I have a cabinet company that makes cabinets for me when I need them… commercial applications.
So, I am doing a side job recently for the construction manager of my biggest client, a national restaurant chain, and the cabinet co owner shows up to deliver the cabinets. Conversation takes place and one thing leads to another to reveal that my client buys some counters from a company that this cabinet guy actually makes for that particular supplier. I suppose he is one of the few that can do some complex solid surface stuff.
The cab co owner eventually tells my guy that he can cut out that middle guy and go straight to him. So, the guy that comes to him to produce these counters, giving business to the cabinet company, is now being cut-throated by the cabinet co.
Although I didn’t want to make a scene there I later brought it up to my guy (the big client’s construction manager). I told him I felt it was sleezy and he agreed.
Luckily I have come across a new cab maker here locally that I think I will be very happy with…. we will see. He is actually a fellow councilman of mine and this company has been in his family for like 50 years. Very good guy too and has all the stuff to make all his own cabinets and counters, solid surface and otherwise.
Do you guys see much of this kind of cut-throat behavior? How do you handle it? I am mostly just venting… it has been on my mind since it happened a few months ago so I figured I would get it off my chest and see what feedback I get at the same time.
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
Replies
The other way around......
When all I did was install stair rails..........I would constantly get asked by the builder or GC if I would cut out the shop and install the rail directly for them if they got the parts.
At least once I said "Sure" and then gave a bid of around $40K for work the shop was charging $1800 for.
And it always got around to me explaining that the shop provided about $40K a year or so worth of work and If I was gonna lose a customer I need someway to make that money up...............
I see it alot.
It's usually pretty short sighted.
I actually had a helper once tell me he was coming back to the job we were on ... mine ... to do some carpentry work in another part of the house. He needed my keys for the weekend so he could get in!
Told him Thanks for letting me know ... and ... uh ... Your Fired!
I confronted the home owner all ready to jump down their throat ... they said the kid brought it up to them and they though I sent him to ask!
sometimes the middle man pays yer mortgage.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
I had a guy pull that #### on me recently. This guy was slow so I was making it a point to bring him along even if I didnt really need him. Next thing I know he's over at one of my clients, working without me. Doesnt tell me a thing, it slips out in conversation later.
Were all hungry here in Michigan, but I dont worry so much about him anymore.
Family.....They're always there when they need you.
if they'll steal your customers they'll steal yer tools.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
hmmm...
let me get this right...
a guy is deliver'n some stuff to a customer... finds out the this customer is buy'n some of his goods... but not from him...
hmmm does he say nothing?
is the middle man guy pay'n his bills? is he a joy to work with? is he a pain in the butt? ( we don't know these things...
maybe he's just proud and states... "man we make those" and maybe the customer asks... can i buy them from you? maybe he'll sell to anyone... so the answer is yes...
all gravy trains end somewhere... if you know where to buy something " direct" do you still insist on going through someone else so that they too can make a profit?
the middle guy is getting cut out everywhere... use to be the middle guy had a warehouse/store full of stuff... and yes you paid his mark-up for being able to buy/pull from his inventory... but so many times now as is your case... the middle guy is an order taker... sometimes he has/adds value and sometimes not...
with access to information there just ain't much of a place for 2-3-4-5 levels of profit taking.... on getting a product from manufacturer to the end user...
was what the guy did wrong? nope... he didn't hunt the guy down... he didn't follow the guys trucks and steal the customer... it just happened in conversation... and he's in the business of selling his product... he's interested in making a living...
I have often been faced with selling something to someone and them telling me...
" man i can't make any money at that price" well thats not really my problem or concern... thats my price and I'll make money... what you do with it AFTER you buy it from me is your business... i'm not in the business of lose'n money so that others can profit...
reselling the products of another always has the risk of you not have'n a huge value in the scope of things... I made a very good living for many years reverse engineering products that the military purchased... sometimes as simple as a power cord that had a IBM part number... that they didn't even manufacture... but were listed as sole source supplier and charging the military $40 for... when it should have been less than $10...
just the way of the world... I wouldn't be too upset about it... unless it was me that was get'n cut out of the loop :)
P:)
This was definitely more by design, at least once it was found out that my guy was the end buyer of the product.Let's look at it like this.... you want new cabinets in your apartment building, all suites. So you start a few suites at a time. You strike a deal with a local contractor to supply and install them. One day the cabinet supplier is dropping off the cabinets and the owner is the delivery guy. he makes a move to cut out the middle guy by offering to sell the cabinets to you directly.I think it is scummy for the cabinet guy to screw his own client over in order to sell directly to the end user.Furthermore, this also makes me wonder how much I can trust the guy myself if he is that sleazy to steal from his own clients.
