During most of the past 40 years, there was enough similarity between houses being built that most companies could handle all the work involved in any type of remodeling job. Some used their own labor force. Some hired subcontractors. Some used a traditional production crew structure while others adopted the lead carpenter system. But however they did it, remodeling companies were able to take on just about any job that came their way.
Winds of Change That was then; this is now. Sometime during the last 10 to 15 years, houses started changing enough that it wasn't so easy —or so profitable — to take on all types of work. One reason is the shortage of skilled labor that has plagued the industry since the early 1990s.
Without enough experienced, knowledgeable carpenters, foremen, and production supervisors, many remodelers came to realize that some projects were much more difficult than they were worth. A parallel shortage of experienced, knowledgeable trade contractors reinforced the notion that being more selective was one key to survival.
Then, too, the more established remodelers began to examine their client base and job history, and quickly realized that certain combinations of client type and project type are more profitable than others.
Specialize and Subcontract The upshot has been a movement in two directions. On the one hand, remodelers are moving toward specialization in a core of project types, often within a small geographic territory and on houses of the same basic age and style.
On the other hand, there is a tendency to hire subcontractors for certain elements within a given project. For example, a full-service remodeling company might take on a whole house remodel but subcontract the basement refinishing to another company — possibly a franchise — specializing in that type of work. Or they might hire a subcontractor to install kitchen cabinets or hire a roof framing subcontractor to cut a hip roof with complicated dormers. In fact, more and more remodelers are hiring framing subcontractors to frame the entire project, allowing them to stretch their own limited workforce over more jobs, performing the highly visible work at which their company excels.
This kind of subcontracting has always been a part of the remodeling business with regard to the HVAC and electrical trades, and to a large degree in drywall, roofing, flooring, painting, and tiling. But it is now expanding into other trades, such as cabinets, framing, siding, and window installation. And, more importantly, even into entire subsections of a given job, such as a detached garage or pop-top.
Generalists No More The days when a single company did almost everything in the entire remodeling process are over. Not only are the specialists better at what they do, they are faster and they usually cost less, too. Remodelers who want to retain their client base are discovering that there are ways to get the job done without having to stray from the type of work at which their company is the most profitable.
The larger point I am trying to make is that there are major changes in store for the remodeling market during the next 5 to 10 years. Remodelers who stubbornly stick by their old way of doing things are in for a surprise, especially if they believe they can use the same kind of field people in the future as they have been using for the last couple of decades. I believe that the companies who recognize the changes already taking shape in the marketplace and who are beginning to make the necessary adjustments are going to prosper. And I think the companies who cannot or will not change are going to be left behind. — Walt Stoeppelwerth is a publisher of management and estimating information for professional remodelers. 800.638.8292; firstname.lastname@example.org;www.hometechonline.com.