 and 10,000 tons a day. Most of the concrete
comes from roads—which require repaving every five to 10 years—and its own and
other firms’ demolition projects.
When the concrete arrives in the yard, it might
be in pieces just small enough to fit into a trailer. Workers use excavators
with a variety of attachments, including hammers, concrete pulverizers, and
backhoe buckets, to size-reduce the material to pieces no more than about 2
feet in diameter. This step also will “separate the rebar and debris that comes
with the concrete,” says Cristian Magana, division manager. The material runs
through a primary crusher onto a conveyor that transfers the material to a
screen for sizing. The rubble that goes through the screen exits the plant,
ready to sell; the oversized material goes to a secondary crusher for more
processing. The final product comes in sizes that range from 3-by-5-inch bull
rock to 1½-inch flex base.
Local demand for recycled concrete is strong,
particularly for highways—like the Grand Parkway project that eventually will
surround the greater Houston area—and for green-minded municipal projects,
where the use of recycled material can help in achieving LEED certification. “A
lot of schools, a lot of counties, and a lot of city projects require it, and
it becomes in high demand,” Magana says. Further, reusing the material “keeps
it away from our landfills.”
The attachments do most of the work of
separating the concrete from the rebar. Magnets pick up any rebar that remains
in the concrete when it reaches the conveyor and drop the rebar to the ground.
An excavator with a shear attachment cuts the recovered rebar down to less than
3-foot segments for sale primarily to brokers who sell it to steel mills or
exporters. How clean does the rebar have to be? “To get the maximum amount of
money, it has to be 99.9 percent straight rebar,” Magana says.
Asphalt recycling, Cherry’s next-largest
recycling segment, has gone through some changes of late. “Five years ago,
people would call us and say, ‘If you send the trucks, we’ll give you the
asphalt,’” says Jim Mooney, vice president of the stationary crushing division.
“Now it’s, ‘You send the trucks and pay me $9 or $10 a ton, and you can have
it.’ What used to be a waste is now a commodity.”
The process for recycling asphalt is similar to
the process for recycling concrete. Removal is achieved either with a milling
machine, which grinds off the top layers of the road surface, or by
“hogging”—using the front edge of a backhoe bucket to pull the asphalt off the
base in slabs and pieces that are 3 feet in diameter or less. In the yard, the
asphalt gets size-reduced to roughly 12-inch-square pieces that fit into an
impactor, which reduces the material to a particle size that can be reused in
road construction. Hot-mix asphalt plants can use up to 5 percent recycled
asphalt in new material. This saves them a considerable amount of money, albeit
not quite as much as it did a year or so ago. “It all revolves around the price
of a barrel of oil,” Mooney says.
Demolition Discoveries
Another
major source of recyclables for Cherry is its industrial division, which
recovers assets as it dismantles or demolishes entire petrochemical plants. “We
go in and take retired [production] units out of the plants—they’re no longer
producing what the new units can, or the EPA’s on [the manufacturer] to redefine
the units or make them more efficient,” says Zachary Stark, the industrial
division manager. He estimates Cherry can sell the salvaged machinery for reuse
about 50 percent of the time. “Some of it is proprietary, and [customers] want
it cut up and taken where nobody can get it. And some is just so outdated that
the reuse is not worth it,” he says. To destroy or dismantle the equipment,
“most is shearable, some has to be cold cut, and we can also torchcut. A
majority of the steel is carbon or stainless; however we [also] do a fair
amount of rare metals.”
In addition to generating those metals,
industrial dismantling produces large amounts of copper from wire and cable
along with plenty of copper and copper-nickel exchanger tube bundles, which the
company either sells intact or processes to extract the copper. “It’s an
interesting line of work; [it] never gets boring,” Stark says of the industrial
division. “Each plant is different. They all have their own rules and specs,
and we have to abide by them, so when they change their rules, you change, you
evolve.”
The Cherry brothers see no conflict between the
demolition and recycling sides of the Cherry Cos. operations. “It’s like a
puzzle; you just have to put all the pieces together,” Leonard says. “Our basic
mindset has always been to look at a [demolition] waste stream as a potential
product feed. So much of it is dictated by the markets available within a
geographical area,” he points out, “because what works in some geographical
locations may not work as well elsewhere. But that’s always our goal, and
that’s what we strive for. The alternative is, put it in the landfill and keep
moving.”
Local Heroes
The
Cherrys also give a lot of credit for their success to Texas for its
pro-business stance and to Houston and its booming petroleum-based economy—and
the feeling seems to be mutual. Cherry garnered some good press last year when
it dispatched its equipment to help the Houston Fire Department extinguish a
five-alarm fire that gutted a $50 million luxury high-rise. The year before, it
made the news when it imploded three 100-foot towers that provided pedestrian
ramp access to the city’s beloved—but now infrequently used—Astrodome stadium.
(It softened the emotional impact of the demolition by distributing unpopped
popcorn in containers shaped like dynamite sticks to 200 onlookers.) In 2014
the Associated Builders and Contractors of Greater Houston gave Cherry Cos. a
merit award for its demolition of the Favrot Tower Apartments, a 13-story
building in Houston’s Medical Center neighborhood.
Nevertheless, the booming economy in Houston
and along the Gulf Coast does present challenges, among them a shortage of raw
materials. “In the recycling of aggregate, raw product to us is discarded
concrete,” says Joe Rizzo, vice president of business development. In its
year-old “We Buy Concrete” program, a partnership with the city of Houston,
Cherry has placed roll-off boxes at six neighborhood depository and recycling
centers where residents can drop off discarded concrete, which Cherry
transports to its nearest recycling facility. “Not only is Houston saving the
cost of dumping this heavy material, but by partnering with the Cherry Company
[sic] we are saving resources by reusing a product that already exists and
returning it to the market for local projects,” said Houston mayor Annise D.
