Technology Update

I read a couple of articles recently that serve as great examples of how our obsession with technology is compromising our ability to function properly. One is a boxing match on March 27th where a boxer had his cell phone fall out of his pants during a boxing match. See the video.  Don't want to miss a call or a text message even if you are in the midst of a boxing match.

The other is the result of a recent Penn State study of 152 college students who admit to texting during class, while taking a shower, and even while having sex. The participants responded to a 70-question survey about their personal texting habits. Over 34% say they sent or receive more than 100 texts in a day and all of them check their phone every four minutes for text messages. See the article.

Hi-tech Lowdown

The Negative Effects of Technology on the Construction Industry

Last week while I was enjoying a Spring Break vacation in Sarasota with my family, I was amazed to see my daughter swimming in the pool with her iPhone. Apparently she had purchased a special case that allows her to text while in the water. I can’t believe the way that smart phones have turned people into zombies. You see couples at dinner glued to their phones instead of talking, and groups of kids interacting with their handsets instead of playing together. Watching my daughter be unable to go for a swim without a phone made me sick. It also made me think about how technology has adversely affected business in general and the construction industry in particular. Although technology has been a boon to many facets of our industry, there are aspects of technological developments that have severe negative consequences.

Now let me preface this post by explaining how fascinated I have been with technology for the past 35 years. I am not a technophobe who is making Orwellian predictions, and I have never referenced the movie 2001: The Space Odyssey. I used to love to program in BASIC back in my college days. I purchased a $4,000 IBM XT for my home back in 1984 and lugged a 20-pound Compaq computer around to conduct business when portable computing wasn't even on the map. My businesses have invested in the latest hardware, software, and computer controlled manufacturing equipment. I currently own three different smart watches and Apple hasn't even released its iWatch yet. So on the technology spectrum, I run pretty close to the bleeding edge. So why would I post a criticism of technology’s negative effect on the construction industry?

I am concerned that technology is distracting our attention from what is important. While high-tech tools can make our lives easier, they can also become a permanent crutch that diverts our attention from critical factors. We become so addicted to the convenience, we forget how to do the tasks that technology is performing on our behalf. Just as we have forgotten phone numbers of loved ones with the advent of a contact database, we've forgotten how to do basic things that are critical to business. We spend more time in front of our computers than we do engaging with associates and customers.

Technology also has a habit of forcing us to become slaves to the high-tech monster. We now spend hours scanning data, inputting information, and reading irrelevant documents. Just think of the time you spend wading through mounds of daily e-mail messages. Add to that the depletion of employee productivity while they scan Facebook and shop on eBay while work needs to be performed. And top it off with the millions of dollars businesses spend on IT work to keep the monster healthy and protected from cyber-attacks. Our dedication and commitment to technology has become frightening.

So how does this affect the construction industry?

Architects were early adopters of technology, primarily through the use of computer aided design. On one hand, CAD has been one of the most incredible software tools to be developed, allowing amazing precision and reducing drafting time. On the other hand, CAD also provides a platform where one can create designs without having a solid understanding of whether the rendering will be structurally feasible. Back in the day when architects produced drawings by hand, they had to have a broad understanding of construction means and methods as well as structural elements. I have seen many a frustrated general contractor who has been forced to make sense of construction documents that have been hastily assembled by inexperienced CAD practitioners. Although CAD is a great tool, it can’t make up for a lack of understanding of basic construction principles.

The use of word processing software for the creation of specifications has also been a boon to the design community. The time it takes to pull together a 500-page project manual has been dramatically reduced since it’s so much simpler to collect detailed product specifications from manufacturers and from agencies like CSI. Unfortunately, this ease of spec assembly also makes it very easy to cut and paste incorrect data. It is very common to see finished specifications that reference an element copied from another source that has no relevance to the project at hand. Specifications slapped together with the help of Microsoft Word can create more problems than they solve.

Technology also creates challenges for contractors. Although tools like cell phones, tablet computers, lasers, estimating software, and spreadsheets have made everyone’s life easier, they also create problems. New means of communicating such as texting, e-mail, and cell phones can create a flood of information that becomes overwhelming. It is not uncommon to have to wade through a couple of hours of correspondence in a typical day. Estimating software and spreadsheets make it very simple to manage a complex network of numbers. Conversely, they also increase the risk of making a simple error that can mean the difference in making or losing money on a contract. Contractors are also having a more difficult time finding labor to perform the work since our labor pool is more interested sitting in front of a computer than swinging a hammer.

