President’s Letter – April 2014

dan welch imageAlive 365 Safety Week 2014 (www.elzinga-volkers.com/safetyweek) was a fitting name for a symposium topic offered in western Michigan by Elzinga & Volkers Construction Professionals recently. The concept is to inspire the construction trade to step up its game with regard to safety.

This topic could not have been timelier to us as we have hired our very first, full time safety person. Safety has not always been high on our priority list as a company. Our staff has always been knowledgeable when it comes to quality and production, but some of our work habits need adjusting, and our new hires need to be trained correctly.

When I started in the tile trade one of my first tasks was to mix a solution of sulfamic acid crystals with water. As I poured the crystals into the water bucket a large chunk fell into the water splashing up directly into my eyes. This near miss is just an example of the many things that can happen to your staff working on the job. 2014 is the year that safety becomes one of our priorities.

DanLetter_cons_profSafety is the buzz word around work sites but during this symposium it became increasingly clear that if you don’t get on the bus, you and your staff will be left standing on the curb. E&V Construction did a small skit showing the evolution of safety within the workforce. It started with a 1990s employee wearing a Hard Rock t-shirt with cut-off sleeves, a bandana, tennis shoes, and blue jeans full of holes. Then it showed the employee of the 2000s and on to the 2010 employee, wearing a professional-looking company shirt, hard hat, safety glasses, safety vest, fall protection, and work boots ready for work. I agree with the importance of looking professional, dressing the part, and performing work safely. I want our staff to do the same.

Safety, moving forward, is a necessary part of each and every job we do. Employees becoming aware of the system, buying into the need, and changing the culture of a business safety plan is essential to providing a working system. Documenting and sending the safety data sheets, tool box talks, offering employee training, researching and purchasing new and better equipment, reviewing job hazard analyses, and analyzing the current loss rates to see what you do well and what you don’t do well are all imperative to your success. Remember, the employee into whom you have invested so much is counting on the leadership you provide to keep them safe.

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Dan Welch
President, NTCA

President’s Letter – March 2014

dan welch imageLife is fragile. Just one year ago I wrote about Johnny Lovisa, an employee who passed away during my trip to Coverings. I am here today thinking how grateful I was as a young tile mechanic, learning from the very best, during the best times. Work was plentiful, the trade was dependent on skill, and the days were less complicated and fun. I’m not sure if the leaders of yesterday were better, or the focus of today is different. It seemed much simpler back then. One thing for certain, I’m honored to have had my mentor by my side as the trade has evolved.

My mentor is a great man who married his best friend, raised seven children, and built a business unmatched by our competitors. His care and soft-spoken leadership has touched thousands of people in the construction industry. I humbly follow in his footsteps as the president of Welch Tile & Marble. Dick Welch taught me honest, straightforward integrity, common sense, and how to learn from my mistakes.

Dick retired to his cabin in Northern Michigan where he spends his best days on his John Deere tractor, cutting wood, feeding his fish, and spending time out with friends. He successfully handed off the company to us, his children. I still depend on the daily phone calls from him. I look forward to the call each day: “What’s going on today, boy?” We discuss the challenges of the day and how we can successfully handle them.

Dick’s retirement has had its challenges. With hip surgery, prostate cancer (2x), and now esophageal cancer, his “retirement” has been less than enjoyable, while we all go through this roller coaster ride of tests, results, treatments, and tests again. This week we are going to Mayo Clinic in Minnesota for no-nonsense review of the options, or lack thereof. I fly out with Mom and Dad to be there for him during these toughest of life decisions.

We are all here for a short period of time. The way we decide to spend the time we have is what we will be remembered for, and judged upon when our time is up. Dick chose to raise a large family, love his best friend, and work hard with a passion for quality and a job well done. He moved aside to allow for the next generation to make their mistakes, stayed involved in a sideline position, coaching his team, mentoring, showing what it is to be a true leader.

My dad and I have been solving problems for decades. To him, what he is going through today is just one more challenge to overcome. It’s just a bit heavier this time. For me, it’s a chance for me to be there for him as a friend and mentor while he makes the tough decisions about the unknown.

True, solid mentors are few in life. Take time to spend with your mentors, with those who have come before you. Be humble and learn from their experience. Its value will be apparent in time, and someday, you’ll be a mentor yourself.

Dan Welch
President, Welch Tile and Marble
President, NTCA

President’s Letter – February 2014

dan welch imageHave you ever wanted to unplug your computer, lock the shop door, and drop the computer in the dumpster on the way out? Today was one of those days. After a long week of teleconferencing with a new construction manager on an out-of-town project, I was convinced the construction trade had lost its mind. Daily progress meetings lasting hours, schedule compression, material delivery delays, and unrealistic contractor expectations can kill your profit margins, and chip away at your sanity.

