The Recession Wiped Out Only the Amateurs
AWCI contractors use a number of techniques to set themselves apart from the competition.
Mark L. Johnson / August 2019
Tim Titsworth likes to build relationships with architects. On most jobs, the president of Concord Drywall, Inc. in California, sets up a walk-through that he calls “an architect’s observation.”
During the walk, Titsworth will ask the architect if he can use certain details elsewhere on the project. Having studied the plans thoroughly in advance, he has figured out how to make the details fulfill the design intent and enable Concord Drywall to be efficient. Titsworth doesn’t want more money. He wants a “confirming RFI” from the architect, a sign-off on the notes the GC’s project engineer takes as they walk the job.
“Change this detail to that detail. Move these windows. Eliminate a second layer of Sheetrock here.”
The architect and engineer can’t believe it. “Did he just fix a bunch of problems, and it didn’t cost us any money or time?” the GC says and smiles. The architect is happy. Titsworth beams inside. Concord Drywall’s reputation has gone up a notch.
“This is how you stand out and make money,” Titsworth says.
Competition for Talent and Projects
Construction competition is growing. The current labor shortage, for one, is stoking it. That’s because it takes lean crews longer to get their jobs done.
“You get about six hours of work for every eight hours of pay,” says Gene Cox, president of Custom Drywall, Inc. in California. “Production is down 30 percent, and that raises costs.”
In some markets, contracts are easy to come by, but the wall and ceiling contractors must fight to find enough field personnel and management talent to handle the work.
“It is not too competitive to land work at the moment,” says Brittni Daley-Grishaeva, president and CFO of Daley’s Drywall & Taping in California. “It’s more competitive to get employees.”
Daley-Grishaeva says that sometimes, Daley’s Drywall is the only bidder on a job. “That’s zero competition,” she says.
In other places, bidding is getting more price competitive.
“There’s more competition than I think there should be,” Cox says. “I notice it with our better customers. Our profit margins are being squeezed. We should be getting better margins, but there are always two or three low bidders to compete against us for our better customers.”
Data from the Bureau of Labor Statistics shows that the number of private construction companies—NAICS Subsector Code 236—peaked at 273,224 firms in 2007 when the Great Recession began. By 2013, nearly one-fifth—53,603 firms—had ceased their operations.
“The recession wiped out all of the amateurs,” Titsworth says.
Today, construction firms are once again multiplying in number. From 2013 to 2018, the number of construction enterprises grew 12.5 percent from 219,621 to 247,123 firms, BLS says.
The “amateurs” may be gone, but the remaining construction contractors often try to woo the cream-of-the-crop owners, developers and general contractors for work. So many firms simultaneously try to pursue that strategy, that it’s hard for any one firm to stand out.
“We have 12 customers we work with, and four that we love,” says one AWCI member contractor. “These four have smart people working for them, and there’s good money to be made, but every other drywall contractor knows this, too.”
So, how can a wall and ceiling contractor stand out from the competition? What does it take? Here are some ideas.
Be a niche player. The answer for many wall and ceiling contractors is to specialize.
“Find a corner of the market that can’t wait for your attention. Go to their extremes,” says Seth Godin, author of This Is Marketing. “Find a position on the map where you, and you alone, are the perfect answer.”
Compass Construction in Ohio has a captive market of just two or three customers who repeatedly toss projects its way.
“We operate in the ‘Land of Oz,’” says C. Brent Allen, vice president at the firm. “We are fortunate to be in this position. We don’t have the headaches of being in the rat race.”
How did Compass Construction get to this point? Allen says it has come down to growing and maintaining good relationships. Healthy relationships are based on trust, and trust springs from a track record of good performance.
“Quality, performance, knowledge and professionalism—that’s how your company stands out,” Allen says. “Although our relationships are changing—the old guard is starting to be replaced by a new guard—this will be temporary. We’ll get to know the new people, and they’ll get to know us.”
Other AWCI member contractors feel similarly about their niche being a haven for steady and profitable business. Concord Drywall is a union shop focused on public works projects, such as schools and colleges. But Concord’s niche has a further drill-down: The firm focuses strictly on small projects.
“A small guy on a shoestring budget can beat the big guys every day,” Titsworth says. “So, the big companies do the multimillion dollar projects like big hospitals. We do the $4 million projects, and we land three to four of them a year.”
Offer great benefits and perks. Some AWCI member contractors say the competition has become more generous. They’re augmenting their job benefits packages with special employee perks. Such perks include paid-for weekly employee lunches, group team-building outings to stellar ski resorts and camping venues, and elaborate year-end holiday parties.
