Competing with the Commodity Drywall

Thomas G. Dolan

November 2006

"In the past couple of years we’ve seen companies that have been around more than 100 years go under, with new companies coming in; this makes for some pretty fierce competition in this market,” says Wendy Bartell, president of Superior Drywall Company, Inc. in Love Park, Ill., a suburb of Rockford.

On the other hand, Bartell continues, "it’s a good market for construction, and has been that way for the past 20 years. At one time, as soon as you got outside of Rockford, you saw hardly anything but open fields, but all that has changed with ongoing building of housing and retail.”

The key reason is that Rockford is about 75 miles from Chicago.

What’s been taking place, Bartell explains, is the "trickle up” effect. New development has followed the construction of new highways. Now Interstate 90 outside of Rockford takes you to Chicago and to the various interchanges leading to Wisconsin and other destinations. Gas stations, restaurants, hotels and malls keep being built. "Growth still looks good for the foreseeable future,” she says.

So there is the business out there, but the problem is it’s hardly a secret. A lot of other drywall companies are out there too. Superior Drywall is the second oldest drywall contractor in the Rockford area, poised to celebrate its 30th anniversary next year.

"We do have a lot of competition,” says Gary Miles, senior estimator. "There are four other large drywall contractors we butt heads with day in and day out.”

Although Superior offers a variety of services, there’s no question that its focus is on drywall. "Probably 95 percent of our interior work is drywall, with EIFS mainly on the exterior,” Miles says. Although Superior does offer plastering, fireproofing, acoustical ceilings, and so on, unlike some other contractors, it has not evolved a specialty niche. It’s always been primarily a drywall company. This means it has to compete primarily with drywall, which is not just a staple for the company, but also a commodity. As Bartell puts it, "We have to really sharpen our pencils to stay competitive and get the work.”

Keep It in the Family
The company had its drywall focus right from the start when it was founded by Ronald W. Peterson, Bartell’s father. He had been in business with his brother for a few years when they worked as latherers and plasterers. But there was not enough work for both of them, so Peterson broke off and founded Superior in 1977. This took place during the time that the more inexpensive drywall, which took less skill to hang, started pushing plaster to the side because it was more expensive and more difficult to apply properly.

Peter­son started as a taper, moving quickly into drywall, then adding things like steel studs, acoustical ceilings and exterior insulation and finish systems. Peterson started out in residential but then left that behind to work exclu­sively in the commercial market.

When Peterson suffered a sudden, un­expected and untimely death in 1999 at the age of 53, a vice president took over the company for a little while, but Bartell explains that the family felt it should remain a family business with the orientation set by her father. So she took over as president in 2001. Her sister, Dawn Klein, is office manager.

Another dynamic that increases the competitive pressure is that, as says Miles, "Most of us employ the same type of personnel.” They all come from the same labor pool and have about an equal mix of Hispanics and other minorities.

Nevertheless, says Miles, "We get nine out of every 10 jobs we bid for.” One reason is that, though Superior has pretty much left plastering behind as an emphasis, it does employ some plasterers for when plastering is needed. Only maybe one or two of the other drywall companies in the area can offer that kind of trade experience. Miles, in fact, has a plastering background. He broke into the trade in 1970, and had his own plastering business for 10 years before Peterson, who was a close friend, bought him out and invited him to work for him. He’s been at Superior since 1994.

Nevertheless, the business is still mainly drywall, and, says Bartell, "The unit prices are pretty much the same, so there is a thin line you have to walk between bidding competitively and making a profit.” Growth has been steady; in 2005, sales were $8.4 million.

How does Superior do it?

"We put all our eggs into one basket—the quality of our workmen,” Bartell says. "It all comes down to them, whether we make a small profit or big profit. It’s entirely in the hands of the workers. We do it so well the first time that we’re never called back. Several of our employees have been here 12 to 15 years, some more than 20 years. Our taping foreman has been here 22 years. That makes a big difference.”

Longtime Employees Rock!
The key is encouraging everybody to work as a team, Barteli says. Although there are standard different levels of authority, when it comes down to making the bid, everybody is in on looking at the prints and going over key points with the estimator; and there is the same involvement while actually doing the job. "Every­body working on a project has a stake in it, and takes ownership of it,” Bartell says.

Superior has from 100 to 120 people working during the busy season, but keeps 40 to 50 throughout the year. The company sponsors an annual picnic and Christmas party. Bonuses are given out based on performance and the profitability of the company.

In addition to the standard skills training, there are other types of training Superior provides, which help give it a competitive edge.

"Jobs are a little different now than they once were, Miles says. It’s not enough just to do the basics well. Because we work on healthcare facilities, we have to have people on the job who have been trained to be familiar with infection and disease controls. Government projects all require people working on them to have background checks, which were never thought of before. And OSHA has much more emphasis on rules and regulations, so we send people through OSHA training classes so that they have a little more knowledge when they are doing the job. If there someone is injured on our job, our people know what to do and how to do it. More importantly, our people are better trained to prevent accidents from happening.”

Miles says there is another thing that helps Superior stand apart from its competitors—design/build.

"We are doing more and more design/build projects,” Miles says. "In the past, the architect would draw the plans and we would build accord­ing to those plans. Now we get involved at the start of the job. We go to the owner with our thoughts and he sends back the start of a design for our input. Our involvement makes the job more practical and doable than it might otherwise be.”

EIFS is often the focus of design/build projects. "We did a historic building in downtown Rockford called Founder’s Landing,” Miles says. "We had nothing but a picture for a symbol they wanted us to make out of EIFS. It was quite a challenge. We laid out the EIFS on the floor of our warehouse and cut foam shapes that would look like the picture. Then we took it to the job site and put it up. It’s 20 feet wide by 40 feet long. It’s now a landmark. We often create from the foam different details that can be used in the design.”

"Recently completed was our work for the Illinois Heart and Vascular Center, probably our largest single project,” says Bartell. This involved actually two related project. The first was an $890,000 renovation of the hospital, while it was still in oper­ation, so it had to be done at night. The second part was connecting it to a brand new four-story building built right next to it, a $2.3 million contract. Some 35 to 40 men were involved in that project with the men working around the clock.

The company has done several schools, including the joint elementary and high schools in Belvidere, Ill.—a contract of about $1.5 million. Superior also builds churches. One Lutheran church provided several challenges in terms of the very high scaffolding required, light coves, soffits and radius ceilings. Superior is also doing several Wal-Marts at once, along with a Sam’s Club, Menard’s and a number of strip malls. Most of the jobs run in the $100,000 to $150,000 range.

When asked how it is being the head of a business in an industry mostly run by men, Bartell replies, "For a time there was a sense of ‘Let’s see what she’s going to do,’ but that has passed. They’ve seen it’s continuing as a family business, with everybody working as a team and nobody more important than anybody else. Our code has been to keep the company running the way my dad ran it. That’s been the secret of our success.”