Business Management: What It Takes

Words: Dan Kamys

Business Management

The best way to learn what it takes to keep a masonry construction business in the black is to go straight to the sources. Masonry consulted three of our industry’s best, each with a unique perspective on successfully managing his masonry business.

We spoke to Steve Borman, CEO of Keystone Masonry in Yelm, Wash.; Don McCauley, VP of Hunt Country Masonry in Leesburg, Va.; and Jerry Painter, president of Painter Masonry in Gainesville, Fla. – each of whom had a solid business philosophy to share with our readers. Following is what they had to say.

Masonry: Don, discuss forming and growing a new company during in a challenging and negative economic climate.

Don McCauley: I had some health issues last year and, in May, they came to a crescendo.??Between a car accident and Lyme’s Disease, it was impossible to work, and I was going to have to take several months off in order to start the recovery period. I was informed that if I left my job, I would not be given my position back.

Then, what started as an unfortunate turn of events for me health-wise became an even greater event, when my wife was laid off from the same company after 20 years. So, we found ourselves at a crossroad. No one was hiring, even with our extensive qualifications, so we decided on the obvious: start our own masonry company.

Since I do not believe in lying around and feeling sorry for myself, we persevered.??Our first year in business has not been without obstacles and challenges.??We were unable to obtain loans, because we didn’t have any income, even though the government says that they have loans available for new small businesses.??We couldn’t get bonding, because we didn’t have a line of credit or a proven track record - a Catch 22.??We started with one employee and did anything that paid money, even if it wasn’t masonry.??We did plumbing, painting, installed carpet, excavation, electric repair work, and carpentry, and then graduated up to masonry and concrete work.

We made an offer with an estimator friend to work for compensation and bid everything we could.??We have recently hired our 37th full-time employee, and with our backlog, we look to have revenue of $2.3 million in our first year of operation – of which $1.9 million is work completed to date.

We have, through the grace of God and amazing suppliers, paid for everything as we have gone, including material, equipment and labor.??We have made a vow to never take on partners and to never owe anyone a dime.

Masonry: How did your company weather the economy storm that began in 2008? What did you learn from the challenges of the last four years?

Jerry Painter: We weathered the storm by not taking on additional debt during the “boom” of 2005 to 2007. We have been able to downsize without financial problems. We also partnered (LLC) with another contractor in another area to expand our market. And we began doing more restoration work.

Steve Borman: Since the Northwest traditionally lags the oscillation of economic swings on the East Coast by 12 months, we didn't experience the storm until the summer of 2009. The affects of that economic downturn are still with us here, and we have not seen an increase in commercial construction since 2009. The housing industy has shown some improvement, however, in the second quarter of this year – which is a good economic index with regard to future prospects for commercial construction. But, as of yet, it does not provide opportunities for commercial contractors who rely on the financing of commercial projects. Funding for horizontal public construction through the stimulus package provided a few jobs for a short time, but virtually no economic growth. Funding for vertical public construction is down, given the lack of funding with reduced business and real estate tax revenues. The construction of high-end condos has given way to condo conversions to apartments, which provide less opportunity for mason contractors.

On the bright side, the devaluation of property has provided an opportunity for developers with cash on hand to take advantage of lower land costs. As a result, we have benefitted from the development of a few new retail centers in communities that are business friendly and demonstrate a high potential for future economic growth demographically.

Keystone has chosen to weather this economic storm. Our perspective is that people will continue to have babies, will need places to live, will shop for the items and opportunities that sustain their lives, will need schools to educate their children, and will need offices and factories in which to work.

I, personally, have faith in the uncanny ability of Americans to reinvent themselves every generation or so, because of our freedom to innovate and our entrepreneurial spirit. We have done so in the past and will continue to do so in the future. We at Keystone have weathered four recessions in our 35 years, and expect to come out of this one a stronger, more efficient and viable company, providing design and construction alternatives to the increasing number of clients who chose to build longer-lived, more energy-efficient buildings.

Masonry: How important are electronic media and technology to your company?

McCauley: It has become almost impossible to function without it.??When you bid a job, all the general contractors Google your company to check you out.??Almost all drawing, RFIs, job correspondence, meeting minutes, pay applications, and contracts are done electronically. Our foremen all have smartphones, so information can be received or sent immediately regarding anything job related. Everything now operates in real time.

