Here in Albuquerque, we've seen the construction market decline like it has in most parts of the country: In 2007, there were 9,000 new construction permits issued; the projection for 2009 is 450 to 500 permits. It's a difficult time, but despite that, we've managed to keep our numbers for our fiscal year that ended in May almost identical to the ones from the previous year. While our numbers look the same, though, our business looks different, and we've had to change lots of things to try to adapt.
For one, we've diversified. Over the years we had done work in different parts of the market that turned out to be too much of a hassle, but now that there's a slowdown, we're back in them. For example, years ago we had pulled out of the commercial/institutional market because the payment terms—not getting paid huge amounts for 45 to 60 days—put a financial strain on our company. After all the years when business was great, though, we've been able to build up enough retained earnings so that those terms aren't the strain they used to be.
We're also doing insurance work again. We had stepped away from that because the administration of those jobs makes them time-consuming, but since the recession, we called up all the adjusters we had worked for and are doing it again. Also, we had dropped tenant improvement work because it's such a time crunch with so many trades working at once, and it would frustrate the employees, but now they're just happy to be working at all.
Besides examining the type of jobs we do, we're also looking at how we're buying products for those jobs.
Besides examining the type of jobs we do, we're also looking at how we're buying products for those jobs. Lately we've been able to take advantage of good deals on oversupplies of products that we're able to move consistently. We've also started doing co-op purchasing with local contractors for products we all use, like moisture underlayment. I called up some of the local guys and offered to throw in their orders with mine. I only do it with competitors I've known a long time, and we all get better pricing. We've also started hand-scraping our own flooring instead of buying it already scraped. It is tedious work, but again, right now our guys are just happy to be working.
These days we're also more aware of doing everything more efficiently. When jobs are local, we're meeting at the job sites instead of at the shop, and our lead guys are more cognizant of making sure all the materials are at the job so we avoid extra trips. For jobs that are out of town, we use our biggest passenger van and send as many guys who can efficiently work on that job at one time so we're minimizing those longer trips. When we had more jobs going on at once, we always just put two guys on each job. Now that we have fewer jobs at a time, we can reduce the number of trips, and it's a nice savings.
One benefit to things being slow is that we're finding vendors for supplies like plywood have a lot more flexibility about working on your schedule. Before, they weren't accommodating about hitting specific delivery times—you could expect the plywood to arrive at 8 a.m. and it would get bumped back to later in the morning, all while you've got guys on the job site ready to work. To avoid that, we always had the plywood delivered to our shop and took it to the jobs ourselves. Now that those vendors really want our business, we're having everything delivered directly to the job site, and if it isn't on time, that vendor is off our list.
Something that has had a big impact on the job site is changing our waste disposal practices. We are now separating items and taking them to the appropriate recycling places. Instead of paying to take the carpeting and pad to the dump, we can recycle the carpeting for free and actually get paid a little bit of money for the carpet pad. We take all our wood waste to a man who manufactures wood pellets; instead of paying $385 to dispose of a 30yard dumpster, he charges us $48 per load to cover his "knife" costs (the damage the nails in the boards cause to his knives that grind up the wood into the shavings).
Back at our own shop, we now separate all the cardboard, plastics and paper. We have a private contractor who picks it up once a month for $28. Previously we had 100 to 140 cubic yards in the shop dumpster every month. Now that we recycle everything, we are down to under 20 yards in the dumpster, so it's a big cost savings and a lot less waste in the landfill.
Honestly, it's embarrassing that it took tough economic times for us to do some of these things, but we were busy and weren't thinking outside of our usual cycle. The cool side of it is that now our employees are aware of the impact these changes can make, they are doing things like recycling in their own lives. So, it's not only saving our company money, but it's making even more of a positive impact outside of our own company.
