I met with one of my customers yesterday to help him do a work out on the payment on his forklift. When he bought the lift he was getting over $8.00 a sq.ft for framing adding bumpouts and decks etc. it got closer to $9.00 a sq.ft.
He was really cleaning up for a while, but as he improved his profit he shared some of it with his employees in the form of wage increases..
Recently to get any framing jobs at all he’s been forced to work for $5.00 a sq.ft. and sometimes less. In fact since the first of the year it’s closer to $4.00 a sq.ft. as those desperite to hang on bid lower and lower..
As part of his cost cutting measures he’s had to let higher priced workers go and sometimes hires them back at the new lower wages as they too desperately seek employement.
Right now his whole crew is suffering, their wages are as much as $7.00 to $10.00 an hour less and they no longer have insurance or other benefits.. he fields calls from those who want to garnish wages and hears about each pleading for a advance to pay this bill or lose their electricity, food, or something else..
He’s barely keeping afloat himself.. if we weren’t leniant he would have lost his equipment a while ago and then he simply could not have competed.. Doing this work out doesn’t put a dime in my pocket or the companies either. We keep the interest rate at the lower rate it was signed up at and that’s actully below our cost of money.
I personally haven’t earned a dime since last summer, the only reason I’m currant is my savings and they are just about gone..
MY question is at what point should we pull the plug? Anybody see a turn around?
Replies
I guess the housing market like everything else rises and lowers. Across the country their are good areas where it is booming and slow areas too.
Nation wide unemployment is at all time lows and the stock market just broke 13000,so somewhere somebodys doing O.K.
bulwinkle,
I've been doing this for 16 going on 17 years now and never in that time have I seen such dispair..
Sure things have their ups and downs, but the MPLS area sold only 5.8 % of homes listed for sale last year.. and if you read the headlines each month since Febuary has dropped more. Last month was the worst on record since 1989. (national not just local)
I spend $50 to $60 dollars a day for fuel and It's been nearly 10 months since I made my last sale..
I'm lucky that I'm conservative because had I lived from paycheck to paycheck as many do I would have been broke a year ago.
As for the DOW adjusted for inflation it's got a ways to go yet to reach it's previous high.. 13,000 would be great news,, 7 years ago..
gas today is right at $3.00 a gallon, compared to 99cents in 2000. cars, homes, everything is much higher compared to 2000 while wages remain about the same..
I've been around the trade long enough to know what you are seeing is the cyclical nature of the business.
It's also known as the roller coaster effect.
At our company meeting friday, we discussed hiring one more carpenter and helper as we are coming close to being booked out 6 months.
Just finshing up two kitchens; one around 100k the other close to double.
Maybe it's time to move.
[email protected]
Eric Paulson,
Move? Pretty hard to do, I've lived here since I was born. I have decades of contacts that I would lose and start all over again selling against kids fresh out of college.
You are correct in that remodeling is strong here as well. However few of you guys have need of my equipment.. if you do it's for a week at best and it's nearly impossible to make a living renting equipment for a week at a time..
I need new homes being built.. that's my bread and butter.. that's what my customers need, so they can make their payments, and even maybe need new equipment..
>>Maybe it's time to move.
The origin of the term 'journeyman' is in the fact that tradesmen used to go where the jobs were--i.e. where the new lord is building a castle. There's an interesting novel by Ken Follett called "Pillars of the Earth" that deals with this somewhat.
That's interesting; I always assumed it was a journey to becoming a master at your trade.[email protected]
I think it was more like.... "OK fellas, this stately manor's finished, but I hear there's a new one going up about 8 shires and 2 fiefdoms over. Sling your tools in a pouch over your shoulder and git walking, it should only take about 4 days to make it as long as the highwaymen don't waylay you."
Maybe a guy living in central London in those days would have steady work near home. Everyone else had to journey.
Actually, I believe the term "journeyman" started in Germany, where a young apprentice was sent away from his village when the Master he was working for decided that he could not teach him anymore. The appretice was then expected to begin his "journey", to find other Masters to study under, to broaden his experiences. The premis still holds today, as, from my own experience, the more good people you work with, the more you learn.
Today, I consider myself a journeyman. The real question is, what makes a master?
You could be right. We might have to get a history prof to settle it.
In some countries, Master Carpenter is a formal title, and has great meaning. Here in the USA, the designation is arbitrary. Who do you think is a Master Carpenter?This is what the all-knowing Wikipedia says about it (I just learned where the term "journeyman" came from--kind of interesting):"Tradesmen in countries such as Germany are required to fulfil a formal apprenticeship (usually three years) to work as a professional carpenter. Upon graduation from the apprenticeship, he or she is known as a journeyman carpenter. Up through the 19th and even the early 20th century, the journeyman travelled to another region of the country to learn the building styles and techniques of that area before (usually) returning home. In Germany, this tradition of travelling carpenters has survived the 20th century on a small level (also done by bricklayers, roofers and other traditional crafts) and is experiencing growing popularity again in the early 21st century. In modern times, journeymen are not required to travel, and the term refers more to a level of proficiency and skill. Union carpenters in the United States are required to pass a skills test to be granted official journeyman status, but uncertified professional carpenters may be known as journeymen based on their skill level, years of experience, or simply because they support themselves in the trade, and not due to certification or formal woodworking education.
After working as a journeyman for a specified period, a carpenter may go on to study or test as a master carpenter. In some countries, such as Germany or Japan, this is an arduous and expensive process, requiring extensive knowledge (including economic and legal knowledge) and skill to achieve master certification; these countries generally require master status for anyone employing and teaching apprentices in the craft. In others, it can be a loosely used term to describe a skilled carpenter."
You are right. I'm not sure if it/was Germany and or Austria where you must be a master to even start a business and even with that you must have permission from the existing master business owner and the local guild. IF they think there is not enough business then they won't let you start a business.
roger
hey, Jim... we gonna see you in Quebec ?
it's only "this far" from Michigan on my map Mike Smith Rhode Island : Design / Build / Repair / Restore
My father-in-law was a master tool and die from Germany and he had to take extra courses and write and do things to get his master licence. This was only done after quite a few years as a journeyman.
