Was 2020 the most challenging year in living memory?
David C Phillips / December 2020
There is little doubt that 2020 has been a challenging year, perhaps the most challenging in recent memory. So we asked contractor members of the Association of the Wall and Ceiling Industry how they have fared, what they considered their biggest challenge(s) to be and, most importantly, what strategies they have developed for success and what lessons they have learned in the process of overcoming these challenges.
As usual, we found a variety of answers to all the questions, but some common denominators emerged.
The first question was, “How have you and your company fared overall in 2020?” (Note that, in order to meet publication deadlines, the article was written in October, so the last quarter of the year was yet to come.)
The answers ranged from not great but still positive, to better than ever. “We have fared well but only 50% of our 2019 numbers,” says Don Freas, CEO of Freas Plastering Company in Concord, Calif.
Similarly from Bill Fritz, president of Mission Interiors Contracting in Texas, “The business is down 50% from last year with negligible profits due to upfront insurance and overhead costs. That said, we are still in business.”
At the other end of the spectrum, Brenda Reicks, vice president of construction at Tri-State Drywall in Sioux City, Iowa reports, “Our work on contract in 2020 has exceeded any other year. We’ve had to multiply our workforce by 35 to 40%.”
Philip Ruffin, president of Pontiac Ceiling & Partition in Pontiac, Mich., says, “It actually helped us slow down a bit and catch up on everything, including collections, change orders and organizational activities. 2020 has been the best year in history for our corporation.”
For many the future also looks bright. Robert Chiasson, owner of Finishing Systems in Ladson, S.C., says, “I believe the construction industry as a whole is fortunate during these times. Volume has remained constant with very few job cancellations and has actually increased during the last quarter. We have contracts in place well into the second quarter of 2021.”
Victor Roach, president of Western Partitions in Wilsonville, Ore., explains their situation in detail, fairly typical of the average response: “Fortunately, our company has fared reasonably well under the circumstances. The construction industry was largely assigned to essential status in the areas we work in. Although at the outbreak of the COVID crisis, some projects and regions temporarily slowed or stopped, most came back in a relatively short time. Our biggest impacted area of business has been our smaller jobs, which have slowed to a crawl with some permanently shelved. The companywide sales impact for us is projected to be a 15 to 18% decline from last year. Only a few office staff have been let go, but we’ve had a 15 to 20% reduction in field forces. The silver lining is that 2021 still looks OK.”
Greg Eckstrom, vice president of California Drywall in San Jose, Calif., expresses his company’s concern for the employees who are most vulnerable, a concern that was reflected in many of the responses: “Thus far, we have done well given COVID-19 and the air quality due to the wildfires in California. These challenges put pressure on our business. More importantly, they add an immense amount of stress and anxiety to our employees who are concerned about their health, their families and their livelihood. We are doing our best to ensure their needs are met during these trying times.”
What shines through in the responses is a positive, optimistic and resilient attitude.
The Major Challenge
What is the main challenge faced by AWCI member contractors in 2020? And what are the most successful strategies devised and implemented to ensure success?
The most common challenge mentioned was the Coronavirus pandemic and its various effects, but this came in different flavors and ramifications for different companies. The strategies also varied from company to company.
Shawn Burnum, branch manager at Performance Contracting (PCG) in Dahmer, Mo., mentions two main challenges: “1) Keeping everyone safe—reacting to COVID in both the office and field environments; 2) Maintaining a strong presence in an ever-changing market and adapting to the clients.”
The successful strategies employed by PCG are, Burnum says, “A specific COVID Task Force that included leadership, legal, HR, safety and operations; consistent communication to all employees about the ever-changing situation and how the company was responding; demonstrating to our clients that we were taking it seriously and leading by example on job sites.”
Freas says their strategy for overcoming the COVID-19 challenge has been “being ready to adapt immediately to our surroundings. Practically, we developed COVID-19 safe practices and standards for office and field.”
Daley’s Drywall & Taping in California provided answers from three levels of the company: Brittni Daley-Grishaeva, president and CFO; Adam Barbee, estimator and project manager; Dan Branas and Roman Morin, superintendents in the field. It’s instructive to see the three viewpoints.
Daley-Grishaeva says the single biggest challenge this year has been the COVID pandemic and the shelter-in-place orders: “Staying on top of all the quickly changing rules and regulations, training our people on the new rules, and making sure all of our policies and practices are in compliance, while maintaining day-to-day operations has been a major focus for the entire company,” she says.
“During the shelter-in-place, our office staff adapted quickly to the remote environment from a ‘getting work done’ standpoint, but it was more difficult to adapt to the seclusion and not seeing each other. We’re glad to be back in the office most of the time with the new safety protocols.”
