Construction lessons learned in 2022
New Hampshire’s construction industry continues to benefit from a unprecedented building boom
As we close the books on 2022, New Hampshire’s construction industry continues to benefit from a unprecedented building boom in nearly every corner of the Granite State. But the cost of doing business in an economy wracked with supply chain challenges and inflation and demand for a shrinking labor pool of skilled workers will continue to affect the industry in 2023. NH Business Review reached out to two construction firms to get their perspective on what it takes to be successful in this economy based on the lessons learned this year.
Kyle Regan, CEO, DECCO.com
Q: What were some of the toughest challenges construction firms faced in 2022?
A: Supply-chain interruptions and inflation by a mile! We’ve developed a great workforce development program to address the shortage of skilled trades, especially licensed trades, and although it’s a challenge for us to find skilled trades to meet our growth plans, the supply chain rupturing and the cost of goods exploding was by far the biggest challenge in 2022.
Q: What are some of the best ways to combat global supply chain disruptions and higher prices for important building supplies and equipment without going with drastic project cost increases?
A: At DECCO we are fortunate to have a loyal customer base, and we worked collaboratively with them in 2022 to pre-buy materials well before they were needed. Stainless steel tube and fittings were severely affected by supplychain problems — we saw some tubing sizes with delivery dates as far out as 60 weeks! So, we worked closely with our customers to order most of the material they would need for upcoming projects, and then we inventoried them at our facility for as much as 6 months before the construction project began. This locked in the material costs early, and also enabled projects to proceed when they otherwise would not have been able to.
Q: What does it take for construction firms to maintain the skilled labor force they need to take on multiple projects?
A: For us it’s the promise of a “career” in construction. Construction, for too long, has been viewed as seasonal, dangerous and unskilled. None of those things are true for the work we do. The skilled craftspeople that install specialized piping systems for us are some of the most creative and intelligent people I’ve ever met, and we are proud to promote the fact that our average years of service for our trade partners is over 15 years! So there are two parts: Part 1 is recruiting people into the trade and erasing the old-fashioned notions of construction; and Part 2 is providing lifelong learning and training opportunities, a career path for advancement, premier benefits and pay, a safe work environment with an inclusive culture that fosters a family feel. If you want loyalty from your employees, you’d better be loyal to them.
Q: How many months of cash flow should a construction firm maintain to help them weather the uncertainties caused by a volatile economy or unforeseen events like the recent pandemic?
A: Cash is king. I’ve seen some of the busiest construction companies with a real strong backlog go out of business! They didn’t manage their cash, and in construction managing your cash and having a strong banking relationship is important. Our customers typically pay in the Net 60 to Net 120-day range. So, you need the cash or lines of credit to be able to operate for at least that long while you wait for your payment.
Q: What are some of the best things a construction firm can do to achieve a healthy bottom line in 2023?
A: As the credit markets tighten and interest rates rise, it’s important to stick close with your clients and understand the funding mechanisms they’re using for major capital projects. Interest rate hikes are likely to make projects non-feasible and be cancelled. Don’t get caught off-guard. Work hard to book and solidify as much backlog as you can. Oh, and vote accordingly in the midterm races. We have all seen what the last two years has brought … two more years of control in Congress will be a disaster.
Steve Korzyniowski, Technical Sales Director, macyind.com
Q: As a custom metal manufacturer in business for over 45 years, how does Macy Industries continue to grow in a challenging business environment?
A: Macy Industries keeps looking for new applications for custom fabricated metal products.
For example, hydraulic doors for garages, windows/doors and aircraft hangars are a perfect area for growth. There are thousands of commercial buildings and residential homes in the New England area that have worn out garage doors or where the owners need a creative solution to enhance their facility or home. This is a new market for us with high-growth potential that we are targeting successfully.
Q: How did you overcome the technical challenges for hydraulic doors in your market for custom metal products?
A: We partnered with Powerlift Doors, a company with deep experience building and marketing this product. We use Powerlift’s basic design and configure doors to fit each custom application in our market area. Each door is made from metal, so this business fits our niche very well and adds a high-quality product to Macy Industries’ custom metal project portfolio.
Q: With the current high inflation environment, how do you keep costs down and remain profitable while introducing new products?
A: We closely evaluate our material and labor costs. Material costs can be controlled through multi-sourcing in the competitive vendor community. Labor costs are addressed by training our employees on efficient fabrication and installation techniques. This is critical.
We send key employees to other Powerlift door fabrication locations for hands-on training with experienced door craftsmen to practice proven shop fab methods and field installation techniques. In this way, we manage to cut costs as we move through the new product learning curve.