Contractors Weigh In on the Current Decorative Concrete Industry - Views on the Market

Upon returning from the city of "Lost Wages" after the 2009 World of Concrete, I found myself reflecting back on the events that took place and thinking about the general mood of everyone participating in this year's show.

As a bystander in several manufacturer booths and a couple cocktail receptions, it was interesting to listen to the sidebar conversations. Many of the discussions revolved around comments like, "Hey, did you hear that so-and-so lost their job after 19 years of service?" or "Did you hear that so-and-so pulled out of the World Of Concrete at the last minute because of finances and decided not to exhibit?" I don't want to detract anything from the show, which was certainly good, but the buzz seemed to focus around our flailing economy.

I asked two of the many friends I saw at the show how their companies were faring in these rough times. I figured it would be interesting to hear the perspectives of these two highly successful businessmen from two different geographical regions. Here's what they had to say:

Tom Ralston, Santa Cruz, Calif.

Bob: How has the current status of the economy forced you to change your business?

Tom: The current status of the economy has forced us to change our business radically. Our sales are down 40 percent. Changes have been made in three areas:

1. Cutbacks and spending. Our office staff has seen their hours reduced by 40 percent overall which obviously reduces payroll. We deactivated spare cell phone lines and office lines. The president's salary (Tom Ralston's salary) was also cut 40 percent.

We eliminated the company's San Francisco Giants season tickets and license. And Tom Ralston Concrete has temporarily taken away group medical insurance from all salaried and hourly employees, hopefully reinstating benefits when our economy recovers. Our company did assist and make sure all eligible employees made a seamless transition to individual medical insurance.

2. Bidding, job costing and management strategies. TRC has seen its prices slashed more than it ever has. Due to fierce competition and clients not wanting to spend extra money on "high end" decorative concrete, we have bidding to make as little as 1 percent net profit. We have sliced prices to the bone ... and hopefully we don't get into the marrow. Our job costing is very intense these days trying to hone in on labor overruns. Moreover, much of the labor for new jobs is budgeted by our foreman prior to starting the job, and we try to hold them to that; it actually has been a good motivator.

3. Marketing and value engineering. We have been pounding the newspapers with creative advertising to let the public know we are ready to work with as economically as we can. We are sending out mass flyers via e-mail and letting architects, contractors, developers, and potential and former clients know what we are doing and what we may be able to do for them. We are offering complete services around outdoor kitchens and "outdoor living rooms" offering to manage plumbers, electricians and carpenters and become the one-stop-shop in that particular area.

We have made cold calls to clients we haven't worked with in years and offered them our services at rates they would not ordinarily get. We try to show our potential clients the various ways to provide value to them; e.g. I offer free management on any time and material project. We also are eager to offer ways to save money and use concrete creatively yet economically with free design advice which can sometimes be as simple as providing various samples for a great color or simple decorative deep jointing to spruce up their slab.

Bob: If you could look into a crystal ball, what would you see in terms of your business over the next one to two years?

Tom: Of course I don't know the answer to that, but by all accounts that I have we will not see any blinding daylight until 2010 or 2011. That being the case, we are buckling up and continue to be diligent to find ways to become more efficient and more intelligent so our company's sales, operations and administrative employees can all raise the bar and help us weather through the storm. I think the difference will be that we run a meaner, leaner company and because of that we will be in a better position when the economy does turn around.

Rocky Geans, Mishawaka, Ind.

Bob: How has the current status of the economy forced you to change your business?

Rocky: The current status of the economy has forced us to become even more watchful about every little expense - do we absolutely need to do this, and if so is this the best price?

While we are being more conscious with money in that regard we are protective of our quality employees, continuing with their development and training and using them where needed to improve and prepare for spring. We're using this time to be even more diligent about improving systems and procedures thereby delivering economies in administrative and management operations and field productivity. The employees are our best and most important asset.

Bob: If you could look into a crystal ball, what would you see in terms of your business over the next one to two years?

Rocky: I foresee thinning out all mediocre employees and getting down to the best qualified people which will improve productivity and quality on all jobs. This means the owner has more time freed up and can work on business development.

While price is important I think setting up a relationship with both current and potential clients is of highest importance. Work will go much cheaper, there will be a much higher number of bidders and there will be times for taking work just to cover or help out with overhead costs.

Residential guys will be moving up to light commercial, light commercial guys will be moving up to industrial and/or civil projects, etc. We are going to see more of this and the problem is some of these guys are getting into markets they don't understand and will go through some rough times in that regard. Work will be out there but require much more time and effort to win.

This is certainly interesting insight from these two industry leaders, and we have recently had seven to eight people ask how our business is doing. I would be lying if I said the economy has not affected us; however, we have been able to sustain and actually do quite well.

Aside from similar points Rocky and Tom brought up, we have maintained a few basic considerations for our business. I once gave advice to a friend/contractor who was frustrated with the number of newbies getting into the industry and, as he put it, "mucking it up." (OK, those weren't his exact words.) He asked what I thought. I told him to quit worrying about something he has no control over and focus on what he does best - decorative concrete! He called several months later and thanked me for the attitude adjustment.

It is this same logic our company has used and quite frankly, I'm tired of what the media has to say regarding our economy. We simply have focused on what we do best instead of what everyone is saying. I believe we will be stronger on the other side and look forward to the turn. So should you.

Bob Harris is the founder and president of the Decorative Concrete Institute, Temple, Ga., which provides hands-on training in architectural concrete. He has personally placed or supervised the placement of more than 3 million square feet of decorative concrete and is the author of a best-selling series of books and DVDs. For more information, call (877) DCI-8080 or visit decorativeconcreteinstitute.com.

Loading