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Sticker Shock Not All Bad

Hello everyone, I hope all is well. First off, I would like to thank everyone who attended AWCI’s Industry Executives’ Conference & Committee Meetings. I think that I can speak for all when I say it was a great week of work, networking and fun in a beautiful location. A special shout-out goes to Dan Wienstroer for introducing everyone to St. Louis–style pizza and toasted ravioli!

Before I tell you my thoughts, let me say that they are solely my viewpoint and may or may not reflect the view of AWCI or its membership. Also, since this is being written a month before publication, some of the content may be out of date at the time of reading.

In late September/early October, several gypsum board manufacturers announced “a game changing strategy” as of Jan. 1, 2012. They are eliminating job quotes, substantially increasing prices and fixing the price for the calendar year ahead. This follows hard on the heels of steel stud manufacturers who changed their quote policies for similar reasons. (See page 49 for details.)

In my opinion, this is not necessarily a bad thing for our industry or, specifically, for contractors. The micro view first: Contractors have had to become leaner and more disciplined to survive (we have to do more with less staff), so a known price per board for all projects for the coming year will make estimating and procurement less labor intensive and therefore easier to administer and verify. Also, most contractors are very accurate in their material takeoffs. We hardly, in fact, ever have a bust on materials. Our major risk is the human side of the labor productivity equation. The stability in material costs eliminates some of our risk; a higher cost on materials changes the labor/material ratio, thereby also decreasing our risk.

In the macro view, such changes in quoting and prices should allow our manufacturing industry partners to achieve profitability. We do need strong, financially secure manufacturers in our industry, and without stability and profitability the manufacturers cannot continue to invest in new products and new technologies. Without continued R&D by manufacturers, our industry—which is a “mature” one—may start to decline. The only major risk in this paradigm shift is the potential to lose market share to competing products. However, I think that the long-term survival and stability of our manufacturer partners far outweigh the risk.

Until next month, work hard, work safely, and have fun.

In addition to being the 2011–2012 president of the Association of the Wall and Ceiling Industry, Wies is president of T.J. Wies Contracting, Inc. in Lake St. Louis, Mo.

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