From the company’s estimator/PM standpoint, Barbee says, “The main challenge of this year was the pandemic itself and trying to maintain competitiveness in our estimates/bids. There is a cost for the protocols, and the client knows this. But we want to make sure we’re able to offer the best bid that will be profitable for us, but still be competitive and affordable for our clients, and ultimately outdo our competitors. Of course, initially the challenge was not knowing if we would even stay afloat, not being aware of what the pandemic would do.”
Branas and Roman provide the front lines viewpoint: “COVID-19 has been a challenge: From jobs closing, to keeping employees on site with all the new guidelines; employees becoming sick/being quarantined; jobs reopening and dealing with all the delays; building confidence to take the COVID-19 crisis with a positive prevention, preparedness and response plan for construction.”
In terms of strategies evolved, Daley-Grishaeva says, “Making decisions, communicating and adapting at a faster pace than we are accustomed to has been our main focus to stay on top of the changes this year. Being willing to change what we are used to doing and finding new systems and structures in our day-to-day lives has been very important and has been necessary and helpful.”
Barbee says, “The best strategy is, and continues to be, to adapt quickly to the unknown. We as a company are melted all of the time due to unknown situations; from there, we mold to the new and carry on.”
Branas and Morin add that working remotely in addition to Zoom meetings helps keep the momentum moving forward with their teams. Time blocking in order to multitask efficiently has been successful for their team leaders and made it possible to meet deadlines easily. They also have introduced one-on-one training on all of their cloud-based platforms, in addition to daily foreman apps.
For Anthony Verderame, vice president at Ess & Vee Acoustical Contractors in Long Island City, N.Y., the main challenge has been “The COVID, working from home for three months, and loss of volume.” His successful strategy to handle has been, “Change with the times and be flexible.”
“The biggest challenge was probably at the outset of the Coronavirus outbreak,” says Roach. “We initiated daily meetings with our senior leadership team just to try to stay on top of the sometimes conflicting changes in protocol from the various governments, general contractors and owners.”
In terms of strategies, Roach says, “apart from slowing down spending on new ventures or expansion, and refining processes, we have not made major changes. We cannot make business out of nothing. We require a good economy that needs to build things for us in order to have work. So, as a strategy, we have been waiting to see how things shake out before we change directions. Sometimes you need the fog to lift before going boldly in a new direction.”
Companies in California have had the air quality issues from the fires to add to the COVID-19 challenges. Eckstrom details the strategies adopted by California Drywall that have proved successful: “We take both COVID-19 and the Air Quality Index very seriously and have enacted protocols to maximize the safety of our employees. These include delivering AQI readings to all senior management, PMs and superintendents three times a day to ensure that our workers are either working within the healthy AQIs or are provided the necessary PPE when the AQI is designated as unhealthy.”
But 2020 has taken California Drywall in a new and innovative direction. “The most successful strategy has been to embrace manufacturing technologies and prefabrication,” continues Eckstrom. “We have heavily invested, both financially and from an employee standpoint, in evolving from a field-based, stick-built business into a manufacturing/prefabrication-based business. Our prefab shop includes roll-forming machines, laser cutters, plasma cutters, press brakes, spot welders and more. We now ship out kitted and custom materials. We are in the process of prefabricating over 500 exterior panels for a project, with at least 100 different sizes and designs, many of which have custom-radiused framing elements.”
Like many, Fritz has suffered loss of business as a result of the pandemic. For him the major challenge has been “the cancellation of multitudes of projects due to COVID-9 and economic uncertainty.” His strategy has been to use 1099 subcontractors over employees and downsizing all overhead areas of the business.
Rick Wagner, owner of Richard Wagner Enterprises, LLC in North Carolina, says, “2020 as an election year, plus the pandemic, have every worker, vendor, customer and basically everyone in a self-propagating fear of mostly the unknown! The media has hyped up everything from the COVID issue to racism to locusts. Fear is never good for any economy. This has created the daily challenge of just how to deal with people and teaching our workers how to follow the rules properly and maintain the COVID regulations at home, so it won’t affect their and the entire company’s health and mental state.”
He says his strategy has been “teamwork, commitment to common goals, and great leadership. And a healthy dose of good ole prayer!”
The next-most-mentioned challenge is a shortage of manpower and other workforce related issues. In some cases, this relates to COVID-19.
“Our biggest challenge in 2020 is having enough experienced people working in the field,” says Reicks. “We’ve had a few people stay home for two-week isolation periods if they were exposed to COVID, which makes it challenging to have enough workers on our jobs. This year, we have sought help from several drywall subcontractors to supply manpower for our large projects. We follow all the required safety measures.”
Chiasson in South Carolina says “the challenges remain the same, which is what you see throughout the industry—mainly skilled labor. I am starting to see younger individuals trickling into the industry, so that’s a plus.”