Earlier in the week, I was sitting through “one of those meetings” watching the twenty-something project manager talk, and talk, and talk… while I feared my team was aimlessly installing tile without my direction. Mentally, I was screaming, “What are we doing here? We’ve got tile to install!”

General contractors are under the same strain we are. They want the project to be safe, meet schedule, and generate profit for their company. However, to keep business, and to entice new project owners, prime contractors have become experts at reducing future liabilities by making subcontractors take the bulk of the risk. This allows them to work with much thinner profit margins by transferring this liability to us subcontractors. So, are you accounting for this risk? Are you charging for it? Are you even aware of the risk you take on each given project?

Daily progress meetings cost time and money. Contractor’s safety protocols cost time and money. Schedule compressions create overtime costs. Unacceptable jobsite conditions cost money. Unclear specifications can cost you if the general contractor plays the “you’re the expert – you should have known better” card. If you only review the drawings and section 09300, you’re bound to get burned by unexpected risk transfer. You must price for it, or fight back with exclusionary language in your proposal.

So, do you know what is expected? Did you review every page of the specifications, work scope, general conditions? Did you see the alternates, field change directives, post-bid addendums, submittals, jobsite conditions? Have you read the contractor’s safety program? Are you prepared to talk knowledgeably in a meeting to defend your company as liability is forced into your contract? Tile subcontractors are at the mercy of the contractor pinched between designer’s material selections, manufacturer’s lead times and the owner’s expectations. We must push back collectively as an industry. If the prime contractor wants to defer risk to us, then we all must charge for that risk. Without accounting for it, we’re willingly taking less profit for the same work. Personally, I’m no longer willing to take it.

I suggest we start the process of handing back liability by line item charges for these jobsite expectations. Are you staffed to provide onsite managers who do not install tile? Are you prepared to place that manager in daily meetings filling out progress and safety reports while much of the work you perform on site is installed unsupervised? All of this when the growing economy is stretching your experienced craftsmen and you train new staff? Remember, general contractors are asking for this documentation, not to solve problems, but to build an arsenal of evidence transferring risk from their wallet to yours. If you miss it on bid day, shame on you. If you take time to exclude these expectations, or charge for them, you’ll be money ahead at the end of the year.

Dan Welch
President, Welch Tile and Marble
President, NTCA

President’s Letter – January 2014

dan welch imageWhether you own a mature business or are just getting started, one thing you’ll eventually have to face is the day you don’t own it any longer. For some of us, it’s the day we retire. For others, it could be the day we die.

Every business is different, with one owner, several owners, family business, partnerships, and more. However, the fact remains, someday, you won’t own the business. So, what have you done to plan for that day? How is your plan communicated to employees, your vendors, your customers? Will you stay involved after retirement? Do you plan to cash out? Is the business your source of retirement, or have you planned and saved outside of your business?

I pose these questions to TileLetter readers  after a recent visit with Tim Curran (family owners of Crossville, Inc.). Tim’s family’s business, The Curran Group, is a fifth-generation family business that still faces many of the challenges that we face at Welch Tile, a second-generation multi-family member business.

I met Tim during an NTCA Five Star meeting at Crossville’s facility in Crossville, Tenn. When he gave a presentation on “Business Succession Planning,” every note of his talk rang true. He is challenged with family dynamics, shareholder disagreements, uncomfortable feelings, and tough decisions, just like any family would be. But the Curran Group’s approach is unique, and it speaks to the resilience of a fifth-generation organization. Tim inspired me to travel to his office with my family, to have an open discussion about family business strategy. He was gracious enough to welcome my request, and I am thankful he did!

Smart, enduring decisions are based on facts, not feelings. It takes a strong leader to separate family from business, and a business cannot survive without all team members pulling in the same direction. My family came away from the meeting with a confirmation that we are here to lead and manage our business for a period of time, and the jobs we individually choose to execute within the organization are compensated to the level as if we worked for someone else.

When it is time for a family member to retire, it is that family member’s responsibility to plan for the event. For a business to survive five generations, it cannot continually afford to “pay off” retiring shareholders. When it is time to retire, family members need to plan for it in advance. Understand the plan will change. Discuss options openly with your family and pre-fund transfers if possible. Also consider life insurance plans to fund the unforeseen. And most important, have a plan communicated to your leadership team and employees.

As your business moves into this new construction economy (post 2008), think about how you plan to retire. How do your employees plan to retire? Does it align with your company benefits? Remember, the ability to retire is only as strong as the plan and funding for that plan. If you’re depending on your business to fund your retirement, can it do so without you? Can it continue without the cash you take?