A guy that I knew worked for a Swiss company as a machinist and as one test he had to file a perfect cube to certain dimensions.
roger
I think people put too much stock in the title "master craftsman." It doesn't mean that they do perfect work or can do anything, it just means that they've settled down and take on apprentices and journeyman as helpers.
Master electricians, Master plumbers...I've known some of each who were barely good enough to get a license. Why is the term considered differently for carpenters?
I agree
It just seems a shame that the title of "Master" dosen't mean what I believe it should. If there was a reconized title, then at this point of my career, it would give me something to aspire to. Having worked in all aspects of carpentry, I think I could call myself a Master, but I won't, because it isn't a formal title, just one that I decided to give myself. And there's already a little to much of "self appointed" titles as it is.
I'll settle for being just pretty darn good.
<"Pillars of the Earth">
Enjoyed that book! maybe not as much as "the Key to Rebecca", but good nonetheless. I think I have all of his novels.
Forrest
Frenchy, awhile back I remember you had a post about the rising population and jobs ,sometime last year . something about projected pop. and housing something along those lines anyway.My wifes employer a major hospital chain in this area hired, a Maternity marketing consultant out of cal., last year she travels to many differant birthing hospitals in the nation. In one of her presentations she noted how many places in the country she worked with has had record birth rates , in some places upwardes of 200% of the occurances of live births I know my wifes hospital has set records in births for about 10 months now and this not isolated to this one area hosp.as the other two hospitals in around here are also pumping babies out in record #'s. Maybe not good for the short term thing we are in now ... but.....someone has got to be pulling a magical hat trick in the long run.
dedubya,
I do know that the seven county metro area has an annual population groweth of over 40,000 people per year..
frenchy ,
I have seen this before.. late 1979 here, interest hit 21%.
The next 4-5 yrs. here saw darn near every contractor in Ore. leaving the state looking for work in the south west or Alaska. Two kinds of contractors survived then .. remodelers and true Custom home builders.
My own feeling is this is the beginning , no where near the end.
The good news is there are quite a few guys down in the tavern telling us how we have such a sorry state of affairs when 1-10% of the population are making most of our tax payments because they are "Creating Wealth " for the rest of us.
So advice is near at hand !!
WSJ had a front page article on MN economy in today's paper.
The MN legislators have the answer for all your woes.
Raise taxes some more!.
Both 10% income tax, 10% sales tax soon in MN ????
junkhound,
If it's well thought out and progressive Minnesotain tax payers are willing to pay a very high tax rate..
Why? Well two things, we invest a lot in education..because of that we aren't going the way of Detroit or other rust belt cities.. Our highly educated population commands real attention from Major corporations. They want well educated people and we have them..
Second in spite of a terrible climate we have a great culteral city, the third highest number of theatres, 4 th highest numbers of musems (I am not sure its numbers of musems or numbers of musem attendees) all major league sports, plus a great concert hall, good classical music performance and many other culteral events..
With well over 10,000 lakes we attract a large crowd of fishing enthusists, boating events and other water activities..
Good things don't come cheap and we are willing to pay for good things..
Heard some national RE expert on The Today Show on Friday and she claimed that its very different throug out the country...while its way down in areas of Florida I think she said it was in Utah that sales were up 18%.
I've been talking to a RE broker in Sebastopol Calif (1 1/2 hours N of SF) and she's saying the market is low but not horrible..that its kind of leveled off...I think its pretty much the same around here. Not great but not horrible...
http://WWW.CLIFFORDRENOVATIONS.COM
Frenchy - its the same here. RE prices went up fast and furious, and a bunch of Los Angeles and national developers came to town, and started building in a big way. Now the market is glutted, the sub-prime lending market is a mess, and there are a ton of out-of-work guys getting desperate. April was the slowest month in sales in this town in 10 years. I recently had a painting contractor call me, and offer to go to work for $8/hr. (but only until I could see what he could do, then he wanted $10 minimum!). I count my blessings that I even have work right now!
"...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
I still see a fair amount of construction down here around Rochester, though certainly not at the pace of a couple of years ago. And there don't seem to be an unusual amount of for-sale signs.
But I'll have to keep my eyes open for new construction starts now that house-building season is starting up again.
DanH
I'm thru the Rochester area at least once a week lately.. not many foundations in that I can see. I can't sell anything to a vacant field. I sold a lot of equipment in that town over the years and suddenly last summer things died..Our resident mechanic has been going hungary lately with lack of work. (industrial sales are all that's kept him occupied).
Rochester usually lags the Twin Cites by about two years in gowth. So I assumed that Rochester and other outlying towns would be my salvation.. sure hasn't been that way so far..
"MY question is at what point should we pull the plug? Anybody see a turn around?"
depened where U are and what U do.
that's the way new const is ... ride the wave then drown.
remodeling is closer to slow and steady as she goes.
same deal with housing ... bet U and your GC buddy weren't complaining when the housing prices were way over inflated ... now they're "corrected" ... and the pulg is pulled.
Just the nature of the beast ...
move to Pgh ... no "boom" ... so no "bust".
and just voted "most livable" again.
latest award probably has something to do with the steady housing/building market.
as a bonus ... coupla huge commercial projects have all just been agreed upon ...
so that'll tighten up the remodeling labor force for a coupla more years ...
all the union carps will actually be working union jobs instead of scabbing themselves as remodelers.
never gonna get rich quick here ... just hope I don't go broke quick either.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
JeffBuck,
If IT were just me or just me and a few who made errors that's the price of doing business.
But nearly every week I'm helping somebody out.. The Customer is 90 or 120 days late and the collections department wants me to tell them where the Forklift is so they can go reposes it..
Somehow I need to put the whole thing together when the contractor doesn't see a way out and the company is burdened with over 10 million dollars worth of nonperforming inventory..
Heck if the contractor is loaded with debt from jet skies , boat payments, new truck and etc.. I have little I can do for them. IF the problem is the forklift payment, I'll do my level best to have everything work out in a way that is fair to everybody.
By the way Jeff, These aren't General contractors,, they tend to be framing contractors. Specialists, Guys who frame the house, maybe install windows and they are off to the next one..
