Greedy Contractors


#1

I just read that some of you guy’s are greedy.

My latest copy of RSI mag has the results of a survey of suppliers that asks, “What issues do you have with some contractors?”

One supplier responded, “They look too much at prices rather than value.”

I don’t know if the rest is on the RSI web page, but I put some of it here,

Greedy Contractors ,

along with my take and comments.

What do you think about those statements by the suppliers?


#2

I always thought it was the suppliers that are greedy,every time a hurricane hits they jack up prices everywhere. It should be price gouging for the markup they have due to a disaster .I don’t think its greed for contractors to buy quantaties of materials if they can get a better deal elsewhere.


#3

That doesn’t surprise me.That may stem from when smart contractors shop for a good price and they lose out on business. Sounds like sour grapes to me. In the end supply houses are just selling commodities.


#4

I have sold to distributors as a manufacturer’s rep, and I have bought from distributors as a contractor.
Distributors get “beat up” pretty good on price from a lot of contractors, but it is no worse than the way that those very same distributors “beat up” the manufacturers.
Some contractors think that the manufacturers and distributors are “greedy.” Some distributors think that the manufacturers and contractors are “greedy.” And some manufacturers think that the distributors and contractors are "greedy."
The bottom line is that everybody is in business to make money, not to be a charity. In my opinion, if a contractor, distributor, or manufacturer can demonstrate added value, in the long run they can expect to sell their products or services for higher prices. Maybe its just my economics degree talking, but I believe that market forces eventually sort out the truly “greedy.” In the long run, reasonable prices coupled with good service usually prevails. In a true “commodity market,” low prices will prevail. If you can’t differentiate yourself from the competition, all you have is price.
As for the article: If distributors think that contractors are “too greedy,” they should be willing to let that business go to competitors who are willing sell at lower prices. As long as a distributor offers a low price in response to a “greedy” contractor, they have no one to blame but themselves. Its Capitalism in its purest form.
Personally, I occasionally compare prices of distributors, but I’m not a chronic price-shopper. Saving $15 or $25 per job is not worth leaving my distributor of choice. I value the fact that my deliveries show up on time, I can get a delivery moved up in the occassional emergency situation, and I don’t have to worry about driveways or landscaping being destroyed and left to me to handle.


#5

Seems like the distributors almost crave the price shoppers. A builder went out last year owing my supplier $100,000 and the lumber yard about $1 mil.
For a builder, that is what a lot do. Run up debt. Sell their last house owing suppliers, vendors and subs. And then end up in… where else… but… Florida !!

Anyway, we have to be price conscious. Sti… I’ve called before and checked prices and gotten a discount on the spot. WOW! I think they worry about it more than me.

But to defend them… (not really) …when you are selling volume… and selling to ANYONE…and giving them credit…and you get burned a few times… don’t blame me


#6

I’m no business major but last I checked there was this little thing called supply and another little thing called demand.

Better call the WAHaaaambulance!
http://img57.imageshack.us/img57/9895/waaambulancehs5.jpg


#7

Well said. The way I explain it to customers is “Everybody is in business to stay in business…”

In reality, we try to squeeze pricing because we are in turn being squeezed by the end use consumer.

It’s one thing to price shop on cars or TV’s or refrigerators, i.e. a commodity where you really DON’T know what the lowest possible price is & what the differences are in quality.

But as people who have been doing this for a few years, we DO know the differences. & As we say here in Texas, “This ain’t my first rodeo.”

I imagine if I worked @ a TV / home entertainment store for 2 years, then opened my own shop where I had to buy from distributors & then resell, I’d be price conscious as well… because (like above) IT’S THE END USE CONSUMER WHO IS GOING TO BE HAMMERING ME FOR LOWER PRICES.

Sure, we all love it when a customer says “You know what? I’m 30 years old & intend to die in this house. What is the absolute best way I can do this roof system?” But how often does that happen?


#8

I bet money the lumber yards and supply houses are bent out of shape with all the money their losing due to poor building over the past couple years. Saying it’s the contractors causing the problem is just a cheap way to lay the blame away from the fact.

