SFIA Gathers Industry Experts for Roundtable Industry Discussion

November 2016

On the evening of April 17, 2016, in New Orleans, the Steel Framing Industry Association convened a roundtable discussion of the participants listed below to share opinions and ideas about the current challenges and opportunities faced by companies that provide services or manufacture, distribute, design and install steel and related construction products. The group was asked to respond to three questions from the perspective of their industry and company.

The text attributed to individuals in this summary is not always an exact quote. Some language was modified so that the open discussion, which is often disjointed due to how people converse back and forth, is captured to convey the intent of the participants as much as possible. Where similar statements came up repeatedly, they were placed with related discussion points rather than in the strict order that they were mentioned.

Attracting and Retaining the Next Generation of Workers
Kathryn Thompson: What is the greatest challenge faced by your company and your segment of the industry today, and how does is shape your approach to the market?
    
Bill Courtney: People, cost and technology are all important, but labor (people) is the most important of these. This is a relatively young industry, and the baby-boom generation is the group that pioneered the technology and our industry today. Much of the CFS industry talent is retiring. Who are the folks that are stepping up to take over? Talent acquisition is key. We have to find ways to make our industry interesting. How do we attract, retain and train the next generation?
    
Randy Daudet: I agree with Bill that labor is a top challenge for us too. We (Simpson) are in the heart of Silicon Valley, so have to compete with the technology industry. We have to position ourselves away from just homebuilding into commercial construction where there is more innovation in design, methods of construction and the types of products that are available to make construction more efficient.
    
Steve Meima: Perhaps we need to take stock of the current entry points for young professionals so we understand them and then create new entry points into the industry as needed. Construction doesn’t seem as exciting as financial services or high tech, yet both are found—and needed—in today’s construction industry.
    
KT: This subject isn’t just being discussed here but also at tech colleges that are having difficulty attracting students.
    
BC: Liberal arts colleges are also trying to prepare their students more for a profession. College is too expensive to come out without a job or career prospect.
    
Megan Washnieski: We’re having different types of labor problems. We are looking for people who want to build things, not just manage.
    
BC: And if you want to build things and create things, then this is where you want to be.
    
Brent Ballard: Our industry needs more craftsmen, not just installers. We must improve the perception of our trade as well as increase awareness of career opportunities. Many enter our industry and do not see it as a long-term career. Our company’s goal is to provide a career path for those entering our trade to show them the job can be more than just a paycheck while they await other opportunities.
    
BC: The demise of the pension has certainly played a role in this (thinking of a career in the industry instead of it just being a job).
    
Pete Wilhelms: There’s been a significant shift in the overall thinking in recent generations, from having a passion for their job/company/industry, to more of a work/life balanced passion.
    
Pat Ford: This ability to recruit and retain employees for the long term is a societal issue, but we need to be able to address this from our industry’s perspective. The construction industry no longer is viewed as a dignified career choice. People who are the “doers” on a job need to have dignity if we want to attract and retain them.
    
BC: Question for Brett and Megan, as two of the younger people around the table: What attracted you to this industry?
    
MW: I stayed in construction because I wanted to build stuff. Construction management programs emphasize management of people and not the building side of it. We want the people who have a passion for what they do, not just a position and title.
    
BB: After graduating, I personally was looking for a company that was stable, where I would be challenged and would have the opportunity to build a long and productive career. My observation regarding millennials is that they are not as focused on the company at which they work, but value the people and work environment.
    
MW: It’s hard to compete when you play by the rules and others don’t. Also, reverse immigration after the last downturn depleted the labor pool, and that hasn’t come back yet. Panelization is one way to deal with this. It allows us to shift the burden from labor to managing the process. Prefab of components also shifts effort from onsite labor to manufactured products. For example, head-of-wall products that save installation labor. And this is further enabled as BIM becomes more of the process. It allows precision that is necessary at the subcontractor level.
    
BB: The value of BIM is that it necessitates coordination very early, leading to more efficient projects with both labor and schedule savings in the field, and a better final product.
    
PF: BIM is still a hard sell in terms of its value proposition. BIM still needs to advance a lot.
    
MW: Agreed, but it can be done well now if done right.
    