The Mpls. /St. Paul market tended to be a nice stable one, it's been that way all of my life. Nice steady growth with darn few boom and bust cycles. 2004 was the floodgate.. too many spec houses started because lending practices suddenly became very lax. I saw the start in 2005 when most of the houses I was visiting weren't sold units or units in a rapidly selling housing developement, rather spec houses put up by ambitious contractors who'd saved a little money during the previous growth period and now they wanted in on skimming the cream..
Sounds like debt counseling oughtta be a growth industry there? Only you can answer why you should/would stay with a business where you see no near-term future, at the expense of your family.
We picked our location partly on stability. Had house guests from the other Rochester (NY) recently. They were astounded at prices here, still rising if slower. Spoke last week with some folks about to move to Ga. Their house sold in under 4 weeks for a price they were very happy with. Still a large amount of new construction here. Which is what you get with growth. Everybody's gotta be somewhere.
On a lighter note, the Ga-bound folks sold me a toboggan they didn't figure they'd need. Couldn't believe anybody here would have one. Now I do. Oddly, almost unused... Doesn't look like they steer much so our driveway should be an interesting slide.
As mentioned, wealthy folks are often still spending when others don't. I'd be looking in that direction. Apparently you know how to sell. Unlimited opportunities.
Good luck.PAHS Designer/Builder- Bury it!
VATom,
Ah! Toboggans!
I've loved the ones I've worn out..
Sure they steer! grab a corner lift and lean, I mean serious leaning not that wamby pampy leaning girls do but lean like your life depends on it (and depending on the size of the tree and the speed it's arriving at, it may)
If you lean too much you tip over and that's the really fun part of tobogganing! snow in your face and down your neck and laughing 'til your nearing wetting your pants..
Sitting down and letting gravity do the work is boring and quickly wears out, (the down side of gravity is that it works at least twice as hard on the way up)
Find some pasture with a few trees to dodge, a massively steep hill ( don't tell me that the Rochester area has no such thing, I know otherwise!) The fun really starts once you get the snow packed hard.. The toboggan now comes to life and shows a part of fun that only fools and the young ever see.
If IT were just me or just me and a few who made errors that's the price of doing business.
I didn't say anyone made any mistakes ...
pretty sure I mentioned something about nature of the beast.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Weve discussed this a few times before with you and I doubt anything has changed. Thats fine we will do it again cause its a top subject right now and its your number one worry.
Ive seen this business for 55 yrs . Ive seen very hard times . I saw the time there was NO building . There was no jobs to be had that anyone WANTED to do. There wasnt any money. My whole family is in this business . Im talking 6 uncles and over a dozen cousins . Grand paw , Dad , spent a career in it . Ive got two brothers . One was a builder and the other a job super. That has brought a wealth of experienes to become knowledge.
Ive heard about the depression all my life . I never saw it but my family didnt have enough food . Ive heard about fortunes getting busted like they were on a finals poker table. I dont beleive this is near as bad as the depression! But Ill tell you what people did in the depression. THey did what ever they had to do . To my family it meant working actually daylight till dark 7 days per week doing anything . You could eat digging potatoes . It didnt pay anything but you could eat.
When we get right down to it we only need a few things . Very basic.
The only thing we have to have here is food. We live in a climate that we could survive in a tent or a cave . The water from the streams is free.
My family dug a basement and moved in it . Thats where I came home to . Im lucky I got delivered in a hospital as my brothers didnt . My uncle dug a basement to put his family in. NO house above . My family hand dug water wells . We also lived in a basement with out a house above . They dug in to survive in Ill where they could stand the temps in the winter out side with out shelter and heat . When they did starve out in Ar , a man from the church loaned them 500 dollars to move where there was work. That was Rockford Ill at National Lock . I was born there . We didnt have paint or floor covering in that basement . We did have plenty of food and we were warm. We slept in feather beds with lots of quilts .
So the answer is you have 24 hrs in the day and you need another job. If you want to keep your acounts thats fine . Theres no stupid kid gonna take your job from you . He has to have a paycheck. Your builders will have to do somthing else . They might try doing a lot of different things as my family did . Ive done several things myself and traveled to work. Some of the best money I ever made was in other states subbing . While I dont look at motels as a way to live , they beat the alternative .
No one can answer your question but you.
I dont think this is going to get better . I dont think its a cycle . The only way its going to get better is personally. By that I mean dig in and live with less . Make life simple . This is a time to own your home out right . Its a time to own the car or truck you drive . NO more payments . You just aint payin fer nothin you dont need. If it costs anythin you aint buyin it iffin you caint eat it . Thats not a new theory by the way. It works.
Now if that means that all you can afford to build is a garage to live in at first then thats what it means . I dont advise living in a basement with out heat .
Thats what people do that are forced to stay in conditions they cant help. Personally I would move or start doing somthing else when I missed the first paycheck, but Ive always had a fear of starving. I never waited on a paycheck myself so I dont know what thats like . I imagine it would be devastaing . Thats why I throw renters out .
Tim
Mooney,
make do or do without.. That's the jest of your sermon..
Not far off! It's how I do things. Yes, I've got a few small payments. There's liquid assests to offset those payments so it's not like I'm naked.. The only real obligation I have is my home.. It's more than 3/4 paid for but since I've worked my whole life to build this I don't intend to simply roll over and die.
In reserves I have almost enough to pay off half of my currant mortage which allows me some breathing room but since I'm nearing retirement I'll need those reserves for retirement. That makes for some hard choices. go into retirement without reserves or without a home..
"make do or do without.. That's the jest of your sermon.."
No , not all of it . You musta napped during the sermon. <G>
btw THANKS for your advice on the tractor thread . If I had asked a couple days earliar you would have saved me 5 grand . Seriously. Well the real advice I needed came in your email and I appreciate you taking the time to write it . I just didnt ask quick enough. My fault . Im ok , Ill get through it .
I also said do other things . I cant help but think if I had you by my side during that big auction I attended I could have made a big hit . If I had your experience I would be a buyer and a trader . Thats just one thing . They sold stuff to farmers at that sale and it brought good money. They sold stuff even farmers couldnt haul off from there that they gave away. Cranes, backhoes , <big> , large dozers they gave away or they didnt sell at all but we didnt know it cause they didnt PO anything so you know better than that . On the other hand my small backhoe went high and so did small dozers. There wasnt any lifts. <G>
Ive been in the same position as you just another song was singing. I could not get enough work to supply a crew full time . If I didnt have a crew I couldnt compete. My expenses were too great to work alone so somthing had to give . Ill never forget my wifes face when she was doing our taxes and she came into the living room and turned off the TV. She told me I was going to have to make some big changes as we were receding . I needed to do somthing now as we were living off the past.