Sure there may be some lumber yards and supply houses doing well in some areas in the nation but for the most part there in trouble.

My yard who I buy from is out hundreds of thousands of dollars from builders who don’t have any money. My contact from the yard has told me more than once, “We’re sick of being the bank”. This January they did $300K less in orders than last January which was slow! The yard down the road had a builder stick them with $2 million in debt recently. The other day saw the owner of the builder on the interstate with his business name off the truck. At one time he was selling 200 homes a year.

Things will get worse before they start getting better.


#9

doug re-iterated my point. Unfortumnately the scum in construction is the buidlers and GC’s usually. Not the subs.
Simply stated, I have not read the article. BUT THEY BETTER DAMN WELL OF STATED THE DIFFERENCE BETWEEN A BUILDER/ DEVELOPER AND A ROOFING CONTRACTOR OR THEY CAN STICK THAT MAGAZINE UP THEIR ASSES


#10

Ethical, quality oriented builders are still doing well…
The market has changed, the real builders are still around, all the guys that took advantage of the boom are not.
Their legacy lives on…


#11

[quote="-Axiom-"]Ethical, quality oriented builders are still doing well…
The market has changed, the real builders are still around, all the guys that took advantage of the boom are not.
Their legacy lives on…[/quote]

Not here in MN. I roof for builders that are very highly reputable that have been in business 20-30+ years and they have little to no houses being built. There have been builders going under that have been in business for 20+ years here.

I talked to a framer that used to have 35 employees running 7 crews keeping busy 5 days a week since the early 90’s and now just a house here or there. Two years ago is when things slowed. All his employees have been let go and he he’s planning to sub only as a general contractor rather than a framing contractor. He said his two main competitors are the two largest framing subs in MN and there bidding to keep their men busy with little to no profit.

The only building in MN is for the rich or the poor. The rich keep building the million dollar homes and the poor keep buying the entry level townhomes. Single family homes from $300-800K which was the builders bread and butter for several years are no longer being sold.

Even the huge builders in MN are hurting.


#12

I wasn’t talking about the biggest builders, they are hurting the most…
I was talking about the best builders, there aren’t many in a given area.
They do the best work.


#13

I am a second generation roofer.I don’t feel any sympathy for suppliers they try to sell @ the highest price possible and offer no customer service.A couple of examples.Had one roof loaded they put 40 sq on one end of the roof lucky it didn’t collapse.Ordered shingles a week in advance non storm year told the salesman to call if they couldn’t get it done no call.

Several yrs ago wanted to get of the roof went to work for supplier doing contractor sales was told to start @21% profit and negotiate from there,needless to say I told them to keep their job

You walk into a supplier and are confronted by an arrogant salesman,they forget who butters their bread.


#14

RT, I find that if you give nothing, you get nothing. Give a little, you get a little. Give a lot, get a lot.

I try to be flexible with my counter guy because he’s like me - in sales & dependant on the whole chain of the process.

If I sense he’s being pushed by his back end, I’ll give him a little room & have on occasion told him to go ahead & bump up the price on the ‘accessories’ (i.e. most anything not shingles / felt / starter related). The way I price most of my jobs, the customer cuts a check to them & if I want to give Ed a bit of a bonus, I’ll suggest he go ahead & add 1.00 per item here, 3.00 per item there…

In the end, I find that when I really need it, he’s there for me because I’ve been fairly responsive to him in the past.


#15

[quote="-Axiom-"]

I wasn’t talking about the biggest builders, they are hurting the most…
I was talking about the best builders, there aren’t many in a given area.
They do the best work.[/quote]

Even the three really good (best) builders I roof for have nothing going on. Nobody is buying right now here in MN. Most of the home owners who buy from them have bought from them in the past. Centex here in MN has one of the highest reputations for repeat business and they are hurting big time. The framer I mentioned before used to frame for them.

One of the framers builders went from 200 homes one year to 20 homes the next. Although that builder is not known for quality home building but rather price.

Luckily it’s been windy and hailing a lot here in MN…