Speaker 1 (00:02):
Like a stranded mule trying to get up in this chair.
Speaker 2 (00:06):
A stranded mule. Stranded mule.
Speaker 1 (00:09):
<laugh> John’s all, I definitely agree with the mule part. I don’t know about the stranded, but
Speaker 2 (00:16):
Stubborn Mule maybe. Stubborn Mule <laugh>.
Speaker 1 (00:20):
Yeah. You stubborn Mule all. Here we go.
Speaker 2 (00:25):
Top of the Marin to you.
Speaker 1 (00:27):
Top of the Marin To you. John, would you be talking about the labor crisis in the construction industry then there? John, would you
Speaker 2 (00:35):
<laugh>
Speaker 1 (00:37):
I hope you can even hear me.
Speaker 2 (00:39):
I hear you. Can you hear me
Speaker 1 (00:41):
Loud and clear, crystal.
Speaker 2 (00:45):
That’s really
Speaker 1 (00:46):
Good. Am I clear?
Speaker 2 (00:47):
That’s really, really good, sir.
Speaker 1 (00:50):
<laugh>, you remember that scene from, what was that called? A Few Good Men. Remember when old Jack Nicholson was chewing him out from the, when he was being questioned in the courtroom, and he asked Tom Cruise at the end, he said, am I clear <laugh>? So Tom Cruise goes Crystal <laugh>.
Speaker 2 (01:10):
<laugh>. Yeah. I, uh,
Speaker 1 (01:13):
Never saw that one Had you
Speaker 2 (01:15):
<laugh>? No. No. I, so I don’t remember. I don’t remember. Like I know when I moved here in two. Are we gonna record right now? Yeah,
Speaker 1 (01:24):
It’s
Speaker 2 (01:24):
Running. I know. Whenever we were here, like when I was in like 1999, I moved here. I remember. I feel like a lot of people watching that movie, like, about that time. Oh, okay. Does that seem about the right time? You
Speaker 1 (01:34):
Were like, what, 10 then
Speaker 2 (01:35):
<laugh>? No, no. I was 20 <laugh>. Does that seem like the right timing? Probably.
Speaker 1 (01:38):
Yeah. It’s old. Yeah, it’s an old movie.
Speaker 2 (01:40):
Yeah, I, I’ve definitely, I’m pretty positive I’ve seen it. It’s been a long time.
Speaker 1 (01:44):
When you got as much moss on your back as I Do you, you know, you’ve seen all those movies, <laugh>? Yeah.
Speaker 2 (01:49):
Like, I don’t, like ever watch a
Speaker 1 (01:51):
Movie. I don’t have time to watch movies much anymore. But since I started working at Kelly Construction, <laugh>, no, just kidding. You’re like, really? But do tell.
Speaker 1 (02:11):
Hey, welcome back to the K-Cup, episode 34. Today we’re gonna talk about, uh, a situation, I guess that’s affecting a lot of people in the construction industry, um, and a lot of related fields as well. But we’re gonna talk about the, you know, the labor shortage that we’re seeing in the construction industry, and we’re gonna talk about some ways that you can navigate that labor crisis and be able to continue to, uh, you know, be productive and, and, uh, you know, be profitable as a, as a contractor or any other industry that’s related to construction. So, uh, I had written an article for LinkedIn, and I know that you probably already saw it, but in the thumbnail, I, I put a picture of an elephant sitting inside of a, a, a job that’s all framed up, you know, and I, and I had a little, uh, you know, text on there that said there’s something in the room and we all need to talk about it. And the el obviously it’s, you know, the old, there’s an elephant in a room, you know? Yeah. We need to have a discussion. In other words,
Speaker 2 (03:12):
You’re never short on creativity, are you?
Speaker 1 (03:13):
No, I’m super creative. Thank you very much, <laugh>. But anyways, uh, the, uh, the elephant in the room is the labor crisis, obviously Captain obvious. And, uh, it’s, it’s interesting that we have seen, you know, some effects of that, but we really haven’t heard a lot of conversation about it. And I think in, in some regard, you know, when there’s an issue like that, that that seems really, like it’s something that you really have no control over, there’s nothing you could do about it. And, uh, you know, and it, and it has the potential to be so far reaching and really rock your world. I think, I think the human tendency sometimes is just to look the other way and not talk about it. Yeah. Yeah. And, uh, but I really felt compelled to talk about it. I feel like, you know, it, it’s at least warrants a conversation.
Speaker 1 (04:06):
And the reality is, is when I was doing research for this, you know, script for this podcast and for the article on LinkedIn is, the reality is, is that we’ve been leaking skilled labor jobs from the construction industry for a long time for, uh, the past 10 years or more. Uh, there, there has been technically a labor shortage, and now it is at crisis level, you know, with the, you know, the, the current federal, uh, immigration enforcement stuff that’s going on. It’s, it’s gone from an ongoing problem that was growing and becoming critical to, um, you know, really a crisis level and depending on where you are in the country mm-hmm <affirmative>. But, uh, anyways, so obviously the, the point of this discussion, it’s not about politics. We’re not here to debate politics. Doesn’t matter what side of the aisle you’re on or what your position is on policy, the reality is, is that it’s happening.
Speaker 1 (05:00):
So what we need is solutions. We don’t need, you know, uh, political opinions, that’s not gonna help anybody. We need, we need solutions as business people. How can we navigate, you know, a challenging time? So that’s what we’re gonna talk about today. And, uh, I come up with three, uh, three ways that we can, uh, you know, take proactive action to, to navigate what really, you know, potentially could be a difficult situation. And, uh, and there there’s really no way of our knowing, you know, when or if, uh, you know, this particular, uh, aspect of this, this crisis or this problem is gonna, uh, improve or change. So the smart move then is to be proactive and take, take action yourselves, or at least start moving in directions that is gonna mitigate or, or serve as a contingency against this, you know, becoming a permanent thing or an increasing problem. So, um, how, how have you been feeling about the, you know, the current issue with labor and, uh, you know, you see a lot of the, um, you know, the back office stuff that I don’t get a chance to see as far as, you know, um, how things are unfolding in the field on different projects and stuff like that. And you talked to some of our bigger subcontractors and stuff like that. So have you been getting any input, have you seen or heard of any impact from, from the labor issue?
