Message from Doug...

Homebuilder Activity

One of the ways I measure the activity of homebuilding companies here in Atlanta is by studying their balances with their Trade contractors and suppliers.  This is the dollar amount homebuilding companies have outstanding with their subcontractors.  If a building company is consistent with how it pays its Trades and suppliers, then this metric is quite useful.  It can provide a good picture of how much work is moving through that company.  

By studying homebuilder balances from the past 12 months, it seems that building activity peaked in October 2013.  Then, balances fell each month, reaching their lowest point in February of this year.  Activity was slowed by the Holidays and the brutal weather we saw in January and February.  Since February, homebuilder balances have slowly risen each month. 

Another reason for this slowdown in activity is lot availability.  For some homebuilders, they sold homes in 2013 at a quicker rate than they anticipated.  Their building outpaced their replacement of lots. 

I’ve talked with many homebuilding companies recently, and the first four months of the year appear to be the calm before the storm.  Many of those companies are wrapping up their current subdivisions and are heavily engaged in development.  They are either opening new subdivisions, rushing to finish their new developments, or in the process of purchasing raw land to bring lots online later this year.

The amount of house lots that will be available the second half of this year will be something we haven’t seen in quite a while.  We’ll keep our fingers crossed that the buyers will be there as well.

Labor Pains

This surge in building activity will bring a few challenges with it.  Material prices will increase.  And, most Trade contractors will have a difficult time finding laborers to get the work done.

One thing I often hear from homebuilders is that their current Trade contractors are not willing to grow to meet the increase in work activity.  These Trades have chosen not to add more crews, trucks or equipment. 

For many contractors, this decision is based on the pounding they took during the Great Recession.  They either lack the capital or the gumption to climb that ladder again.  I understand.  High overhead and truck & equipment loans continue even if the work stops coming in.

This is forcing builders to find additional Trades to get their work done.  We first saw this last Summer when homebuilders were desperate to find key Trades and suppliers to keep their homes on schedule.

At Herbert Construction, we have not taken the “no growth” stance that many of our peers are adopting.  We still have trucks and equipment that aren’t fully utilized.  We have the capability to increase our workload without investing in more trucks and other equipment.  We’ve refined our hiring and training systems to reduce some of the typical labor problems.

We are open for business and we’re full steam ahead.  If we were a doctor, the sign in front of our building would read, “Now Accepting New Patients.”

I am excited about our position.  We can handle any increase in activity from our current clients.  And, we have spots available for a few good homebuilding companies to join our team.

To Your Success,

 

P.S. Even with the flurry of activity you are experiencing, remember to call “Pops” on June 15th – Father’s Day.  And, if you are a Dad, don’t be too busy working to be a good father to your own kids.

Recent Referrals

It’s June! Flag Day, Father’s Day and the First Day of Summer! What’s not to be happy about? Just as sure as the days become longer, we want to be sure to thank our great customers and friends who have recently referred our company:

Jimmy Coxe, Loren Construction – Homebuilder  www.LorenConstruction.com

Mike Webber, Ceratech, Inc. – Supplier  www.CeratechInc.com

Mike Guinan, Fortress Construction – Homebuilder  www.FortressConstruction.com

Foundation Success

How Herbert Construction Co. Turned A Footing Forming System Into A Competitive Advantage

 

Doug’s Note: I was asked by the editor of Concrete Contractor Magazine to write this article about our company’s unique footing forming system.  The article appeared in the April 2014 issue of that influential magazine. 

In the early 1990s Barry Herbert, then President of concrete construction company Herbert Construction Co. based in Otsego, MI, learned of an alternative method for forming footings.  Barry had spoken with Ron Colvin, a concrete contractor from Berrien Springs, MI about footing construction.  The two had become friends through their membership in the Concrete Foundations Association of North America (CFA).  Colvin was using a footing forming system that eliminated the 2x4 lumber that is typically used for footing construction. 

My father Barry, my brother Mike, and I, visited Colvin.  Colvin showed us a couple of his jobsites where we saw the forming system in action.  The system involved the use of thin-gauge metal forms instead of the typical wood 2x4s used to form the sides of the footing.  The forms were simple to set up and prepare for concrete placement.  Once the footing concrete was placed, the forms were easily removed and ready to be used again.

Concrete has been placed in this footing
using grade pins and a laser level.

 

After seeing the system in action, we decided to implement the system within our own company.  We hired a steel company to cut and bend the thin-gauge metal and set about teaching our field crews how to use the system.  The system was easy to learn and simple to use, which shortened the learning curve.  However, the buy-in from our employees to try something new took a little longer to work through. 