RD: Pre-fabbed headers are another example of labor savings.

Code Creep and Expanding Regulation
SM: One of the significant issues we face is the regulatory process that is requiring more and more disclosure, beyond what actually has any value for a user.
    
PF: Codes and standards have proliferated so much that they stifle original thought and responsibility. Builders and designers need to have more freedom.
    
Mark Nowak: Related to that is the code creep that is occurring in both the building and environmental standards. Now we are seeing attempts to incorporate social justice and similar issues into standards, with the long-term objective to introduce these into government procurement specifications, green codes and standards and eventually to regular building codes.
    
SM: Spend some time at Greenbuild (the annual conference of the U.S. Green Building Council) and you can see the momentum building.
    
Robert Wills: (asking other participants) Do you see “green” as being a big driver in the decision-making process today?
    
MW: Green is not as big a driver as it was, but passion at Greenbuild is as still strong. Interest in disclosures is still high.
    
RW: There seems to be more emphasis on the practical side of green that can lead to cost savings such as energy and material savings.
    
PF: We need to reduce liability creep, and regulatory and code creep. Regulations are getting out of hand.
    
RD: The AISI specification committee needs more focus on solving the everyday issues of industry and design. With the explosion of computer power, we are too often pursuing academic issues rather than more practical issues.
    
PF: This is a big problem.
    
RW: It’s not just at AISI but ASCE and others. The ANSI process requires balanced committees that include researchers and other academics.
    
PF: We have cookbook codes and standards that take away the ability to think or innovate.
    
Owners and general contractors have all become accustomed to inexpensive services, and scope creep has decimated margins. In the name of cost reduction/cost efficiencies, profit has been driven out of many segments of the construction business. To break this cycle, the line must be held on fees for value-added services. Our design efficiencies cannot be given away for the same old price. As with other business models, ours must be sustainable. Part of this also means reducing the climate of liability in construction, probably by enacting some form of tort reform.

Preparing for the Next Cycle
KT: What should be the industry’s top priorities for the next five years?
    
RW: We are in a cyclical business and now, while construction is still growing (slowly), how are we going to position ourselves for the next downturn?
    
BC: No matter what happens, we need to make sure we are the material of choice. Technology, and how we use it can be essential to gaining and holding that position. We need to build bigger and stronger buildings using technology such as high-strength steel or other improvements.
    
RW: The advantage that we all have is that all the mousetraps have not been created. CLT (cross laminated timber) is not the only new product coming out of the wood industry. There are many types of steel products that have been available for years, and also are coming into the market, that are not even being considered for use in construction. The industry must collaborate to innovate.
    
SM: Collaboration and clarity in our communications must occur up and down the supply chain. The end users, all the trades, need clear messages on standards and accepted practices and construction techniques.
    
BC: Panelization is where there is a great opportunity, and as it comes of age, BIM will be a great enabler—although the technology and adoption needs much more development.

Marketing (Getting to the Table to Sell Ourselves Better)
PF: We need to market better. CFS is still considered an up-and-coming material by others outside our industry.
    
MW: Some parts of the market are changing due to impact of codes and standards, particularly in the residential mid-rise markets. Builders and developers who pretty much played in the single-family townhouse or three-story-or-less apartment markets are now in the mid-rise apartments, condos, student housing markets. My experience with these builders and developers is that they grew up on wood framing. They know the product. They have relationships with framing contractors who are basically wood carpenters. When they move up another story or two, they tend to bring everything along with them that is in place from their smaller building experience.
    
BC: How do BIM and other technologies makes us more competitive? We are way ahead of these builders with BIM and how it enables panelization.
    
MW: Prefab is a big part of what we need to market, but marketing our quality control is a big advantage. BIM brings great improvements in QC. We also need to get to the table early to sell our expertise. This is our biggest issue over the next five years.
    
PF: We need to get to the table earlier with GCs, but we need to bring value with us to sell.
    
PW: BIM forces the general contractors to make product decisions sooner than they would in the typical award process, however, that’s often when many product decisions should be made.
    
RW: From past attempts, it’s clear we need external funds to catch wood’s spending on marketing. We won’t get there by passing the hat within the CFS industry. We need a check-off program similar to what the wood industry has with the Department of Agriculture.
    