Speaker 2 (06:31):
Yeah, I mean, to your point, you know, different parts of the country are impacted in, in different ways and, and obviously, you know, the way these things are happening, uh, that that’s also had an impact. I mean, here, here, you know, on some of our jobs recently, we’ve, we’ve seen a few issues and had some issues where, you know, for a week or two, our, our jobs had, you know, limited, you know, carpenters and, and those type people, uh, for a short amount of time, you know, it, it was a difficult few days or difficult week or whatever mm-hmm <affirmative>. Due to, to a labor shortage. Yeah. Uh, and, and it was in regards to, you know, what, what you’re talking about, uh, it’s not something that I’ve seen extensively over time, but I know those crackdowns are just starting to happen. Yeah. Uh, I don’t know what that looks like long term. Yeah. But I mean, if that one or two weeks is a reflection of what it could begin to look like more often, then that would be a real issue, you know? Yeah. Uh, you know, you also kind of refer to, I guess, you know, skilled labor shortage, something that’s been going on for quite a, quite a time. Yeah.
Speaker 1 (07:38):
Keyword skilled.
Speaker 2 (07:39):
And, and we, we have seen that, and we have, uh, you know, we’ve had a job or two, really, really one major job I can think of where, you know, we, we kinda had a company that we ended up subcontracting with that really just didn’t have the skilled labor that they kind of said they had. And at the end of the day, when push came to shove, they, they couldn’t get the people they needed to do the job. Yeah. And, and it, it turned out quite kind of catastrophic off, off, you know, honestly. Yeah. Uh, so if, if that thing could begin to happen with, uh, you know, the problems that you’re talking about, and that would obviously be a much larger scale Yeah. Then if that catastrophic project is, is the result, and, and that’s what it would look like, then yes. I mean, the labor shortage would, would be a real fiasco. Yeah.
Speaker 1 (08:27):
For sure. And then again, too, like, like we kind of touched on the whole skilled thing. Uh, we know that we were feeling some a, a little bit of pain and frustration, uh, you know, several years prior to this situation just with, uh, you know, some, some contractors that they’re able, they were able to man jobs. But a lot of times, you know, you say you get a crew a 10 that shows up to a job, maybe one of those is skilled, and the rest of ’em kind of serve as helpers to that one skilled, you know, person. So, and obviously that affects productivity. It also affects cost because those people are still getting paid even whether they’re skilled or not. Yeah. And, uh, so obviously that inflates, uh, cost to, you know, the GC running the job, managing the job, and, uh, and then as far as the ratio of, you know, body count to actual productivity, you know, we know that ratio got skewed the other way.
Speaker 1 (09:25):
You got, you know, you know, more body count for lower productivity really. Yeah. And, uh, so that, that was already an issue that we were aware of and had, had seen, and from time to time it would result in profitability issues for us. And I’m sure it as for Yeah, absolutely. For other, you know, contractors and subcontractors, uh, in the mechanical fields. I’m sure they’ve dealt with that and been frustrated by it. And, and I’ve, I’ve heard tell of some, some, uh, subs actually scaling their crews back and, and guys that were trying to get out of the field and start running their business have kind of gone back in the field, put their bags back on and just quit hiring labor because they couldn’t find anybody that had any skill level Yeah. To use. So, you know, it’s another, another issue. So, uh, anyways, we’re gonna talk about three strategies that, you know, if you want to think outside the box or if you’re thinking ahead and you want to go in another direction where you’re not so dependent on, uh, on unskilled labor, uh, you might be able to employ some of these, these three strategies to be able to do that.
Speaker 1 (10:33):
So, so let’s talk about strategy number one, invest in technology and prefab now. So, um, you know, a lot of, a lot of companies, uh, and, you know, companies are just people, you know, and particularly guys that are, you know, lean towards construction and the trades and stuff, a lot of times we’re, you know, we’re more on the doer side in, in, you know, wanting to get in there and get our hands dirty than we are in the, uh, the administrative side and thinking business strategy and things like that. You know, just because you’re great at a certain, uh, trade, um, it doesn’t necessarily mean that you’re a great business person. We’ve talked about that before. That’s another skillset that you have to develop over time. Uh, you know, once you hang your shingle up and start and start hiring out, uh, for whatever your, you know, your profession is far as the, the prefab stuff, uh, tied to the technology, uh, piece of that on strategy number one, uh, prefab is, is obviously it’s, it’s something that’s not just the future.
Speaker 1 (11:36):
I mean, it’s, it’s really, right now, there’s, there are some companies that have made big moves to invest in prefab, and we’re starting to see it make inroads. Uh, I mean, not a week goes by that I don’t get emails from multiple prefab companies and, and prefab associations that hold national conferences and stuff all over the country. Mm-hmm <affirmative>. All year long to talk about prefab and, and to see the latest technology and stuff like that. And that would be another form of technology that could help contractors is, uh, you know, BIM technology, the 3D modeling and stuff like that is, is technology that would help you be able to, uh, you know, if, if you decide to move towards prefab, which we’re gonna talk a little bit about why prefab is something that is, uh, you know, a positive when, uh, you know, when it comes to the labor issue, is that it takes less people to produce a better product.
