The Finish Line
Follow the Money
So wrote Roger Waters, one of the geniuses behind Pink Floyd, in the song "Money," from the epic album "The Dark Side of the Moon."
But whatever happens to the EIFS "pie"?
Back in the golden years of Floyd and EIFS, (the '70s and '80s), EIFS was the product, to have and behold, and especially to sell and install. Now EIFS has, shall we say, a different reputation.
Sure, there are devoted users but there are a lot of paranoid specifiers and potential users who will not even touch EIFS anymore-the feeling being that it's too risky, and that they will become embroiled in all manner of problems down the road. The situation is crazy and sad, since EIFS really is such a great product. But that is the way it is, so we deal with the cards we've been dealt. Or we can try to change the deck.
Saucerful of secretsWhen clients who are thinking about getting into the EIFS business in this century ask me for my two cents about how to proceed, I usually ask them to listen to me run-on about how things were and how things are now, and how they got the way they are. Here's my answer:
Ask yourself this question: What product can you buy now that is cheaper and better than 20 years ago? The only one I can think of is computers, which just seem to get better and cheaper, and now are more like an appliance than a gadget for geeks.
Now consider EIFS. You can buy a pail of EIFS basecoat adhesive now for almost half of what it sold for in 1985. And that doesn't even account for inflation. What's wrong with this picture? The price of the resins and machinery and people that make it sure have not gone down. So what has? Two things: quality and margins.
Try this acid test: Ask an EIFS contractor if the products they are using today handle the same way as they did years ago. Many will tell you that they do not "feel" the same. Why is this? The formulas have changed but in what way? One way is that new and improved resins are used now compared to decades ago. This is a big enough issue with some contractors that they prefer to use, and will only use, certain brands because of their handling characteristics, or they change brands. Another way that things have changed is the amount or type of resin has sometimes changed. For instance, some adhesives and finishes use blends of resin types, rather than being, for example, "100-percent acrylic." Using blends is not bad per se and in fact is common around the world. Resin is the most expensive single large component of EIFS adhesives and finishes, and is the ingredient that gives the adhesive or finish most of its key properties. Less resin generally means lower performance and lower cost.
Adequate resin levels make the products less sensitive to field mixing errors, which can be an issue in a product like EIFS that is created on-site. But this is not where the real problem is: The real cause is the margins. Proper margins allows for a better product-you get what you pay for. In fact, some small EIFS producers have an advantage in this regard: With lower overhead and lower production costs they are able to put more of the good stuff into their products, while still maintaining competitive prices.
One of the reasons there were so few field problems with EIFS in the '70s and '80s is that there was enough profit in the overall sale and installation of EIFS that everyone made a decent buck. In other words, the margins were high enough. This includes big enough margins for everyone involved, including the producers, distributors and contractors. These reasonable margins allowed for lots of customer service, including pre-sale technical support, time to deal with specifiers, and plenty of on-site assistance. If you are wondering why there seem to be more field problems these days, this is one of the main reasons. But how did this happen?
Obscured by cloudsThe answer is easy: Unable to sell against each other through product knowledge and superior services, a downward spiral started of simply cutting prices to get the job. It became a sort of self-destructive, cannibalistic consumption-type of situation. And the bottom line is that quality suffered, and the only real victors were the jackals of the construction industry, the lawyers. But what to do about it?
Raise prices. Easy to say but hard to do. Anyone who knows much about sales and marketing knows that once you start lowering your prices, it's hard to get them back up. Buyers get used to getting a good deal, and feel that prior to getting lower prices, that they were getting gouged. Not so. Prior to the price war, they were getting proper prices. Now the end users are getting what they pay for.
In doing market studies, I am sure that the EIFS industry could withstand easily a 20-percent increase in the installed price for its product. This would still make EIFS a terrific bargain, because there is no other product that has all of EIFS's features and benefits that is anywhere near EIFS in price. But how can this be done?
This is a real problem. Collusion between competitors in an industry is a no-no-it is called "price fixing" and there are very heavy duty federal laws about it. To get prices up where they belong takes resolve and leadership, and that is one of differences between the good old days and now. Sure, there are many well-known brand names in the EIFS industry but who is the leader nowadays? It depends on what aspect of EIFS one is talking about, such as breadth of product offering vs. quality of the product vs. marketing savvy. But from my perspective, there is not one company that does all these things well. What to do about this state of affairs?
Here is my wish list for what the EIFS industry should do:
• Come up with a standard way of doing EIFS with drainage. There are too many different ways to do drainage at this time and this confuses specifiers and makes designing the walls difficult.
• Mount a PR campaign focused on the public, to make sure they understand what EIFS really is and to allay their fears. This should be via the mainstream media, not just through industry trade magazines, which is akin to preaching to the choir and does not get to the real audience.
• Do an educational campaign for specifiers to make sure they understand the true state of the EIFS industry and that this product really does work fine.
• Get some language into the building codes, which requires that EIFS to be installed by contractors that have been trained on the specific system they are installing. This is a harsh step, but the current laissez-faire method of supposedly assuring that qualified people install EIFS via optional privately mandated training requirements simply does not work. Something with teeth in it is needed: legislation. It's preferable for the EIFS industry itself to offer a sensible set of requirements for this now, rather than have it rammed down the industry's throat later on by some well intentioned but clueless bureaucrat: regulate yourself lest you be regulated.
• Meet directly with those third parties that have a huge influence on EIFS, such as realtors and insurance agents. These people seem to be especially hungry for good information about EIFS. When I have spoken to these groups, they have been very interested, and grateful, in being told what is really going on with EIFS.
• Publish a small "how to use EIFS" booklet that goes over all the issues above. To see the kind of thing I have in mind, download the free "EIFS Homeowner's Guide," found at www.eifs.com.
In the era after the debacle with EIFS-clad houses in Wilmington, N.C., that put the EIFS industry back 10 years in development, there has been a sort of free-for-all in the EIFS community terms in working together as an industry. It's kind of like a bunch of kids squabbling over the size of a slice of pizza from a pie that is a fixed size, instead of making the pie bigger. This problem is what's known as market share and it's the name of the game for beer, cornflakes and other commodity products. Please note, however, that EIFS is not a generic, commodity product but is a proprietary system. The problem is the systems are being sold and installed at commodity prices. This is a business model that does not work and is not a stable long-term strategy.
I believe there are still a lot of untapped new markets for EIFS that can be opened up. This can be done by getting prices up so you can afford to develop those new markets, and can afford to take the time and re-educate the public about the benefits of EIFS and especially not to fight over "a splice of my pie."