Design-Build Drivers

The design/build segment of the remodeling market has no special immunity. It is influenced by the same market forces that are shaping — for better or for worse — the national construction industry as a whole. Currently, the national construction outlook is murky, with pockets of strong and weak activity scattered among a largely tepid country.

And so it goes for design/build firms in this country. Some are logging strong numbers; others are struggling to stay solvent. H. Dale Contant, president of Atlanta Design & Build of Marietta, Ga., is president of his local NARI chapter, and as such, he says he hears a lot of different stories, both good and bad.

“Home sales are way off around our region, so a lot of builders are trying to move into remodeling,” says Contant, whose firm is ranked No. 453 this year. “That has hurt a lot of the smaller guys around here, but most of the mid-sized to larger companies are doing fair to quite well — and I’m happy to count myself among them.”

Dennis Gehman, CR, CLC, CKBR, of Gehman Custom Remodeling in Harleysville, Pa., says his market shows all the potential of being quite strong, but clients are just not signing on the dotted line. “Calls are up, but jobs are down,” says Gehman, president of the No. 359 firm on this year’s list. Gehman says bathroom projects remain strong in his company, and he attributes that to a new showroom with a strong bathroom component. But larger additions and whole house remodels are tailing off fairly heavily “I think people just aren’t feeling as confident or secure in their finances as they did a short time ago,” he says.

Case Design/Remodeling, No. 10 this year, is a large company with a national presence, so it experiences what the national building market experiences. “It’s dropped off a bit over the last 12 to 18 months, but the jobs are still there in most places,” says Mark Richardson, CR, and president of the Bethesda, Md.-based company. “We used to be able to pick the apples up off the ground, but now we have to go up the tree to get them.”

Retaining people and maintaining reputation

Aside from a generally overall healthy construction climate in his area — new home sales notwithstanding — Contant cites his firm’s marketing as a big factor in it being able to maintain a strong presence in the market. “We have a good Web presence, and we get exposure when we contribute to local and national magazines, but most of it is keeping in touch with past clients,” says Contant. “We send out a newsletter and postcards to them, but what we’re really focusing on now is training our people every day in how to better deal with our customers to give them a great experience. That could end up being our most effective marketing tool.”

Richardson says that his company is also spending more time and money on marketing in the future, but they are being very systematic about it. “Typical ads are becoming less and less predictable than in the past. We’re finding that grassroots and networking efforts are more successful today,” he says. “And a big part of that is going back to basics with our clients and trying to generate repeat business and referrals.”

Richardson attributes his company’s policy of monthly communication with past clients as going a long way in generating good feeling and repeat business. “We mix it up between phone calls, letters, coupons, invitations to a home show or any number of similar things, but the most important thing is that we keep in touch with them.”

Gehman is also focusing on previous clients in his marketing efforts, but he is also looking to a different source for potential referrals and business — local architects. “We’re trying to make contacts and develop better relationships with them and foster a sort of partnership with them,” says Gehman. “We don’t have to be competitors; we can be almost like partners.”

What’s bad for builders could be good for you

One thing that Contant has noticed in his region of slowing new home sales is that new opportunities are popping up for remodelers, sometimes at the expense of new home builders’ misfortune. “There has been an influx of trade contractors and builders getting into remodeling, and that provides a measure of stiff competition,” he says. “But that also means that there has been an influx of qualified labor into the market, and we in this industry are always worried about finding good people.”
Contant also says that with the hard times a lot of the national builders are having, vendors and suppliers are starting to shift away from offering special services to them and opting instead to deal with remodelers. “They’re starting to recognize us as good sources of revenue,” says Contant.

Like many in the construction industry as a whole, Richardson is starting to look at offering additional and specialized services to potential clients. “We’re looking at green remodeling, aging-in-place services and other special design aspects that would not only further diversify our portfolio, but also as another way to deliver more value to the client — which is exactly what they’re looking for these days.”

Gehman says his firm could have been better prepared for the current slowdown, but it will be stronger once the upturn comes. “We’ve cut back a lot on overhead, and a lot of that means we’re just more efficient. But we should have cut back a little sooner because we also had to let a few good people go,” he says.

Despite that and the fact that he’s hearing more interested calls than seeing contracts signed, Gehman remains optimistic about the future for his market north of Philadelphia. “I’m hoping that things will pick up next spring because a lot of people have been planning remodeling pro-jects for awhile.”