Friday, September 11, 2009
Puget Sound area remodelers suffering from serious slowdown in jobs
Established firms see fraction of their usual workload as skittish homeowners hold off on major projects
Premium content from Puget Sound Business Journal - by Camden Swita , Staff Writer
Date: Sunday, September 13, 2009, 9:00pm PDT - Last Modified: Friday, September 11, 2009, 2:28pm PDT
Michael Tenhulzen, right, president of Tenhulzen Remodeling Inc., supervises a dining room expansion in Redmond for a repeat customer. The firm’s business volume is at about three-fifths of last year’s level. Employee Cary Longmire is on the stepladder.
Many remodelers see an upswing ahead, but in the meantime most local firms and their suppliers are still getting badly hammered by the economy.
Typical is Bryan Comstock, owner of Seattle-based Double Dog Construction Co., who said he has 20 percent to 30 percent of the volume of work he had at this time last year.
Comstock sees plenty of signs that the slump reaches beyond his own company, which generated about $250,000 in revenue last year remodeling and expanding single-family homes.
“You go to the lumber store and it’s empty,” he said. “That worries me.”
Alan Ness, principal of Ten Directions Design, a small Seattle remodeling design firm founded in 1990, said he has about about a quarter as much work as last year — and he’s not alone.
“It is really tough,” Ness said. “I have talked to people where they’re just covering their expenses.”
Shirey Contracting in Issaquah is doing about a third as much work as last year, said President and CEO Donna Shirey, who is vice chairwoman of the National Remodelers Council of the National Association of Home Builders.
“For a while the phone was ringing again,” she said. “Now it’s not. That was in July.”
Each person on Shirey’s staff has taken either a 20 percent pay cut or a 20 percent reduction in hours, and the company has completely cut five of 14 positions. The company, which focuses mainly on green home remodeling, generated $4.6 million in revenue in 2008. Amid that gloom, the National Association of Home Builders Remodeling Market Index shows the West Coast industry’s expectations for the future rose from 30.4 in the first quarter of 2009 to 33.4 in the second quarter. An index number over 50 indicates that a majority of contractors view market conditions as improving, so optimists are still in the minority.
The remodeling market is hampered by anemic home equity values that play a major role in financing remodels, said Michael Tenhulzen, the current vice president and incoming president of the Remodelers Council of the Master Builders Association of King and Snohomish Counties, and majority owner of Tenhulzen Remodeling in Redmond.
While many local companies saw an increase in work this spring, which is the high season for remodeling work every year, the jobs were mostly small compared to previous years. Instead of adding another floor or completely redoing the master bedroom, homeowners were often only redoing a bathroom or sprucing up a basement.
Dan Klusman, director of communications at the Master Builders Association of King and Snohomish Counties, interviewed several local contractors and saw some trends emerge.
He doesn’t find it surprising that business is down, but said how severely a contractor is being affected isn’t uniform. Some “are really hurting,” he said, and “some are doing good but not great.” He said that the contractors that are doing all right tend to have well-established systems for maintaining contact with clients after a job, which leads to more follow-up work and a greater chance that clients will refer them to other potential customers.
“But nobody’s got a real foolproof, ironclad business system at this point,” he said. “There’s no magic bullet for a remodeler right now.”
There are fewer big jobs to be had these days, Klusman said.
“If you’re a married couple and you’ve been planning for several years to add a second story or to gut the house and start over,” he said, “you’re not jumping in now, you’re still on the sidelines.”
Another sign of the times Klusman noticed: “They’re installing (less expensive) laminate countertops for the first time in years,” he said. “It’s been granite, granite, granite for over 10 years and now it’s laminate.”
Tenhulzen said he also heard, through speaking with others in the remodeling industry, that the story varied from contractor to contractor, based on “where they’re located, but also on their target demographic and the services that they offer.”
His own company generated $5 million in gross revenue last year; this year it is on track for $3 million. The company has cut staff.
Staff cuts have contributed to a new threat for established remodeling contractors: a man and his truck.
One-person remodeling operations, which Tenhulzen says are sometimes carpenters who’ve been cut from larger remodeling firms, have been offering homeowners prices that — on paper — look like deep discounts. Tenhulzen believes that these low-ball bids come with inexperience, especially in contracting and budgeting.
“They’re confusing the marketplace,” he said. “They’re inexperienced in proper budgeting, estimating and contracting.”
Wayne Apostolik, owner of Northwest Homecrafters Inc., of Seattle, and chair of the Remodelers Council, has felt the sting of these upstart competitors.
“The price difference between myself and new contractors who I’ve never heard of is enormous,” he said.
One remodeling contractor, however, said her company is doing quite a bit better during these hard times.
Melissa Irons of Irons Brothers Construction Inc.in Shoreline said she has seen a 77 percent increase in business from last year.
“From our perspective,” she said, “we’re working harder for the work we have, but our volume is fine.”
Irons said her company has ramped up and diversified its marketing quite a bit.
“We were in the Shoreline Parade,” she said, “because people want to make sure to do business with someone who’s doing well.”
