I stand by the statement: contracting is possibly the toughest of all industries. If it is not the toughest, it is a business with a huge risk/reward factor. The risk/reward factor is someone that bids for work with many unknowns. Will the job be run smoothly? Your profit and loss margins are typically dependent on the general contractor’s ability to effectively run the project. If they run a good project, being fair to all parties and have the knowledge of field construction, you may make a profit. I use the word “may” because there are many other factors at play that can impact your bottom line. Owners with impossible demands, overzealous inspectors—and now supply chain issues with price increases no one would have anticipated—are verification of my stance on contracting. Then, we have regional issues to consider that further make contracting tough.
In a Big Country
I have been a licensed contractor in two different regions of the country. I grew up in the Southwest, where plastering and stucco is everywhere. Bidding on work was as easy as driving around town and asking to bid on projects. It was not if they had stucco on the project, but only if they had the contract for it, and then you could bid too. The other factor is labor to do the work. Again, due the demand, the labor supply of lathers and plasterers was pretty plentiful. Sounds easy: find work that was plentiful; skilled labor was not tough to find, and plaster materials were all close by. Sounds like no worries and an easy business to get into.
However, I have not talked about pricing. Bidding stucco work in the Southwest was tough. Prices were more than competitive. I can recall bids where I had no profit put in and was told I was still too high. This was my world and I was used to it.
In the great Pacific Northwest, I found the prices for doing stucco work were favorable and making a profit would be easy at these prices. I could get double (and at certain times triple) the money for what I bid the same type of work for in the Southwest. However, now I had a new set of challenges. First: getting the general contractor to even consider you to do the work. It was not the price, but out-of-towners are not always welcome and rightfully not always trusted. It was not like the Southwest, where everyone plastered; your credentials were almost automatic if you were born in the right place.
In the smaller plaster markets, you have to earn a name and reputation, which can take time. The next challenge was the labor supply. In regions where lath and plaster are not common, you cannot make a few phone calls and then have a crew. Materials are another challenge. In regions where plastering is routine, so too is buying materials. In many other regions, the supply yard may be far away and have limited stock. In addition, the prices tend to be much higher as shipping costs are added, and today that is a significant added cost for a project. The final challenge is that the general contractors do not know stucco and often refused to do even the minimal flashing required to install a functional stucco project. Then the weather is another factor to consider.
Each Region is Different
Additionally, each region had its own unique challenges. The general contractors who move around the country often fail or refuse to comprehend regional markets. An example is when a builder contracts with a Southwest plastering firm to come and do some homes to take advantage of a lower bid price. The general and subcontractor team up on a great new partnership. The developer gets a lower installed cost stucco and the plastering contractor makes a better profit margin. The plaster crew shows up and fires up the big plaster pumps. They blow out 20 homes in less than two weeks. Then what? Where do they go? The developer may have nothing ready for another six months. The plaster crews can’t sit around waiting all that time, so they go home. This is why high production or affordable stucco work is not found in other regions of the country.
Production was developed to meet a supply and demand need. While weather plays a factor in other regions of the country, it has not stopped the Europeans who make stucco the primary cladding in that continent. It still seems that the Southwestern U.S. is the leader in stucco production and that several factors have led to innovation, efficiency and optimizing the sequencing of trades to keep stucco the most affordable of all claddings—at least in that region. Supply, demand and the overwhelming desire to keep prices in check can be powerful forces to overcome.
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