Thank you,
Dan Welch
[email protected]

December 2013 Letter from the President

I’ve been your NTCA president for 12 months now. After a year where I have much to be thankful for, I’d like to reflect on why I am an NTCA member, dan welch imageand why I am thankful to be involved with the NTCA.

Have you ever sat through an advertising presentation for your local Yellow Pages or an online directory wondering how this will bring me business? Me too, and far too many times. So, I finally started asking the sales rep, “What do you do, specifically, for my business, or other tile contractors?” The response is either a blank face, or hip-shot talking points about metrics, viewership, or whatever.  That’s when I  realize how valuable my NTCA membership really is.

I joined the association over 12 years ago because my company (and I) needed craft training and education. Although we have brought training “in-house,” the manuals offered by NTCA are still used for our apprentice training today. The continuing education we receive from the association is worth the price of admission for any and all tile contractors.  However, for Welch Tile, I can confidently say, the NTCA is the #1 marketing and advertising tool we use – but only valuable if we stay involved.

So, you could spend your profits advertising with companies who want to sell you ads, or you can spend your time involved with the NTCA which gives you credibility in front of:

Architects / designers

Home builders associations

Manufacturers / distributors

Prime contractors and building owners

Other tile contractors

Getting in front of these groups can definitely lead you to revenue opportunities. Don’t believe me? Here are 2,000,000 reasons why Welch Tile values our NTCA membership:

NTCA Member Partnering:
Food Processing Project
An opportunity for a food processing plant in the southwestern region of the United States presented itself in August of 2013, during a time when we were unable to provide staff. I contacted an NTCA Five Star Contractor member in the region, and it turned out that their business had a hole in their schedule large enough to accommodate this project. I was able to provide our client the service they needed and two NTCA members were able to make a nice profit: $323,000.00 in gross sales.

NTCA Member Partnering:
Large Hospital Project
Three NTCA Five Star Contractor companies were able to team on a large hospital project on the East Coast to sell a total flooring bid with tile, terrazzo, stone and carpet. This project came about during the worst of the economic downturn, and we were out of local work. The joint venture was able to provide work for our staff and partner along with other NTCA tile contractors who also needed the project to weather the economic storm: $830,000.00 in gross sales.

NTCA Knowledge:
Large Local Hotel Shower Renovation
Currently, we are starting a large hotel renovation with 270 rooms. This project bid in mid-2011, then again in early-2013. Initially, we were severely under-bid by a competitor using entry-level products with subcontracted labor. We battled the price-versus-value war, and provided substantial information with regard to peace-of-mind, product performance, and TCNA guidelines. Our ability to specify product and knowledge acquired through many years of listening and contributing to the NTCA Technical Committee gave us just what we needed to close this job: $879,000.00 in gross sales.

These case studies, totaling $2,032,000, are just a fraction of the reasons why Welch Tile is an active member of the NTCA. We joined the NTCA to learn; we stay a member for the return.

The NTCA is a unique group that I hold in strong regard. Our membership in the NTCA yields the largest return on investment each year, leaving all other advertising (combined) a very distant second place. In fact, all ad salesmen now get sent to voicemail. I’d rather spend that time involved with the NTCA. I challenge you all to invest, get involved, and tell others.

Thank you,
Dan Welch

President’s Letter – November 2013

dan welch imageIn my articles, I try to offer a value to members by using my experiences (good or bad) to dig deeper into business practices, challenges or opportunities. This month is no different.

I believe our single biggest investment opportunity is training and retaining staff. As 2013 winds down and summer work slows, this is a great time to reflect on what we can do differently to provide our customers with better value while eliminating problems that can erode the bottom line.

Welch Tile offers apprentice training to our new hires, but when we are busy it is tough to take the time to do the training. In lieu of formal training, we found offering best practices on subjects like grouting, sealing, mixing, cutting, fitting, installing and troweling keeps the team fresh. Have your key people spend time with the newer group, teaching them the proper way to perform a task, and explain what could happen if it’s done wrong.  Most of our mistakes have resulted from a lack of knowledge, and it’s our own fault if employees simply don’t know what they could be doing wrong.

This year we are adding best practices when working with specialized products.  We like higher-risk, higher-profit specialty installs, which require mechanics with advanced knowledge of complicated processes.  Their training must go well beyond the newer employees, yet most specialized projects require manpower in excess of our highly-trained installers. So how do we find enough mechanics?  We must field-train, communicate, and adhere to best practices.  Eventually, our new mechanics become our veterans, and the next generation learns from them.