Speaker 1 (12:36):
And, and, uh, that product is generally produced in a controlled environment. So not only are you, you can minimize, uh, you know, the churn on labor, but your QC goes up because you’re in a controlled environment. So quality can be managed much easier mm-hmm <affirmative>. And it can be managed in real time. So, and you’re doing repeatable processes, so now it, you know, there’s no guesswork out there in the field. There’s not one set of eyes trying to manage multiple guys on a, on a, you know, a project site that are, you know, producing varied levels of quality, the, the quality level’s gonna get, you know?
Speaker 2 (13:17):
Yeah. That makes sense.
Speaker 1 (13:18):
Standardized. Yeah. Right there.
Speaker 2 (13:20):
Well, kinda like the software doing the same thing over and over. Kind of the same thing in that, in that prefab process. Yeah. You’re building your components, you’re doing things the same way over and over and over. It’s repeatable once you do it a lot like that, you know, once you do something over and over you, you become good at it.
Speaker 1 (13:35):
Very good at it. Yeah. You, and you can just streamline your whole process. And, uh, you know, there’s, there’s some big companies, like I said, that are making moves towards prefab because they think it’s a, uh, the future. I, I watched a, a short promo video for the, the company CertainTeed, you know, they provide a lot of substrates and different, uh, you know, uh, products for, you know, uh, building, uh, vapor barriers, panel boards, all, all different kinds of components. They are going hard into prefab. And, and
Speaker 2 (14:07):
So I, I guess I’m not, I haven’t done a ton of research on the prefab and not, not really, you know, I’m not really too well versed, I guess. Uh, but I mean, I do find it interesting. I I, I do think that there’s obviously, you know, sometimes when it, when it could be really helpful. Yeah. You know, I’m thinking about just like the, you know, pre-engineered metal building, like what that did for construction. And I, I know that, that they’ve been around forever, and then I know they’ve been popular for a long time. Yeah. But I mean, that really gave a lot of options Yeah. Of, you know, that that really changed the game for, for a lot of building types and, and different things. Yeah. Uh, so
Speaker 1 (14:45):
A early version of prefab, really. Yeah.
Speaker 2 (14:48):
So if, if, you know, if prefab can, can look like that and can, and shape the landscape like metal buildings did then, then obviously it’s, you know, it’s, it’s something that could, who knows in, in 20, 30 years, it may be used in that manner, you know? Yeah. Yeah.
Speaker 1 (15:04):
I don’t even know if it’s that far in the future, just like that,
Speaker 2 (15:07):
That reminds me of a couple projects that we did a few years ago. They were some bathroom, some kind of prefab bathroom units. Yes. And, uh, they, they were actually good sized buildings. It wasn’t like they were just this little, you know, 10 by 10. Yeah. But, but they essentially, we did a little bit of site work, we did a foundation and, uh, some underground plumbing and then this, these things came in, went on a crane and just set ’em right over the top of it. And yeah. Like you say, went from a, a rock pad to like a complete building. It felt like a day. I mean, obviously they had some time prefab in this building and building it Yeah. Up to that point. But I mean, basically once we were ready for ’em, they were there and yeah. Drop these buildings in and pretty cool. It worked really good, actually. Yeah.
Speaker 1 (15:57):
Um, so as far as application across the industry, um, with contractors, obviously shifting to prefab components when you can, even, even if you’re not going all in on prefab, like you were talking about prefab, uh, restroom components, uh, prefab roofing systems, things like that. Maybe prefab wall, wall panels, uh, you know, depending on, uh, what the project is, you might be able to, uh, you know, source those and that can affect your competitive, you know, edge, things like that. But, uh, anyways, uh, as far as real estate agents, uh, you know, they can also, uh, educate clients on builders that use efficient methods. So, you know, like for, for, if you’re a commercial real estate professional out there and you’re, you’re hearing, you know, moans and groans about the, the labor shortage in the construction industry, that should put a red flag up in your, uh, your area of expertise too, because your clients on the commercial side, obviously are going to have interactions with contractors.
Speaker 1 (17:10):
And so if you’re trying to lease a property and you can’t, you know, the contractor can’t get labor to white box it out and do a rental for ’em, that’s gonna be a problem getting the lease signed. Yeah. So you can educate, you know, your clients on builders who have the more efficient methods who are utilizing prefab stuff or, uh, you know, other ways that they can make use of, um, you know, teams that they’ve developed their own, so they’re not waiting on a sub to produce labor, you know, things like that. So, uh, lenders, they need to understand that construction methods, uh, uh, that reduce labor dependency are beneficial to their clients too. Again, that the trend might be looking towards, you know, builders who are, are moving towards, you know, taking advantage of prefab components or, or, uh, at least able to source those things and, and make, uh, you know, project timelines be shortened.
Speaker 1 (18:07):
And, uh, and then architects, that’s, um, something interesting and something that I look forward to having some discussions with architects about is, you know, how much are they looking towards prefab down the road? Like, are they, are they starting to use that in their design process more and more? Mm-hmm <affirmative>. Are they, are they looking to source certain components of, of their designs to, uh, you know, to be able to utilize that and obviously, uh, as contingencies for budgets for, for, uh, you know, their stakeholders and projects. So anyways, that, that was step one, kind of got a little long-winded and pro <laugh>, ProTrac, not protracted, but uh, uh, anyways, expanded on that a little bit more than <laugh> than I wanted to, but, uh, uh, I really got stumped on my own outline there on the, on the, uh, technology aspect of that, didn’t I? The old brain went,
Speaker 2 (19:02):
<laugh>, that’s all good. Happens all
Speaker 1 (19:03):
Love us. Oh, yeah. So anyways, uh, step one, uh, make sure that you’re employing available technology and, uh, that, that allows you to streamline your crews. And then, um, and then also part of that utilize prefab when you can at least start looking into it, because it is a thing, it is here to stay. So, strategy number two, develop and retain the team that you have. So my little note here on the reality, uh, it’s that the reality is, is that you actively, uh, need to be invested in your employees. And if you don’t, you may lose them because of this labor crisis. And, uh, replacing them, particularly if, you know, if you have employees on the labor side, like, like, you know, uh, teams that actually go out and self perform work, you really, if they’re a good crew, you want to invest in that crew and you wanna make sure that, uh, they understand that you value having them around and you want to keep ’em around.