BC: We need to market steel’s superiority.
    
RD: We need to market steel as a strategic material for U.S. defense and its importance in transportation and building construction.
    
MW: Number one has to be showing the building and developer world, owners, etc., that steel is a superior product compared to wood and concrete. There is a real threat to not only lose the mid-rise market but also the partition market that has been the bread and butter for this industry historically. The threats are real, but so are the advantages of CFS such as quicker construction, fire resistance, termite resistance, flexibility in design and even sustainability (recycled content, less land disturbance compared to concrete and wood).
    
BB: Contractors and owners like the stability of steel compared to the relative volatility of wood.
    
MW: We definitely need to do a better job of marketing ourselves and the quality and control advantages of cold-formed steel; we just need to get to the table earlier to “sell” the technical advantages of our market.
    
RW: There should be more people investing in this market.
    
PF: We have to do this to beat back wood, and it’s a microcosm of all the challenges we have: It’s (wood) cheap, fast and very temporary.

The Future
KT: Look into your crystal ball to the year 2025, and describe your vision of how a perfectly synchronized and optimized industry should look.
    
PW: Are we going to become more vertically integrated, or as a specialized consultant with the project team? I see much more pre-project planning to maximize efficiency in the field.
    
BC: Well you have to add value all the way through the chain because you can’t just say “we just produce studs” and that’s it. It’s easy to say “we can put it all together in a smooth continuous process,” but the reality is that we live in a society today where there are so many specialists out there who have different ways of doing things. It’s like in medicine where there’s a heart doctor, a kidney doctor, a vascular doctor—all who may have a different way to fix an issue, and you really rely on your internist to coordinate that information and chart the best course for you. We have become so specific and specialized in what we do that it’s hard for us to be that coordinator who brings the complete solution through the whole process.
    
MW: Just selling a product won’t hold up in the future; there are too many overlapping areas of design such as the thermal envelope, moisture prevention, special inspections (and their impact on order of operations onsite). [This] will require the CFS industry to form partnerships with designers at the start and offer solutions on how CFS fits into the building design and operation. If we wait until the bid stage to get involved, it will be too late.
    
MW: There is a similar process to building every building, and you can break it down into chunks. Then there’s an opportunity to standardize the processes that are similar.
    
RW: Technology has already changed how users “shop” for products and services. Rather than talk to a clerk in a brick-and-mortar storefront, they can browse the offerings of hundreds and thousands of products and providers. They’re not coming to talk to any of us until they’ve already almost made a decision. We have to get our information out there early so they can start including us in the decision. And we’ve got good information, it’s just not getting out there into the marketplace.
    
MW: It will be increasingly important to provide a delivery system that is seamless for the builder and designer. That means integrated software that talks to whatever platforms develop. In 25 years, our handheld devices or whatever takes their place may very well be the code, the standards and even the engineer or architect. As close as we can get to seamless delivery of information to clients, architects, etc., the more competitive we can be.
    
Also, products serve multiple purposes. How can we add value that makes it easier for the developer or builder or architect? Delivery systems (such as integrated design) and products that answer these questions would be an ideal scenario.
    
MW: We need to change the mentality so that most steps can be turned into a factory process.
    
PF: But the complexity of a project is hard to overcome.
    
RD: It’s more about collaboration. Think about how complex a building is. It’s a one-off thing. There’s no incentive to automate everything for that one building.
    
PF: Love it or hate it, general contractors will drive the business, architects will design the architectural functions and engineers will take care of everything else, including serviceability. General contractors will have to assume the risks and responsibilities of the project because it frees up the subcontractor from overwhelming regulation so they can build, and designers will be able to think and solve. It’s the only way that stakeholders will ultimately be able to profit and earn a living wage.
    
Larry Williams: Pulte was able to do this with a $50 million plant in northern Virginia. Everything was automated for 10 to 12 different house plans. It took them eight hours to build the structure. But it was limited in being able to serve locations where transportation costs were reasonable. It eventually collapsed when the housing market fell apart.

Election Impacts on CFS
What impacts do the roundtable participants expect the presidential election will have on the CFS industry?
    