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
or how about this...when does a referal mean someone owns the whole neighborhood.
A local solid surface shop that id delt with in the pas t referred me to their client for some cabinetry. I did the work, no problem, He wanted 10% finder's fee(illegal in some states if home owner is not informed, I believe).
I realized that there was potential money to be made in solid surface, so I took the courses. Piece of cake except for the weight of that ####.
Later, I get a call from the neighbor and wanted their kitchen refaced. I scheduled an appointment. I explained to them that the cabinets were shot and the tops were too. No sense in doing one and not the other. I asked them if they wanted a price on both. At that time they realized I did tops and wanted to know if I could save them money. I told them I'd give them a price for my services and they could get another price from someone else and I have no problem working with other trades.
Later, i get a call from the solid surface company and he was screaming that I took his client from him and I at least owe him a percent. Called me a f'n back stabber, etc. I went home that night and slep like a baby, no guilt or remorse.
I got the job, he didn't. Both the cabinetry and the tops made profit (2 jobs, one consult)
Three years later, I run into him. He was still fuming He told me that people like me are the reason why he isn't making money. Everyone keeps stealing/underbidding his work. I shrugged my shoulders and walked away
Funny thing is he was driving a $40k+ tricked out F250 diesel 4x4 and I was in my little $10k toyota 10' stakebed truck, full of tools, cabinets and granite counter tops
here's another...
I've had a homeowner stopped me on the street and asked if I do entertainment centers. Then asked me for a business card. That GC thought it should be his perspective client because I was working on his job. His reasoning was that I would never had meet the person if had not been standing/working out in front of his job.. Probably true, but he's not a cabinetmaker either.
Funny thing is that in the past, said that he doesn't do anything under $20k
Edited 4/7/2009 1:01 pm by migraine
getting work from a neighbor is ok under most circumstances I suppose. The problem would be for you to give your number to the client and then take on work from them.I had that happen recently to me. The guy I did the cabinet work for, in the sceario with which I began this thread, hooked my up with the job in question. I gave my number to the office manager where the work was being performed so I could handle stuff efficiently. Months later he calls me and wants a few odds and ends done... could have been a quick few hundred in my pocket... but I informed him that I would turn it over to the guy I did the work for in the first place and he would get in touch with him.The guy I turned it over to then decided to do it himself. I was perfectly happy with his decision.Had I stolen the job, I would have felt like a piece of trash. That is not the way to do business. Matter of fact, I think it is greedy and such short-sighted greed usually costs you in the end.
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
I think in this case there should be a difference made between a wholesaler and a retailer. In my case had a wholesaler whose product i promoted and sold go behind my back and sell direct to a customer. Happened twice actually. I was more than happy to jack my install rate up, end customer still saved some, but I never sold another piece of that companys product. They went out of bus. Recently. Guess it was a little expensive to find thetre own sales after they screwed enough of their vendors.
dont bite the hand that feeds you. If that company went direct to get a 20k sale and under cut their own vendor that supplies them with 250k a yr then thats dumb. If that vendor was marking it up 4 to 5 times then I can understand. But I dont think thats what happened here.
maybe I'm use to it... I was the largest single seller/distributor of 3M OSH products in the country... I sold every dustmask and breathing product the military used... plus hearing and eye protection... they cut me out... starting selling direct... cost me a few hundred k a year... but i had a good 4-5 year run... I developed the business... i got the stuff spec'd... but i got cut out of the loop... I wasn't even pizzed... wasn't the first time... wouldn't be the last... Kodak did the same thing to me with about the same numbers...
I understand everyone wants to make a dollar... but i often go to great trouble to find a manufacturer that makes what i want and will sell to me... even if i have to buy a truckload at a time... after I've done the legwork... they often want me to go through a "dealer" I'm not interested in that... that means i pay more... when the dealer did nothing to make the sale happen... just my take on it...
loyalty is earned... and i hold it dear when i have a personal relationship... otherwise I'm looking for the best deal I can make today...
