MARKHAM, Ont.—Decommissioning a manufacturing plant may seem like just another engineering project—assess the site, remediate environmental concerns, and present the property to the owner in agreed-upon condition.
But there are simple ways to improve the client’s bottom line and satisfaction with the contract, while minimizing the impact of unexpected risks.
“There is no legal requirement to decommission a site, but some property owners are not aware of that,” says Gordon Onley, business development manager with Fisher Environmental Ltd. of Markham, Ont.
“You can sell it lock, stock and barrel without decommissioning, although with any industrial manufacturing facility, [decommissioning] is likely to be a condition of sale.”
Environmental consultants with experience on these projects emphasize the need to focus on people. Distressed employees and unions are common symptoms of plant closures, along with negative publicity for the client.
Don Bremner, chairman and CEO of Restoration Environmental Contractors Ltd. (Gormley, Ont.) offers clients the opportunity to employ workers who are losing their jobs because a manufacturing plant is winding down.
He encourages owners to start decommissioning soon after a decision has been made to close the plant, not only because employees will still be available, but because the site will be ready for new development as soon as possible.
“This is particularly suited to smaller communities where closing a single company or plant can have a huge impact,” Bremner says. “As much as possible, we find former plant workers who we can train to assist us in decommissioning that plant.”
Plant engineers know the building systems and the location of infrastructure, such as underground storage tanks, he adds. Temporary employees are treated much like new construction workers—provided with skills and safety training, introduced to the Workplace Hazardous Materials Information System and placed with more senior decommissioning staff.
A case in point was the recent decommissioning and demolition of the 300,000 square-foot Weyerhaeuser Pulp and Paper Mill in Sturgeon Falls, Ont.
“We told the community would live in their town, use local suppliers and unionized contractors, hire individuals locally through union halls and hire ex-Weyerhaeuser personnel wherever possible,” says Bremner.
“Obviously there can be some bitterness when a plant closes down after 100 years, but with this approach, you can salvage something positive for the community and place your client in the best light possible.”
Liability and trespassers
Another concern on the client side is liability. JMX Demolition and Environmental Contractors in Gormley, Ont. for instance, completed an environmental abatement and demolition contract at a former Firestone tire manufacturing plant in early 2012.
The main concern of the client, the City of Hamilton, was liability associated with trespassers.
“The big [attraction] for kids was a lake about 20 feet deep over an area of 250,000 square feet in the basement,” says JMX co-owner Jeff Norton.
“We had to work carefully to meet the client’s wishes that as little as possible be added to the pool of water. We demolished the building down to the floor slab, and then sealed any openings so nobody could get in. You need to do what’s most cost-effective for the client to achieve the specific goals of the decommissioning contract.”
Then, there are surprises. Dan Belzowski is owner of Toronto-based G and D Consulting, a due diligence firm with experience in site remediation and decommissioning.
One of his biggest challenges was decommissioning a five-acre site belonging to his father-in-law. The experience provided him with significant insight into the client side of the process.
The site was once home to a kitchen appliance manufacturer and had been used as a warehouse after the manufacturing company had suspended operations.
“When my father-in-law decided to decommission the property we had several engineering firms study the lot, but once we got the excavators on site we found two underground storage tanks as big as submarines that nobody had discovered,” Belzowski says.
“I had to have them cut in half to remove them. We also found the foundation of a water tower that was buried so deep, a full-sized CAT excavator almost tipped over as it tried to remove it.”
Worse, the property had become more heavily contaminated by soil and concrete illegally dumped on the site by others. In total, 800 truckloads of soil and 200 truckloads of concrete were removed from the site. Groundwater contamination added to the headaches.
“Lesson number one was make sure to contract a competent engineering firm,” says Belzowski. “The price of remediation escalated from $60,000 to $150,000 and eventually settled around $4 million. At that point, I took over the project myself and delivered it for $1.9 million.”
Belzowski encourages owners to begin remediating a site as soon as possible, well before the plant is decommissioned. “If we have time, we can use soil treatments that take time to work, but are very effective,” he says. “What good is a rush job on a property worth $6 million if it costs $8 million to clean up?”
He advises clients to come clean with their environmental consultants. “If they know there’s a specific contaminant on the property, we explain that this is privileged information,” he says. “If they tell us about it, the bank won’t suddenly call their loan on the property.”
Consultants should also consider the future use of a property before remediating it, he says. “If Joe’s Welding sells to Tony’s Welding, the problems won’t start until Tony tries to sell the property for another use,” he says. “Of course, Tony may also wonder how much responsibility Joe has at that point.”
Taxes and property values
If a manufacturing plant has left soil deeply contaminated, it may not present a major issue if the property is going to be used for a condominium with underground parking.
“If they’re already going to be removing the soil as part of construction then it may not be prudent to remove that soil prior to the sale,” Belzowski says. “However, the buyer needs to acknowledge the condition of the soil in the purchase offer.”
Finally, consultants can help their clients achieve significant tax breaks, particularly if decommissioning is a long-term prospect.
“When property taxes outweighed warehouse rent on my father-in-law’s property, he initially had the main buildings demolished to the foundation to decrease the assessed value of the property—and the tax rate,” he says.
“Likewise, if the government says your property is contaminated, then try to get the property taxes reduced to next-to-nothing to reflect the decrease in property value.”
If a brownfield is going to remain out of commission for a long time, Belzowski recommends clients install solar panels and earn money on programs such as the Ontario government’s Feed-in-Tariff program.
“Decommissioning a contaminated manufacturing site isn’t a death sentence,” he says. “By working in your client’s best interest you can turn a bad case into something they can live with.”
Peter Kenter is a Toronto-based freelance writer.
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