You talk about a shell she fired on me that hit me sqaure in the face . Reality had caught fire . I had thought I was making money becuase I was handling a lot of it . There was money in the bank but in reality it was robbing Peter to pay Paul. MS sermons deal with knowing your true costs and I didnt . In about 24 hrs we came up with a plan for my business which wasnt what I had been doing . Ill have to say it took guts to leave what I knew or stupidity. I think a little of both or a lot of stupid. One thing I knew is what I was doing wasnt working and it wasnt apt to change . That was really the biggest factor in my decision. I made the decision when I wasnt broke , but I was going down. If I had waited till it ruined my credit I dont now if I would have ever recovered.
On the other hand I knew I needed a retirement and I didnt have one . That was worth a gamble as well.
So the result was I could hold a losing hand or I could bluff my way into a winning one . It was a no brainer because if I lost I would have nothing either way. There was only one chance at winning before I got busted. I took it . Scared to death but I took it . It worked out.
Ill have to say if I take any credit that I stayed with what I know as a basic educaton as I had to learn a lot more for the transition.
One thing people laugh at me about is that any thing Ive got has to earn its keep. If I buy somthing I dont eat it must make money. Ive criticized peoples dogs before as not being useful. I dont do that anymore but thats the way I feel. My wife owns a dog that is worthless . She knows how I feel but its still eating our dog food . Every time I look at that dog I think that . I think its a way of life or from where we came .
I took a mechanic to the auction that is a very good friend . He is selling or I should say he has closed on one and has accepted an offer for two pieces of commercial real estate. On the selling price he did very well gaining 500 percent on the one he closed on and he felt great about it . I told him I was glad for him but I would have never held that real estate . Of course he wanted to now why with his feelings hurt. He held that property for ten years with out rent . The way I look at it he left 100,000 on the table by not gaining rents . He would have had the same profits at the end which would not have changed. Thats one way of looking at it .
You always talk about lifts and never anything else . Ive never understood why your area of selling is so very small. I would at least look into buying for other yards while handleing your own accounts. The boss could hardly object when he cant replace you and hire someone else to live on nothing and know nothing. That wouldnt work for him . Of course what I said is not educated and only you have that type of education on this subject.
Tim
Mooney,
I'll jump into the middle and tell you that dogs earn their keep.. even the little yippy lap dogs (that I hate) the way they earn their keep is several fold.
First I've gotten a dog for each girl. They learned the responsibility of taking care of another living creature and the cost of that care (cost both in time and yes money) The oldest daughter had to see her pet die due to cancer so it should afford her a lesson on the whole life cycle and the importance of living well.
Second dogs provide unrequited love and affection.. when your friends quit you and your family argues with you, your dog will be there loyal and honest asking for nothing but a bit of food and a pat on the head..
Because of that unrequited love you will live longer. pet owners (here I'm guessing I saw it once but forgot the exact details) live another 4.5 years In addition dog owners baby's have 1/2 the incidents of asthma as non dog owners. Plus if a dog licks a wound it speeds healing. (it's mouth is antiseptic)
I should repeat some of the recovery things that Readers Digest reports but frankly I don't remember them well enough except to state that if you are ever injured or ill having a pet speeds recovery.. (they said pet not just dog)
As for how small my market is, I did that deliberately.. Anybody can sell machinery.. the trouble with that approach is then you are competing at a price level and selling stuff at the lowest price someone is willing to pay that is a sure way to starve..
I used to work 80 to 120 hours a week. My earnings for that effort and stress is about what I now make (or used to make) working 20 hours a week.
Become the expert on a particular area, your income goes up, your stress goes down and you'll have time to enjoy the finer things that life offers..
When my brother was a transplant surgeon he made a fortune and worked relatively little. When he lost that ability he became a GP and now his days are often 18 hours long or longer and his income is a tiny fraction of before..
I am reluctant to give up that expertise. It has value to my customers, I benefit from it and I cannot express the satisfaction when I hear the words every single customer tells me. "I wish I had done this sooner"! I know that I have helped a person in a very real and tangible way. I know for example that person can still be framing a decade after his body will stop him without the forklift.. Most of them would not enjoy the benefits if I had not persuade them to try it.
IT's very much like nail guns.. When they first came out, carpenters laughed at them.. they were many times more expensive then their hammers and the cost of nails was horribly high compared to bulk nails..Plus they added the complexity of compressors and hoses. They were heavy and awkward and unlike your hammer needed maintenance periodically..
IN this area Telehandlers have become as common as nail guns..
The 20% faster with 20% less manpower is real.. conservative even.. I know that if circumstances force me to repo a forklift from a customer he's out of business. There is no way in this tight a market he can build for what developers are willing to pay without one.. It would be like building without your nail gun..
I feel I did that.. For nearly 17 years I've sold telehandlers to carpenters.. when I sold my first one the guy was in a hopeless bind about to go broke.. the telehandler saved him and made him wealthy. I saw his crew struggling thru knee deep mud carrying a few 2xbys desperation on their face as they fought mud and the schedule. I jumped out of my car and asked who the boss was..
The rest is history..
I''m sure other telehandlers have been sold to carpenters and I'm sure I wasn't the first one to do so. But I remember stopping in a new housing development in the late 90's assigning forklift's to customers as they came up to my truck. In retrospect I shouldn't have discounted them as I did.. The company I worked for at the time didn't pay much commsion, mainly base pay and expenses, so I had no incentive to not discount them..
What carpenter in his right mind wanted one?
I can share in that story too.
In 1972 I bought a 400 graco airless gun. It was the first airless in this town. In that era all of our new houses were rough cedar trim on ranches. For a few years I was the call guy to spray that rough cedar. The closest thing to competing was a spray pot and compressor. I did the painting so cheap no one wanted to invest 1600 for an airless. Then the painting world changed . Cambell Hausfeild came out with a 300 dollar gun. It wasnt piston and it wasnt fast but it would spray stain all day long . The rebuilt kit was 100 dollars . First builders bought them and today homeowners buy them. That changed the painting trade and its still changing .
