# Please read and discuss



## Custom Drywall Svc. (Oct 31, 2008)

http://www.wconline.com/Articles/Column/BNP_GUID_9-5-2006_A_10000000000000674684


_The worst thing about a deep recession may be the inevitable stupid pricing that follows. By stupid prices, I mean bidding or pricing goods and services that are below a company’s cost. The second worst thing about a deep recession is below-cost pricing drives the entire market price down and it takes two to three times as long for them to return to a reasonable level. A lasting recession ingrains these stupid low prices, because as one low-ball price king goes out of business—and they do—there is always another willing victim to take his or her place. This leaves a construction market with no profit margins, encouraging subcontractors into tax evasion, violating labor laws, over-looking quality and increasing construction defects. It has happened before and seems re-occurring, usually with a few minor twists. 

Consider the last deep recession of the late ’70s and what happened within the construction industry. The leaky-building crisis. But how and why did this happen? 

*A LOOK BACK*

In the early 1970s, a predominant number of construction workers in this country went through a formal apprenticeship program. Flashing and installation practices for exteriors were simple, basic and universal. As a result, most buildings did not leak. By the mid ’80s, most construction labor had not been through any apprenticeship training and was reliant on what the field was teaching them, right or wrong. Combined with the stupid prices of the early 1980s, this resulted in poor field practices and became widely accepted as the industry standard. The result was a rash of leaky buildings across the country that dominated the 1990s. 

I believe in capitalism but allowing price to be the sole driving force in any industry is always problematic. History has shown us that building owners and developers tend to be predictable; they take the lowest bid. 

The subcontractor who bids below legitimate labor and material costs will have one or more of three outcomes:

Go broke and not finish the project;

Resort to cheating by not paying payroll taxes, workers’ compensation insurance; using unqualified and often an illegal work force;

Do such a bad job that construction defects are imminent.

I have dealt with general contractors and developers during stupid pricing times. The owners always have the answers for all three of the possible outcomes from super cheap bids. One might think, “These contractors just have lower overhead”; that would explain a reasonable percentage below the others, but not 50 percent. Some contractors just make a bidding mistake: too high and they are thrown out, too low and they are the lucky (unfortunate) winner. What happens on the mistake bid is the contractor realizes his error and then backs out. It is the super low bid that the contractor knows he has beaten the competition by 50 percent that should concern everyone. Building owners, general contractors, municipalities or institutions may think they just got lucky and saved a bundle with the super low bid. Let’s review the three outcomes again:

1. Contractor Goes Broke: The owner should not care about a contractor going broke. 

Wrong: rarely does any contractor go broke and not leave a path of destruction and devastation in his wake. It costs money to clean up the mess, sometimes more than the median price bid. 

2. Contractor Cheats: The owner should not care about a contractor who cheats. After all, it’s not his problem.

Wrong: contractors who cheat leave unpaid bills, as well as the destruction. People want to get paid and they will reach above to get it. Building owners and general contractors may be shocked it may not protect them. 

3. Construction Defects: The owner will watch him carefully and make sure the job looks good. Building owners are not experts in construction and what looks good may still be defective. They think with the money that is saved, they can just hire an expert to watch the super cheap contractor. 

Wrong: I have been around many of these types of projects with “so-called” experts. Even if they know what to look for, they cannot be there and watch every move of every worker, and things get covered up. 

I would suggest building owners, general contractors and architects be extremely cautious of prices that are “too good to be true.” Building owners, municipalities and institutions would be advised to receive the bids, find the median price and select the most qualified contractor that is no lower than 15 to 20 percent below that median price.

Why do we believe the bid that is 50 percent below all the median bids will provide the best value? Are all the other subcontractors just that greedy and insanely over-priced, even in these tough times? Or is it more likely that the super cheap contractor is either very desperate or made a serious mistake? In either case, the question to the owner is: Will you knowingly take that stupid price and compound the mistake? W&C 
_ 
_Mark Fowler_


----------



## d-rock (Oct 21, 2009)

*great article*

couldn't have said it better myself. too young to remember construction in the early 80's, but i do recall my father (electrician) dealing with ultra low pricing and the backlash. We're in for a bumpy ride, and I'm just hoping i can sail it out. I refuse to lower my pricing beyond dignity, i wouldn't be able to pay insurance, workers comp, taxes...etc. To me that would be failure as a business owner and craftsman. Most of all it would be STUPID. Not only are they destroying an economy, but they are destroying a trade