Manufacturers and distributors have benefited from having an online platform for storing technical product data. This enables a typical manufacturer to post detailed information on product details, drawing files, performance data, and installation instructions. In the past, this information was communicated directly to customers by a salesperson who had extensive training and served as a technical consultant to architects and contractors. Now manufacturers hire salespeople and train them on where to direct customers for the technical data. They have sparse background on the particulars of their product offering. Gone are the days where the sales consultant would train architects on product design, structural issues, finishes, and general construction practices. This information is now gleaned from accessing the internet. Architects have reduced their direct contact with manufacturers to AIA approved CES presentations that are bland overviews of the product segment. The main source of construction information has transferred from the trained consultant to Google.

I’m not the only one who fears the direction technology is taking us in. Steve Wozniak, Elon Musk, and Bill Gates have all been recently quoted on their concerns for the negative effects of our high-tech explosion. Musk was recently quoted as saying, “Artificial Intelligence is the biggest existential threat to mankind.” Gates was quoted as saying, “It’s a scenario that doesn't bode well for our future as a species.” I don’t know if I think the current challenges we struggle with today are that monumental, but it is something to think about for the next couple of decades. My immediate concern for now, however, is that I have a daughter who lives her life in a small box called an iPhone. 

Redefining Sustainability

My company is currently in the process of restoring over 1,600 window sash for a large historic project in Buffalo, NY. As I recently walked through our plant and saw the thousands of windows in various stages of repair, I reflected upon how we were repairing windows that are over 135 years old. This made me think about the current state of the construction industry and what our expectations are for the life of a building structure and the components that make up that structure. Over the past ten years, there has been a great deal of talk about Green Buildings and sustainability, but how many of these “Green” commercial or residential buildings are designed or constructed to last for centuries? When will the life cycle of the structure and the construction materials themselves become factors in the sustainability criteria? It seems to me that more effort is placed on whether a material is recyclable than whether it can perform over the long haul. It is time that the design community, manufacturers, and construction processes begin to consider the life of the building if we are truly going to incorporate sustainability in our industry.

Back in 1993, the U.S. Green Building Council developed the LEED green building rating system as a way to guide building owners to be environmentally accountable and to use resources responsibly. The LEED system has had a profound effect upon the design community by motivating advancements in energy efficiency, use of recyclable materials, incorporation of natural daylight, and reuse of water. The LEED program made the word “sustainability” a household term over the past ten years, but has it truly redefined sustainable design? I would submit that LEED has been most successful in motivating changes in how structures consume natural resources and how the structure can be recycled at the end of its useful life. Very little emphasis has been put on designing a structure and using component materials that will last for many generations.

I like the definition of sustainability from author and professor Geir B. Asheim. “Sustainability is defined as a requirement of our generation to manage the resource base such that the average quality of life that we ensure ourselves can potentially be shared by all future generations.” I would submit that true sustainability in the construction industry implies that we construct edifices that can be used for many generations. It does not mean that we build a structure that has to have its major components replaced every 20 years.

Take windows for example. The major window manufacturers have developed designs that require the replacement of the entire window once the insulated glass seal has failed. Although the window is made of materials that can be recycled, it isn’t designed for multi-generational, long-term use. Changes in the glazing details that would facilitate glass replacement could dramatically extend the lifespan of these products. Other manufacturers use inexpensive materials such as vinyl for major structural members that have spurious life expectancy. Ask any window manufacturer for the life expectancy of their products and they will refer to their 10 year product and 20 year glass warranties. Is it unreasonable to expect a window to last for more than 20 years? I don’t think so.

Other products such as appliances, finishes, roofing, HVAC, lighting, siding, etc. also have very limited life expectancies. Some promote lifetime warranties that are so burdened with legalese they are rendered useless.  By limiting the warranty to the original purchaser, prorating the warranty every year, and limiting exposure, the warranty actually protects the manufacturer more than the purchaser. American manufacturers have become more concerned with cutting costs than building better products. If manufacturers made changes in designs and the base materials used in fabrication, they could dramatically improve the expected years of service. Although many of the changes in materials will increase prices, there is a market for more durable products.

It’s time that the construction industry begins to take the life cycle of our new structures more seriously. We need to make advances in the quality of our construction designs and materials for the industry to truly become driven by sustainability. We should view our work as a testament for future generations rather than a disposable structure that will eventually be long forgotten.

