Remodelers: Laying Off or Ramping Up for a Rebound?

Laying off employees in a small business can be particularly difficult. “Small-business owners are facing the grim reality that they’re having to part with people they consider their extended family,” John Kabateck, executive director of the California chapter of the National Federation of Independent Business told the Los Angeles Times in December. “Unlike medium- and large-scale businesses, these are close-knit families. Telling an employee they have to leave is like evicting a close loved member of your family from your home.”

Tough Decisions

Conventional wisdom says to unhitch your “C players” first, but once that’s done and there’s still little work coming in, remodelers need to make some tough decisions. With sales off 25% and uncertainty about the future, Ron Trull, owner of Trull Building Co. outside Philadelphia, felt he had to lay off staff.

“It wasn’t easy,” he says. Trull is down to one employee in the office and two in the field from a total of seven staff. “We use more carpentry subcontractors on demand in lieu of just keeping the staff busy,” he says. Although he has scheduled work through January and February, Trull is not sure how much worse things will get. “How long will it take for the acidic trickle-down to get to us?” he asks. Layoffs can send morale to a new low point. To avoid some of that, Bob Fleming, president of Classic Remodeling & Construction, in Johns Island, S.C., suggests making all cuts at once “rather than [cutting] here and there. It’s demoralizing for employees to ask ‘Who’s going to get cut this month?’” Fleming let go four employees and doesn’t foresee more layoffs.

Linda Minde, co-owner of Tri-Lite Builders, in Chandler, Ariz., is letting attrition take its course. So is Bill Connor of William S. Connor & Co. in Indiana, who didn’t refill a project manager position from last April. Jim Strite, owner of Strite Design + Remodel, in Boise, Idaho, laid off one person and is using him as a trade partner.

Many are cutting back hours to keep people on. “Things are as slow in Minnesota as I have seen them in 36 years,” says John Sylvestre, president of Sylvestre Construction, in Minneapolis. Sylvestre met with his staff, and the employees came up with their own solution: go to 80% time and keep everyone working.

While the field staff “self-regulates,” those in the office work eight days out of 10. For example, an employee works Monday through Friday in week one and Monday through Wednesday in week two. Staff alternate so that there is always someone in the office.

New Opportunities

While adjusting for the new reality of lower volume is imperative, this down economy won’t last forever. There are opportunities even now for hiring people for marketing and/or sales.

Greg Antonioli, president of Out of the Woods Construction & Cabinetry, in Arlington, Mass., had budgeted for a new project developer in 2008, but, in an attempt to be fiscally responsible, he says, he decided to hold off on making that hire and instead took on the additional workload himself.

In hindsight, he believes he would have gotten more jobs in the pipeline if he could have been out there “chasing work” and marketing for 2009 and 2010 “instead of shouldering the load and running around dealing with piddly jobs.” He says, “I was a bottleneck, thinking we were saving money; we didn’t in the long run.” He will be looking to hire soon.

Though ramping up by hiring might be ambitious, now is a good time to set goals — develop an energy auditing division or handyman division, or go after a new market — and perhaps take on part-timers or commissioned staff.

“You can’t just sit passively and do business as you’ve done before,” says Chris Landis, co-owner with his brother Ethan of Landis Construction, in Washington, D.C. Landis has created three scenarios for 2009: a Big Audacious Goal, a “reasonable but reachable” goal, and a fallback plan. “We’re going to go after new markets and hire another salesperson who is willing to work only on commission.”