Strategic Thinking

A session by Ted Garrison, president of Garrison Associates, Ormond Beach, Fla., addressed strategic thinking for contractors. Garrison talked about the construction industry as a whole, and contracting businesses specifically.

“The construction industry was in trouble before the recession. We were just confused. But we were so busy we did not take the time to notice,” Garrison said.

In 2005 — in the middle of one of the biggest construction booms in history — 40 percent of contractors did not make a profit.

Garrison pointed out that the construction industry had an extremely high turnover ratio, ranking second only to the restaurant industry.

“One of the first signs of decline of an industry is when you can’t find and hire good, quality people. We hid it because we were busy,” said Garrison. “We all have to take accountability for the industry.”

Garrison was quick to point out that there is a lot of construction work to be had. While the market is not where it was five years ago, it is still an $800 billion industry. He asked the audience why they were experiencing a work shortage, and why they were unable to turn a profit.

“We need to be more creative and start using the right side of our brain also. We need to do that to create a better business model for our industry,” Garrison said.

He pointed out that the companies that constantly go out of business are those that try to compete in the lowest-cost environment. The market can only allow for one low-cost business and, due to the low-profit margins, the rest of the low-cost operations will not be able to make it. The high-price companies manage to keep going because they differentiate themselves.

“You need to outthink competition, not outmuscle them,” Garrison said. “We have all these myths. One of which is that we have to compete on price. This is not true. One, you don’t have to bid that job and play in that arena. Two, you can compete in that environment by competing on value. We have to be different than our competitors. When you are different you don’t need to compete with them. They are not a competitor.”

He explained that 17 percent of the public will always buy value. Unfortunately, those individuals already have companies they deal with and you will not have the opportunity to bid to them. Another 27 percent are Wal-Mart shoppers and will only go with the cheapest option. However, there is the 56 percent in the middle who will buy for either price or value.

“Those are the people you want to get in front of. But, it’s important to remember that these individuals buy on price when they can’t distinguish value. It is our fault if we can’t explain the value of the system to them,” Garrison said.

“How many people wake up in the morning and say ‘I feel like buying some sheet metal today?’ The question is why are we trying to sell something that nobody wants? Who told you that was a good idea? Wouldn’t it be better to sell something they want? What do they want? They have a need or problem that we need to solve. We need to explain the value we deliver.”

New President and Awards

Robert Zahner, senior vice president of A. Zahner Co., Kansas City, Mo., received the SMACNA Contractor of the Year award.

“The old adage ‘when you want something done, ask a busy man’ applies to this year’s recipient,” said Richard Rivera, 2012 SMACNA outgoing president. “Robert continues to amaze us all with his focus and commitment and we are all grateful for his leadership and service to the industry.”

In addition to the normal challenges of the position, Zahner navigated a leadership transition assuming the co-chair title from a 14-year veteran of the position. For the past year he worked through the challenges that occurred as a result of the leadership change at SMACNA’s labor partner — SMART, the International Association of Sheet Metal, Air, Rail, and Transportation Workers (formerly the Sheet Metal Workers’ International Association).

Zahner’s years of service to SMACNA include chairing the Architectural Sheet Metal Council and serving on the SMACNA Board of Directors, the SMACNA Budget and Finance Committee, the High Performing Contractor Task Force, the Products and Programs Coordinating Committee, the Siding and Decking Task Force, the SMACNA Testing and Research Institute Board of Directors, the SMACNA/Sheet Metal Workers International Association (SMWIA) Best Practices Market Expansion Task Force, and the SMACNA Strategic Planning Committee.

Howard Stine, executive vice president of Charles E. Jarrell Contracting in Earth City, Mo., was elected to serve as president. His term in office began at the close of the convention.

Stine has taken an active role in SMACNA leadership for many years. Currently he is vice chair of the Budget and Finance Committee, chair of the Investment Committee, and a trustee on the Industry Fund of the United States.

Among his past service to SMACNA and the industry is membership on the SMACNA Board of Directors from 2005 to 2009. He has served as co-chair of the National Energy Management Institute (NEMI) and National Energy Management Institute Committee (NEMIC) International Certification Board. He was inducted into SMACNA’s prestigious College of Fellows in 2009. Stine and his wife Jeri are members of SMACNA’s Political Action Committee, SMAC PAC, at the chairman’s club level.

Publication date: 1/14/2013