The dry-erase board at many drywall contractors’ offices may soon require an update. The messaging in recent years has centered on “get it up, finish it, avoid re-work.” But increasingly —especially for larger firms—the growth and profitability are creeping farther out in the supply chain.
I heard it directly from a contractor recently. Their core drywall finishing business is “doing fine,” but the market is tough. Their panel business is the growth leg.
The takeaway? The labor-intensive finishing business is squeezed. More growth lies upstream, but it involves learning new skills and trades—panel manufacturing, offsite production and production automation.
Where’s the Growth?
Let’s break this down. Labor costs continue to escalate. Jobsite scheduling is a challenge. More general contractors are self-performing framing activities. The pressure on margins is tight. And the volume of available projects is constricting.
One of my sources says: “Our markets are brutal right now. Our revenue is down this year.”
Drywall is not the growth area, he said. He is looking to scale elsewhere. And so are others. But where?
Offsite panelized production. Manufacturing wall and floor/ceiling assemblies in a factory or large warehouse offers control versus framing and finishing everything on site. As proof, some AWCI member contractors have doubled the square footage of their offsite production facilities.
Exterior finished panels. Going beyond basic panel framing, some firms have expanded their operations to produce finished exterior panels—high value-added products with less direct competition.
Technology / automation. Some contractors are tracking their production processes and studying workflows. They’re using the data to help them work more efficiently.
This is more than just doing the basics better. It’s re-thinking the business model. Instead of sending framers and finishers to jobsites, some firms are shifting the value to manufacturing, where workflows and quality can be controlled—and optimally repeated.
Implications for Wall Contractors
So, if you’re a drywall contractor, ask yourself: Should I stay focused on framing and finishing or expand? You don’t necessarily need to abandon the basics. But look for a growth engine going forward.
To thrive, consider adding panelization and kitting. Some drywall contractors offer powder coating services, fabrication of ornamental metalwork and modular bathroom pods. Those services have shifted their businesses from labor-intensive operations to higher-value manufacturing. After accounting for the initial investment, I assume these operations deliver better margins.
Of course, you don’t have to do this alone. The market offers fabrication equipment with software to link designs to the production floor. Roll-forming software can integrate directly with BIM models. The Steel Framing Industry Association has case studies that show how drywall companies can produce steel framing assemblies with complex geometries.
What does it all mean? It means you have a choice to bring some framing in-house and reduce your reliance on jobsite labor. It means you can improve the accuracy and quality of your work. It means you may capture more market share.
This Is Your Moment
To the contractor who’s seen the wallboard business flatten, this is your moment. The job is no longer just applying tape and texture. No, you’re steps away from being a technology-driven producer. The change won’t be easy. You’ll need to become a logistics manager, systems integrator and more. Nevertheless, it represents an opportunity to align where profit and growth reside.
Ask yourself: Where is my next margin to gain? In the field? Or offsite?
Mark L. Johnson writes for the walls and ceilings industry. He is also the editor of BuildSteel.org. He can be reached via LinkedIn.com/in/markjohnsoncommunications.
