Diversify for stability
November 13th, 2007 by Allan Heydorn. Posted in Pavement RoundaboutHow has your year been? Pretty good, I’d guess … unless your market focus is new residential construction.
A recent report by Associated Builders and Contractors finds that in the 12 months from September 2006 to September 2007 nonresidential construction spending grew almost 17% while residential construction spending declined almost the same amount, just over 16%. So contractors invested primarily in that market have felt the seat belt tighten and heard the tires screech as residential new construction slammed on its brakes, and those contractors probably are trying to decide what steps to take to make sure they don’t go through another year like this one.
While there are no simple answers – every contractor in every market has his or her own issues to contend with – diversifying the services you offer and the markets you do business in can certainly help smooth out the spending bumps in the uneven construction road.
I’ll be out at National Pavement Expo West in Las Vegas, this Thursday through Saturday, directing a conference program that just might offer some insights into how you can protect your business by helping you diversify, grow, or simply operate more effectively. If this week isn’t good for you check out National Pavement Expo, Jan. 30-February 2 in Nashville, which has even more you can learn. For more information on either show visit www.nationalpavementexpo.com.
And if you make it out to Las Vegas later this week make sure to stop by Room S222 of the Las Vegas Convention Center and say “Hi.”
January 30th, 2008 at 7:36 am
No doubt about it- the residential bubble has burst. We are seeing housing drop and our area is the #1 in California for foreclosures. This reminds me of the Dot Com debacle- hyper inflated prices righting themselves and people being surprised when the bubble bursts. It does not surprise me. I feel for those who have lost or are losing0- but this is how the market weeds out those who are not here for the long run. The “fly by night” contractors will be eradicated for the time being. And the ones who do what they promise for a fair price will have work and survive. Hopefully you have built a good customer base because the competition is fierce, particularly when the home building contractors are moving into the public works arena which is what we are seeing now. They are really taking some jobs at below cost and I think they are in for a very rude awakening.
Public works contracting is very unforgiving of even the slightest miscalculations. You must be diversified- those who have cut their teeth on one area and stayed there are really going to have trouble in So Cal this year. The larger paving contractors are in both public and private. They will be the ones who not only survive but profit. The smaller guys have to look for other avenues to turn a profit. Sweeping, striping, crack fill, even pressure washing. Hauling away trash if your dump trucks are sitting- what ever it takes to get your crews working. And if your estimator is not up to par- time for him to hit the trail. There are a lot of good people looking for work.
James