Ive seen things like that over the years like builders owning brakes for siding as everyone was installling it . Now its concrete siding and only one guy works this town with a brake that lives 30 miles away. The viynl siding put painters out of business . Insides are now done by a lot of HOs . With the shows that are on tv painters are having a small share of the building .
I saw the change and bought automatic finishing tools for drywall. I even bought a air gun for shooting drywall nails that didnt work but I tried . The bazooka which is the taping machine is still going strong today but the pay is different . Now you have to own one to compete so its expected. The profits are all but gone . They used to make healthy profits when we were competing with hand finishing .
I can see your point that the lifts are necesary. But have they come so common place that the expense of one is for the framer to bear and the profits are smaller than years gone by?
Seems business has changed drastically over the last few years. I see it every where. Plants are doing so much work in house today when they used to hire everything outside mechanically. It seems the name of the game today is to maximize profits on what little business there is to steal. If plants get a job they figure out how to keep it all in house . That has been the case here for building contractors . A builder told me the other day that he was spending 3 grand per house for digging work. He builds 6 houses per year which is not a lot but he was justified in buying a small tractor with a hoe attachment . Since he bought it he uses it for other things as well like driveways and landscaping . He bought forks and it moves lumber around the house . While it doesnt lift it very high it carries it through mud , etc. He keeps it with him just like his job trailer . Incidently we didnt used to have to have a job trailer and now they are common place. It takes so many tools now to make a living .
This is an ever changing industry.
Tim
Mooney,
To answer your question, yes with the slow down you simply cannot build one by hand and compete price wise,, not if you want to earn more than 15 cents an hour.
Oh I'm sure there are exceptions. There is a "name" builder who commands a real premium because he's the hot name in custom home construction. He can afford to subsidize his higher framing costs with the profit he makes because of his name. It's ironic in that he doesn't want his guys to get lazy and use the lift instead of humping lumber by hand. He uses expensive finish carpenters to hump lumber. ???
Untill 2006 the speed gained by owning a forklift and the lower labor costs saved more than enough to pay for the equipment.. (pay for it for 5 years and use it for 25 years) I'd do rent to own deals where the framer could prove it to himself for 6 months or how ever long it took to convince himself that owning one was a good deal. Some figured it out in out in two or three months and got the lower interest rate that ownership afforded while some stubborn guys took as much as a year but sooner or later they'd call me and ask me to switch from rent to ownership..
Ever changing industry for sure.. I suspect that in a relatively short time stick framing will slowly disappear. North America is about the last place left where stick framing is norm.. If the movement goes towards ICF's or SIP's or something else, I'm not sure.. right now in the metro area ICF's cost about what a stick built house does.. SIP's are about a 5% premium on sell price alone but offer superior energy savings over ICF's.
I'd think that due to insurance concerns the advantages of ICF's in fire (4 hour rating) tornado's etc. they should quickly become lower to insure.. add energy savings and they really do look attractive..
The ICF selers are telling me that this slow down is great for their business.. during the rush nobody had the time to go out and learn alternative methods of construction. During the slowdown many contractors are seeking something to differ themselves from the competition and are looking hard at ICF's
Frenchy, after reading your original question, then your followups I've come to this conclusion: you know the answer to your own question, but you dont like it and you aren't ready to act ....yet!
You'll be there soon because that boom business isn't coming back anytime soon.
You are rationalizing your decision to stay in the business, even though there ain't no business by deferring your decision to leave in lieu of staying "loyal to my clients".
Your loyalty is misguided though. Yes, it honorable but it's pointless. Both you and your clients are held captive by the market and the market is speaking loud and clear. Your clients don't need their booms! They won't anytime soon either.
When the market gets corrected, the need for booms will appear again and so will you, if you don't re-establish yourself in some other industry.
Its hard for some cheese lovers to face the facts. You've obviously read the book "Who Moved My Cheese" and I challenge you to look in the mirror and honestly decide which mouse you are. You won't be too thrilled to know the answer but as soon as you make the move, you'll be much better off.
Sorry to hear that your market is so devastated but I started warning about this housing bust a few years ago. I didn't like hearing about it either but the forces driving it are already in place. In most localities it's going to get a whole lot WORSE before it gets better. Your dilema is to hold onto your house and it will cost you your retirement. The reality is that if you hold on, you'll find that your true value of your house is significantly less than what you thought you had when everything shakes out. If you liquidate today at the much lower price that you have too, you can buy a whole lot more, so it all comes out in the wash. If I were you, I'd do what I could to preserve my cash. In these downward spirals, cash is king.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
Blue-eyed-devil,
You are absolutely correct! I hate to admit it even to myself but I know you are correct.. At my age it's hard to start up again. If I leave, er when I leave (I may have a plan that might save both the company and myself if I can just get the manager to pull his face away from the computer and think),,.
The owner recognizes that it's a good chance but he's old enough that he wants his manager to run the show his own way, without interferance. He'd like to retire but can't pull himself away.
The manager is one of those dedicated to computer data and frankly I hate the damn things.. I'm sure if I put the whole thing on a spread sheet he'd go for it, but the solution requires foresight and creativeness, something spread sheet masters can't achieve..
I live in Fowlerville (West side Livingston County) and the local newspaper reported that we've had 74 permits pulled since January. It was at 178 same time last year, and 240 something the year prior. My good buddy is a trim carp in Livingston county and his house is in foreclosure now because he can't find work. They're packing up soon and heading south to start over once school is out.
All building trades are screwed in Michigan IMO. I had to go back to a real job to pay the bills again, but most of you guys don't have that luxury. Maybe you've said it here before and I didn't catch it, but what's your plan?
Frenchy,
I used to be in sales, when I was in my early twenties. I was never as adept at it as you obviously are, mainly because I never found a product or a sales presentation that I could really get behind...commit to completely. As a result I was never a great closer. So I understand how strongly you feel about selling a real product which fulfills a need. And I appreciate how much you care about helping your contractors to keep their lifts for a few more months, hoping that the housing market will rally enough that they can get back to work.
I've read a lot of your posts about your belief in your product. You're certainly the kind of salesperson I'd want to have in my company, if I were producing and marketing a product. You have integrity and passion, both of which make for excellent results on all levels of corporate sales.
