A PMI meeting speaker points to a marketplace dominated by very large and very small firms.

We all know there's a shortage of plumbers. Inevitably, that will lead to a shortage of plumbing contractors.

Carl Cullotta, vice president and senior partner of the Chicago-based sales and marketing consulting firm Frank Lynn & Associates, addressed this issue at the spring meeting of the Plumbing Manufacturers Institute (PMI), held April 9-12 in Albuquerque, N.M.. Among his key points:

  • Plumbing contractors are beginning to exhibit the same consolidation characteristics as home builders. Larger firms are getting bigger and increasing their share of the market. At the same time, the market remains highly fragmented at the low end. According to Cullotta, the average size of the top 1,000 plumbing firms has increased by around 20 percent in the last five years, mainly at the expense of medium-sized companies. However, the repair/remodel and custom home markets continue to be serviced primarily by tiny companies.

  • There are around 500,000 plumbers working in the United States, but about a third of them are age 45 and over. Since the average retirement age for plumbers and other construction trade workers is 55, that means the experienced work force will be reduced by about 167,000 in the next 10 years. That's how many plumbers need to be trained in that time span just to stay even, but expected growth in population, household formations and construction will require many more.

  • Even if the industry could somehow recruit and train enough new plumbers, it will be impacted by the loss of experience. New plumbers require more training and supervision. For manufacturers, this also has implications in the loss of brand preferences. According to Cullotta (and to anyone else close to this industry), plumbing contractors are notoriously loyal to favored brands and reluctant to change. As old-timers retire, those brand loyalties will not necessarily be transferred to successors.

  • A shortage of plumbers will inevitably lead to a shortage of plumbing contractors. Cullotta predicted the loss of as many as 15,000 annually over the next decade, while industry growth is likely to add the need for 5,000 to 8,000 additional plumbing firms. He predicted a shortfall of 3,000-4,000 contracting firms annually.

  • Hispanics are under-represented among plumbing contractors. Hispanic representation in the construction trades more than doubled between 1993 and 2003, to about 15 percent of the workforce, but they are somewhat less represented in the skilled trades, said Cullotta.

  • According to Cullotta, these demographics spell further trouble for plumbing unions. The UA has been the primary source of training, but younger workers place less value on union membership than older workers. The burden for training plumbers will fall on manufacturers and other industry participants - like Home Depot. Manufacturers will respond by making products simpler to install and repair. This trend is already underway.

    Points Of Contention

    I might quibble with a few of Cullotta's conclusions. A synonym for problem is opportunity. For instance, although Hispanics may be slightly underrepresented among plumbing contractors, that doesn't mean they will be so in the future.

    Same with his bleak outlook for unions. If they play their cards right, the UA could find its outstanding training programs more valuable than ever. Unions may not have much appeal to young people, but I think that refers more to unions in general that stifle individual initiative. The UA and other construction unions have more to offer than collective bargaining and political muscle. Their training programs are the pipe trades' version of an Ivy League education, and thus appeal to the brightest and most ambitious apprentices.

    Trouble is, the best and brightest tend to gravitate toward the biggest dollars in the commercial-industrial pipe trades. Finding and training people to become residential plumbers will be more difficult.

    Most disheartening to anyone who cares about this industry is the devaluation of the plumbing trade. It's understandable why manufacturers may need to “dumb down” their products, but what's that say about the future of the trade? Many people working today as “plumbers” are in reality low to moderately skilled assemblers who know how to connect certain nuts and bolts but have little grasp of the overall dynamics of a plumbing system.

    Don't miss Jim's program, “50 Simple Tips To Boost Your Business Writing,” to be presented at this year's ISH North America trade show in Chicago, Sept. 28-30. “It's guaranteed to freak out some English teachers,” Jim says.