RW: AISC did an analysis and concluded that for 2017, it won’t matter who is elected. Not much will change in 2017. In 2018 and beyond, a couple of presidential candidates (who have since been eliminated from contention) would have a significant impact, but most others would not make any difference.
    
KT: The approach has begun to change toward construction spending. Many states have taken funding unto their own hands instead of waiting for the federal government to act. Twenty-four states have overhauled their construction funding programs and 14 more are in the process of doing so. Georgia, for example, implemented a hotel tax to replace falling tax revenue from their gas tax. The states want a long-term solution, not the stop-gap stuff coming out of D.C.

The Steel Framing Industry Association, Falls Church, Va., is dedicated to expanding the market for cold-formed steel in construction through programs and initiatives that promote the use of cold formed steel framing as a sustainable and cost-effective solution, advocate the development and acceptance of favorable code provisions, educate members with reliable data and other critical information that is essential to effective business planning, and create a positive environment for innovation.
    
Kathryn I. Thompson is a founding Partner and Chief Executive Officer of Thompson Research Group. In addition to managing and setting the direction of the firm, she also serves as director of research. She brings over 15 years of experience analyzing, modeling, and advising institutional investors, pensions and hedge funds on investment and portfolio management.
    
Brent Ballard is a project executive for Marek Brothers Systems, a prominent Texas-based commercial metal framing/drywall contractor in business since 1938. He began with Marek in 2001 and now serves on A&M’s Construction Industry Advisory Council. In his 15-year career, he has served as estimator, senior project manager and director of operations, playing critical roles on a variety of projects.
    
Bill Courtney is the president and chief executive officer of ClarkDietrich Building Systems Inc. He has over 30 years of experience leading this construction materials manufacturing company. He served as SFIA’s inaugural president and provided leadership and direction that was essential to the organization’s growth from 11 members to a national network of more than 1,500 members today.
    
Randy Daudet, P.E., S.E., has worked in the steel framing for 27 years and is the product manager for Simpson Strong-Tie’s line of connectors for CFS framing. He has been a member of the AISI committee on specifications for over 15 years and currently chairs the AISI test based design subcommittee. Daudet has been on the SFIA board since 2014 and currently serves as treasurer.
    
Patrick W. Ford, P.E., is a principal in Matsen Ford Design and also SFIA’s technical director. He is an active member of ASTM and ASCE, serves as chairman of the framing design subcommittee and in other leadership roles for technical subcommittees of the American Iron and Steel Institute, AWCI and Cold-Formed Steel Engineers Institute.
    
Stephen H. Meima, APR, LEED Green Associate, is executive director of the Gypsum Association. He earned a LEED Green Associate accreditation from the U.S. Green Building Council in 2012 and an Accreditation in Public Relations from the Public Relations Society of America in 2008.
    
Mark Nowak is principle owner of M Nowak Consulting LLC, a research and consulting company with emphasis on technical and management support for associations and their member companies. Nowak has nearly 30 years of experience in research, consulting, management and training related to the construction industry with a broad scope of technical expertise.
    
Megan Washnieski, P.E., is the operations manager for South Valley Prefab, Inc., a Denver-based company that specializes in the design, engineering, fabrication and installation of prefabricated building envelope assemblies. Washnieski actively participates in the industry and is on the SFIA technical committee.

Peter Wilhelms is the vice president of marketing and product development for Negwer Materials, Inc. With over 25 years of product knowledge in cold formed steel products, Wilhelms has been involved in CFS projects from shop drawings and field training to reviewing installed products and project closeout. Along with engineered steel products, he has been involved in over 400 CFS truss projects.

Robert J. Wills, P.E., is vice president, construction market development overseas, for the American Iron and Steel Association/Steel Market Development Institute, providing oversight and direction for construction market programs in commercial buildings, residential construction, and the transportation/infrastructure markets. He is widely recognized for his expertise in fire safety engineering, structural fire testing and performance, wind engineering, and geotechnical and foundation engineering.

Larry W. Williams has more than 35 years of experience in management, marketing and strategic communications, including 25 years in the steel and construction markets. Prior to joining the Steel Framing Industry Association in 2012 as executive director, he served as general manager of market development and sustainability for the World Steel Association (Brussels) and president of the Steel Framing Alliance.