Maybe it's time for you to move up a notch in the sales world. Sell some new medical equipment, perhaps. A product that really helps people live better, freer lives. Something where technological advances open new markets for you and allow you to be a proud spokesperson for a great scientific breakthrough.
The housing market is very low in many areas of the country. Some of your lift owners may have to re-organize, get into remodeling or other kinds of work where that machine has little value. I've had to make that decision several times in my life, constantly seeking new markets for my skills, or learning new skills, as the economy shifted unpredictably. I've had to sell some great toys, things which I'd worked very hard to acquire, just to get through bad economic times. The main thing that kept my spirits up was trying to do the best work that I could manage, for my own inner satisfaction.
You don't have to leave your home. You're too good a saleman not to find something else which will fit your passionate approach to presenting a real product.
Hudson Valley Carpenter.
I've accepted it. I went to the owner of my company with an economically solid plan to get both me and the company out of the currant mess they are in..
If we have to make down the equipment to the currant market level the company will take more than a million dollar loss. I have a solid plan that would help them get past that and put the inventory at currant market values in a reasonably short period of time. (and save my career) while being slightly profitable..
The owner liked it, however he wants to retire.. to do so he needs to turn the company over to someone who can run it successfully. The manager has a differant mind set.. he wants everything on a computer spread sheets so he can measure the model I forecast against projections..
In addition he wants to pick and choose which parts of the plan according to his management concepts. Instead of seeing a chance to save over a million dollars worth of inventory, he'd like to continue almost as things are..
He's been wrong in the past and I'm absolutely certain that he's wrong now.. It's not my job to manage the company so I won't challenge him on this.. The owner will go along with the manager beause he wants to retire and feels the need to give him free reign..
I will change careers and no doubt eventually find another product that is both profitable and worthwhile..
I get a magazine every month called Fastline. It's page after page of equipment for sale.It's mostly farm equipment but it's also trucks and trailers, large mowing equipment, weed spraying equipment, and construction equipment.They also have ads from metal fabricating shops where they build truck grills, flatbeds, fencing, cattle feeders, etc.They have ads from businesses which strictly sell equipment tires.The company is out of Kentucky buy they publish a different magazine in every state.Here is their website.http://www.fastline.com/about.aspxI noticed a company out of Denver advertises in the Kansas magazine. The company is Clark Equip and here is their websitehttp://www.clarksequipmentsales.com/I just thought it was interesting. They have tractors that sell for $150,000 and combines selling for $200,00. I wonder what kind of commission you make when you sell a $200,000 piece of equipment.^^^^^^
a Smith & Wesson beats four Aces
mrfixitusa,
Commision varies tremendously, depends on who you work for.. when I sold for Caterpillar they paid me 12% commision on gross profits after expenses.. However they also paid me a salary and mileage for using my own car..
Ingersole Rand pays me 45% of the gross profit but no expenses or salary. I don't sell I don't eat, it's that simple.. I spend as much as $65.00 a day for gas lately and that's all taking away from the reserves I set aside when Business was good.
Profit on large items tends to be extremely slim. I sold quarter of a million dollar cranes, and made more than I could selling 1/2 million dollar cranes.
New tends to be extremely slim profit wise while I can make tremendous profit on older cheap equipment..
If I sold only for the money I could make I'd sell only old cheap equipment and make a fortune.. However that always catches up with you.. People buy equipment not because it's neat (hopefully) but because they can make money with it.. Seldom does older and cheaper equipment pay out.. down time costs tremendously.. both in schedule and in profit..
Fail to show up on time ready to go to work and you quickly gain that reputation.. Customers don't want to hear about your problems, they want the house built on time so interest costs remain as forecast.
IN addition costs of parts and any required labor can quickly overtake the cost of more modern, currant equipment..
Finally manufactures compete against each other to produce the best most efficent features. Doing so gains market share and with market share comes profits..
I've answered your question pretty well but I'll bet you still aren't satisfied. Let me put it this way.. I see every contractors income when they fill out credit aps. On average I make about 60% of most most successfull contractors make..
I'm extremely successful, having earned my living as a salesman for the past 3 1/2 decades. Only one person in 100 is capable of earning a living in the field for 5 years. Most leave for more secure, less demanding careeers.
Short answer,, commison on a $100,000 piece of equipment could be as little as nothing or as much as $20,000.00
"The owner liked it, however he wants to retire.. to do so he needs to turn the company over to someone who can run it successfully."
frenchy - With your plan and experience, why can't that person be you? Just curious...buic
BUIC,
Three reasosns,
First an owner is basically an administrator, I'm lousy at administration.
Second Being stuck in an office all day? Yuck!
Third reason, I'm not impressed with the long term chances of the industry.. Right now there are 23 manufactures of telehandlers for sale in America. 18 here in Minnesota.. The industry is way overdue for some massive consolidation and It's already happening. Many brands that were made in various places are now simply JLG's with differant lables and paint..
JLG bought the industry basically and it's gonna leave the scraps to the survivors. The end result will soon be the manufacturing of telehandlers overseas to whichever country offers the lowest cost. Caterpillar has been practicing that for decades now. Terex did the same thing with the crane industry..
While short term there will be a recoverery soon (and I'm already seeing signs of one) long term the outlook isn't so rosey.
That's a lousy state of affairs. Unfortunately, yours isn't the only area of the economy being damaged like that...good luck always,buic
frenchy,
I think HudsonValley hit the nail on the head. You're essentially a salesman, and a master salesman at that. I think you already know from working with your manager that it's time to leave the Titanic.
It can be very hard to separate yourself from your job- who you are v. what you identify with- but with your skills it would not be hard to move into other lucrative sales positions, such as medical technologies or new woodworking equipment. Great salesmen stand behind their product, but always know that it's they who sell the product, not the product itself.Expert since 10 am.
Jackplane,
thanxs for your very kind words. Yeh I know it's time to change, I've been thru enough to realize that.. I'm unsure where the future lies. I know how managers are about hiring people.. they want the guy they just fired but not him, another guy with his qualifications, except better. So If you don't have experiance selling left handed tiddlewinks he won't consider you.. Doesn't matter how many right handed twiddlewinks you've sold left handed ones are differant..
