The MOST Important Element of Survival in Contracting Today
It’s Never Been More Important. The least fun things in contracting have now become the most important element of survival. That’s right, job costing, constantly focusing on account- receivable, eliminating waste, tightening productivity, cutting back on crews, and squeezing everything you can get out of everything you find.
No doubt, a few of the competitors, and builders in your area may not have the operating capital to survive the temporary slowdowns or shutdowns and steep material price increases. This means there has never been a more important time to get your money back from contracts as soon as possible. You should also be ready to place liens on anyone that seems shaky right now. I can’t think of a time when collecting your AR and avoiding low, or no margin contracts have been more important. This might even be time to switch to contracts based on time and materials where you can. At the very least you can try to add escalation clauses to your contracts. No one looks forward to pressuring their builders, but now is the time to pick and choose the ones who are most loyal and profitable for your company.
If you install fiberglass insulation, go to job sites and make sure the smallest of waste is used. Make sure blowing machines are never set too wide open. Foam kits are kept above 75 degrees. Trucks are loaded with everything needed so that go-backs and material runs are virtually eliminated.
For those installing spray foam, especially open cell, don’t overfill cavities. Even the small ones. Work with your builders to prevent shaving the walls. Use energy rating software and sell 4.5”-5” in a 2”X 6” wall so there is no shaving at all. Use daily job site reports. Check your yields multiple times a day. Maximize your yields on every job. Don’t spray butter! This is not the time to focus on making flat pretty foam, this is the time to get the highest yields you can. There’s no problem with making good-looking foam. You should. But the focus must be on yield more than anything else.
No one knows exactly when supply will return to normal. We know you are fighting to fulfill every contract and we are fighting to get you all of the products we can. The good thing is, after every fight, the winners get a prize. Market demand is extremely high and housing inventory is at an all-time low. When considering the shortage of materials and buildable lots, the estimates are that demand will outpace the production of new homes well into 2024. This means there is a lot of construction to be done.
On the other side of the equation, the current administration has reentered the Paris Climate Accord. Meeting these goals means decreasing energy demand of new and existing buildings is back near the top of the agenda in Washington, DC. In addition to climate goals, February 2021 showed us the state of our electric grid and what can happen when a serious cold front hits the south. Imagine what demand would have been if you added half a million electric cars to that same demand.
The point is, when supply returns, there will probably be more opportunities on the table than ever before. So even if you see companies or programs slow or shut down during the price increases, keep in mind that demand drives the market. Housing demand is at an all-time high, bills are coming before Congress to address the massive amount of energy used by buildings. Everyone is pushing for better envelopes and lowering demand on the grid. Everything is in your favor. Even if some shutdown, new builders will spring up and rise to meet the market demand, even more programs will open up, and the survivors in the insulation, retrofit, and weatherization industry stand to gain more of the business created by them.
IDI’s goal is to partner with you now more than ever. Our commitment is to fight for every ounce of fiberglass, spray foam insulation, PPE, or any other material we can get. And, we are also committed to helping you get the most out of it. If you need help training, maximizing your crews, increasing your yields, product substitutions, job costing, or just for creative market strategies, reach out to your local branch, your tech service reps, or our business development team. We are in your corner and working every day to help you win.