These days, general contractors subcontract more and more installation. It's reached the point where many companies have project managers and/or superintendents but no actual craftsmen or installers on staff. Subcontracting the plumbing, electrical, and HVAC segments of a job has been popular for years, because of separate licensing laws, plus the close relationships these trades have with manufacturers, brought about by the need to provide service to homeowners.
But in the past 20 years, you can add roofing, siding, windows, insulation, flooring, drywall, tile, appliance installation, and painting as areas within residential remodeling now dominated by the specialty contractor. Many remodeling companies are recognizing that, as they grow, they can't be directly responsible for everything.
Where it's going
If you're wondering where this is headed, take a look at the home building industry. In new home building, the 15 largest builders have a 28% share of market and are moving toward 40% and higher. Most subcontract every aspect of building, either to specialty contractors or lumberyards and distributors. The lumberyards and distributors not only supply the product but the biggest -- BMC West, Builders First Source -- also install it. Might they not at some point offer the same service to big remodelers?
Subcontracting in residential remodeling would probably have grown faster except for one factor: language. For instance, the home builders of America can't build a house without the benefit of Hispanics, Koreans, Eastern Europeans, and other immigrants who subcontract the framing, roofing, siding, window installation, and other trades. What prevents remodelers from doing the same is the fact that many immigrants don't yet speak English and therefore can't communicate with clients, who, in remodeling projects, live on the jobsite.
While companies may get around that by using project managers as a go-between, this is a short-term solution. If this industry wants to really take advantage of this resource in the way home builders have, it must make it a goal to teach immigrant workers to speak English. Lumberyards and other suppliers could play a big role here.
Immigrant subcontractors are also going to have to know how to use pocket PCs and Palm Pilots -- bilingual or otherwise -- so that field people can keep them informed of the progress and problems involved in any particular job, can handle the paperwork/management requirements for each project, and so that those same field people can communicate with the customer.
This means that the use of technology and the need for training in technology is going to accelerate in the next few years.
Other changes that fuel the trend toward more subcontracting are taking place on the product front. For example, it won't be long before manufacturers start to predesign products in such a way that the product is nearly finished in the factory and then shipped out to be installed. This will make companies and contractors focus on certain products, offering them on an installed basis. Additionally, it's not out of the question for a small-to-mid-sized bath or kitchen to be built in a factory and then shipped to the site for installation, requiring only the plumbing, electrical, and HVAC hook ups as necessary. In the past five to 10 years, the number of remodeling companies with volume greater than $8 million a year has increased by eight times or more and will continue to grow rapidly. Large companies like these will be relying more and more on subcontractors.
The need for English-speaking craftsmen, the desire of clients to communicate -- electronically and otherwise -- with their contractor, and the growing size of some remodeling companies is going to force the remodeling industry to undergo the same type of change that is now happening to large home builders, but with a greater emphasis on keeping the customer happy. --Walt Stoeppelwerth is a publisher of management and estimating information for professional remodelers. (800) 638-8292; firstname.lastname@example.org ; www.hometechonline.com.