Third Generation Carpenter with Seasoned Ideas on How to Weather the Current Storm
By: Steven Ferry
AWCIís Construction Dimensions interviews Mike Weber, president of Island Acoustics in New York City, and incoming president of AWCI. He takes the helm from Jim Keller, who has skillfully navigated the economic downturn during his year as president and is thanked for his great leadership during these challenging times.
ACD: The last half year has been quite a ride in the construction industry. How do you describe the situation at present, and where do you see it going?
MW: I donít think weíve hit bottom yet; it looks like weíre in for extremely challenging times over the next two years. The private sector has been hammered by the lack of financing and funding on projects for private developers, and thatís what I donít see turning for another two years or so. I do believe there will be opportunities in the government/institutional sectors of our industry.
How do you think the AWCI membership should best prepare for and deal with this situation facing us?
MW: Members should explore opportunities in their respective markets by expanding the products and services they offer their clients.
Treat your business as you would run your diversified financial portfolios. Diversification is the best course of action to minimize the impact of downturns in the economy.
Good advice. What current or impending legislation or government regulatory initiatives do you see impacting AWCI members in the year ahead?
MW: There is increasing involvement of the government in corporate America. For example, allowing the National Labor Relations Board to order employers to recognize a union if more than 50 percent have signed the cards infringes on the American right of private ballot.
Do you see any other issues or alarm bells in the future for the industry?
MW: As contractors, we are in a bit of a Catch-22 in relation to cash flow: The banking industry has rewritten the criteria for private equity borrowing midstream in projects. So, if you were barreling along on a major high-rise project last October, 30, 40, 50 percent into it and that developer didnít have a strong balance sheet and couldnít come up with additional funding to continue that project, itís putting a lot of pressure on the cash flow of the contractors involved with the job.
If the owner is attempting to finish the project, itís being borne on the back of the contractors renegotiating their payment terms.
So I see more projects being liened, payment terms being renegotiated, contracts being renegotiated, owners and developers looking for additional cost savings on projects that have already begun.
And the best strategy for handling this is Ö?
MW: Walk softly with a big stick! And, be mindful of who you do business with. Companies that are diverse enough to operate in the governmental/institutional markets, that have the qualifications to bid that type of work, should have a higher rate of successóbut the government arena is a very challenging market to be in.
How does AWCI itself look to you today?
MW: Itís an association with close to a century of experience and, I think, very conscious of the economy. It will continue to be under pressure from its members and associate members to minimize the economic impact the entire country is experiencing. There is certainly a correlation between everyoneís 401(k) plans and the benefit packages in the union sector, which has also taken its lumps with their pension plans. I know the conservative investments AWCI makes as related to our solvency are also under pressure. Our objective here is to minimize the damage that weíre all feeling on the economic side.
So one specific action the AWCI Executive Committee will take, in view of the volatility on Wall Street, will be to evaluate the portfolios on a quarterly basis as opposed to annually.
This is not the first recession and even depression that AWCI has navigated, and itís still going strong.
MW: Itís certainly not the first recession or downturn of the economy, and if weíre going to call this a depression, itís certainly not the first, either. I have been in this industry for more than 25 years, so obviously I wasnít around for the Depression. I believe the current economy far exceeds the typical recessionary cycles we have experienced, with the contraction in our markets seeming greater and broader in scope. There are still areas of concern weíre not even aware of yet. I believe the bottoming in the housing market is in sight and hopefully we can begin the slow road to recovery.
Letís hope so. What do you think the membership could be doing more of to improve either their own positions or that of AWCI?
MW: Iím a big advocate of improving communication and sharing information within your own company. Evaluate your strengths and weaknesses and put yourself in a position to adapt to potential opportunities in the market.
What are your objectives for the association over the next year?
MW: Simply, to keep the ship afloat by improving the lines of communication with our members and sharing as much information as possible to give them the resources necessary to make educated business decisions.
Do you have any particular message for the membership?
MW: I wrote an article for our local chapter here a couple of months ago: Adapt or Die! I still believe this to be the call sign of the times. Additionally, it is important to be extremely mindful of your overhead and resources and work with your banking partner to ensure you have adequate capital, since the cash flow is the single biggest challenge we have ahead.
How about you now. Youíve been in the industry for close to quarter of a century?
MW: Well, I started working around acoustics when I was 12, part time. I worked for the company in the warehouse until I hit 18. In 1976, I went into the field and worked as a carpenter until 1984. Then I moved into the office and learned the estimating and project management end of the business until 1991. Then I became a partner with my father and I have been running Islands Acoustics LLC with him since then.
Your father is no doubt pleased but not overly surprised about your appointment to president of AWCI, following your service on the board and AWCI Executive Committee. Did he ever hold any positions in the 17 years Island Acoustics has been a member of AWCI?
MW: No, I donít think he ever held a position in AWCI, but he has been president of the New York chapter a few times. Heís what he likes to call "semi-retiredĒ today, spending the winters down South on his boat and coming up for the summer to help out as he sees fit.
What would you say is the high point in your career in the industry? The greatest achievement, what youíre most proud of?
MW: I donít think I have accomplished that high point yet! But I can say Iím proud to be a New York union contractor. Every day I come to work, Iím faced with a different challenge, a different twist, a different excuse, and thatís what makes me tick. I think Iím an analytical guy: I sit back, I listen, I like to assess situations, I like to evaluate the landscape. I also enjoy engaging with my competition and peers.
There is a sense of accomplishment that Iím a third generation carpenter and run a second-generation family-owned business. I donít have the statistics offhand, but I feel pride in the fact of bucking the second-generation failure statistic. I am proud of the relationships that I have built and have maintained from the hand-off from my father.
How would you describe your philosophy, on life in general or on construction in particular?
MW: When times are tough, I believe in keeping your nose to the grindstone and paying attention to detail; donít take your eye off the important things, and if you donít lose sight of some of the basic fundamentals of running a business, then you will succeed.
I trust that what goes around, comes around. I believe in paying it forward. Weíre in a small industry where if you just do the right thing and stick to that, the rewards are well worth the wait. Some of the leadership values that Island Acoustics adhere to are passion, integrity, fire in the belly and collaboration.
Do you have any hobbies or personal interests outside of construction?
MW: Yes, I enjoy snowboarding, boating, and I love golfing. I am also intrigued by technology. Certainly, thatís one thing we can always improve in our industry. Iím a big believer in using technology to improve productivity, and I know AWCI is working on some of that with our new Construction Management Technology Committee.
And your family?
MW: My wife, Jane, is a teacherís aide in the school district where we live; weíve been married for 22 years. I have two daughters: Emily is about to turn 15 and is a freshman in high school; Lauren is 19, a freshman in college.
Thank you, and much success in your tenure as president of the association.
Steven Ferry is president of Florida-based Words & Images and has been writing for the construction industry, and AWCIís Construction Dimensions, for more than a decade.