Re-View Project Highlight: Provo City Center Temple

In December of 2010, the Provo Tabernacle succumbed to a fire, leaving only a masonry shell. Over the past two years the site has been under construction where the construction team excavated 40 feet below the Temple to build two levels beneath the surface. This mammoth undertaking also involves a historic restoration of the original Tabernacle.

Re-View is fabricating and installing custom mahogany windows with custom art glass for the original building. Each window has to be manufactured to fit a uniquely shaped window opening including very complex curves and angles. The laminated, insulated, art glass is extremely heavy, making some of the units weigh close to 1,000 pounds. The following pictures are of Re-View's work in our plant and in the field:

Reflections on 2014

As I sit at my desk during the final week of the year, I am always amazed at how business comes to a screeching halt during the holidays. One good thing about the receding pace of work is that it gives me time to reflect on the business. The past year has been an exciting one for many in the construction industry. The leading economic indicators for commercial and residential construction are all showing steady increases. Architects are hiring again, contractors are more optimistic, developers are taking risks, and manufacturers are investing for the future. But just as is always the case, there are many challenges for us in the upcoming year. Here are a few of the things I have learned in 2014.

Make Hay While the Sun Shines

Although the construction industry is far from achieving a high growth phase, we have been steadily moving forward for the past couple of years. Housing starts are slowly recovering and employment in the sector has made steady gains. The value of construction by segment reflects past growth and points to a more predictable future. Although these statistics do not indicate a boom year for the industry, there will be more opportunities for all in the year ahead. What is key about this steady growth scenario is that the players who have survived the recession are in great shape to capitalize on stable growth. Manufacturers are much leaner, architects have pruned deadwood, and contractors are staffed to meet current market demands. Weak competitors have also been culled from the marketplace, making for a more promising climate to conduct business. Now is the time to start your engines and leverage the changes that were dealt by the great recession. Don’t miss out on the opportunities that 2015 will bring by staying in that familiar hunkered-down posture of the last seven years. 

Don’t Count on the Government

Maybe I have become jaded over the decades, but I have come to the conclusion that you cannot run a business based upon what may happen in the State or Federal government.  We do a great deal of preservation work on governmental buildings and my first-hand view of the waste of governmental funds is nauseating. Although I have often been the recipient of this largess, it is a shame our leaders are not better stewards with our tax dollars. I have also had the pleasure of battling agencies like OSHA and have seen chalk boards in their offices with targeted penalty dollars to be assessed to local businesses. Add to that the 27 percent increase in health care costs for our business and one can quickly lose faith. I don’t have a solution for the fiasco; politics is just politics.

On the other side of ineptitude of governmental decision making, our industry just received an early Christmas present from Congress. Two weeks ago, they voted to allow businesses to depreciate up to $500,000 in machinery/equipment purchases for 2014. This move is intended to provide manufacturers the incentive to make investments in plant and equipment. It’s is a good program to motivate investment to drive the economy. Unfortunately Congress waited until the last week of the year to approve the move so it became a windfall for companies like mine that have already made such investments. These days I just sit back and see what craziness comes from Washington. I’ve found that a good strategy to employ is to take the lumps when lumps are served and take the money and run when the wind blows your way.

Good People are Harder to Find

One would think that given our high unemployment rate for the past five years, it would be easy to find people who are qualified and want to work. I haven’t found that to be the case. I believe there is a diminished pool of talented people who want to perform the physical labor associated with construction activity.  I don’t know if it has something to do with the millennial generation, an aging workforce, the rise in obesity, or just a gradual degradation of our work ethic.  It might have something to do with all of the above. I like this video from Mike Rowe of the show Dirty Jobs expressing his concern for the diminished interest in occupations requiring hard work. Regardless of the cause, the industry is going to have to work harder at finding people willing and able to work. In addition to spending more effort to sift through the rank and file, we are going to have to be willing to pay more for people who want to work and learn the trade.

 Invest in Yourself

There has been a great deal of news recently about unrest in the United States around race, authority, and governmental responsibility. It is time that we stop looking outside of ourselves for change. Real change happens from within.  If you invest in yourself, your faith, your family, your friends, and your company, you will discover the quickest route to positive change. We are becoming a country of spectators who are waiting for someone else to lead us to satisfaction. Wealth is not to be found in the next lottery ticket. Break this trend by becoming a personal change agent. Take the individual responsibility to engage yourself in personal improvement and you will see the world change around you.

