Commercial Disaster Restoration Industry SWOT

Part
01
of three
Part
01

Commercial Disaster Restoration Industry-SWOT

The strengths of the commercial disaster restoration industry include recurring increases in earnings, expansion of services offered, a wide range of events covered which allows for successful business growth, no need for office space, and high risk of wildfires in the US. On the other hand, weaknesses include large cash investments when opening a business within the industry, only 25% of work being commercial, and insurance payment delays.

Strengths

  • Approximately 900,000 U.S. residential properties in 13 western states are thought to be at high or very high risk of wildfire damage, which has an estimated property value of $237 billion.
  • Seventy four percent of restoration companies have reported increased earnings the last couple of years.
  • Companies in the industry are successfully expanding their services from just curative to preventative, which include moisture control systems. This expansion relies on customer education.
  • The industry covers a wide range of different events allowing companies to expand their area of service.
  • The four most common business models are bio-hazard and trauma cleanup, contents restoration, mold remediation and abatement, and water, flood and fire damage.
  • Businesses in the industry are mainly franchises that involve the use of "proprietary products and specialized equipment." The advantage of this is that most restoration and disaster recovery franchises can be operated without the need of renting office space, which allows franchisees to save the cost of renting commercial space.

Weaknesses

  • In order to open up a business within the space, an estimated investment of $50,000 is typically needed.
  • Restoration training and equipment can be expensive and require constant investments due to the rapidly changing way restoration is effectively done. This involves purchases of air movers, dehumidifiers, air scrubbers, and other tools.
  • Only around 25% of work completed in the restoration industry is commercial, whereas, 65% is residential. This infers companies focusing solely on commercial properties are at a disadvantage.
  • Twenty-five percent of restoration business owners report suffering up to two months of insurance payment delays, while an additional 12% report waiting more than eight weeks.

Opportunities

  • It is estimated that around a half million structural fires occur each year. Of this, 30% are commercial and 70% are residential properties fires.
  • North America is vulnerable to major weather and catastrophic loss events. Recent climatic events include Hurricanes Harvey and Irma in 2017, wildfires in California in 2018, tornado outbreaks, and
  • flooding events. It is projected that due to climate change these events will occur more often.
  • In the first six months of 2018 alone, the U.S. saw $6 billion in damage from weather disasters.
  • The "steady emergence of medical data", mostly due to information accessibility, is leading companies to understand indoor air quality as related to health and are more likely to purchase preventative systems or schedule regular maintenance.

Threats

  • Thirty four percent of all business growth in the industry depends exclusively on weather events.
  • The top threats to businesses, according to business owners, are recruiting, retaining quality staff, maintaining margins and profitability, differentiating their company, maintaining a steady cash flow, and increasing costs of doing business within the industry.
  • Clients are demanding the industry adapt to using less toxic chemicals in the restoration process.


Part
02
of three
Part
02

Commercial Disaster Restoration Industry Trends

The commercial disaster restoration industry in North America is poised to continue to grow and expand in response to immediate and future trends. However, the current trend of employee burnout and future trend of increasing public awareness of and sensitivity to hazardous materials within this industry will have to be successfully addressed to maximize the positive potential of this growth and expansion.

Overview of Immediate Trends

  • Natural disasters like hurricanes, wildfires, and flooding are driving demand for commercial disaster restoration professionals and are a current trend of the commercial disaster restoration industry, as per industry experts.
  • Commercial disaster industry professionals also agree that technologies with mold detection, digital documentation, and drones are an immediate trend in their industry.
  • Employee burnout in the commercial disaster restoration industry related to factors like unprecedented busyness, increased demands of insurance companies, and frivolous lawsuits is currently trending as well, according to industry experts.

Immediate Trends

  • "The US is vulnerable to a wide variety of natural hazards" including flooding, drought, wildfires, tornadoes, and earthquakes. These natural disasters continue to increase the need for commercial disaster restoration services.
  • Canada is also exposed to many natural hazards, and weather or weather-related disasters account for approximately 80% of all disasters, continuing to increase the demand for commercial disaster restoration services.
  • Better mold detection technology has helped the public to begin to become more aware of mold and aided commercial disaster restoration professionals in their mold removal efforts.
  • The common availability of smart phone devices and digital technology is streamlining the way that commercial disaster restoration professionals gather and report data.
  • Drone technologies are currently being used as a damage analysis tool for properties and structure exteriors by commercial disaster restoration professionals in the US and Canada.
  • Employee burnout is a growing concern within the commercial disaster restoration industry, and a study is now being done by Middle Tennessee State University to better understand this disturbing trend.

