Where Are We Going?
As we grew our company, the path seemed clear, the objectives attainable; success was almost assured. In five years we moved our shop and grew our business faster than a weed. We designed and built our current shop from the ground up. It doesn’t get any better than that.
We purchased a large bridge saw. WOW! He, we da bomb! Nobody can stop us!
And $50,000 seemed like so much money!
We started banging out four kitchens a week. Now we needed more installers to continue growing. More installers mean more gear. And then, “Lets order at least one more router!” And it kept coming.
Then we moved up to a kitchen per day. (For our shop, the average kitchen is pretty big, with three slabs and a trick edge.) We couldn’t make undermount sink cutouts fast enough; we were buried in undermounts.
We ordered a CNC machine. This was a quantum leap forward for our little operation; we became concerned about the overhead. Could we line up enough work? Are we smart enough to run the thing?.
And $250,000 seemed like so much money! (And, believe me, it is.)
The CNC arrives and we’re banging out six to seven amazing custom kitchens a week. Hey, we the bomb, diggity McBigTime fabricators now!
At least everything was hunky dory until about three months ago. We felt downward pricing pressure. Our schedule, which was always eight- to 10-weeks-out, was now out only three weeks. And, we had lost a couple of small dinger accounts to clowns doing prefabs at one-third what we’re charging.
When we opened our shop, it was one of 20 within a 60-mile radius. Now, there are at least 120 shops. Well, probably 70 shops, with the rest whacking stuff up in their garages.
Here’s the rub: Some of these shops pay workers under the table, are uninsured, hire undocumented workers, don’t pay workers’ comp, and avoid other legal niceties. They can fabricate at 15-percent- to 20-percent-less than folks playing by the rules.
So, we find ourselves battling with low-end shops. Most of our clients appreciate our quality, our showroom and the peace of mind that comes from hiring an established custom shop. Sadly, 15 percent to 20 percent of prospective customers go with the low ball, and we’re beginning to feel it.
And then ….
Well, I started writing this in last February, and then we wound up getting really busy. Production was back to normal almost overnight, and it’s the first time we’ve been less than smashed in several years.
So was I just writing something in a bad funk while wading through a shallow spot in the business cycle? Nope.
The points are still valid. We’re fortunate that the local construction market is still in a heavy boom and business picked up. When the economy chills and there is less work, the issues I mentioned will come back home.
So what do we do now? How do we position ourselves in relation to the new reality? How will the new paradigm affect the medium-sized custom shop?
Having worked 16-hour-days, six days a week for what seems like a lifetime, we now find ourselves in a completely different place, in a vast field filled with opportunities, landmines, threats and unknowns. We’re having internal discussions at our shop, and trying to read the tea leaves as we work to figure out how to position our company for success.
And the hits just keep on coming. I heard a rumor that our favorite local big box store was looking at getting into the game. No, not contracting out the stone work; the store will actually do the fabrication. Ouch!
One of the big companies that makes engineered stone is now selling granite that’s “certified.” If you don’t think the corporate world has an amazing marketing machine, you have a big surprise in store. (And the words “big” and “store” are a pretty good hint here.).
And, I was at a home show last month, and some guy had a booth with a huge sign announcing his amazing low prices – 70-percent-lower than our rates – to the world. He was signing contracts and taking checks right there on the spot.
He was selling blanks, but Joe Sixpack didn’t know any better. Amazing.
Those guys don’t scare me, though; it’s the monster factory operations that send chills down my spine. Twenty kitchens per week! Forty kitchens per week! These guys are doing to granite what Henry Ford did to cars, and they’re coming to a town near you.
If I had a crystal ball, I would look in it and seek guidance. Do we focus on our current high-end niche? Do we diversify and start selling/installing imported blanks? Do we purchase more equipment and turn into a factory? Can we do all three?
We’re not standing still. We just ordered a SawJet from Northwood Machinery; this monster will double or triple our productivity and increase our overhead in one fell swoop. If we stay busy, we stand to profit like a big dog. If we slow down, it could kill us.
We’re trying to try to grow our company to the point where we’re rock-solid (no pun intended, really). Hopefully, with increases in productivity and efficiency, we can bulletproof ourselves in these changing times.
We’re forming another company to cut exotic materials. We’re looking a forming a supply company. We’re going to grow and diversify our operation.
Are these the right moves? Only time will tell. These are serious issues that all of us will face at some point. I, for one, don’t want to be standing around wondering how my company became roadkill. I wish I had the right answers, right now. Sadly, I don’tt.
I do know that the solution is not ignoring the new paradigm. For now, all I have to offer is questions – but I hope this helps you think about the future. It’ll be here before you know it.
Get ready.
If you would like to discuss this in depth with other like-minded fabricators, visit us at www.stoneadvice.com. It is a forum for slab fabricators. All are welcome!
‘Til next time … Mark Lauzon, stonecutter.
Mark Lauzon is a fabricator in Oregon and the administrator of www.stoneadvice.com, a Website dedicated to slab fabrication.
This article first appeared in the April 2006 print edition of Stone Business. ©2006 Western Business Media Inc.