Now I have to decide was the other guy really that poor a salesman? If so, how did he get the job in the first place? There is more than a 50-50 chance that there is something wrong.. It may be a poor territory, it may be a poor product, it may be a bad company or lousy service or whatever.. Or it may be that the salesmannager isn't really up to the job he's in.. (that's happened a lot in my career) Just because you personally can sell ice cream to eskimo's doesn't make you a skilled salesmanager.. (have you ever heard of the Peter principle? )
It sounds realtively easy,, if you have skills just get a new job.. However that's only a tiny tip of the iceburg. As a experianced salesman you must ensure that the compensation is enough.. No I am not greedy but yes my kids all need new shoes and like to eat on a regular basis. ;-)
I've worked where the territory was lousy and built it up to the point where it was the best territory in the company.. then a new salesmanger comes and decides that I'm lazy and expensive so he fires me and gets two younger guys willing to work for less.. He thinks that because they are hungary they will build the split territory up greater than I did and he'll look good.. (it doesn't happen that way but salesmanagers last even less time than salesmen)
That's a lot of work for little reward.. Or you work for a company and they promise the moon but nothing ever happens.. Some companies will hire you for your contacts and as soon as they have those they replace you with a kid who just wants a start...
Some industries are so frought with corruption that you get tainted simply because of spending time with them. Aluminum Siding and windows used to be like that.. (watch the Movie Tin men with richard dryfus and Danny Devito sometime)
Change is hard. I guess sooner or later it will happen, it always does.
Lots of wisdom from Mooney, there.
Here's what I'd do: I'd look at this time as an opportunity to drown-proof my business or livelihood by finding out what sidelines I could expand me or my business into. Ex: can you rent out some smaller equipment that whoever has business there will always need? or that homeowners need? Can you add a little storefront or online mailorder business selling something you know a little about? Can you learn how to do something there while manning the store but while there's no customers in there?
You need to be more bulletproof through diversification if you're gonna hang onto your business through bad times--or to any business.
Best of luck!
Yeah, when construction is down generally DIYing is up, which is one of the formulas the big boxes rely on. So look for a DIY angle, or at least something that's oriented more torwards remodeling.(I realize this is a bit of a leap for a heavy equipment guy, but being creative is a necessary part of any business model.)The other option is to look for compatible business opportunities outside of the construction trades -- commercial fork lifts, lawn mowers, steet sweepers, et al. A guy I know in the auto repair business also sells big (by MN standards) boats -- $100K and up. He says he's doing OK even now -- the guys with money have money.
So convenient a thing it is to be a reasonable Creature, since it enables one to find or make a Reason for everything one has a mind to do. --Benjamin Franklin
bjAtlanta,
Frankly I'm a salesman.. I've sold too many things to bore you with a list but it's how I've earned my living since I was 5 ( I was one of those annoying kids who knocked on your door and sold magazine subscriptions, snow shoveling services, lawn mowing services, etc.. (I seldom did the work, I'd have kids with me eager to make some candy money and they'd do the work)...
I'll get by but will my customers? An awful lot of them are relatively young, and their whole career has been carpentry. Their talents may not translate well into the remodeling arena. plus or minus 1/4 of an inch won't cut it for trim work and some have the personality of a snake.
Others that do have a decent personality simply can't or won't sell.. Selling is a major portion of remodeling. Dropping a quote off and hoping your low price gets you the job is a sure way to fail.
IN addition they've invested heavily in training, tools, and equipment to frame, not to lay tile..
As we've discussed before, I design water and wastewater treatment plants and related facilities (wells, water towers, lift stations, etc.) Most of our work is in the Minneapolis-St. Paul metro area but we have projects all over MN and WI, with some work in Iowa and North and South Dakota.
Our work tends to follow the housing industry. As more houses are built, they need more water and sewer capacity. We did see a slowdown over the winter, but things seem to be coming around - I've picked up a half dozen new projects in the last month or so. Hopefully that's a good sign.
How big is your territory? It seems like we've seen more activity across the border in Wisconsin lately - more and more people are moving there and commuting back to the Cities for their jobs. Also, do you deal with commercial developers? I'm seeing a lot of construction work right in Minneapolis - there are several city blocks' worth of townhome/condo construction going on in the Uptown area, and they have plans to build two new hotels just off Lake and Hennepin Ave. one this year and one next year. Also, my office is down by Southdale shopping center, and there's a lot of work going on in that neighborhood as well: to name a few examples, there's a new Westin hotel under construction, they tore down the old Target store and are building a new SuperTarget (I see all kinds of lifts in use on that job as I drive by every day), my office building is in the process of being converted from leased space to office condominiums (although this project is pretty near complete), and this spring they're scheduled to tear down the office building two doors south of us to build something newer and bigger. Roger Staubach bought a multiplex theatre across the street from my office and was going to build a 30 or 40 story skyscraper; that deal did fall through, but the building and land is on the market and I expect something will go in there sooner or later.
Stuart,
I too am slowly beginning to see signs of recovery.. small, tiny and just barely a hint but signs never-the-less.
As for commercial construction.. the company I work for has never sought that market.. While we do sell to some, it's not our major customer base.. several reasons mainly having to do with the value of used equipment.. Commerical users tend to use up equipment much faster than the housing industry does.. In doing so they tend to be unrealistic about the value of their used up equipment thinking that we should simply unload those worn out units on unsuspecting carpenters and smaller contractors who are our bread and butter..
I have been prospecting the Wisconsin area lately and have some interst.. however western Wisconsin seems to have unrealistic views of the price of units.. Their budget is 20 to 30 but when shown units at that price always look over at units priced higher and ask for those. I understand.. they are in a bind. the typical building contractor in western Wisconsin builds a fraction of what a contractor in the metro area builds, so has a much harder time making payments even at that lower budget. Thus his credit is shakier and is inclined to buy only what he can afford to pay cash for..