I kinda figure with instant information over the net everyone knows what everything cost these days
p
Just recently happened to me Pete. I'm on a huge job right now and I subbed out a rocker to raise some fairly complicated steel hung ceilings in a commercial building, (there's one in a circle, several rectangles, a trapezoid etc). So the guys comes, gives some mighty mighty stiff prices but the get approved. Halfway into the project he gets asked to price out a wall reinforcement and gives another insanely high bid. The customer doesn't take it at first, but then goes straight to him (the rocker) and makes a deal with only him. I was cut out.
I gave the rocker a little hell, and told him not to do that again. I had to sit with it a few days before deciding to just let it go with the customer. Usually I would not be so light with something like this, but the customer has been very very good to me and I've made some great $$ from this job so far, plus there promises to be more work in the future. The designer who hired me to do this job (I've been on it since October), wrote the customer about this and really slapped his wrist hard. Customer has never said one word to me about it and I've decided to do the same. The designer and I had a long conversation about it and he thinks I made the right choice, even though he himself was pizzed.
The rocker did a fantastic job with all his work by the way, but he'll never get my business again.
You have to choose your battles in life, be as objective as you can with a long range view in mind asking yourself if it'll be worse for you in the long run to burn bridges & die on that hill, or just let it go (truly let it go) and allow the law of the Universe to enact itself. It's inevitable no matter what.
I think I'd tell the Rocker it'll be 20% to you if he wants to ever get your work again... and not to do it again.Makes me wonder how many of us have contracts with our subs. I'd like to but never have.However, working as a sub myself, on larger commercial projects, I always have a contract to sign, from the GC.
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
does a bid in writting count as a contract?
Maybe that's why all my subs get along ... no one works without something on paper. Even my plumber scribbles something out before each job.
his bids are hand scribbled chicken scratch ... but all the details are in there somewhere. Old electrician used to type up a very nice, detailed and broken down bid. I could quote the customers the exact models/ numbers/ locations off his paperwork.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
I was thinking more along the lines of a contract that lays out expectations of behavior as well as job scope. non-compete type clauses maybe?
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
"does a bid in writting count as a contract?"If it has a signature, it absolutely can be used as a contract, yes.
I was asking Pete if he'd consider anything with a sig a contract.
I know I certainly do.
I think that's part of the problem ... some who don't like "contracts" might think of them as an intimidating stack of paperwork. They don't have to be ... a simple ...
what ya gonna do and fer how much with a sign here plese ...
is all it takes.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Agreed 100%, and it's binding.I find however that the more detail the safer things can be for both.
the reason I like the more detailed bids has nothing to do with the subs ... it's all about the customers ... who from time to time ... conviently forget what they asked for and what we priced.
I like being able to pull out both my signed contract with the clients and my signed contract with the sub in question and ppoitning out the sub quoted and priced the very same item that I quoted and priced for the client.
as a rule the customers only see my contract with them ... contracts between me and the subs are none of their business ... but it is handy to have them when any issues come up.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
I have rarely had a contract with a sub....boy did I learn a long overdue lesson on this last one. Yeah, the contracts I was talking about were the customer contracts. You're dead on about the customer forgetting what was agreed on.
I type my own up when I sub.
Most each and every time I've skipped that step ...
I've come to regret it.
always seems to be a "miscommunication" somewhere along the lines between the customer, designer and GC ... and somehow I'm always the one who eats it to make everyone else get along better.
When I have something basic printed out and signed ...
the conversations are much shorter.
"sure, I'll type up a change order ..."
takes me out of the finger pointing game.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
That is a two-way street. Sometimes too much detail can get you in a bind when interpretations come into play. You should see my terms and conditions page that I attach to contracts....btw, I no longer use contracts. With my commercial clients I use email. I send a proposal and all I need is a simple email confirmation.