Painter: We are using more technology for communication and to reduce travel and manpower. We use tools like email, texting, Skype, etc.

Borman: Keytone has long had a website – While our employees use Twitter, Facebook and blogs, ad nauseum, for whatever purposes they deem useful, as a company we have not used these media as marketing tools, simply because our commercial clients do not use them. We do, however, communicate with our key employees via iPads, iPhones and laptops on the jobsite. More important, we design in three-dimensional Auto Cad and have the ability to provide Building Information Modeling (BIM) and Masonry Coordination Drawings to our clients via the internet. Design assistance is an important service in our business model.

Masonry: Are there specific masonry issues you must address in your area of the country? Which codes and standards affect your business most?

McCauley: Before the earthquake that affected Virginia in 2011, the big issues were freeze-thaw cycles, waterproofing (flashing and cavity design) and wind in winter. Now, since the earthquake occurred, the designers are going overboard with seismic designs.

Painter: Energy efficiency of single-wythe masonry is becoming a problem (Florida, Southeast).??“Energy people” don’t want to allow calculations for mass.

Borman: Since we build in a category D seismic zone, seismic activity has always been our greatest concern, but we do it as a matter of standard practice. We have struggled long and hard to create codes that reflect the empirical performance of masonry systems. Our greatest challenge, in this regard, has been educating engineers – especially those from outside the area – to understand our codes and standard practices. Wind load is accounted for in a similar vein, but easier to account for. Flooding is not a problem inherent in masonry design, but wind-driven rain is, and we must use water repellants on our masonry rain screens. Masonry: What is the biggest material competing with masonry in your area of the country?

McCauley: Ours (Virginia area) include drywall studs and DensGlass on exterior walls; curtain walls; and EIFS and tilt-up concrete – although none can hold a torch to masonry.

Painter: Our biggest competitors (Florida, Southeast) include steel frame, light-gauge steel and steel stud.

Borman: Wood. America still has, in many respects, a frontier culture. People have always built with the most readily available material. When the wood runs out, they turn to alternative materials. When looking at world history we find that, historically, all buildings tend toward masonry. The recent use of steel and glass has been driven by the price of real estate in downtown urban areas. The life-cycle cost of these buildings will, one day, prove to be unsustainable. Similarly, the use of wood will, one day, prove to be unsustainable.

Masonry: Do you feel the masonry industry does an adequate job of promoting itself?

McCauley: No, I have been beating this drum for years. We, as mason contractors, have a tendency to not work together and share information for fear that someone may steal our “men” or “trade secrets.” Everybody always wants to do something, but when the time comes to pull together to promote our industry, it always boils down to fear, and a tight economy only makes it worse.

While we try to promote our industry as individuals on a local level, the strength is truly in numbers, and that is why the MCAA is so important, to form a unified front. I have made it a point to put my heart and soul into the MCAA; they have really made a concerted effort to pull our industry together. They are making great strides through contractor certification, Vision 20/20, and work with our fellow trade associations, such as the National Concrete Masonry Association and the Brick Industry Association.??They are also making our presence felt in Washington, through lobbying and legislation. A push, as an industry, in a focused manner means we need to work together through a national organization that can take back our market share.

Our market share has eroded, since other industries have united and spent an inordinate amount of money to promote their products, even if those products are inferior to and more expensive than masonry.??They have convinced the designers that their product is the “bomb,” and that masonry is “old school.”??We need to teach them otherwise.??The time is now to take back our market share through strength in numbers, to share our knowledge, and to promote what we know is the greenest and greatest building material ever – masonry!

Painter: No, we do not.??We must raise awareness through research and promotion.?? The X and Y generations are all about “cheap.”??We need the research to disprove promotion material of other systems.?? They are not telling the truth. ??We must have data to back up our claims.

Borman: Unfortunately, we have not. The masonry industry has always been a regional enterprise, since the materials we use are harvested regionally by local family-owned enterprises. The historical decentralization of the masonry industry has been an impediment to competing with large multinational organizations that dominate the lobbying efforts in Washington, D.C., and even within the committees responsible for enacting the building codes. A more consolidated effort is needed on our part to promote the use of masonry.

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