What does the Future of Construction Look Like?
Is the subcontractor ultimately going to become extinct?
Is it possible that what was once old could become our future? If we look back at construction to pre-World War II, it was common to see the general contractor self-perform much of the work on a project. They would have carpenters and a few other trades.
Since plastering in southern California was inside and outdoors, many general contractors would self-perform this work, as well. There certainly were subcontractors but they were usually electricians or plumbers. After the war, tract houses and the mass production boom created the need for the specialists who could deliver quality and high production. These subcontractors could produce better quality and lower the cost through efficiency, production and skilled supervisors who were experts at the craft. The end result was doing a large volume of specialized work. The added classifications for various subcontractor licenses prove the point. But is that changing? We seem to be bundling and merging; a lathing license classification is gone and others have merged. Is the subcontractor ultimately going to become extinct?
Another warning sign may be the rise of the multi-trade subcontractor. These are subcontractors that do every trade. They gobble up work and general contractors support this for two primary reasons: One, they know the massive volume will be too tempting and the sub will often give away one or two trade segments to get the overall package; and two, their size, meaning they typically can finance larger projects. While this is good for the general contractor, it is not good for the subcontractors and even worse for the more skilled crafts.
In some ways, this kind of subcontractor is really not much different than the old general contractor. They are not true specialists. The old adage that I can simply hire a supervisor who is an expert at the skilled craft is intrinsically flawed. How does the CEO know who is an expert? Because he said so? He has more than 20 years in the industry? That really does not mean much. The better adage is, “you don’t know what you don’t know.”
This trend does not support specialists and experts. As one multi-trade sub told me, “If I make money at a trade, I keep it going; if I don’t, I just dump it.” This may be a smart business decision but it is not good for the more skilled trades. Because these huge firms have influence on designing, they will often work to eliminate the trades, which require more skill in favor of generalists. However, looking long term, is this just putting their own companies out of business? When production levels are lost and a need for skills diminishes, doesn’t this spell demise for them too?
The Bigger Picture
I had a large framing and drywall contractor claim he desperately needed fixed unit pricing to give to his general contractors. He needed to lower his overhead and make the worker responsible for production. He gave me a puzzled look when I told him that this would likely be the beginning of the end for his company. I explained if this comes to pass, what value is provided? The general will just cut you out. He assured me that this would not happen, as his generals needed and liked him.
Many of the large general contractors have started to self-perform framing and drywall work. It just makes good business sense for them to do this. Just like it made sense for the large wall and ceiling contractor to avoid plaster. The value of the experienced supervisor at maximizing production through craft knowledge, experience and organizational talents is coming to an end. General contractors do not need the subcontractor with limited knowledge or skills. Once they figure how to shift the risk, does this mean the end of skilled crafts? While subcontractors are upset when the general contractor self performs, they should look at why they would do this and did we play a hand in it? We started, supported and institutionalized the shift away from skilled trades to endorse systems that virtually anyone can install. We promoted the era of the “universal” worker, the jack-of-all-trades and master of none. The end result might end with the extinction of the specialty contractor, because they are not so special.
The final piece may be the recent rise of complexity to assemble exterior envelopes. The subcontractor’s value for production of installation to lower installed costs through skilled trades is diminished. Ever changing complexity makes production impossible. If all is required are basic carpenter skills, why wouldn’t they hire in-house consultants and workers, and do it themselves? They can utilize the down-time to do other general tasks. What is our future?