Speaker 1 (19:59):
And, uh, and you’re gonna do whatever it takes to, to, you know, make that happen within reason, obviously. So why does it matter that you develop and retain a team that you have if you have one? And it’s, and for those that don’t have one, it’s something that you might consider, you know, doing again in the future. I know that, uh, there was a time when labor was so abundant there that it, it almost wasn’t worth having a crew retained because y you, you know, the in-betweens is what kills you when you have a, a crew. Like if you got, if you have those, the, the dips, you know, in, uh, opportunity to get the crew out there and being productive on a job site, the dips is what kills you because you’re, you’re paying to hold onto that crew until the next time you need ’em.
Speaker 1 (20:45):
And that’s a challenge. But given this, this, you know, current labor crisis and the way it looks like, it’s, it’s projected that it’s not really gonna go away, that, uh, it, it may actually, you know, expand going forward. Um, if you have a team or, or are considering developing a team, it’s something that you need to give serious consideration to as a contractor and then invest in that team and really, you know, cultivate it to make it a good team. And, uh, with the idea of, of having a long-term relationship, one, it makes your ability to respond opportunities, uh, much greater. You know, you’re able to be, uh, more nimble, more responsive when somebody needs something that’s gonna make you stand out. Because if other companies are saying, look, it’s six weeks before I can get a crew to come do your, you know, your build out or whatever, and then you call another contractor, he is like, yeah, my crew’s looking for something to do right now. You know, when do you want to get started? Right.
Speaker 2 (21:46):
Boom. To a team that’s been working together for a long time, obviously does a better job. I mean, oh yeah. Everybody knows who’s pushing what button. Yeah. And, and they work, you know, well together. Yeah. They’re cohesive. That team’s constantly having to be changed. Then, then that process is broken and, and you’re not putting out, you know, as good of a product.
Speaker 1 (22:03):
Yeah, I agree a hundred percent. Um, you were, and you kind of just, uh, touched on that your existing team, if you have a team, they’re gonna know your systems, your clients, and your standards. Okay. Yeah. And they’re gonna, and they’re gonna adhere to those, uh, employee retention is really, that’s the competitive advantage like we just talked about. If you have a team and you’re able to retain them, that gives you a lot of options that other builders, other contractors aren’t gonna have. And you know, like the little note there brings out culture eats strategy for breakfast, especially in a labor shortage. So, uh, you know, you can strategize all you want, but if you ain’t got the, the warm bodies to make the strategy happen and execute, it really doesn’t matter. Right? So, um, so what can you do to develop a team and retain it action items, uh, listed there?
Speaker 1 (22:55):
Pay competitively and do that immediately. So, you know, the, the old days, uh, you hire someone for five bucks an hour and then, you know, 10 years later they get seven 50 an hour or whatever. Those days are kind of gone. Like, you, you need to know your market and the labor market, and you need to be able to, you know, understand that if I want to, you know, hire this person, retain ’em, I need to be able to make sure that I’m at least being competitive and I’m doing that in, in a timely manner. Uh, so like it brings out there, you wanna research market rates and adjust to those, uh, not just waiting for some annual review that you may or may not have and, and try to keep ’em, they may be gone by the time annual returns around the seat’s empty across the table from you ’cause they weren’t retained.
Speaker 1 (23:43):
Uh, create clear career paths. Uh, I think that’s a great point because I know that particularly, uh, young people, you know, gen Zers coming out into the job market right now, there is so much noise out there about, you know, college is a waste of time now, and, and you should have a vocation and well, that’s great, but now you got, you know, multiple years of Gen Zers who have graduated with degrees before that idea ever came out and started getting thrown around. And so what are they gonna do with their degree? You know what I mean? So there’s a lot of uncertainty out there in the market. So any company that can create positions and with that position explains that there’s, here’s your career path. If, if you become part of our team, this is, this is how we would like to move you along as you, as you stay here, as part of our team, that’s gonna be a big, uh, a big seller for being able to, you know, acquire good team, good quality team members, and then retain ’em as well, uh, invest in training, uh, any kind of new skills that, uh, you can do to make your team more efficient, better at what they do.
Speaker 1 (24:55):
If you know you have a team and you’re invested in keeping that team, then it is just like if you, if you have a vehicle or, or, or some tool that you use regularly, and there’s components that you can buy after market to make that vehicle perform better or whatever it, humans are no different. There are things that you can do after market that can optimize their ability to perform. And it’s funny how sometimes we’ll invest in mechanical things all day, but it’s like the human thing and we don’t really want to do that. And it, and that’s, it’s human nature for some reason. But going forward, I really think that’s gonna be a big factor in retaining teams, because again, you can go out and hire a lot of people, but getting those difference makers in your team and keeping them is a little different.
Speaker 1 (25:44):
That’s a little different ball game, and that’s what’s gonna set you apart. Uh, improved job site conditions, uh, you know, good tools. You don’t wanna send guys out to the job and they gotta share one saw, you know, you send a bunch of guys out to build something and they got one hand saw <laugh>, it’s not even a power saw. They gotta, they have to share, you know, or one hammer or whatever. Of course, that’s an exaggeration, right? But you get the idea. Yeah. You know, you wanna make sure that they, they have the best tools that you’re able to provide at the time based on, you know, your, your situation as, as a, you know, business owner. But, you know, trying to optimize their ability to be productive on the job. And, uh, also being safe. Obviously you don’t want to, you know, there’s some ragtag outfits out there that, you know, they don’t run safe jobs, you know, and, uh, you know, they got, I’ve seen some of the stuff I’ve seen just driving around and doing my sales calls and stuff. You see some scaffolding stuff and you’re like, oh my gosh. The, the board you could see, literally see daylight and the splits and the, the planks. They got up on the, you know, three tiers of scaffolding. So don’t be that guy. You know,
Speaker 2 (26:53):
You, they seem safe.