May I ask where you are building new units? In some respects you preceed me..Housing developments need water and waste water facilities in before the houses are built (or shortly after)
"May I ask where you are building new units? In some respects you preceed me..Housing developments need water and waste water facilities in before the houses are built (or shortly after)"
Frenchy, I'll send you an email in a little bit.
frenchy ,i used to be in the car bussiness,i couldn't or wouldn't do the chnges it took to stay in bussiness,mainly becoming a tote the note/bank. so i hit the road but still miss the bussiness.
thinking about getting back into it,but if i would the internet/ebay would be the avenue that i would do. wouldn't something like that work with your equipment? this internet thing has changed the brick and mortar bussiness forever. i gaurentee you if i was looking for a forklift my first look would be on the internet. if i could buy a forklift from you and save 5k and have it shipped for 3grand and save that much in sales tax,i'm all in.
there is no such thing as a local market now,it's national and worldwide for all products now.and you can't use the excuse that a auction format doesn't bring as much as you pointed out to tim that things bring more than you retail for at auctions. larryhand me the chainsaw, i need to trim the casing just a hair.
alwaysoverbudget,
Buying equipment from the internet is a sure way to lose! First, darn few dealerships make a profit on selling new equipment. Typical Gross profit is often 2 or 3% The profit center comes from parts and service.. I've never worked where the rental center does anything more than create lower priced units to sell either, well I'm sure looking at the rental rates of places like United and Hertz they make a tidy profit renting but they are the exception, dealers typically don't charge that high a rate..
All equipment isn't alike. A Kia isn't a Mercedes and a 1/2 ton pickup won't tow a dozer.. Equipment is often very custom..
Should you have aux hydraulics? side tilt or swing carrige? 48,60, or 72 inch wide carriage? which one of 9 differant fork sizes is best for you? Which hydraulic fluid is spec'd? tires are a hugh choice! We can sit and spend hours talking about tire selection alone.. make the wrong decision and it will be costly..
Think there's a big differance in Price? Well I have access to dealer costs of 19 brands of telehandlers.. there isn't 1% differance in an apples to apples deal between any of them.. My standard quote is that I will match anybodies price in an apples to apples comparision.. Only rarely have I been called on it and when I am I'd have to raise my price to meet the other bid.. Contractors talk among themselves.. If I charge more to you than I charged to someone else that reputation would quickly get around.. I'd lose business.
If we are speaking about Used, I can show you two identical brand forklifts with exactly the same hours showing on the meter. Appearance wise they look nearly the same, and yet there may be $20,000 or more differance in value between the two of them.. (the slightly scruffier one is worth more! maybe!)
Do you know how to spot a tip over forklift? There are two risks with a tip over.. first that the engine ran for a while on it's side.. (remember diesels are injected and will run in any position even upside down), if so how much damage was done when the engine oil wasn't getting to the pump? Will that engine fail in the first week, first month, or maybe two years from now? Properly maintianed a engine in a telehandler used by a framer will last 25 years, so failure in much less than that is an indication of abuse..
The second risk is that the towers are gronked (twisted) maybe slightly, just enough to wear out pins, cause cylinders to leak, and put an uneven load on the chassis. That's assuming the boom was properly replaced and not just straightened.
Get a mechanic to check it out?
How many mechanics have enough experiance on telehandlers to make a proper judgement? There's a world of differance between changing oil on one, doing minor repairs etc. and evaluating one for tip over damage..
IN our dealership which has been selling these things for nearly 20 years there is only one mechanic capable of giving a full report on the condition of any forklift and 4 capable of determining condition on the brand we sell.. that's out of 70 mechanics many of which have worked on them for over a decade..
When I worked at Caterpillar most mechanicss were talked thru the problem tranfering their general knowledge of equipment to the specific problem. only a handful of mechanics had actaully been to school on them and of those I only trusted one guy to solve hydraulic problems.
Knowledge is power!
If you attempt to know everything about everything you will soon fail.. become an expert on something, the best there is, the one others refer to when they need advice and you will make a good living.
I don't really have any answers but things change and some people seem to be able to shift gears and move on to the next gig, while others sit and are stuck in neutral.Some wait for things to come back around and maybe this works.My Dad had a small business for 20 years? in a small town and during the 1970's things changed because of the advent of discount stores (like walmart)Dad had a HS diploma and no experience other than running what we used to call a dime store and he applied for a job with a utility company and they hired him and he stayed on another 10-15 years and retired.Some people just move on don't look back and don't give it a second thought. Others get frozen with the attitude "this isn't fair", "I didn't cause this to happen", "I'm entitled to better than this, look at what I've done the past 25 years".Good luck !^^^^^^
a Smith & Wesson beats four Aces
mrfixitusa,
That's not the situation here.. Have you ever read who moved my cheese?
I'm lucky I have a skill/talent as a salesman. the product varies but the skill does not..
The only reason I haven't moved yet is two fold..
Hope that my assesment of the market is too pessimistic, that the market will recover and I won't be forced to start all over again pioneering a new product.
Second that those who provided me with a living for the past nearly 17 years have a loyalty and that disappears if I go.. In addition they most likely will be hurt without my involvement.
I know what your talking about. YTD i've made .25% of what I did last year. If I wasnt doing rental homes right now (ironically) i'd probably be out looking for a job.
The rentals have afforded me the ability to leverage cash and pay it back to keep me going.
Now if I can just keep finding affordable houses, fix them, get them rented,.......yeah much better.:>)
Just heard an MPR report yesterday on Twin Cities real estate.
IIRC:
This April new home sales down 22% from a year ago.
Homes listed up 11%...a glut.
Hear's the kicker, home ownership rates at 78% (second highest in the nation) after rising 10% during the run of the last 8 years...everyone who can buy has already (even some who shouldn't have--sub-prime).
My comments:
This situation will take a while to change (growth). Housing could become more affordable (price declines, foreclosures). If jobs are created, attracting new bodies into some of these homes could get easier. Long term there will be growth. Short term things will be flat in construction.
basswood,
Pretty much the conclusion I reached a while ago. I'm now focusing on the commerical contractor and remodeler. Long term has yet to be determined..
One minor comment about the Twin cities market.. annually over 40,000 people move into the 7 county metro area. That movement creates demand even in a down market and some new home construction is occuring..
The Twin Cities area has an excellant reputation for the quality of workers due to our excellant schools. The tightfisted old Sweeds and Germans who built this area invested heavily and wisely in schooling, creating a tradittion of excellance which attracts major companies all out of proportion to our location. Frankly no one moves here for the weather.