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
Yeah, I'm using fax & e-mail more & more these days for work records with people. It really frees you up.The thing about details is to troubleshoot what you know, or think will be a sticky wicket with people. For instance if I install trim throughout a house, all the doors, baseboards, windows, mantels etc., I put in there specifically that I don't caulk & fill holes as paint prep. I have run into that snag before and I always spell it out. I always specify what the trim is. If the person doesn't want to pay for #1 select to be painted, then I specify that I am using #2 or a lower grade to be prepped by painter. I will do prep work if requested to. Through the years I have found what typical customer expectations are & aren't and there are a lot of common tripping points.. Also I like to communicate with the other subs as to who is doing what before I write out any contract.
Yeah, but when i mentioned contracts here I meant it in the context of behaviors expected of subs such as how additional work should be handled and non-compete clauses for related work.
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
"Makes me wonder how many of us have contracts with our subs."Yeah, that was the other part of the problem. It was basically a handshake and a bill at the end of the job which was a mistake.To put it into context, the customer is a very wealthy, very well known individual who I know can be intimidating, and I think that is what happened to the rocker. It was the rockers mistake to immediately agree with him however.I'm sorting out what I learned from this long term.
Always have a contract is certainly one of those things.Brownbag said it best "The anger eat you up" or something to that effect.
Life goes on and I don't intend to be eaten by anger.
These days loyalty is being replaced by the instinct to survive.
I worked for a company at one time that had its employees sign a
paper that said they wouldn't go behind the owners back to get
work from the customers.
It happens.
"Loyalty being replaced by the instinct to survive" well- it is and it isn't. I am buying some slate this spring.- In the past I have bought a reasonable amount of both used and new slate,tile etc. from a salvage yard in cleveland. this project requires new slate--- so I am buying it direct from an out of state supplier. however-- I can't have it delivered directly to the job site------- "No problem", I figured-- I have 3 primary roofing suppliers in Akron-- but one gets 90 plus % of my purchases---and they have become my primary supplier because once they arrived in town they have given me outstanding service that totally eclipses the other 2 suppliers so-- I figure it's a simple matter of calling supplier #1 with the outstanding service---and offer to pay a fee for the slate to be delivered to THEIR shop. NO DEAL stevo---turns out my #1 supplier now wants to sell slate as well( they didn't used to)-- I looked like a schmuck asking them to unload my special order at their facility-and cutting them out as a middlemanHowever-- they have been on record for years as not selling real slate---and they never clued me in to the change in their merchandise or I would never have asked for the favor But--stupid me-- I figured " we are all in a recession together--it's important to maintain long standing relationships and help each other out with these little courtesies"Sooooooo I am actually glad that supplier #1 has clued me in to where I fit in the grand scheme of things.
I also needed a good deal of copper for this project. I priced out the copper with supplier #1( the one who refused me the favor)---- they are charging last years price--- I shopped the copper with supplier #2---THIS years price is roughly HALF of last years price supplier #2 get's the sale. If supplier #1 had done me the favor-- I wouldn't have dreamed of buying the copper anywhere else. BTW--- I called someone else for the favor. Not a roofing supplier-- but a very small mom and pop lumberyard/garage builder that I have known for 12 plus years. THEIR response for my request???? " ABSOLUTELY Steve---- we would be happy to--- just let me know a day or so ahead of time and I will arrange to be here personally so I can unload it myself-- I have just the place to set it in the whare house-- there is no need for you to pay us--HAPPY to do it!" I am buying some other goods and services for my house this year---and definitely going out of my way to give preference in buying from people where there is some kind of longstanding relationship or personal connection.ANDI am gratefull for supplier #1 clueing me into the status of our relationship. by refusing me that favor-- which would have taken them all of 5 minutes-- they have saved me several hundred dollars I was prepared to PAY for the service---and several hundred dollars in COPPER costs----and I am sure by the end of the season the rejected favor will have saved me several thousand dollars over-all.Best wishes,
stephen
Edited 4/7/2009 8:22 am ET by Hazlett
Hiya Jen - Nice to see you around again.Hope things are good with you and the family.
Work was non-existent in Jan & Feb, but is picking up now.
We're planting a bigger vegetable garden this year, and keeping
the lights turned off more. We're hanging in there.
How about you?
I hate to hijack this thread too much, but - How long have you been away from BT?I got divorced in December of 2007. Got laid off from my job in December of 2008. At the moment I'm at my GF's house piddling around on BT while she makes supper. All in all, things are fine. Thanks fer asking.