----------



## super rocker (Jul 8, 2009)

*Insanity is now normal*

The stupid pricing is full blown madness. A taper I hang for just told me the most horrifying pricing in history. The job is new construction. Upstairs apartment, 9' flat ceilings, 25x30 room 17 feet high dormers,off angles,total of 170 12'. Downstairs garage, 60x60, 13' high, total 170 12'. Total of 340 12' sheets. The drywall contractor is buying all material,scrapping and hanging and taping level 5 for $7800. The material and scrapping is $4500. This price is 100% legitimate because the builder showed my taper the proposal. Outrageous,but sadly true.


----------



## [email protected] (Dec 23, 2008)

Geez, I really need glasses. Just realized this article was posted today.


----------



## [email protected] (Dec 23, 2008)

I usually find about one pertinent article in any given issue of the trade rags. This was this months winner. Problem is, next month they will go back to saying how great business is. Seems they're afraid to tell the truth more than once or twice a year.

The article hit it on the head. Now let's hear about the pirates who do not comply with the prevailing wage, the paper tiger immigrant subs who do not pay out their illegal sub-subs, those who pay the insurance for a month( for proofs) then cancel the policy, etc. 

How about some coverage about how the GCs and Architects have shoved all liability onto us. Not just contract language but from the very start, we are having to "pay to bid" work. We now must pay deposits/ print shops to even peek at the plans, then have a bid done in two days. How PMs largely refuse to address Requests for Information in a timely manner and further hamper one's ability to bid properly. And this trend of rebidding against more subs after the bid is awarded to the GC prior to groundbreak.( GC has bids low enough to have gotten the job, then hunts down subs willing to undercut the bid they went to the owner with, basically just to increase their profits)

But I digress. The problem is that we still haven't run out of guys willing to "buy" bids. Even established union shops are doing it. And GCs who incentivize their estimators/PMs to deliver cutthroat pricing are perpetuating this.


----------



## Mcex-boarder (Oct 12, 2009)

Great article,the problem as I see it and have seen in the past,is that every time piece work prices roll back juring hard times,it takes forever and a lot of hard times to climb back up to where it should be,although I have always been a drywaller by piece work,an example I can give is around 1989 ,I took a break from residential drywall and went comercial,I was getting 18$ an hour plus 10 per cent vacation pay,benifits,travel time when required,in comparison to today 20 years later,assuming if you could get 25$ an hour,you are hard pressed to get travel time and where I live,Calgary,alberta,I beleive their is not a single comercial outfit in town that pays vacation pay and benifits,not in the drywall business anyways,although it is not just the drywall business,its every industry,a freind of mine who drives a 3 ton delivery truck,at a rate of 15$ an hour in comparison to 1989 when my step dad was getting 17$ an hour for driving the same type of truck,I wrote in a previous thread that I dont see it ever getting back to being a good respectable trade,and I firmly beleive that,those days are gone,actually the drywall trade is abolished as a trade in a lot of pockets in canada,including where I live,its just skilled labour,not many journeyman interior system mechanics left,with papers that is,funny though,painting is still seen as a respected trade,journey man papers and all,I spoke to a local trade shool and asked how did this happen,and he explained that an acredited trade requires three supporting parties,first,personal interest,which their was a lot of,second ,local goverment and trade school support,which offered full support,and third,industry support,which there was not any,the large companies claimed they prefered their men to only know how to do one thing,such as board, or tape,or texture,etc,the large companies expressed no need for drywall to be considered a trade,plus it would be cheaper for them if it was just considered skilled labour,sorry a little of topic ,but it is the truth and sometimes the truth sucks,the business will only continue to become worse over time,I have a nephew in his early 20's working as a taper,and a while back he said to me ,UNCLE,I think it's time for me to get into a real trade,like electrical or plumbing,you know a real trade he said,nuff said ,mission accomplished drywall industry.


