Masonry Magazine April 1979 Page. 26

Words: Bill Jones, Chuck Taylor, Corb Garton, Don McGinnis, Frank Todd
Masonry Magazine April 1979 Page. 26

Masonry Magazine April 1979 Page. 26
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CONTRACT SURETY BONDING

continued from page 8

when the contractor runs into difficulty, they also enable the company to respond quickly to future requests for additional bonding. If some unforeseen development occurs that changes the contractor's financial position, it may not become a calamity if the surety company has been informed.

Rates play little part in the decision by a bonding company to bond a contractor, again because of the credit vs. insurance nature of the surety business.

That is not to say that there are not some rate differences. Just as banks establish a prime rate for preferred credit risks, so do some bonding companies utilize both standard and preferred rates as applicable to their surety customers. Rates for bonding are of course regulated by the various state insurance departments.

If surety bonding companies prequalify contractors through extensive investigation and evaluation as we've seen, then why was it so difficult during the recent recession for many previously qualified contractors to obtain bonding? Were they any less qualified? The answer is that during difficult times, many contractors are tempted to bid with very thin margins in order to keep their staff and equipment busy. Taking on such work can be a substantial drain on the assets of a contractor. Without substantial financial resources these contractors could not survive. Bonding companies that withheld bonding during this period were in many cases protecting contractors from the pitfalls of such an economic situation.

Loyalty and mutual respect are as important as any other factors in the contractor/surety relationship. This results from good communication between both parties with respect to current operations, contractor's plans and objectives, surety attitudes and requirements. Each party has a right to expect full and open communication from the other.

A successful contractor I know once told me the two reasons for his success: "I have never fallen in love with my equipment and allowed my debt to get out of hand, and I have always thought of my bondsman and my banker as free employees on my staff.

"If I go to borrow $100.000 and my banker won't lend me more than $50,000, then I'm a fool if I go down the street and borrow $60,000 at another bank. I rely on my banker's professional judgment to keep me out of trouble. The same goes for my bond company."


Brick Association Elects Officers

New officers of the Brick Association of North Carolina were installed at the group's annual meeting held recently in Greensboro. Pictured (from left) are: treasurer, Don McGinnis, Kings Mountain Brick Co.; outgoing president, Bill Jones, Boren Clay Products Co.: vice president, Chuck Taylor, Taylor Clay Products Co., and president, Frank C. Todd, Moland-Drysdale Corp. Not shown is Corb Garton of Greensboro, general manager and secretary.

26 MASONRY/APRIL, 1979


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