Speaker 1 (26:54):
No, not safe. So have some good safe equipment for your guys if you, if you’re performing work and manage that. And then consistent schedules. Um, I know when I was a young guy that used to frustrate the, the tar out of me, uh, whenever you’d show up on Monday, and if the manager of the job site didn’t know what crew was going on, what we had different phases. Like when I first started as a, uh, union carpenter in California, going through the, you know, the carpenter program out there and everything, and the wood joiners union, you’d show up at a project at a, at a, um, development. Different crews would go in different phases. One crew would be, you know, uh, you know, stripping forms and rolling mud seal. And another crew would be rolling floor joists and subfloor, and another crew would be framing, and another would be set and post and beam.
Speaker 1 (27:45):
And another one would be cutting and stacking roofs and sheeting roofs. But sometimes you’d show up and they didn’t know who was going where. And you’re, you’re burning daylight for an hour and a half while they’re figuring out yeah. Where you’re gonna go start. That kind of stuff can really take the wind out of a crew sail. So having a good schedule, sticking to that schedule, being organized, so there’s no question in, in the mind of your crew when they show up, what they’re gonna do can go a long way to retaining that crew and not having them be frustrated with you thinking of this guy, I don’t even know what I’m doing today. I’m standing around here twiddling my thumbs, you know? Yeah. You know, I’m gonna jump on the next ship that looks like they really got their act together. You know what I mean? Yeah. So it’s just, just having that attention to detail and, uh, and then recognizing reward, that’s another one where, you know, back in our day it was like, you know, your reward was getting a good kick in the, in the back of your pants every once in a while by your foreman telling you, yeah, it’s not too bad. I won’t fire you today. You know, you get a good kick in the seat of your pants, but nowadays, you know, it’s a little more touchy feely out there. Yeah.
Speaker 2 (28:49):
That don’t work anymore. You gotta
Speaker 1 (28:50):
Be a little sensitive, you know, if you’re not, things can go south in a hurry. <laugh>. Yeah. Might have to give a hug out here, there. I don’t know. <laugh> <laugh>.
Speaker 2 (29:00):
Yeah. I mean, I think retaining team is, is a huge way to, uh, obviously fight against this crisis of labor shortage. Yeah. Uh, you know, I just think here that, you know, we kinda lean into culture a lot. We talk about that all the time on, on our podcast, and yeah, honestly, just sitting here talking to you about it, I don’t even know really how I would class our culture. I think that it just kinda <laugh> came together as we started hiring a few pieces, but I think that we spent a lot of time just making sure we get kinda like-minded people or, and I don’t even wanna say people that think the same, because honestly, we don’t necessarily think the same. There’s a lot, there’s a lot of views and different things that we have that are different. Sure, yeah. For sure. But, uh, but through our process, you just find people that, that you can be cohesive with and people that you can work with. I think that’s probably one of the, the most important factors. Huge. So you don’t waste five years with somebody for them to constantly be looking for another job or whatever. Yeah. So, I mean, I feel like that’s something that we’ve, we’ve done good at, and I hope that we can continue that. But I mean, I feel like that we, we have a pretty good rate of, of people hanging around and, and, and staying, you know, staying on board
Speaker 1 (30:11):
Practically zero drama. Yeah. Like, I seldom work for someone where there was no drama
Speaker 2 (30:16):
<laugh>, and there’s, there’s a few situations that, that are outside of that. But I mean, yeah. Overall, uh, I think that’s one of the biggest things that we’ve done is just, is just hired kinda on fit. Like, let’s, this person feels like they’re gonna be a good fit. Yeah. Uh, and, and overwhelmingly that’s, that’s worked out good for us. I mean, I think that would be a key thing in, in retaining people is just for sure do your due diligence in the beginning Yeah. And make sure that, that that person’s kind of checks all the boxes and, and, and, and does what you, you know, would want somebody to do down the road, I guess, if you will.
Speaker 1 (30:52):
Yeah. Yeah. That, that episode that we did on, if you need to Hire someone Do This, I think was the title of it. Yeah. That’s one of our more watched episodes, so. Oh, that’s cool. You definitely had some good suggestions in there on how you, your process for that. Yeah.
Speaker 2 (31:06):
But you definitely don’t wanna be losing people when the, when the Yeah. The pool to hire from is not too full, you know? Yeah.
Speaker 1 (31:14):
Yeah. That could be scary nowadays, particularly if you got to produce a certain amount of revenue, you know, every month, every quarter, you don’t want to go through two drive a period where you’re missing two or three pieces, you know, because you got a lot of turnover. And, and I have been involved in, uh, you know, organizations briefly, but, uh, where I saw that, where the turnover is like literally 50%. Yeah. It was a miserable situation. And, uh, I mean, it was just daily uncertainty, you know? Right. Couldn’t get work out and things like that. So you definitely don’t want high turnover, like you’re talking about. For sure. So as far as, uh, you know, team stuff like that, I mean, where would you, how would you weight that out of these, like these two strategies so far? Uh, you know, making sure that you’re employing technology to improve, um, efficiencies, and then considering the option of prefab and moving towards that where you can, um, how would you, where would you rate this, this piece as far as, uh, your team and retention and all
Speaker 2 (32:30):
That? I mean, to me, I feel like the team’s probably the most important. I think that you really need to spend a lot of time and effort, you know, keeping your team on the same page and, and keeping everybody, you know, up, up to date on what’s going on and what the plan is. I mean, specifically in, you know, times like we’ve had the last year or two where, where the market can be a little bit tough and work can be a little bit slower for some people. I mean, some people are saying they’ve had their greatest years ever, but mm-hmm <affirmative>. You know, it’s a little bit different for everybody. Uh, just making sure that everybody knows kinda what’s going on and what the expectation is and how you even feel, you know, about the future. Yeah. I mean, honestly, just sitting here talking to you about it, I know that’s something that I could do better.
