CAREFUL WHAT YOU WISH FOR For all the potential gain, though, bringing trades in-house is an endeavor fraught with complications, and they’re complications that remodelers often fail to consider. The problem, essentially, is that a full-time tradesman is not just another carpenter who fits neatly into the production hierarchy. Trades have different operational needs, and if a company’s systems aren’t set up to accommodate those needs, things can get tricky.
Phil Bowman learned that lesson when his Columbus, Ohio, company, J.S. Brown & Co., brought on a full-time electrician. One complication, says Bowman, the company’s general manager, was that the electrician’s need for a stock of supplies didn’t mesh with J.S. Brown & Co.’s accounting system.
The company had no system for tracking material costs that weren’t direct job costs. That meant the electrician couldn’t realize the economies of scale that an independent contractor would have by buying parts in bulk. And if he did buy supplies that were used on different jobs, it made job-cost accounting more difficult.
“You’d get into the difficulty that if you bought a thousand feet of coaxial cable, it’s supposed to be charged to a job, or divvied up among two jobs or three jobs,” Bowman says. “Well, if only 200 feet of it was used, you had to expense the whole thousand to current jobs in progress, and it overstated some of those costs. It left our accountant pulling her hair out.”
Scheduling quickly became another problem. Originally, the electrician was supposed to only work larger projects. But it quickly became apparent that that wouldn’t keep him occupied, so the electrician’s role was expanded. Bowman had to balance two conflicting priorities. First, he had to keep his electrician busy with electrical work. Otherwise he’d end up with a high-wage earner doing fill-in jobs usually budgeted for a laborer or carpenter’s helper, which didn’t make anyone happy. But Bowman also had to serve his project manager’s needs. Everyone wanted the in-house electrician to keep project costs down; scheduling conflicts were common.
“It was, ‘I needed him over here and you need him over there’; which fire is burning the hottest at this particular moment?” Bowman says. “And that’s a pretty tough way to distribute your manpower.”
Like Bowman, Seattle remodeler Michael Fast’s efforts to operate an in-house trade were complicated by the fact that his company’s volume meant asking employees to fill dual roles. Fast once cross-trained his MRF Construction carpenters to reduce his dependence on painting contractors, whose performance disappointed him. At first, Fast says, he loved having more control over scheduling. Eventually, though, he realized that he was paying his skilled carpenters a premium to do low-cost labor.
“We were able to attract better-quality carpenters, and we wanted to leverage that skill,” Fast says. “It was nice to have the control and get [the painting] done when we needed it, but I found that if I could find good painters who focus just on painting, that would free up my people to do more profitable things.”
Besides, Fast says, his carpenters just weren’t as efficient as full-time painting crews; carpentry was his company’s core skill, not painting. “We aren’t a painting contractor, we’re a remodeling contractor, so we decided to focus on where our strengths are,” Fast says.