Believe in Miracles

Last October, I watched with the rest of the country as a baseball team surprised the world with its performance in pursuit of the World Series.  The Kansas City Royals came out of nowhere as a remote Wild Card entry to come within one game of winning it all.  They were successful by believing the impossible was possible and by not giving credence to the naysayers. All of a sudden a group of kids who love the game of baseball were making history. It is time to begin believing in miracles and believing in yourself. As my teenage daughter said, miracles are like pimples; once you look for them you find them everywhere.

So I tip my hat to 2014 and head into 2015 with hope, excitement, and confidence. Although our path will still be littered with challenges, there are exciting opportunities ahead for those who are brave enough to embrace them. 

Unhealthy Insurance

For some reason, I find myself gravitating more to old Bob Dylan music than usual.  I am particularly fond of the song, “The Times They are A-Changin’ ”.I guess I find this song comforting as I navigate changes in the construction industry. As a business owner, the changes in health insurance are on the top of my list.

Professionals in the construction industry are quite familiar with how insurance affects our industry since we contend with all types of coverage in many different aspects of the business.  Coverage such as bonding, general liability, workers compensation, OCIP, CCIP, and others are just a part of doing business.  Health insurance, on the other hand, has become a major challenge whether you are the owner of the business or the guy swinging a hammer in the field.

Of all of the political changes that have emerged from Washington over the past 50 years, I would have to say that the passing of the Affordable Care Act (ACA) back in 2010 surpasses them all in creating controversy. The new law has created discontent from rich to poor and everyone in between because it involves significant changes for all.  This post is not another bitch session on the unconstitutionality of Affordable Care, or a politically charged diatribe.  I just want to outline the challenges that confront many of us in the construction industry.

According to the Census Bureau, 53.9% of the total population is covered by an employer based health plan.  A very high percentage of architects, general contractors, owners, subcontractors, and union members are beneficiaries of this type of coverage. The average cost of such health benefits is $2.70 per hour or 8.5% of total average compensation.  So we’re talking about significant costs that will dramatically impact this type of coverage in the future as these costs increase.

I wasn’t the only one who found the provisions in the ACA to be complicated as it was being considered on Capitol Hill, signed into law, and contested at the Supreme Court.  The original documents were said to be over 10,000 pages long and many people in Congress even admitted that they didn’t fully understand its implications.  The law itself is 2,409 pages long.  The program went into effect on January 2014 and all of its effects on healthcare in the United States have yet to be seen.

Our company decided to grandfather our existing program back in December 2013 so we could provide the same level of coverage to our employees for the current year.  Over the past decade, we have become familiar with double-digit increases in health insurance costs and have changed from one insurer to another in an attempt to purchase the best deal available in the marketplace. We are now in a position where we have to pay the new rates that are a result of the implementation of the ACA.  Currently we are confronting a 52% increase to renew our coverage for 2015.  Yes, you heard that correctly.  Fifty-two percent!

So what’s a company that is confronting such an explosion in overhead cost do when it already is one of the single largest line items on the financial statement?  We really only have the following options:

1. Absorb the entire increase as a company and increase our prices in the marketplace to cover the difference.  This will result in our customers paying for the added cost of insurance, or will drive the company out of business if we fail to remain competitive.
2. Switch to a self-insurance alternative where the company assumes the risk that our employment base will not suffer catastrophic costs.  My company is in the historic window business; we are not actuarial experts who can effectively gamble on future health outcomes.  We also have fewer than 30 employees, making this option highly risky.
3. Change the coverage of our current plans to new plans where there are higher deductibles, increases in co-pay amounts, reductions in total coverage, and decreases in prescription coverage.  These changes reduce the premiums, but effectively transfer the health costs to the employee who has to fork over more money for every procedure.
4. Change the amount the company contributes to the individual and family plans.  This results in lower corporate costs, but transfers increases in coverage to the employee.
5. Eliminate all coverage and ask everyone to purchase their own insurance on the exchanges.  Who knows what this would mean for our employees?

Our company will probably choose some combination of the above alternatives to meet the challenge.  So in essence, the burden of the costs associated with ACA will be shouldered jointly by the company and by our employees.  This wouldn’t be an issue if the company was flush with cash and our employees were paid like investment bankers.  But that’s not the case at Re-View, nor is it the case for most companies engaged in the construction industry.

