Lately I’ve been conditioned to cringe even before hearing the reply when I ask people around the industry, “How’s business?” The construction slump has left most plumbing and mechanical contractors as battered and bruised as Taliban wives.
Thus it is that the ears perk up when hearing something different than a funeral dirge, like when I asked that question of a mechanical contractor recently and got this response:
“Oh, it’s bad out there. We’re hanging on for now, but our bookings have dropped off a cliff. But you know what, in the long run this will turn out for the best. The crunch is helping to drive the guys who don’t know what they’re doing out of the industry. We’ll survive, and so will our strongest competitors. That’s OK, because it means when business picks up again maybe sensible bids will have a chance to prevail. It’s been a long time since that happened, even before the market went bust.”
Not his exact words, since I wasn’t recording or taking notes, but that’s the gist of our conversation. His assessment touches on a harsh truth about recessions.
This downturn is more painful than any since the Great Depression, and only the coldest of heart would cheer it on. Yet now that we’re enduring it, it’s worth pointing out that recessions are capitalism’s way of dispensing with excess.
Banks made too many goofy loans to finance too many houses and buildings people couldn’t afford, which reverberated into more construction than there were competent contractors and trade workers to handle. Now a shakeout is underway at all levels (although not as thorough as it would be without government intervention, but that’s a story for a different day).
Recessions milder than this one used to occur in the United States pretty regularly at four- to five-year intervals. Then, from 1982-2007, except for two minor speed bumps in the early-’90s and briefly in 2001, we experienced the greatest quarter-century of economic growth in our nation’s history. The 2008-2009 collapse can be viewed as payback for that uncommonly long run of good fortune.
Yet as bad as things are, the desperation meter doesn’t compare with the Great Depression. Back then a quarter of the labor market was out of work, without welfare and unemployment checks to help out. Today, more than nine out of 10 people are still employed, still paying their mortgages and still in need of our industry’s services. PHC service firms have been hit less severely than construction contractors, and some have hardly noticed any slump at all.
Another silver lining comes from the unemployment data. Of course, it’s not just data, but real people and families that are suffering, and there are plenty of them. Hardly a week goes by when I don’t hear of someone I know losing his or her job, and I’m sure many of you can say the same thing. We can commiserate with their pain, yet at the same time find a silver lining in it.
From your perspective as contractors, the present job market represents your best chance to overcome the industry’s most pressing and lingering problem - finding good people.
Until the last year or so, just about anybody worth hiring was already employed. Not anymore. Some very capable plumbers, fitters, office staff and management personnel have been laid off. For the first time in decades, this industry’s job market is tilting in favor of employers.
Some of the best prospects can be found among former competitors. They have failed at running a contracting business, but many of them are superb mechanics and project managers who stand chastened with new respect for business owners with bills to pay and a payroll to meet.
Oh great! So what if good people are available, when you don’t have enough work to take them on.
Think that through. Many service firms could justify adding a truck or two if only they had worthwhile technicians to operate them. Construction firms have a harder time adding payroll these days, but why not see if some of those former competitors might be able to bring in enough new business to justify hiring them.
In any case, stay positive. Recognize that this whopper of a recession won’t last forever and may well have bottomed out. While you’re struggling to stay in business, try to devote a little time each day to think ahead about how you’re going to capitalize when the market bounces back.