Parker in announcing the program. We Buy Concrete generates about 100 tons of
concrete a month—“not a whole bunch, but it’s 100 tons we didn’t have,” Rizzo
says.
Cherry also places “washout boxes” at concrete
mix plants and with contractors that have LEED credits, where they collect
aggregate, sediment, and Portland cement washed out of a concrete mixing truck
at the end of a job. When the boxes are full, Cherry hauls them back to the
recycling yard.
Family Values
Cherry’s
“Refer a Friend” program addresses another Houston-area shortfall: the lack of
skilled labor. Any current employee who steers a family member or friend to a
job at Cherry can earn up to $1,000 if the new hire lasts at least a year. “It
gives validation to how we’re [treating] our current employees for them to
refer someone,” Rizzo says, and the referrals “make better employees over the
long term.” The majority of current employees are referrals, and Refer a Friend
has resulted in about 33 successful hires in the past year.
Even more important than finding new employees
is the welfare of the people who already are Cherry employees. That’s the
responsibility of a safety department that consists of a corporate safety
director, three divisional managers, an office administrator, and four on-site
safety representatives. “Some jobs, especially on the industrial side, require
that if you have more than eight or 10 people on site you have to have a
full-time safety person there,” says Eddie Smalley, a divisional safety
manager. Safety has to be that person’s full-time responsibility, he points
out. “They can’t be working as a ground man, or greasing machines, or flagging
traffic; they’re the safety guy. They’re making sure everybody’s doing what
they’re supposed to do and helping them if they have problems.”
One of Cherry’s safety precepts is, “The only
person who can stop a job is anybody.” Anybody includes the new hires, who have
to wear green hard hats for the first 60 days on the job. “We tell everybody,
‘You have the right to stop work,’” Smalley says. “We shut the whole job down,
whatever aspect of the job that happens to be, and nobody goes back to work
until 100 percent of the people [on site] are satisfied.”
Cherry runs morning safety meetings every day
of a job to identify potential hazards and outline plans for mitigating them.
The firm also trains employees via an in-house, four- to five-hour “Basic
Orientation Plus” safety course from the Association of Reciprocal Safety Councils
(Cleveland) along with OSHA 10-hour and 30-hour safety training for
supervisors.
Last year the greater Houston chapter of
Associated Builders and Contractors gave Cherry a Diamond Award for its
implementation of ABC’s Safety Training Evaluation Process. Much like ISRI’s
Circle of Safety Excellence™ program, STEP allows builders and contractors to
benchmark their safety programs and performance against similar companies and
industry averages. The Diamond Award indicates that the company’s incident rate
is at least 50 percent below the national average for each of the past three
years, and its experience modification rating was at or below 0.700 that year.
Beyond safety measures, the family-owned Cherry
Cos. takes pride in treating employees as part of the family. Educational
benefits are a top priority, with the company covering the cost of tuition and
books for employees’ technical training. “We encourage our employees to get
additional education,” says co-owner Rick Cherry. “If they come to us and want
to do [work-related education and training] after hours or on the weekends,
they submit it to us, and nine out of 10 times, we’ll approve it.”
The company also does what it can to control
employee health care costs. In 2014, when the health insurance premiums
increased, the Cherrys chose to absorb those costs and not pass them along to
their employees. Cherry also matches a portion of employee contributions to
their 401(k) retirement plans, and it gives hourly employees eight days of paid
vacation a year, which they can begin to use after six months on the Cherry
payroll. “The industries that we’re in, [that’s] not really common practice,
but as a family-owned business, that’s how we do business,” Rizzo says.
Family values helped the company and its
employees weather the most recent recession. Even though its volume of business
dropped 25 percent, Cherry did not lay off a single employee. “Our people put
their heads together, figured out where to cut costs—every one of us counted a
lot of pencils for three years—but we did not lose a single soul,” says Leonard
Cherry.
“That’s not a statement of credit to Rick and me; that’s a statement of
credit to our people.”Though not all of the Cherry brothers have
stayed involved in the business—the youngest, Keith, took the original
house-moving operation independent in 2001, and the oldest, John, spun off the
asbestos abatement unit in 2003—Leonard and Rick remain the top two members of
the 10-person management team. Rick manages the safety department,
transportation division, and industrial division, while Leonard runs the
stabilized materials and commercial divisions and oversees administration.
Family ties will figure into the next
generation of Cherry leadership—or not. “Our favorite saying is, ‘Bloodline
will get you hired; it will not prevent you from being fired,’” Leonard says.
“That’s truly how we practice it. If you’re family, we’ll find you a job—and
not just [for members of] my family, but yours, if you’re an employee here. But
no one comes in anointed. Promotion is by skill set and hard work, not by
bloodline—no exceptions.” Leonard and Rick’s aunt, two brothers-in-law, and two
sons-in-law are part of the company currently.
Business
has improved since the recession, with volumes continuing to climb, margins following
suit, and the larger footprint of the company’s recycling segment lowering its
overall transportation costs and operating costs. As a consequence, the Cherry
Cos. has essentially doubled its business over the past five years, and the
Cherrys anticipate modest growth over the next five years.
Where the company ultimately winds up, though,
is not really for them to say. “That’s the challenge of the group coming behind
us,” Leonard Cherry says. “The current management team has an average age of
58, so we need the next generation to take ownership of the next big push. We
can tell them what we’re going to do for the next five years—we can see that
far—and we tell them, ‘This is our model; now you show us yours.’”
Theodore Fischer is a
freelance writer based in Chapel Hill, N.C.