What are you going to do?  Here is what the esteemed management consultant Bob Dylan would do:

“Come gather ‘round people wherever you roam

And admit that the waters around you have grown

And accept it that soon you’ll be drenched to the bone

If your time to you is worth savin’

Then you better start swimmin’ or you sink like a stone

For the times they are a changin’”

I Need Some Help

I was having lunch the other day with a friend of mine who works in one of the large law firms in town when the topic of hiring new employees came up.  Although the type of employee one hires for a law firm is quite different from the people I hire for our manufacturing plant, the similarities of our frustrations were incredible.  Our biggest complaint was how difficult it is to find employees who have a passion for work.  Given the fact that the unemployment rate in the United States is around 6.2%, one would think that there are a lot of people out there who are very hungry for employment.  That has not been my experience.  The biggest challenge my company faces right now is finding good employees. This made me wonder what’s going on in this country that is driving a general malaise in the workforce.

I tend to use a lot of sports analogies in running a business.  One of my favorites is the example of how a successful company must attract the best people in the same way a championship team selects the best players.  It is also critically important to have the right people in the right positions.  You won’t make it very far in the NFL by having your wide receiver play on the offensive line.  Jim Collins’ book “Good to Great” emphasizes the importance of effective staff placement.  Since the team is of critical importance, this applies more pressure to hiring the right people.  The days of hiring based upon whether someone can fog a mirror are gone forever.

Last year, I attended a preservation conference where RudyChristian spoke on the serious decline of people trained in the traditional building trades.  The general lack of interest from the youth of America in the trades has caused many schools to discontinue offering these degrees.  We experienced this phenomena 15 years ago when it became increasingly difficult to find talented craftsmen.  As a result, Re-View began to invest in automated equipment that enabled us to manufacture period work without relying on master carpenters for every process.  These investments allowed the company to grow despite the dearth of experienced talent.  Now we are having a major challenge just finding people who want to work in general, never mind finding someone with experience in their trade.  If the people who are protesting raising the minimum wage to $15 applied the same amount of energy to showing up for work and applying themselves every day, I have a $15+ job available for them right now.

This made me wonder whether we are dealing with a generational trend.  Is there something about the psyche of the Millennial generation that contributes to my challenges in finding people with a strong work ethic?  Millennials are defined as people in the United States who are 18 to 35 years old.  William Strauss and Neil Howe wrote several books on the Millennials and generational theory, and they state we are in a period of generational crisis where the current generation is demanding change.  This crisis is largely a result of 9-11, the economic downturn, and the stagnation in government.  Some of the prominent traits of this generation are a sense of entitlement and a narcissistic demeanor.   Jean Twenge wrote a book about the Millennials titled “Generation Me” where she concluded that narcissism is markedly higher in the Millennials than previous generations.   I think I’m on to something.

So let’s take a look at how these generational trends affect a business.  Millennials have a distrust of the country’s institutions, which includes companies like mine.  They don’t think in terms of what they can do for the company as much as what the company can do for them.  Their work is a means to engage in other endeavors rather than as an opportunity to create a career.  Millennials expect to get paid well and move up the corporate ladder as part of the deal, not as a result of expending the extra work to improve your ability and standing.  It’s better to get something for nothing than have to work hard to earn it.  Sitting behind a computer terminal is much more desirable than labor intensive occupations.  Instead of being lucky to have a good job, they feel their employers are lucky to have them show up for work.  After that depressing profile, I am starting to agree with Twenge that we are truly in a crisis right now!

Although I generalize profusely about millions of people above, these trends are having a dramatic effect on businesses’ ability to find people who want to work in either the trades or manufacturing.  Companies are going to have to pay more and have better benefits while they receive reduced output.  There will also be fewer people in the marketplace looking for work that involves sweating for eight hours a day.  If you want someone to work on weekends or extra hours, you had better be willing to compensate them well for the effort.  Team building consultants will no longer be able to use the term “There is no I in the word TEAM” since the employment base is primarily concerned with themselves.  It’s a new world, baby.

I guess we baby boomers have nobody to blame but ourselves.  From the start we spoiled our kids with lavish birthday parties, organized sports for every season, the latest in fashion, personal automobiles, etc.  Helicopter parents were always there to swoop in and take care of any problem no matter how big or small.  Kids were too busy in the summer with their organized activities to hold down a job.  I guess I never should have provided trophies for the losing hockey team back when I coached because I was just encouraging that sense of entitlement. Essentially, we got what we asked for.

So what is a business to do?  Last week, as I dropped my daughter off at college, I told her not to worry about the fact that her art college was 60% female and that a high percentage of the males were gay.  I told her she was more than capable of overcoming the statistical odds if she were serious about finding someone to date.  My advice was to embrace the challenge.  I think that advice also works for businesses that are trying to attract talent during these challenging times.  There are good people out there.  It is just going to take more effort and a strong dose of patience to find them.