Speaker 2 (33:12):
Uh, I mean, I think that I do try to communicate and, and let everybody know where we’re at and, and what the plan is. And, uh, there’s times where I do that better when, when we’re, when we’re not as busy, and I can Sure. Really kind of think and do whatever. Yeah. But, uh, you know, to your point, we, we are somewhat a little shorthanded now, so if I’m not careful, I’ll let some of that important stuff kind of slide through the cracks. Um, so, so definitely I think that that’s very important to, to stay focused and keep your team focused and yeah. Let ’em know the plan, you know? Yeah. I think that’s a huge part of it. I mean, I think the technology and that kind of stuff goes hand in hand with that. Yeah. Uh, I mean, everybody’s wanting to be more efficient. Everybody wants to learn. Sure. Uh, so if you can keep your team right, I think that’s, that’s key.
Speaker 1 (34:01):
Yeah, I agree. I think, I think that’s really the centerpiece of, uh, of most of the things that you do in business. Um, so some good applications for industry with, you know, thinking about your team as strategy number two, uh, retaining and developing the team. Uh, one suggestion is that you, you can cross train employees so that they can handle multiple tasks. So that way if, like, like you’re talking about, if you do lose a piece, and it can happen to anybody because everybody has their own, you know, drivers and, and they may have a, a motivation that is unseen to you as an employer, and eventually they make a move, and there’s nothing you can do about that. It just happens. But like this brings out, you can cross train employees to be able to handle those multiple rules, you know, to bridge those mm-hmm <affirmative>. Those times. And I, I’ve seen you do that before where you’ve had to move some pieces around from time to time when things happen unexpectedly. Yeah. And it always seems to work out. I mean, it’s, but again, though, it works out because you have the right culture and, and you got people mm-hmm <affirmative>. That you, you know, you know, you can rely on
Speaker 2 (35:12):
Well too, I think in that you kinda, even when things are going smoothly, you’re kind of realizing what people are good at and Yeah. You know, what other things they could potentially do. Yeah. Uh, so I found that when we do find ourself in those situations, you kinda already know who could probably jump in and help out and do whatever. Yeah. Uh, and I think that would be a good time too, to set the expectation for that person, because you do wanna know what you’re doing. You do not wanna know like what’s your, you know, what’s your role gonna be. Yeah. Uh, so if you drag ’em in there and start trying to get ’em to do multiple things, they might get a little, uh, you know, I guess they wanna understand what’s happening that you don’t want, you don’t wanna, uh, you don’t wanna confuse ’em.
Speaker 2 (35:58):
You Yeah, for sure. And, you know, we’ve all had to wear a lot of hats here for a number of years, but we, we are kind of to the point now where everybody kind of has their role. Yeah. So, so it’s even more important now for us to clarify, look, we, we need you to help here, but this is our plan. Like, this is not gonna be long term, or this, or this may be long term, if you like it, we might do something in a, you know, for the other position that you’re, whatever it is. Yeah. Communication, I think you just communicate that clearly, you know?
Speaker 1 (36:25):
Absolutely. Yeah. Good communication. Uh, so like for real realtors in the commercial industry, uh, you know, a good thing would be to build relationships with reliable contractors and refer clients to them, you know, uh, contractors that operate, uh, you know, conscientiously and, and address things like what we’re talking about today. You can see that they’re, uh, organized in such a way where they’re not as devastated by things like this, that they merely just make the necessary adjustments and keep rolling. So, you know, that would be great. It brings out too that like lenders sometimes will prioritize contractors that, uh, have more stable teams. Like, so if they, you know, if they hear good things about how a contractor performs and, and, you know, they’ve had a team that’s been there for, you know, many years together, working together, uh, that reflects well on, on that company.
Speaker 1 (37:21):
And that can put commercial lenders at ease and gives them a level of confidence. Like, look, these guys been around, they don’t have a lot of churn, you know, they’re, they’re gonna be here tomorrow too, so I’ll do business with them. And then architects too, you know, they want to, they want to, you know, develop relationships with contractors that are conscientious about things like this, have a, a certain level of awareness and, uh, and also function in a way that demonstrates that, you know, they’re able to deal with whatever happens, whatever’s coming down the, the, you know, the, the pike so to speak. They’re able to make the adjustments and keep performing at a high level. And, uh, again, that’s something I think that we strive at, at Kelly, is to, to always, no matter what’s going on in the back office, our front facing people are always taking care of business and, and communicating well, and, and checking the boxes, getting things done that need to be done that, you know, that’s facing them at any given time. So I think that’s great. So, uh, the uncomfortable truth, like, I like to end those, those strategies. There’s always an uncomfortable truth around a certain point, but it, you know, it’s, it’s, it just says that you’re gonna have to pay people more and treat ’em better. And, uh, like it says there, it’s not a punishment, it’s just the cost of doing business these days. Yeah. You know, if you wanna retain people.
Speaker 2 (38:47):
Noted.
