It’s a Fair Wind
January 2009It seems that the winds of change continue to howl and give no real indication of subsiding any time soon. And while the general prospects in our industry are less than encouraging of late, this sobering adjustment period may have some redeeming aspects for those contractors who demonstrate a necessary combination of tenacity and flexibility. We are witnessing the unfolding of a cycle in our industry that conjures unpalatable memories of the mid-seventies, and those who want to remain viable must be ready and willing to adjust rapidly but intelligently to the changes being dealt by a crippled economy.
Oh, I know we all claim to be amenable to change, but there always seems to be some (or much) resistance to the actual transitions. Old ways die hard and so good remedial strategies fade without being implemented or lose momentum from a lack of the proverbial "follow-through.” Let’s face it, change requires effort; big change requires huge effort. But survivors will recognize that change happens in any case, with little or no regard for our reluctance to accept it. Survivors will overcome their natural tendency to resist inevitable change and will become change managers. They will proactively develop strategies to plan for, direct and control change if they expect to rise above the general decline.
Estimators who are also leaders in their respective businesses can contribute to these strategies, and estimators who are employees can incorporate these tactics into their approach to work procurement. As I’ve implied, those who follow remedial strategies such as those offered below may actually benefit from the economic realities that will be others’ downfall.
One obvious scenario that will commonly unfold with the tightening market involves manpower and productivity. As backlogs diminish and ongoing jobs near completion, effective change managers will be selective but proactive in immediate downsizing—reducing their work force to effective operational levels while keeping their most productive field hands busy. The positive upshot of "smart” downsizing is that it allows the estimator to raise the productivity expectations of his best craftsmen, thus giving him a competitive edge on the labor side.
Similarly, responsive change leaders will look for ways to cut overhead to match the field contribution. This could range from reducing the fleet to reducing the staff. The proposition of laying off a receptionist or an administrative assistant may seem drastic, but such measures enable the estimator to more effectively compete for the work that keeps the rest of the company afloat.
Measures that estimators might unilaterally employ to become more competitive are several. Keep a watchful eye out for value engineering, and pass a greater percentage of the savings on to the prospective client. Work harder to get less costly material and system substitutions accepted—make them more attractive. Shop and demand better material prices from your suppliers. Remind them that they must be more competitive to keep your business.
If you are a union shop, ask for some project-specific wage concessions for jobs on which you are bidding against non-union shops. They are often amenable to this. Remember, it is in their best interest to reduce the hourly rate to help you get the job and keep their members off the idle lists.
Bid more work. Move our of your comfort zone (you can bet your competitors have moved out of theirs). Explore other geographic areas and expand your scope of work. Bid smaller jobs that you might have passed on before. By increasing your bid volume, you should be able to contribute more to your backlog.
These and other common sense steps can help a solid drywall contractor to survive in these troubled times, and surviving such egregious adjustment period can yield multiple rewards. Eventually, your field of competitors will have been reduced to a handful of worthy adversaries (no more annoying spoilers); you will have trimmed your organization to a cost-effective "fighting weight;” you will have adjusted your scope of work to fit existing markets; you will have pre-positioned yourself for more favorable times with a more productive and better disciplined work force.
So don’t despair—keep an optimistic eye on these positive consequences and weather the stormy winds of by being change managers. Odds are, you will be on the list of survivors when the breezes blow fair again.
Vince Bailey is an estimator/operations manager for San Juan Insulation and Drywall, Durango, Colo.