“You have to make your company the most attractive it can be,” Daley-Grishaeva says. “So few people are looking for jobs. The ones who are get snatched up fast.”
One way to stand out when competing for talent is to sell the company’s culture. Some wall and ceiling companies indulge employees with an encouraging, down-to-earth, family like work environment. They present their firms to job candidates as a fun and fulfilling place to work. And this has worked for these firms.
Not uncommon is going up against one’s own customers in attracting management talent. Your customer, a general contractor, may try to lure project managers and estimators with stock options, life insurance policies and special trips as part of its executive compensation packages. What do you do when you’re trying to draw talent from the same candidate pool?
“You make your offers as attractive as possible compared to the competition,” Daley-Grishaeva says.
Maintain strong relationships. Maintaining strong business relationships may matter more than anything you can do to remain competitive.
“We focus on the long-term relationship,” says Daley-Grishaeva, who notes that Daley’s Drywall has many long-standing clients. “We’re not out marketing ourselves to new clients, just the clients we have.”
Daley’s Drywall’s goal is to make their customer’s lives easy by going the extra mile. She believes this strategy leads to repeat work.
While all points of contact with customers matter, likely a few relationships matter more than others in preserving long-term partnerships.
One key relationship lies between wall and ceiling contractor’s estimator and the general contractor’s estimator or bid processing manager. The subcontractor’s job foremen and the GC’s field superintendent form important bonds, too.
Of course you want the GC’s superintendent to view your firm as an asset, and job foremen can do much to create that impression. However, Titsworth believes estimators ultimately control the reins of a good GC-sub partnership. For example, on bid day, the sub’s estimator working with the GC overrides any conflicts going on in the field.
“A superintendent could hate your company,” Titsworth says. “But on bid day, your estimator and the GC are going after a job and hope to land it. The GC is thinking, ‘Concord Drywall, you have the right number, and we have an understanding.’ He’s not thinking about field disputes.”
Work the details. Few things speak louder than a track record of successfully completing projects. General contractors prize subcontractors known to complete their work on time.
One strategy to do this is to be proactive and do a lot of upfront planning. As soon as the construction documents become available, the wall and ceiling contractor should review the details. Why? Because today’s construction documents are typically incomplete and may contain inaccuracies. Architects simply run out of time to proof all of their specifications, Cox says. Some cut and paste in specifications supplied by building materials manufacturers. One manufacturer has a gypsum board with a high sound rating. Another’s board is spec’d for its fire rating.
The subcontractor’s job is to bring method to the madness. Maybe one brand of gypsum board could suffice, which would simplify material procurement. Maybe the 16-inch on center framing needs to be modified, because the plumber is working off site on 20-inch-wide plumbing runs—and the GC doesn’t know it.
Cox says Custom Drywall recently worked on a 200-unit apartment building that had a total of 250 RFIs. Custom Drywall contributed 40 RFIs and had to reckon with the impact of the others. “We felt we ended up designing much of the job,” Cox says. But caring for the GC in this way was good business and has led to more work, he says.
Bid the full number. A common practice among subcontractors is to bid a low number, land the job and, later on, submit RFIs and change-order requests. Titsworth believes the practice harms the trust relationship between the wall and ceiling contractor and the general contractor. A better approach is to be straightforward and complete.
“Separate your firm from the typical contractor who bids low, finds faults in the blueprints, writes RFIs and asks for change-orders,” Titsworth says. “RFIs are nothing but a delay and a disruption.”
Titsworth tries to bid “the right number.” He includes everything his firm plans to do and keeps exclusions to a minimum. His motto is this: Submit the “complete bid” and you will stand out from competition.
“Help general contractors to avoid delays and disruptions. Don’t let them get bogged down by an excessive number of RFIs,” Titsworth says.
Keep it real. Recently, a foreman for Compass Construction misinterpreted the shop drawings related to cold-formed steel framing. Allen admits the miscalculation affected the engineering of the structure. Immediately, the project engineer called Allen. And Allen says he simply “put all the facts on the table.” Then, he suggested a solution.
It was the correct reply. And it made Compass Construction stand out from the competition.
“The engineer told me it never goes that way with other firms,” Allen says. “His other customers don’t understand exterior framing. He says he has to hold their hands to get things done, but we get on the phone and get right on solving the problem.”
Mark L. Johnson writes regularly about the wall and ceiling industry. You can reach him at linkedin.com/in/markjohnsoncommunications.