The strategy he has adopted for his company is using out-of-town workers for larger projects. “They are able to acquire their own housing and their focus tends to be that sole project,” Chiasson says. “I use my hourly employees for the smaller local projects.”
Art Trautman, president of Sonora Drywall in Arizona, has been facing similar challenges: “Labor shortages and the emergence of group (crew) labor providers. Labor shortage has been an issue from some time, but recently has been much worse. I have never been contacted as much as this year by individuals offering group services to fill our shortages. It began with individuals who had crews they would provide at an hourly rate. Now some of these individuals have incorporated and even companies from other parts of the country are here. When we utilize these companies, we always make sure they carry the correct insurance and have proper PPE, but for me it is a bit of a concern that you don’t really know who you are getting.”
Their strategy? “All field foremen and supervisors are using digital platforms for plans and record-keeping,” Trautman says. “I can’t remember the last time we printed plans, and all employees clock in and out from smartphones.”
There were some other major challenges mentioned.
Ed Dougherty Sr., general manager of Tedco Insulation in Kennett Square, Pa., notes, “The extreme ups and downs of the cycles. So busy at one time that we don’t have enough manpower and have to work overtime at our expense to meet deadlines. Then everything comes to a screeching halt so we have to lay off good employees whom we can’t bring back when we hit the next cycle.”
The solution for Tedco has been “cutting spending and only working for known partners that are not struggling themselves.”
Ruffin notes, “The biggest challenge is having customers process change orders. Typically, every excuse is used. Now we are hearing G’s are short staffed, owners are spending more time critiquing extras, way more back-and-forth than normal. Cash flow has been taken to the brink.”
Their strategy? “Schedule tracking and loading manpower to the schedule has been a big success,” Ruffin says. “It has given us a visual to show our customers what happens to our manpower levels when a project is delayed, pushed, preceding trades fall behind, and so on. It also ensures that the latter trades are not blamed for being behind schedule. We look at this process early and often to ensure the later trades receive their allotted amount of time to complete their work and are not compressed due to preceding trades falling behind.”
Michael Mazzone, president of Statewide General Contracting & Construction in Hawaii, explains that his main potential challenge lies ahead: “Since 90% of our workload is government, my concern is that with the shutdown of business and tourism, our state and city projects will lose funding due to a decrease in tax revenues and the money will run out.”
To cope with this he says, “We are diversifying into different markets and expanding our customer base.”
Scott Bleich, principal of Heartland in Iowa, says, “The single main challenge has been the erosion of our backlog. We have seen many potential projects that have been put on the shelf for 2021 and beyond. Specifically, we’ve seen the number of private projects dry up and we have had to concentrate more on public work. This then leads into our second biggest issue: Reduced fees on our bids.”
Bleich explains how they have addressed this: “On more of a macro level, we’ve adopted the Entrepreneurial Operating System. This comes down to companywide accountability. EOS gives us the mantra of, ‘What gets measured, gets done.’ We are using this companywide but specifically for these times, and at a micro level, we are concentrating on sales and marketing and keeping track of opportunities, follow-ups, touches with clients, and other measures.”
What Have We Learned?
“At RWE we learn lessons every day,” says Wagner. “We strive for each team member to grow daily. We never fear failure—we grow from it!” He also suggested a very pertinent title for this article: “What don’t kill you, makes you stronger!”
Bleich echoes the sentiment: “I always tell our people that we don’t win and lose, we win and learn. One specific learning experience this year was that we underestimated the dates for our return to the office.”
“Things keep evolving, and we have to be ready to meet those changes,” says Verderame, a sentiment expressed by many.
“Managing workload and standardization have been the most important lessons,” says Trautman. “Being stretched too thin is far more detrimental than not having enough work. Standardizing how repetitive tasks are performed and when a special or unusual situation arises, knowing that a specific format will be followed has helped work go smoothly.”
Says Eckstrom, “Our industry is changing, and if you don’t change with it, you will not succeed. You must invest in technology and tools to scale in manufacturing/prefabrication. You must learn from your failures to continue to move forward.”
Ruffin says they have learned that “if there is an opportunity to leverage the job to get your change orders approved, take it—you will be much further ahead.”
“Banking is an essential part of government fund delivery,” says Fritz. “Make sure you have the right bank and the right banker—unfortunately, we didn’t.”
Barbee may be speaking for all contractors when he says, “Our lesson learned from this historic moment is knowing that we as individuals should be very grateful. There are a lot of businesses and people out there that have lost a lot, or everything. We as individuals/companies cannot take anything for granted. If we are able to better help others, we should.”
David C Phillips, a freelance writer and photographer, is an original founding partner at Words & Images.