There is a $1 hijacked thread fee associated with this thread. Please remit payment immediately.
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
Wow....
I guess it's been that long! Divorced, laid off...I would've remembered that. Taking a furlough from trusses?
I think I stopped posting when it got too politically abusive.
When you come back, you realize how much you missed everyone!
I have a scenario to throw out to the peanut gallery for input.
We've been dealing with a cabinet supplier for 6+ years. Almost always get cabinets from them, unless the customer wants a cheap cabinet from Lowes or HD or the lead time is a problem, which brings us back to in-stock items at Lowes or HD. But, 90% or more of our cabinet volume goes through the same supplier.
We used to get our countertops exclusively through them. Over the years, we have learned who the top supplier is and developed a relationship with him. One project was a charity type job that I worked with the designer from the cabinet place. He suggested we purchase the tops direct from the top guy to save the markup of the cabinet supplier. Another time, we needed a small section of countertop (no cabinets on the job) and our designer recommended we call the top supplier direct. All this to say, we haven't gone incognito to find the identity of the supplier or anything like that.
Is it right to use the top supplier when the cabinet company is supplying the cabinets? The cabinet supplier does not do any top work- 100% of their tops are subbed out. They will take responsibility for screw ups, but so will the top guy. I don't feel that we get any benefit from paying the cabinet supplier's markup, it doesn't really seem like any value is added to us.
So, are we committing foul, or is it just good business?
Jon Blakemore
RappahannockINC.com Fredericksburg, VA
I think your situation is markedly different from the scenario I posed. You are seeking out a different supplier. In my case, the supplier is cutting his own customer out... essentially screwing a guy that has put trust in him.I do a lot of work for a major restaurant chain. When I order stuff, I inevitably have to disclose the customer's identity to my cabinet supplier, for instance, because he delivers the cabinets to the job site. What if he were to just start contacting my client on his own, trying to ensure he got all their cabinet orders?
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
Your last paragraph seems to sum it up nicely, Jon. If the cabinet maker isn't adding value to the job, how does he justify any payment?
Exactly!!!
I laugh at all the whining by some of the posters.
If you don't ADD VALUE, you are just collecting rents. Feudalism went out some time ago....
If the counter guy is a licensed sub, and isn't under contract to the cabinet guy; then he's a free agent or separate entity and can work for whomsoever he chooses.
You're right, Jencar. In a legal sense, without a contract, you ARE a free agent.
However, you are jeopardizing a continuing relationship with a good REPEAT customer to make a one-time sale to the end user. NOT a very forward-thinking approach.
Remember, there is always somebody else that can do what you do, and you may be forcing your customers to go looking for them.
Remember, there is always somebody else that can do what you do, and you may be forcing your customers to go looking for them.
Thats the whole point... the customer found out WHO was doing the actual WORK and wanted/was offered to work with that person... the one who PRODUCED... people always want to deal with the actual person/firm thats doing the work... buck stops here... not "well let me talk to my supplier"
if you are the one doing it... then there ain't no body else...
p:)
There's been lot's of times that I've been working on a job in a new home construction or remodel at the request of the homeowner or their designer, but being paid through their GC. I've always figured I'm working for the owner and as such when a followup occurs either from them or a friend/neighbor I'm free to deal directly with them. I've never felt beholding to the GC. Am I wrong? Sometimes they've seemed to act that way.By the way... in over twenty five years as a custom woodworker, I've only been hired by a GC once. And yes, I do feel obliged to them, wouldn't go back to the client w/o their permission, and certainly wouldn't approach the client w/o them.
When you read down the thread, it's all about relationships. If you have good relationships, things work to the benefit of all (including the customer), because things work smoothly, any problems get easily resolved by people who work together.
When you get parts of the 'system' that don't work together well, problems happen and things go bad, and people start looking for someone to blame.
The single minded pursuit of the lowest price, biggest buck with no thought to the bigger picture is detrimental to the long term plan. As my father used to say, you end up in a race to the lowest common denominator.
People need to think about how they would feel if they were on the receiving end of these behaviours, and act accordingly.
Quite true Harry, but the bottom line is who adds value to the process and what is their contribution worth.Everyone in the food chain needs to:A. Make a contribution
B. Justify the charges for their contributionIf they can't do both, then you gotta ask if they belong in the chain.