Masonry Magazine August 1993 Page. 13
When the Going Gets Tough
A check with eight leading masonry contractors to see how they're coping with the adverse construction market confirmed the truth of the old adage, "When the going gets tough, the tough get going!"
WE RECENTLY asked eight leading mason contractors how they're surviving in the slow construction market. Our questions were designed to determine survival techniques and avoiding pitfalls. Though the participants' answers aren't meant to be total solutions, they will provide insights into how others are coping.
Replies to our first question-What is our firm doing that has helped in surviving the construction slow-down?-were varied. The most common response was to reduce overhead costs and avoid excessive spending. This was most often done by budgeting and tight controls on a line item by line item basis.
W.C. Dentinger of Bill Dentinger, Incorporated reduced overhead costs by nearly 16.7 percent using this method, in addition to cutting white collar costs in the areas of bookkeeping and estimating.
Explore Different Disciplines
Donald Grant of Grant Masonry recommends exploring different disciplines in construction. Lenny Pardue of L.C. Pardue, Incorporated concurs with Grant, attributing his firm's survival to a trim budget, diversification into new fields and the use of new technologies.
Richard Matthews of KMCO, Incorporated warns against dealing with general contractors who have bad paying habits. This hard-learned knowledge caused his company to borrow more money than normal and led to increased lawyer's fees.
John J. Smith of Smith Masonry found that a dedication to a quality commitment program enabled his firm to be a better subcontractor on their projects, thus helping them to survive. Jerry Vernon of Vernon Masonry also found that streamlining to a smaller volume of work helped reduce poor quality; and in these tough times, one job done well is better than many jobs done poorly. Vernon also suggests close supervision in addition to cutting overhead costs.
When asked what tactics have been tried but did not work, respondents agreed that generating work for the sake of work is the tactic most advised against. As Dentinger states. "Many years ago we learned several good lessons, including the fact that volume doesn't overcome all, and one good job is better than three or four bad jobs. In a depressed market, no work is better than bad work. There is absolutely no future in low-balling the only job in town in order to generate work. While no work and a bare bones overhead situation can kill you eventually, it will not kill you nearly as fast as bad jobs and overhead will."
Keeping your company's mission in view and avoiding work that is contrary to this should be adhered to. Smith Masonry Company, contractors geared toward large projects, ran into problems when they tried to bid competitively on smaller projects. Smith recommends bidding selectively and Grant agrees stating, "don't buy a job just to keep busy." Kenneth J. Tejeda of R and R Masonry also warns that bidding too low can cause further losses.
When asked what are the most important considerations in running a masonry contracting business in tough times, we received insights into come this problem he advises running a tight ship.
Harold E. Kochan of Hansen and Hempel Company also laments the low bid nature of the industry. To get work he recommends becoming "Lean and mean, deleting all excess baggage, and concentration on getting the best and the most out of the fewest." But he warns that this may be difficult to convert into a work load. Tejeda also advises running a lean business in an attempt to keep costs down.
Matthews advises holding off on the purchase of new equipment, unless your capital is good. If you have the available money then this may be the best time to buy, because equipment manufacturers will also be looking to generate new profits and deals may be more common. Otherwise, if your capital is low, retain it.
When asked for other insightful advice on how to survive the slow down, Vernon recommended maintaining close communication between key personnel to keep in touch with changing situations, while overcoming poor coordination between the general contractor and other crafts.
Dentinger emphasized the importance of keeping an on-going job cost bookkeeping system that provides project cost status reports that are tied back to the original estimate.
Matthews answered, "The only
MASONRY-JULY/AUGUST, 1993 13
If you have the available money, this may
be the best time to purchase new
equipment... because equipment manufacturers
will also be looking for ways to
generate new profits,
and deals may be more common.
a key problem facing the construction industry. The industry is bidder driven and as Dentinger observes this rewards cheap work, not quality personnel and craftmanship. To overcome this problem he advises running a tight ship.