Subcontractors buy materials, hire labor, bid against competitors and then have crews install materials. While some contractors focus on getting a lower price on materials (or finding ways to pay the workers less) those are pennies in profits; it is the value of what your crews produce weekly that is the key to making money. Production is the most crucial element for you and your company if you want to succeed and grow. The stucco industry is possibly the best example of production and impacts to the overall market and market share.
According to the US Census Bureau, stucco cladding has climbed to an all-time high of 27 percent market share on new single-family homes. This is primarily due to the southwestern U.S., where most new tract homes are clad in cement stucco. The reasons why stucco is so popular in the southwest are often argued and seldom understood. One misconception being that cement stucco cannot handle cold weather. The real reason is pretty simple: cost. This, in turn, leads some to think it is the open or merit shop structure that makes it possible.
However, cement stucco was the favored cladding in the southwest in the 1970s and that was when the workers were predominantly union. Stucco can certainly handle the heat, and that’s one reason it is a preferred cladding in Phoenix, but it is also a favorite in San Diego where the average temperature is considerably cooler.
In these markets, the installed cost of cement stucco is at a place other claddings cannot meet. Vinyl siding has been the U.S. leader in residential siding for one reason; cost. Fiber cement siding is closing in fast as the installed cost is close to vinyl, yet yields more benefits. However, stucco remains king in the southwest. Even the most affordable of southwest tract homes are clad in cement stucco. You may think it is because these homes are more expensive and can afford stucco cladding. I assure you the major home developers do not think this way. For them, it is about cutting costs and regardless of where they are in the country, that mantra is the same. How can stucco be the lowest cost in one region and a premium in another? The answer is production.
Why Production Matters
Assume an average home has 2,250 square feet of cladding or 250 square yards. In the southwest, the stucco industry uses square yards and not square feet to estimate stucco. A large high-volume plaster pump will often use up to ten or eleven workers for a crew. That crew can apply about 2,500 square yards (22,500 feet) of cement plaster per day. Most crews require 20 homes to be ready before they bring a crew out to the project. This is about 5,000 total yards or two days’ work and allows the crew to double-back to begin the brown coat application. The same size crew will average about 1,500 yards a day applying a brown coat. By the end of the week the 20 homes are completed with a 3/4-inch cement cladding. That works out to 2.75 worker days per home for stucco. While this does not include lath and a cement finish coat, it is easy to see how production makes stucco affordable and provides reasoning into why cement stucco is king in the southwest.
Before a homebuilder gets too excited seeking stucco bids from these pump crews, they need to understand that costs climb (and climb fast) when you add foam shapes, an acrylic finish or other details. These add aesthetic value and ergo, increase costs. In some cases, it can be dramatic. It’s similar to buying a pickup truck. Base models are significantly less than the King Ranch or Eddie Bauer editions.
The Big Picture
When I was young my father’s company ran up to five of these production pumps and all he seemed to care about was how much production we were getting. His focus was not on the lather or even the finish crews. He wanted lathers to focus on waterproofing and finish crews to focus on leaving the site with little to no patch work. For him, the key to success and making money was all about the production of his plaster pump or “gun” crews. I would shake my head in confusion as there was so much more going on. He told me, “Someday, you will understand what plastering is about.” It took me a while, but I now see the bigger picture. It is not about squeezing pennies out of a material supplier or forcing the workers’ wages down, it is ultimately all about the production rate of your crews. Win that battle, and you win the war.