Jul 21 2009
Thought we’d pass on a few stories that have come our way recently. They really demonstrate the magnitude of the melt down.
The first comes second hand from a local saw mill owner. He opened his mill in the mid-60s. He recently told a mutual friend that he has NEVER seen the economy this dead. That’s saying something considering the number of recessions he has personally survived including the horrible 1982/1983 recession when no one was building anything.
The second story comes from a paving maintenance contractor. He went out to price a simple pot hole repair and was stunned to discover that an asphalt plant offered to fix the pot hole for about half the price. To put that into perspective, asphalt plants usually chase road work and only drop down to installing NEW parking lots when times get tough. Them doing a patch is unheard of. Their overhead alone would be more than the price of the job.
Our third story comes from an electrician I know. He went after a new project very aggressively. The project was prevailing wage so nobody had a wage rate advantage. He assumed his production would be quite a bit higher than normal, and his crews are already incredibly fast. He slashed his margin…and he was more than 10% above the low bid! The winner has NO CHANCE of getting out of the job with his direct costs being below his price.
Our fourth story comes from a large, regional multi-family remodeler. He has built an amazing business over the last two decades but, as he just discovered, no great strategy goes unpunished. He had focused his business on a highly specialized niche and at a size that served large, publically traded property owners. He owned his niche. Unfortunately for him, his clients have cut their spending by 80%. 80%! They have no money so this contractor, who has done everything right for over 20 years, is forced to slash staff and overhead costs just to survive.
Our final story comes from a mechanical service contractor. Here is another contractor who excels at keeping clients happy and loyal. One of his previously SUPER LOYAL clients was planning on expanding part of his mechanical system and had always just handed the job to this contractor because they did his work on a time and material to a GMP basis. This time the work will be bid by eight (8!) other contractors – all at the advice of the design team. Stupid design team.
These stories came from coast to coast, North to South. It’s not just in your area. It’s happening everywhere. Dig in and get everybody inside your company giving their all. Their future depends on it.