Speaker 1 (38:47):
Noted. All right. So let’s talk about strategy number three, diversify your client base and project types. So again, there’s nuance to this because we, we’ve had other discussions about, you know, being productive and, um, you know, being able to expand, um, our, our revenue base, things like that. And, but we’ve also talked about how, you know, the riches are in the niches. So that would almost seem counter to this, you know, about diversifying your project base, but the, the reality is there’s nuance to that. You, it may simply mean that, uh, you’re not, you’re not delving into a niche or a specialty necessarily, but maybe there’s a couple areas that you can specialize in instead of just one. And, uh, I don’t really have any good examples of that right now off the top of my head. Maybe you do John
Speaker 2 (39:39):
<laugh>. Yeah. I mean, well, I mean, one thing that I can think of is, you know, we have a couple of clients that we work with, uh, and, and it’s, it’s a negotiated work. It’s, they, they usually put their budget out there. Uh, you know, they know that we’re going to, uh, we’re going to approach them in a fair way and mm-hmm <affirmative>. Be very open to ’em. Yeah. Uh, but, but those jobs pay a little better than, you know, like a public sec sector job or, or something that the margin’s a little bit lower. Yeah. And, uh, you know, if you, if, if you start cutting out some of those things that you don’t have to, uh, you know, you don’t have to work so cheap on, I mean, and the thought behind the thought behind this is, is, you know, not having the labor to be able to do these jobs.
Speaker 2 (40:25):
Yes. So you, you’re cutting some expense out and then you’re working with a client who’s willing to pay a little bit more. Yes. So that math kinda works, you know? Yeah. Uh, and, and if you can, I guess if you find that spot, you find that, that that sweet spot, uh, you know, in revenue or however you measure Yeah. Uh, and, and you know, that you can hit that with, with those, um, with those clients. I mean, maybe you just stay there for a while, you know, and, and, and with the market like it is, and then the, the, the labor like it is Yeah. Maybe you’re not so, so, you know, thinking about growth, but like, let’s maintain here for a while, uh, with these couple of clients and let’s just, let’s be profitable here for just a little while and, and let’s see what everything does, you know?
Speaker 1 (41:08):
Absolutely. So the, the higher margin projects, obviously you, you could do less of those and, and still be, you know, profitable. Right. Potentially, um, you know, obviously that is all dependent upon your team and all that, how you’re structured. But, but theoretically, if you do, you know, fewer projects at higher margins at the end of the year, uh, you know, your top line revenue might not be as much, but your profit Yeah. May be greatly increased. Right. So that’s funny how those numbers work like that, but that’s a reality. Um, so like you said, you want to shift towards, uh, smaller, higher margin projects. Um, the reason why I put smaller in there is because if, if some of these bigger projects, obviously the bigger the project, the bigger the scopes, the more bodies it takes. So if you can focus not only on higher margin, but maybe potentially smaller projects mm-hmm <affirmative>. That require less bodies, you’re gonna be easier to staff. And obviously the, the profit’s gonna be increased. So Yeah. That, that makes it more palatable for
Speaker 2 (42:15):
Sure. And I mean, you’d have to be willing to scale down if that’s kind of the goal, but I mean, I think, I mean, I know our goal is just to be profitable and, and, and to make everybody’s life as good as possible here within the company. So Yeah. Uh, we, we don’t necessarily, that’s a good goal for us, you know? Yeah,
Speaker 1 (42:34):
For sure. Uh, projects that use your team efficiently. So that’s just a fit thing, you know, that’s really something that, that, uh, I would think you would really kind of, uh, you know, be at the head of that, uh, you know, making that determination. Like when, you know, the estimating department is talking to you about different projects mm-hmm <affirmative>. I’m, I’m pretty sure you can glance at ’em and based on prior performance, you can say, well, I don’t really think that’s a good fit for us. Let’s focus on this project.
Speaker 2 (43:04):
Yeah. And too, just historically, I mean, we know what kind of jobs we get, we know which ones we do good on. Yes. So obviously we kinda lean into those kind of jobs Yes. As they pop up and, and come out, you know what I mean? Yeah.
Speaker 1 (43:15):
That’s exactly what that, what that’s really indicating there, uh, clients who value quality over over speed. Uh, you know, there are clients out there, believe it or not, that really value a premium, uh, you know, knowing that they’re getting quality.
Speaker 2 (43:32):
Yeah. One of the clients I just was referring to is kinda like that. I mean, they hire us, the, you know, I don’t know, the first time we worked for ’em five or six years ago, we went out, we did a good job. Uh, and they’ve literally come to us half a dozen times since then with projects. Yeah. And it’s, it’s, it’s our project. I mean, they come to us, they, they, you know, right from the beginning, they’re talking about hiring us Nice. Uh, and they see the value, you know, that we bring and, and then we obviously value them as a client. Yeah. So we’re fair, uh, we’re transparent, we do a good job, and it, it pays off.
Speaker 1 (44:08):
Yeah. For sure. And then, uh, work that leverages technology and prefab, again, that’s something that you kind of just gotta put that antenna up and just be, you know, have your ear open, I guess, for opportunities like that with the thought in mind that look, labor might continue to be a problem, uh, in the future. And, uh, I know the experts are estimating that they don’t see any relief in sight to the end of 2027, possibly longer based on all this, you know, the industry stuff that I’ve read online about it. So it, it’s obviously just having that, you know, having, like I said, having that ear open with the idea, like you hear of a, you know, a designer that’s, you know, really trying to employ a lot of prefab might be great to just go after one of those projects just to get your feet wet and see what it feels like to get in there and just swing components in, into place with a crane and bolt ’em together and, you know.
Speaker 1 (45:05):
Yeah. Stuff like that. So, um, so things to avoid as far as, uh, step three is concerned large scale projects with tight deadlines, obviously with labor being up and down and having some dips in availability. Uh, boy, if you’re held to tight deadlines and it’s a large project that, you know mm-hmm <affirmative>. LDS could be a nightmare on something like that. Uh, and, and never assume that the stakeholders are gonna be understanding, you know, that you can’t get labor. ’cause that’s, that’s not a guarantee either. Sometimes it’s what’s on the paper as far as the day is concerned, and Right. And that’s what they’re sticking to. So, you know, you have to mitigate that as the contractor. Uh, low margin, high volume work. We kind of talked about that earlier, how, uh, you know, if you’re going after a lot of low margin work, you gotta do a lot of it.