Overview of Future Trends

Future Trends

  • Professionals in the commercial disaster restoration industry are currently debating whether more professional credentials and licensing is needed to handle natural disasters. Some believe that is definitely necessary, while others believe that it could "bog down the restoration process and make fast-acting responders potential violators. "
  • The public is becoming increasingly aware of and sensitive to hazardous materials in their body and environment that may require the commercial disaster restoration industry to make changes to their standards and practices in the future to effectively respond to public concerns.

Research Strategy

We first researched immediate and future trends of the commercial disaster restoration industry from multiple credible sources like Restoration & Remediation magazine, Restoration Industry Association articles, and the North American Humanitarian Response Summit synthesis report. We then gathered more specific data about Canada to complete our findings.



Part
03
of three
Part
03

Commercial Disaster Restoration Environmental Trends

Around 25% of the work performed by businesses in the restoration industry is commercial. Environmental trends that are impacting the industry mostly include severe catastrophic weather events but new technologies are being developed to address these environmental concerns. There was no difference between the trends for commercial restorers and smaller operators, however, the trends do impact commercial restorers differently by creating more demand for their services.

WEATHER EVENTS

  • Every state has experienced at least one disaster event that totaled more than $1 billion in losses since 1980, which demonstrates the need for disaster restoration companies that can help large-scale businesses.
  • In 2017, there was a spike in weather events, which has shown no sign of slowing down. The worsening severity of storms is leading to an expanding market for home and commercial restoration.
  • Weather events such as cold weather, spring rains, summer storms, and the resulting floods are predicted to remain as strong in the foreseeable future.

FLOODING

WILDFIRES

HURRICANES
  • In Florida, Hurricane Irma led to 689,000 residential property claims and 51,396 commercial property claims, resulting in a shortage of restoration workers for both homes and businesses.
  • Hurricane Florence impacted over 80,000 businesses.
  • Hurricane Michael saw $624 million in small business disaster loans for more than 12,000 people, which included more than $112 million in damage.

CATASTROPHIC EVENTS

  • Catastrophic events and large losses are the biggest challenges for major client groups such as property managers and insurance companies, which contributes to the increasing demand for commercial disaster restoration companies.
  • There have been continued calls for national credentials for those that restore disaster zones following major disasters, a trend that has been increasing since Hurricane Katrina due to the rising legislative challenges.

NEW TECHNOLOGIES

RESEARCH STRATEGY

We examined existing information regarding industry trends for commercial restoration that were related to environmental concerns. We further verified these as trends using blogs and articles from professionals and experts in the restoration industry. We then searched for each trend separately to identify its impact on the commercial restoration industry.


