If you’re paying attention to current national forecasts for the construction industry, you may be understandably confused by the mixed signals. New home sales might jump in one month, prompting optimistic quotes from some industry experts, while in the same month prices may drop drastically and you’ll hear about the poor overall health of the market. The fact is (and it’s no secret), that national numbers are a bit skewed right now because some markets, such as some in the Midwest and Northeast are really tanking right now, while other parts of the country are going great guns.
Anthony Wizner, CGR, CGB, GMB, CAPS, president of ABA Home Remodelers in Clifton, N.J., is one of those unfortunate construction souls stuck in a slow market. “It’s pretty crappy right now, but it’s what it’s supposed to be. We had a good ride for awhile and it was just a matter of time before we had a correction,” says Wizner.
With 35 years of experience, Wizner says he and his team at ABA (No. 316) have been anticipating this downturn and had prepared by paying down their debt, increasing lines of credit and keeping cash reserves on hand. “I know how these slowdowns can hurt,” says Wizner. “I’ve been through three or four of these over the years and this is the first one we prepared well for and it hasn’t hurt.”
Like many in slow markets, Wizner says the work is still there to a large extent, but the clients are a lot more cautious and hesitant to commit to large remodeling jobs. “It’s a lot harder to sign clients and get your numbers right now. We’re in a high-end market and we have to work harder to get clients. Plus, they want to scale down their jobs, so we might get a $500,000 addition where three years ago it would have been $750,000,” Wizner says.
In some areas of the country, the current market is one of a return to normalcy — which can be a good thing. “After Hurricane Ivan in 2004, remodeling demand around here was very strong,” says Brandon Irwin, marketing director for 1st Choice Home Improvement in Pensacola, Fla., which comes in at No. 322 on this year’s list. “But now it’s back down to normal prehurricane levels. It may seem slow to some, but it’s really just normal.”
And in the Northwest, especially parts of Washington and Oregon, there are no signs of a slowdown at all. “Last year was great, and we’re tracking this year to be a little better,” says Mark Tiffee, president of A Cut Above Exteriors in Portland, Ore. “We had our big downturn just after the terrorist attacks on Sept. 11 and our corrections occurred then,” says Tiffee, whose company ranks No. 72 this year. “New construction has slowed a bit in places, but with a steady influx of new residents, our overall market is now very strong.”
Marketing Remains a Challenge Everywhere
Wizner says that even though he and his firm prepared for the current downturn, he still had to let a few people go. This is especially hard for his company because he says his employees have always been the largest part of his marketing plan.
“We’ve never done a lot of true ‘marketing.’ Rather, we’ve tried to rely on our presence and reputation,” he says. “That means our employees have to impress our clients each and every day.”
Wizner says his company does have a fleet of eight trucks that are all lettered and he does do some direct mail and signage, but his overall marketing budget is less that 1 percent of his total, and will likely remain so.
Like Wizner, Irwin says his company’s marketing approach has been to rely heavily on a good reputation, which relies on great employees and good field marketing to bring referrals and repeat business. But his company also delves into television, radio, newspaper and trade shows. “We focus everything on professionalism,” says Irwin. “We try to make the point that when they come to us, we’ll take a lot of time to present everything they need from material samples to educational materials so they can make the best choice for them and their home.”
Tiffee says that marketing is an ongoing discussion in his firm, not because it hasn’t been effective, but because it’s getting more expensive. “We’ve depended on direct mail, radio and the Yellow Pages for the most part, and newspaper ads and inserts to a lesser degree. But all those costs have increased. Plus, a lot of other firms have increased their marketing as well, so there’s more competition for customers,” he says.
Tiffee aggress with Wizner in that a firm’s employees are the biggest part of any marketing campaign, and like almost all those in the construction industry, finding and retaining those great people is always a challenge. With about 80 employees and the desire to do as much work in-house as possible, Tiffee is considering getting some help in finding quality labor.
“We’ve been fairly successful in keeping quality management, sales and office staff, but good installers remain hard to find and retain,” he laments. “At some point we’ll probably have to hire a human resources director to recruit them.”
Opportunities Still Abound
Tiffee, whose company also has a renewal by Andersen franchise component, sees great promise in effective Internet marketing. “We’ve taken the time to develop a very well-done Web site and we’ve maintained it for several years. When customers do a simple Google search for remodelers in our region, we always pop up in the top two or three results,” he says. “Plus, Renewal by Andersen works with Google directly and gets us high placement on a pay-per-click basis, which has worked out well.”
On the Florida panhandle, Irwin sees some of the negative effects of the post-hurricane boom as now presenting opportunities. “We had a lot of remodeling companies pop up after the storms — in fact a lot of us call them ‘storm chasers.’
And they would engage in unethical or downright illegal practices such as lowball pricing or building without permits,” says Irwin. “We had to really compete with them for jobs there for awhile, but now we’re getting a lot of calls to fix their shoddy work.”
Irwin also sees the Gulf Coast market, even though it is one where new construction has been and will continue to slow down, as a very strong remodeling market. “As the market balances, we see the remodeling industry as wide open for us. We predict a lot of work,” he says.
Wizner, while not so optimistic in his assessment of the northern New Jersey market, still sees potential — and a light at the end of the tunnel. “We’ll continue to mine our architect, trade contractor and previous client lists and secure business,” he says. “And we’ll still be here when the dust settles.”