The construction industry saw tough times in 2011, but it could have been far worse.
As of October, the industry unemployment rate was just above 13 percent. While the number isn’t good, it is nowhere near the 17.2 percent unemployment rate of last year, at least according to figures from the Associated General Contractors of America.
The AGC also reported that between August and September, the construction industry added 26,000 jobs. Many of these jobs are due to a boost in spending within the nonresidential sector. The association says it would like to see more spending when it comes to federal building and infrastructure projects, but the economic numbers are starting to go in the right direction.
SNIPS spoke with some industry experts to find out how contractors can keep the momentum going through 2012 and beyond. The consensus is that contractors need to start using today’s available technology to be successful tomorrow.
Highs, lowsThe HVACR industry had a challenging 2011, according to Ron Jarnagin, president of the American Society of Heating, Refrigerating and Air-Conditioning Engineers and a staff scientist at Pacific Northwest National Laboratory in Richland, Wash. However, it also had its high points: Jarnagin said the 2011 AHR Expo in Las Vegas was one of the largest such shows held outside of Chicago and New York. And Jarnagin is “optimistic in looking ahead.”
ASHRAE holds its annual winter meeting in conjunction with the AHR Expo. The Jan. 23-25, 2012, event in Chicago is on track to be one of the largest, Jarnagin said. More than 1,700 companies have already reserved booth space, which the president said shows that manufacturers and contractors still have a strong interest in technology.
For contractors to stay profitable in 2012 and over the next several years, Jarnagin said technology and education will be important.
“We (ASHRAE) continue to provide our members access to educational opportunities so they are up to date on the latest industry technologies and ASHRAE standards,” he said.
New technology is important because contractors must find ways to save money, stay productive and keep their projects on track, he added.
“Today’s economy means everyone is looking to save money, so I think we’ll continue to see a focus on new energy-efficiency technology as well as customers who are interested in replacing outdated equipment they’ve held on to through these tough times,” said Jarnagin.
Members of the Sheet Metal and Air Conditioning Contractors’ National Association also had a challenging year, but new SMACNA President Richard Rivera said most member contractors were preparing in 2010 for the lower work levels of 2011.
“Management paid more attention to the things that helped operate their businesses leaner,” he said.
Rivera also said that SMACNA members that were prosperous during 2011 were the same ones that focused on customer service and made changes to their business models. They also made productivity a main focus of their business strategy.
PreparationsWith 2012 looking to have the same economic challenges as 2011, Rivera and Jarnagin are urging their members to stay lean and efficient. By doing so, contracting companies will be able to deliver on promises to customers.
“I think the biggest challenge is the demand associated with the ongoing strengthening of the industry,” Jarnagin said. “As part of that, we’ll see a mindset of ‘every job, every time, done right,’ as the industry works to deliver and maintain better buildings.”
He explained that the industry as a whole needs to do a better job of providing customers with exactly what they need.
“For our industry, this means doing a better job - engineers doing a better job in designs, contractors doing a better job putting designs together and commissioning agents making sure everything works as intended,” Jarnagin said.
Rivera agreed, saying that contractors need to position themselves in a way that will allow them to compete with other contracting companies once the jobs come back.
“We need them to have them focus on maintaining lean (manufacturing) principles and emphasize the need for proper cash and credit management,” he said. “By doing so, this will help them pursue where the markets are heading.”
Rivera also said that the HVAC and sheet metal industry needs to start thinking more about collaborative design and building processes. This can mean more of a focus on building information modeling. Whether contractors want to start exploring with BIM or just want to tighten their shop efficiency, new technology is one of the best ways to do it, according to Rivera.
“New technology changes the way we do business,” he said. “Building information modeling, prefabrication and modularization, 3-D laser scanning and laser port tools continue to reduce man-hours in both the shop and the field.”
Stepping upWhen it comes to working in the sheet metal shop, “‘lean’ is the word,” said Patrick Rossetto, vice president of Duro Dyne Corp. Rossetto said he believes the sheet metal and accessory company is trying to help customers become more lean and efficient.
“Business this past year for us has been unbelievable,” he said. And we expect “to finish up that way.”
Rossetto said the company was “lucky” to have started laying plans early to diversify its product lines and offer as many products as possible. The company is also beginning to get into the air-distribution business and will soon start selling products such as grilles, registers and diffusers.
But one of the most successful moves for the Bay Shore, N.Y.-based company was reorganizing its distribution strategy. This in turn helped many Duro Dyne customers become leaner.
Rossetto explained that Duro Dyne changed the way it shipped products to distributors. The plan reduced inventory by allowing those distributors to select from over 100 different product lines. In the past, a distributor had to order an entire skid of flexible duct. But now they can order just three rolls - when they need it. This means that distributors are not sitting on extra product that they don’t need.
Duro Dyne is also offering more products that it says will help with efficiency. One new product is a pinning system that uses less power. The company is also set to unveil a new system that Rossetto said would help contractors more efficiently wrap their ductwork.
Rossetto said the company encourages distributors to educate contractors on the new product offerings. He said that distributors need to communicate to contractors how a product will create value for them.
But contractors also need to do more than just offer energy-efficient products to customers; they need to adopt them to their installation and fabrication services. Trimble is one company that is aiming to offer products that will help contractors improve their HVAC and sheet metal jobs. Pat Bohle, general manager of the company’s construction division, said 2011 was a great year for Trimble.
Earlier in the year, the company acquired BIM software maker Tekla. Trimble also released two estimating and computer-aided drafting products, as well as two duct-fabrication products. 2011 also saw the release of Trimble’s Field Link software.
Bohle said that the challenges of 2011 are going to be similar to 2012.
“Margins are tighter,” he said. So contractors need to be “as accurate as possible” with their bids.
And contractors may be realizing that, Bohle said. Trimble has seen large numbers of companies requesting training on estimating tools and software. Bohle said Trimble offers self-taught overviews that can be found on the Web, as well as classroom-style sessions. For contractors who want to “deep dive” into the estimating process, Trimble can send a representative to tailor a course specifically for a company and its goals.
Trimble has also introduced several other products that are helping contractors once they get the job. With new construction still slow, many contractors are looking at work in existing buildings. For some of these buildings, it is difficult to get the original blueprints. Trimble’s 3-D laser scanner is helping contractors get measurements quicker.
Bohle explained that the laser scanner takes a photographic scan of an existing building. It records millions of points that are then used to create a 3-D model.
Trimble’s field services have been “adopted in incredibly alarming rates,” said Bohle. And they’ve become more and more popular since Trimble introduced its first field “solution” in 2008.
“Contractors are asking us for these solutions,” Bohle said. And they are asking for Trimble to create more products that will help contractors exchange data more efficiently.
Bohl added that education and new technology is going to help contractors get ahead next year. For Bohl, 2012 is all about “lean and BIM” products.
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