Puget Sound area remodelers suffering from serious slowdown in jobs
Established firms see fraction of their usual workload as skittish homeowners hold off on major projects
Premium content from Puget Sound Business Journal - by Camden Swita , Staff Writer
Date: Sunday, September 13, 2009, 9:00pm PDT - Last Modified: Friday, September 11, 2009, 2:28pm PDT
Michael Tenhulzen, right, president of Tenhulzen Remodeling Inc., supervises a dining room expansion in Redmond for a repeat customer. The firm’s business volume is at about three-fifths of last year’s level. Employee Cary Longmire is on the stepladder.
Many remodelers see an upswing ahead, but in the meantime most local firms and their suppliers are still getting badly hammered by the economy.
Typical is Bryan Comstock, owner of Seattle-based Double Dog Construction Co., who said he has 20 percent to 30 percent of the volume of work he had at this time last year.
Comstock sees plenty of signs that the slump reaches beyond his own company, which generated about $250,000 in revenue last year remodeling and expanding single-family homes.
“You go to the lumber store and it’s empty,” he said. “That worries me.”
Alan Ness, principal of Ten Directions Design, a small Seattle remodeling design firm founded in 1990, said he has about about a quarter as much work as last year — and he’s not alone.
“It is really tough,” Ness said. “I have talked to people where they’re just covering their expenses.”
Shirey Contracting in Issaquah is doing about a third as much work as last year, said President and CEO Donna Shirey, who is vice chairwoman of the National Remodelers Council of the National Association of Home Builders.
“For a while the phone was ringing again,” she said. “Now it’s not. That was in July.”
Each person on Shirey’s staff has taken either a 20 percent pay cut or a 20 percent reduction in hours, and the company has completely cut five of 14 positions. The company, which focuses mainly on green home remodeling, generated $4.6 million in revenue in 2008. Amid that gloom, the National Association of Home Builders Remodeling Market Index shows the West Coast industry’s expectations for the future rose from 30.4 in the first quarter of 2009 to 33.4 in the second quarter. An index number over 50 indicates that a majority of contractors view market conditions as improving, so optimists are still in the minority.
The remodeling market is hampered by anemic home equity values that play a major role in financing remodels, said Michael Tenhulzen, the current vice president and incoming president of the Remodelers Council of the Master Builders Association of King and Snohomish Counties, and majority owner of Tenhulzen Remodeling in Redmond.
While many local companies saw an increase in work this spring, which is the high season for remodeling work every year, the jobs were mostly small compared to previous years. Instead of adding another floor or completely redoing the master bedroom, homeowners were often only redoing a bathroom or sprucing up a basement.
Dan Klusman, director of communications at the Master Builders Association of King and Snohomish Counties, interviewed several local contractors and saw some trends emerge.
He doesn’t find it surprising that business is down, but said how severely a contractor is being affected isn’t uniform. Some “are really hurting,” he said, and “some are doing good but not great.” He said that the contractors that are doing all right tend to have well-established systems for maintaining contact with clients after a job, which leads to more follow-up work and a greater chance that clients will refer them to other potential customers.
“But nobody’s got a real foolproof, ironclad business system at this point,” he said. “There’s no magic bullet for a remodeler right now.”
There are fewer big jobs to be had these days, Klusman said.
“If you’re a married couple and you’ve been planning for several years to add a second story or to gut the house and start over,” he said, “you’re not jumping in now, you’re still on the sidelines.”
Another sign of the times Klusman noticed: “They’re installing (less expensive) laminate countertops for the first time in years,” he said. “It’s been granite, granite, granite for over 10 years and now it’s laminate.”
Tenhulzen said he also heard, through speaking with others in the remodeling industry, that the story varied from contractor to contractor, based on “where they’re located, but also on their target demographic and the services that they offer.”
His own company generated $5 million in gross revenue last year; this year it is on track for $3 million. The company has cut staff.
Staff cuts have contributed to a new threat for established remodeling contractors: a man and his truck.
One-person remodeling operations, which Tenhulzen says are sometimes carpenters who’ve been cut from larger remodeling firms, have been offering homeowners prices that — on paper — look like deep discounts. Tenhulzen believes that these low-ball bids come with inexperience, especially in contracting and budgeting.
“They’re confusing the marketplace,” he said. “They’re inexperienced in proper budgeting, estimating and contracting.”
Wayne Apostolik, owner of Northwest Homecrafters Inc., of Seattle, and chair of the Remodelers Council, has felt the sting of these upstart competitors.
“The price difference between myself and new contractors who I’ve never heard of is enormous,” he said.
One remodeling contractor, however, said her company is doing quite a bit better during these hard times.
Melissa Irons of Irons Brothers Construction Inc.in Shoreline said she has seen a 77 percent increase in business from last year.
“From our perspective,” she said, “we’re working harder for the work we have, but our volume is fine.”
Irons said her company has ramped up and diversified its marketing quite a bit.
“We were in the Shoreline Parade,” she said, “because people want to make sure to do business with someone who’s doing well.”
CSWITA@BIZJOURNALS.COM | 206.876.5428