Sources
Sources

From Part 02
Quotes
  • "Today, the restoration industry as a whole is worth about $210 billion, and this figure is expected to grow even more in the coming years. This is because of several factors, including the increasing intensity of natural disasters, aging homes and infrastructure in the United States, as well as commonly occurring wildfires and flooding."
  • "Natural disasters are driving demand for fire and water damage restoration professionals. As natural disasters like wildfires, hurricanes and flooding have swept across the country, the demand for restoration professionals has grown significantly. "
  • "New technologies have made it far easier for even homeowners and professionals to detect mold in homes and commercial properties. Therefore, they are going to create a greater demand for the services of mold abatement and restoration professionals."
Quotes
  • "R&R did a study of its own specifically within the restoration industry. The purpose of the study was to better understand the overall state of the restoration/remediation industry, with a focus on current restoration companies, their business portfolios, expected changes in the next year, and other pertinent details. "
  • "Two-thirds of contractors said their revenues were up, and they expected them to continue trending upwards. Large-scale natural disasters can certainly be credited for an uptick in work."
  • "Software is enhancing efficiency and its adaptation is now a must,” commented a respondent on this year’s study. When asked to list up to five current trends in the restoration industry, 30 percent of those surveyed cited innovations and technology. Restoration contractors arguably have more choices when it comes to software than ever before."
  • "The good news is some industry experts see the industry finally becoming more proactive with technology, instead of reactive. Adopting new technology is the driving force behind how the restoration industry will work collaboratively and effectively with other industries to achieve common goals."
  • "With the neck-breaking speed of the restoration world, and seasons of unparalleled busyness, employee burnout is also a very real and growing concern. Jake Avila grew up in the restoration world – part of a family-owned restoration company. Today, he is an associate professor of construction management at MTSU’s School of Concrete and Construction Management, and is helping spearhead the study on employee engagement and burnout."
Quotes
  • "Due in large part to the ready availability of smart mobile devices, paired with the increasing demand and expectation for timely and complete documentation, several digital documentation products have become available in recent years. What changes is the way these systems interact with everyday tools and equipment, streamlining the way technicians gather and report data."
Quotes
  • "Many owners experience burnout at some point in their career. We don’t have to look far for causes: slow AR’s, elevated demands from TPA’s and insurance companies, unrealistic property owners, frivolous law-suits, etc. The industry has always been challenging, becoming more so the last decade."
Quotes
  • "There have been discussions about providing special credentials for anyone restoring disaster zones following major natural disaster, this conversation may gain headway again in the future. Emergency managers understand how imperative is it to have an organization or workforce of reliable occurs on-call at a moment’s notice. However, some say these credentials could bog down the restoration process and make fast-acting responders potential violators. "
  • "Restoration companies will also have to account for the public’s increasing awareness and sensitivity to any materials that are hazardous to the body or environment. "
Quotes
  • "Cleaning and restoration professionals increasingly will face the challenge of responding to situations where chemically sensitive individuals are involved. The primary cause of chemical sensitivity is exposure to chemicals, but controlling chemical exposure is difficult because more chemicals are being added to our lives every day — from off-gassing from building products to the use of personal care items to residual chemical contamination in the indoor and outdoor environment."
Quotes
  • "Until recently, drone technologies were expensive, highly specialized tools only practical for industries like mining and agriculture, but advances in technology have made them viable for dozens of industries ranging from insurance to roofing, solar and, yes, even restoration. "
  • "For restoration, drone technologies are most useful as a damage analysis tool for properties and structure exteriors. Rather than manually measuring and gathering imagery, drones can fly over a damaged structure to help restoration pros get all the information they need. Capabilities vary from one solution to another, but more advanced drone solutions in the United States and Canada can provide detailed roof photos, along with measurements, three-dimensional models of the structure and property, and even AI-powered damage detection to make inspection and analysis incredibly simple."
Quotes
  • "The following topic areas should be used to focus future NAHRS discussions and serve as primers for all future NAHRS related deliberations: Licensure and credential requirements for professional disaster response personnel."
  • "The variety of geography within the US, from coastal areas to high plains and mountains, deserts to wetlands, and the variation in climate zones leaves the US vulnerable to a wide variety of natural hazards. Coastal and river areas are prone to flooding. Tropical storms and hurricanes impact the coast each year. "
  • "Drought and wildfires are not uncommon, primarily in the western US. Approximately 1200 tornadoes impact the US each year. 42 out of 50 states has a reasonable chance of experiencing an earthquake."
  • " Canada’s immense size, varied climate and extensive geography expose it to numerous natural hazards. The geologic characteristics of western Canada make it susceptible to rock falls, snow avalanches, and earth-quakes. Approximately 1500 earthquakes are recorded in Canada each year with potential risk to several major Canadian cities on Canada’s west coast, the Ottawa-Montréal corridor, and the St. Lawrence Valley. "
  • "Approximately eighty percent of Canadian disasters are due to weather and weather-related hazards such as tornadoes, hurricanes, hailstorms, blizzards, storm surges, ice storms, and floods. Hailstorms and tornadoes are recorded annually in southern Ontario, southeastern Québec, and in the Prairie provinces of Manitoba, Saskatchewan, and Alberta. Canada’s Atlantic coast is susceptible to hurricanes and storm surges and severe winter storms occur frequently across parts of the country. "
  • "In the summer months, high temperatures and low humidity create conditions ideal for wild fires that typically threaten rural settlements on the Prai-ries, in British Columbia, Ontario, and Québec. Flooding, which is Canada’s most frequently occurring disaster, affects all provinces and territories with the highest frequency in Ontario, New Brunswick, Québec, and and Manitoba."