----------



## rockdaddy (Jul 2, 2009)

Everyone knows what their true costs are for doing a job.Plain and simple. If someone is cutting his own throat to keep the wheels greased and keep the men working then that is their business and be sure that their sin will find them out and the market will do what it does with hackers and flush them away. Naturally, there will be someone to fill the void. WIll that one be a legit guy to be reckoned with or another slouch? ANSWER = WHO CARES!! 
The problem with this business at the moment and basically in general is that everyone is constantly re-inventing the wheel. Everyone is developing that better business model thats gonna change the industry and make them rich beyond their dreams. Now that reality has settled back in lets get our head back around the fact that it's all a load of crap. Builders make their money on the backs of each and every one of us. Regardless. It's the law of the jungle.
There are only so many ways you can skin the cat folks. Numbers are hard and cold and they never lie. If someone is giving lowball numbers he is either buying better and knows more than you do or he is someone who isn't very smart and he is rolling the dice. Either way there is nothing you can do but adjust to the conditions that are out there and keep your pencil sharp and your quality solid. Forget about what other people are doing and make THEM talk about what you are doing and you will control your own future. Invest in a computer and know how to use it. Save the money of reproducing plans by doing it yourself at home or in your office. Speak the new language of the builder. The new guys coming into the trades do not have the real world experience that you do. The new young guys are college educated with a step by step manual on how to build a house. Handshake agreements are a thing of the past as are the gentlemen who made them.
Put some steel in your spine, ask and get your price, give them more than what they bargained for. The business will keep coming even though everyone will continually try and change it. You just can't go wrong with good old fashioned basics. The drywaller is not disappearing. The drywaller is evolving.


----------



## Stormy_Ny (Jun 13, 2009)

rockdaddy said:


> Everyone knows what their true costs are for doing a job.Plain and simple. If someone is cutting his own throat to keep the wheels greased and keep the men working then that is their business and be sure that their sin will find them out and the market will do what it does with hackers and flush them away. Naturally, there will be someone to fill the void. WIll that one be a legit guy to be reckoned with or another slouch? ANSWER = WHO CARES!!
> The problem with this business at the moment and basically in general is that everyone is constantly re-inventing the wheel. Everyone is developing that better business model thats gonna change the industry and make them rich beyond their dreams. Now that reality has settled back in lets get our head back around the fact that it's all a load of crap. Builders make their money on the backs of each and every one of us. Regardless. It's the law of the jungle.
> There are only so many ways you can skin the cat folks. Numbers are hard and cold and they never lie. If someone is giving lowball numbers he is either buying better and knows more than you do or he is someone who isn't very smart and he is rolling the dice. Either way there is nothing you can do but adjust to the conditions that are out there and keep your pencil sharp and your quality solid. Forget about what other people are doing and make THEM talk about what you are doing and you will control your own future. Invest in a computer and know how to use it. Save the money of reproducing plans by doing it yourself at home or in your office. Speak the new language of the builder. The new guys coming into the trades do not have the real world experience that you do. The new young guys are college educated with a step by step manual on how to build a house. Handshake agreements are a thing of the past as are the gentlemen who made them.
> Put some steel in your spine, ask and get your price, give them more than what they bargained for. The business will keep coming even though everyone will continually try and change it. You just can't go wrong with good old fashioned basics. The drywaller is not disappearing. The drywaller is evolving.


Great pep talk Coach ...... But from what I am seeing up here is, we are "De-volving" ...... regressing....... At 28 Cents a board ft to finish. Soon it will cost us more to work then to stay home.


----------



## evolve991 (Jan 24, 2008)

Evolving eh? In my area the prices had JUST began to rise above the prices of the 80's and have come crashing down BELOW that range now. Using Illegals and cutting every corner is NOT Competition it is the DESTRUCTION of a Trade.


----------



## rockdaddy (Jul 2, 2009)

How else can you look at things? Do you want to feed your family and get ahead or do you want to sit around all day pissing and moaning all day because you don't want to do whatever you have to do?
It's bad enough that we have to be treated like second class citizens on the job but maybe, just maybe, it's the whining prima donna attitude that allows it. WHo cares what Joe Blow is doing? Does he feed your kids and pay tuition? NO. Do what you do and do it hard and you will be the best is what I'm saying.


----------



## rockdaddy (Jul 2, 2009)

28 cents to finish only? If I could get that I wouldn't need any hangers and I would only have to work three days a week.
Try making ends meet on 30 cents for hang/finish/ small materials and come back and talk to me. I'm having a tough go of it pricing things at 53-56 a foot. If I were getting 28 cents for finish only I would be the cat who swallowed the canary!


----------

