New housing market squeezes our profits

I SPENT SOME time with a fellow phc contractor whose firm has been doing new home construction for three generations. He's ready to toss in the towel and feeling pretty low. In his end of the business, $35 per hour labor charges means he can't be competitive! Now, before you think it's a matter of his not being fast, he bid just three days total time for a two-bath home, which includes everything

I SPENT SOME time with a fellow phc contractor whose firm has been doing new home construction for three generations. He's ready to toss in the towel and feeling pretty low. In his end of the business, $35 per hour labor charges means he can't be competitive!

Now, before you think it's a matter of his not being fast, he bid just three days total time for a two-bath home, which includes everything from curb line to finished set and trim along with the HVAC. That's for two mechanics, so the total labor hours are 48.

He has virtually no mark-up on materials, so his margin is razor thin. He'd like to continue offering health insurance to his mechanics, but most of his competitors don't have benefits like that, which gives them the edge needed to beat his prices.

While it's easy to fault the builders who have become sharks where beating up subcontractors is concerned, the fault really lies with the subs that are intent on beating one another down to a point where an honest living can't be earned.

It kills me to see our industry being run into the ground by the new housing construction market. If homeowners really knew how badly quality was suffering in new housing construction, they'd have nightmares. My friend has no choice but to use the cheapest products he can find. This, in turn, drives suppliers to seek out dirt-cheap products, which often means they're going to be an import. In other instances, plumbing fixture manufacturers have bypassed the mechanical contractors and established direct accounts with the builders — effectively shifting profits from the plumbing firm to the builder.

Last year I had several builders call to ask for pricing, so just to get a feel for what was going on, I met with them. They all indicated they weren't happy with the quality of work or pricing they had from the mechanical contractor doing their work.


'We already have pricing from a number of contractors, so let's see how sharp your pencil is.'


Builder No. 1 forgot I was coming (I arrived at exactly the appointed time). He proceeded to give me copies of the other contractors' quotes (separate HVAC and plumbing contractors) and hastily blackened the numbers with a magic marker. No doubt he knew their bids could be easily read by holding the papers up to a light source. He then went on to tell me that he would be providing the plumbing fixtures because he has a direct account with the manufacturer. I was to receive the fixtures, warehouse them, transport them to the site, install them and — get this — provide a one-year warranty on the fixtures!

Builder No. 2 had requested I meet with him at the housing project to see a framed house. He would provide me with the prints and details once there. Upon arrival, there was another p-h-c contractor's truck in the unfinished driveway. I was on time, so I went in anyway. The builder and his estimator were both there with specifications in hand and so was the plumber who was already doing their work! He was installing water lines.

Now that's about as low-class as a guy can get — having other bidders visit a site while the current mechanical contractor is working. No doubt the GC was doing this deliberately in order to beat down the mechanical sub's pricing.

On top of that, he handed me a menu-like list for pricing: so much for a first-floor closet, vanity, tub and shower and the same for second-floor fixtures. I was to provide pricing for every conceivable fixture based upon its location in elevation — not its location on that floor. So, by that pricing, bathrooms could be stacked on top of each other or located at opposite corners and there would be no price differential!

Before I could leave, two more mechanical contractors arrived (about 15 minutes had elapsed), which gave me an easy way to leave without telling the GC what was on my mind. I managed to wish the plumber installing the water lines, "good luck with this character," on my way out, and he replied, "yeah, I know," in a tone that spoke volumes.

By the time I met with Builder No. 3, my expectations were so low that the meeting held no disappointments or surprises. He regaled me with lots of blustering comments about how he is affiliated with a national builder who constructs thousands of homes per year. Once again, he had a direct plumbing fixture account. "That way you don't have the hassle of meeting with the owners," he said.

He, too, handed me a laundry list of fixtures, which were also listed by story height without any consideration for location on each story. This time, the homes were much larger, averaging 5,000 sq. ft., so their location at opposite corners would have a greater impact on time and materials. I was to fill in the numbers according to what I felt was required.

"Oh, by the way," he said, "we already have pricing from a number of mechanical contractors, so let's see how sharp your pencil is."

Well, not sharp enough to put out my eye, which, I'm fairly certain, is how sharp it would have to be in order to be the "winning" bidder.

Dave Yates owns F.W. Behler, a contracting company in York, Pa. He can be reached by phone at 717/843-4920 or by e-mail at [email protected].

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