Speaker 1 (45:59):
And the more projects you do means the more bodies you have to manage. Right. And again, if we’re talking about a labor crisis, that doesn’t really make sense, you know, to pursue that. Yeah. So, uh, and you may already be in a, in a tight spot if that’s your business model, you know, cash flowing and low margins that you could be in a tight spot going forward. Uh, clients who don’t understand the current market realities, again, that’s something that we try to do as a, as a company, especially on the private side, when we get to have our sit downs with potential clients. Uh, we’re very good about, you know, trying to discuss, you know, the current market and, and what the expectations should be based on that. We may not, you know, say it just like that to a client, Hey, you know, based on the market, but we try to set the expectations ’cause we understand Yeah. What the market is. And if we know the labor market’s tight, we’re always gonna be trying to mitigate that with having some, making sure that the client has realistic expectations on, on timelines. Right. So, uh, anyways, that is, uh, step number three. Let’s see what we got for <laugh>.
Speaker 1 (47:13):
I’m rolling today, John. I’m in the, I’m in the zone. Can’t you tell <laugh>? Uh, all right. So smart strategic move. It says, don’t compete on volume when you can’t deliver volume. I think that makes sense. Compete on expertise, quality and reliability. And really that’s, that’s something that we’ve always tried to do. That’s really part of our culture anyways. Always has been. That’s not gonna change mm-hmm <affirmative>. So, um, I think we’re positioned well as far as that’s concerned. Um, again, like the labor shortage, it’s not, it’s not gonna go away. Uh, I know that some people haven’t been as impacted by it, uh, as others have. I know in other parts of the country it’s been, you know, devastating to, uh, some parts of the country. As far as the building industry goes, I don’t think we felt it here as much as other parts of the country have for some reason. Uh, you know, we’ve seen just a little bit insulated from, from, you know, what’s going on in other areas, like into that regard. We have seen a little bit, but not as, not as bad. But it doesn’t mean that we should be prepared, uh, you know, to, you know, deal with that in case it does become a, a thing. So anyways. Any, any closing thoughts on this?
Speaker 2 (48:26):
No, I mean, I think that, uh, I think we’ve pointed out some good stuff. Uh, I mean, just to reiterate, like, I, I think team’s so important. I think you really gotta invest, you really gotta spend the time. You really, really gotta do all that, all that stuff. I know another, you know, you know, you just were saying that, that the, uh, the, uh, you know how we’re insulated here in Louisiana a little bit from some of that, and we went through some of it here a couple of weeks ago. Yeah. But, uh, even as a general contractor, I mean, we feel the stress of, of having, uh, you know, shortages when we don’t see people on the job site or we don’t, whatever. Yeah. But we, we probably don’t relate to the same level that some of the subcontractors That’s right. Have and do.
Speaker 2 (49:08):
That’s right. Uh, so some of this probably resonates well with those guys. I know. Absolutely. You’ve given a few examples of subs throughout, throughout the podcast. So, uh, you know, obviously those guys really need to be thinking about, you know, what that looks like and how do they, how do they make sure they don’t run into a problem? Yeah. Uh, and you know, obviously that helps us as a general, uh, but it’s something too that we’re conscious of. I mean, we, we’ve already kind of had some brainstorming sessions on what we’re gonna do and how we’re going to do a few things different here in 26. Yeah. So definitely something that needs to be front of mind for everybody. Just think about how you’re gonna deal with it and what, what your plan’s gonna be and Yeah. If, uh, if what our thoughts work, right, you know, past what we’re, we’ve already talked about today, we’ll, we’ll let everybody know.
Speaker 1 (49:58):
<laugh>. Alright. We’ll keep our ears open for that. Keep our radar on. So the three strategies are, uh, you know, invest in technology and prefab now start thinking about that, uh, building a team that you can retain, having a good, uh, good team culture and all that. And, and then being really, I, I guess at the bottom line on step three is really be more selective about the types of projects that you take, try to focus on, uh, you know, larger margin projects that maybe aren’t as labor intensive. Uh, so obviously smaller, smaller jobs, smaller scopes, um, you know, you eat the elephant one bite at a time, so maybe you can, uh, you know, build your top line revenue with smaller chunks instead of, you know, trying to build it with two or three big chunks, you know, things like that Yeah. To consider. And like you said, with subcontractors, they, they’re on the front lines.
Speaker 1 (50:54):
I mean, we deal with them after they’ve signed a contract for the project. So, you know, they’re dealing with that labor upfront. They’re, they’re the ones probably losing sleep at night wondering how they’re gonna man three different jobs because, you know, <laugh> again, subcontractors for, for every one job that we have with a sub, you know, they may need to have three. You know, that might be the ratio, right? So if we have, you know, four or five projects going on, they might have, you know, 10 or 12. Right. And, uh, so obviously they’re gonna be dealing with that labor, uh, in a much more intensive way. And, and like you said, uh, we need to be cognizant of that and maybe have that conversation with them when we’re, uh, you know, doing a pre-construction screening and, and getting prepped for a project. We might just say, Hey, so how’s things looking with, with your, your team labor?
Speaker 1 (51:44):
Things like that. Just kind of get a, a, you know, check the temperature so to speak with them. Yeah. Uh, just so that you can be, you know, keeping a watchful eye mm-hmm <affirmative>. And, uh, thinking like, maybe I need to be, you know, yeah. Nurturing this a little bit. Make sure they’re gonna be all right. So. Right. So yeah. Anyways. All right, well that’s gonna wrap it up for episode 34 of the K Cup. Uh, this one was a little chunky and choppy, but hey, at least we got her done. Done is better than perfect, right, <laugh>. All right. Any closing thoughts, John?
Speaker 2 (52:18):
I don’t think so. I think we got it all covered today.
Speaker 1 (52:20):
All right, man. Appreciate you being here. Appreciate you all your insight and, uh, come back and see us again for episode 35 coming real soon. Bye. Bye-Bye.