Volume 47, Issue 6 - July/August 2008
A dealer’s perspective
The Score: David 1, Goliath 0
Why Some Big Companies Are in Trouble
by R. Mark Reasbeck,
Owner of Coyote Springs Window and Door of Las Vegas. Mr. Reasbeck’s comments are solely his own and do not necessarily reflect those of this magazine. He can be reached at email@example.com.
Back in the May 2005 issue of Shelter magazine, my column was titled, “The Times They Are A-Changing.” In that piece, I stated my concern about new mega-companies that strive to be an all-encompassing, one-stop subcontractor/supplier (in other words, an all-things-to-all-people kind of company). Three years and a collapsed market later, I bring to you an update.
Select a Goal
“We’ll make it up in volume.” That is the silliest statement ever made in the business world, but I believe this is the mission statement of most mega-companies. These conglomerates are an entrepreneur’s nightmare. I have been on the “second place is the first loser” honor roll many times since they appeared on the scene. When competing with their bids on windows, not only are the margins slim, but mega-companies give away free installation by working the cost into a bid for another project. So on the proposal, “installation included” is free.
I know I’m several bubbles off plumb, but doesn’t someone still have to drive to the job to do the installs? And wouldn’t someone have to buy nails, caulking, flashing paper and Gatorade®? And how about those pesky little non-essentials like workman’s comp, liability insurance, vehicle insurance, unemployment compensation and health insurance? Did we forget anything? Oh yeah, there is an installer who probably doesn’t see the bigger picture of free installation and will expect some sort of monetary compensation for his labor. Looks to me like “free install” just ain’t that free.
Select a Category
As a 50-year resident of Las Vegas, my connection to other construction people creates a rather lengthy list of contacts. The mega-companies will do anything to get all of the work, and that includes ruining the market for everyone. Pick a category and talk to any subcontractor who tries to compete with the mega-companies and he will tell you how frustrating it is to go head-to-head with a company whose management has no vested interest in the industry it serves. At the top of the pyramid, there is a voice screaming, “Get the numbers up,” and the management drops their prices to pick up the volume. Bully tactics are the rule of thumb.
Meanwhile, the entrepreneurs and owner/operators who have to make decisions based on keeping the doors open are forced to play the game, focus on other segments of construction or close their doors. If it wasn’t for downsizing, and relocating last year (see October 2007 Shelter magazine, page 80), this column would now be written by the Gen-X Window Guy.
In May 2005, no one thought that our industry would see such a washed-out road ahead of us, and some of the mega-companies are in mega-trouble.
One in particular, SelectBuild, is really struggling. My information is always verified by fact, and SelectBuild’s first quarter produced a $33.9 million loss. In my travels around Vegas, I discovered one of the company’s yards had an “available” banner across the abandoned building and 55 idle trucks in the rear yard.
A Select Few
Entrepreneurs built this country. Folks who had an idea put their butts on the line, took a risk and believed that they had the best idea that ever passed through brain cells. Owners don’t want to see sweat go to waste, and most make decisions that ensure there are decisions to make a year from now. I wish no demise to any company who doesn’t have a goal to see everyone but them close their doors; but, if that is the goal, I must then quote Simon Cowell from “American Idol:” “Off You Go.”
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