Discover your free Construction Marketing Ideas Email Newsletter

Saturday, July 28, 2007

Helping the underdog -- the subcontractor's plight

In journalism, some stories never get out. The truth is buried under conflicting observations and self interest. You need to dig beneath the surface to find out what is happening, and rarely are individual journalists informed enough about the issues -- and free enough from issues of business survival or preservation -- to write the whole story. I'm in one of those situations now, and it is going to test my writing abilities to tell the story without offending potential clients or misrepresenting the situation.
But I can see clearly in the research that the unsung heroes and victims in this story are the subcontractors and suppliers; the people and companies at the bottom of the construction industry pecking order who find themselves battling challenging demands for lower prices, additional service, and risk. They often experience a dog-eat-dog marketing game; you get the business not so much by how well you build your relationships and truly respect and relate to your clients, but how low you can crash your price (or accept onerous terms or conditions that increase your costs); because if you don't, the owners' rep and/or general contractor will say "I'm going somewhere else."

Of course, marketing, as we know it, isn't relevant or well practiced in this silly game of desperate, for want of a better word, "downmanship". You know who your potential clients are in your local community, and you either suck up to them by giving them the price they want (or the added services/costs) or they'll just torpedo you from future jobs.

One time after another, I see the construction industry eco-system is being hammered by pressure; from cost-saving and downloading, through consultants and specialists taking their piece of the pie, while forcing costs and risks further down the chain. The concept of marketing and value get distorted and messed up in this equation; and the subs pay dearly, through their heart, soul, and profit margins.
So, if you are a sub, what answers do you have? I see two, and neither are perfect.

1. Join/participate an association that truly represents your interests to advocate on your behalf.

In the U.S. this is relatively easy to do through the American Subcontractors Association. Its local chapters openly and straightforwardly represent their members interests. In Canada this is presently harder. "Mixed" associations purportedly represent both the sub trades and general contractors (who also have their own associations) with owners and the public. The problem is that while the mixed association works well when the general and and subcontractors interests are aligned, the environment in these associations can be like the fox in the chicken coop if you are a sub -- and the generals are nearby. They may talk the talk about how they support your interests, but sometimes they talk with two faces; and you don't see the other side of the person purportedly speaking on your behalf.

2. Go for the retail market -- the end user -- and market/sell your services directly.

This can be residential work, or commercial maintenance stuff. You cut out the middleman, you are NOT the sub any more -- it is your job, and you set the price, and deal with the true user-customer who actually pays your bills directly. Here, you need to market, rather than rely on someone else to market for you -- and you control (within limits) the universe of relationship and business issues. As well, this approach may give you some important diversification, in case the other side of your market crashes.

I'm sure that some subcontractors advertise in our publications because they feel pressure from their upstream clients; who are effectively downloading their marketing costs onto them. I hope our advertisers realize that we seek to practice what we preach; we advocate that the best form of marketing is to make your current clients truly happy with your service and relationships, and accordingly we support our advertisers with practical, inexpensive (usually free) advice and direction to enhance their business.
Logo at top right is from the American Subcontractors Association of the Carolinas, which is currently leading a campaign with the North Carolina legislature to improve retainage provisions for subcontractors.

1 comment:

John Pratt said...

Hi Mark,

I like the blog and was reading about your company. It looks like you are providing a valuable service to the construction industry. Let me know if I can be of assistance.

All the best,

John Pratt