But, once the system was up and running, its effectiveness was evident.  No longer having to buy new 2x4s resulted in a huge cost savings.  However, the biggest benefit was the increased productivity of the new system over the traditional method.  It took fewer man-hours to set up the basement footings.

In 1998 Herbert Construction Co. acquired a concrete construction company in Atlanta.  We brought the footing system from the sandy soil of Southwest Michigan to the red clay of Georgia. 

After using the steel footing system for years, we were looking for ways to further improve the system.  Mike Herbert came up with the idea to replace the steel forms with a plastic material.  We experimented with different variations and settled on a plastic used in the trucking industry.  The new plastic was lighter and easier to work with than the previous steel material.  An already good system was made even better.

Labor Problem Solver

Herbert Construction Co. uses a
plastic footing forming system to
prepare this footing for
concrete placement.

The use of this unique footing forming system has helped Herbert Construction Co. solve some of our labor challenges, as well.  Over the years, the skilled labor force in Atlanta has dried up.  Many of our new hires have never learned how to use a shovel or swing a pick.  We have to show them how to do that during their first day of training.  This system, however, eliminates the need for teaching new employees how to measure and cut 2x4s and set them to grade.

We are able to quickly train new employees on the footing system.  This allows the unskilled laborers to be productive once they get out on the jobsite.  A reduced learning curve leads to quicker profitability with the new employees.

Eco-friendly System

In our Atlanta market, most of the 2x4s used to form basement footings are discarded on the jobsite.  Instead of being re-used on the next foundation, they are left onsite as construction debris, then thrown into a construction dumpster and brought to a landfill.

The footing forming system allows the
forms to be stripped quickly and used
on the next foundation, which reduces
waste and increases productivity.

By using a reusable, recyclable footing form instead of the typical forming method, we have saved over 2.4 million feet of lumber from going to the landfills.  This savings is the equivalent of a line of 2x4’s stretching from Atlanta to St. Louis, MO.

Competitive advantage

Herbert Construction Co. is the only concrete contractor in the Atlanta market that uses this type of footing system.  It has become a way to differentiate our company from the many other contractors in the Metro region.  The home builder is responsible for the disposal of the traditional 2x4 lumber used to form basement foundations.  The lumber remains in a rough pile on the jobsite until after the basement has been backfilled, then the home builder pays to have it removed.  We are able to show prospective builder customers that we can eliminate that cost for them. 

In addition to reduced customer costs, Herbert jobsites are cleaner and less cluttered because there isn’t a pile of used lumber near the construction driveway.  We stress the cleanliness of our jobsites to our customers and prospects. “Our jobsites are cleaner and less cluttered because the typical pile of used lumber isn’t present,” says Barry Herbert.

There’s also an environmentally-conscious marketing aspect of the system.  Quite a few of our customers appreciate the fact that – by utilizing our company – they are sending less trash to the landfill.  They can use this as an eco-friendly differentiator when meeting with prospective homeowner clients.

The footing for this basement foundation
has been set up and is ready for
inspection.  After inspection, concrete
will be placed and the footing forms
will be stripped.

Most importantly for our company, the system’s speed allows us to set up footings with fewer man-hours than a wood forming system.  This gives us a productivity advantage over other companies.

By frequently analyzing our field operations and how we perform our work, Herbert Construction Co. strives to increase our productivity.  Barry Herbert explains, “We look at how we can improve our jobsite efficiency and reduce our labor costs.  We are constantly trying to improve the way we do things.”  The refinement of a unique footing system is just one way we have accomplished that.

Herbert Construction Attends Career Day

 

A recent statistic said that half of all the buildings we will need by the year 2030 have not yet been built. That means that Construction will be alive and well for some time! But, anyone in the construction business would probably agree that skilled labor has become harder and harder to find. The Great Recession forced many in construction to find other careers. Herbert Construction is dedicated to educating our youth about the exciting possibilities of a career in construction. Recently Chris Barrett and her daughter Lindsey participated in Career Day at Addison Elementary School in Marietta, GA. The kids asked really great questions, and helped to further the company's commitment to keeping kids aware of jobs in construction.

Did You Know?

According to the National Highway Traffic Safety Administration, texting while driving is the cause of 18 percent of all fatal crashes and 23% of all car accidents. That’s 1.5 million crashes every year! Texting while driving also makes a crash up to 23 times more likely!

So, as we head into the busy Summer driving season, why not consider taking a pledge not to text and drive? No text message, funny cat video, or work email is worth risking your life for. Go to www.itcanwait.com.