However, we can’t expect even our best mechanics to jump from a luxury stone hotel install to an epoxy-set-waxed-FVT-vinyl-ester-acid-proof dairy install without a little memory refresher, right? So, rather than relying on memory recall, for each job:

• Keep a library of best practices, or a checklist for each type of install/product.
• Make sure you, or your most qualified mechanic, start the job.
• Have a preconstruction meeting to run through the best practices checklist.
• As you dig into your training programs and build efficiencies within your company, look closely at processes and how you can make them simple to repeat. Training may stick by day three of a project, but throw six months and 10 projects between the next time you use that product again, and you may forget the small and seemingly insignificant tricks. Then your checkbook begins to whimper.

This month, I am allocating time to provide a step-by-step process to one of our largest revenue sources (and the riskiest segment): fully-vitrified tile. In addition, we are creating white papers for our staff to remind them of the “gotchas.”  These white papers are simple, one-picture, and one-paragraph documents focusing on failure points.

Taking time to work “on” your business is equally important as working “in” your business. Take time (between visits to your deer stand) this fall, and review the year.  Fix problem areas with repeatable procedures. Your checkbook will thank you. Happy Thanksgiving everyone. Enjoy family and be safe.

Dan Welch
Welch Tile & Marble
President NTCA

President’s Letter – October 2013

dan welch imageOctober is the time of year that you find out if all of the year’s activities have a chance of paying off. It’s the start of the last quarter – the time to ask, “Do we have the fuel (a.k.a. work) in the company tank to finish with profit?”

This month I want to talk about the effect volume has on a company. Riding the tile roller coaster for the past five years, I have learned a few things. One is that you can recover gross profit on every job but that doesn’t ensure you will make net profit at the end of the year. If you do not forecast and follow a tight budget, the overhead can kill your gross profit and leave you scratching your head.

Net profit is our business goal and needs to be realized if you intend to be in business for very long. Remember, a tile business has many moving parts that can wear just like a car. If you do not change the oil and rotate the tires you end up with a blown engine and a flat tire, standing on the side of the road praying for a ride. 2013 has been a year of recovery for many businesses, and a year that the car needs some attention if you plan on running it another year.

For example:

  • Budget $1,000,000 in sales with$180,000 in overhead costs = 18% overhead
  • Actual sales come in short at $800,000 with the same $180,000 in overhead costs = 22.5 % overhead

This scenario lowers your net income by 4.5%. If you planned for a 3% net income you just lost 1.5% ($15,000) because you didn’t have the work to cover your overhead.

This year the opportunities are out there to put some extra work on the books, if you can get it done. We decided to go outside of our comfort level and take on a project out of state that we would not have been able to do without a partner to offer additional labor.

Focusing on business segments that require a quality, highly-knowledgeable, experienced workforce and teaming with others that share your same mantra, is a key to success. The NTCA has helped me team with this like-minded group of individual companies to help grow our business and help them prosper as well.

We are working with Artcraft Granite Marble & Tile on two projects out west. Artcraft’s James Woelfel and I have learned that this process can be a win/win. It allows us to take on large, complex projects with the support of two teams of industry leaders. This process can pay dividends to both companies. It has increased our volume and allowed Artcraft to fill a hole in its schedule.

Traveling across the country with staff can be very expensive and sometimes leaves employees unhappy. However, everyone is unhappy when the year rolls the other direction and work opportunities dry up, triggering a net loss for the employee and the business. Volume needs to be managed to control cost. Strategic planning and taking risks can pay off.

Dan Welch , Welch Tile & Marble
President NTCA

September 2013 Letter from the President Dan Welch

dan welch imageRecently, the NTCA Executive Committee met in my hometown near Grand Rapids, Mich. The weather was fantastic, and the camaraderie was extraordinary. We discussed our strategic plan and analyzed the future needs of this association. We spent many hours of discussion and reflection on topics like membership, training, workshops, certification, and Five Star. These discussions are critical to the direction of this organization, and keep staff on task with the changing tile-contracting environment.

Our discussion continued well after the Executive Committee meeting, as we watched passing boats on “The Pond.” The topic of estimates versus proposals was debated, among others. The proposal process is the single biggest sales tool we have as a contractor. If you spend the time on a quality, well-thought-out proposal, it pays dividends! A price-only estimate may get you work, but that work will be contingent upon price and price alone. Remember, customers don’t have a working knowledge of what it should cost to do a quality project. A proposal should not be a dollar price; it is a tool to differentiate the work you do compared to the dollar-per-square-foot-to-install stereotypical answer.

Details make the difference. If you are installing crack-isolation membrane, using an epoxy grout, or installing on a diagonal, you need to relay this additional expense to your customer so they can understand the difference. Your competition may get the work, purely by keeping their mouths shut – and charging for it later.

For example, we at Welch Tile are in need of a new truck, but it needs to have certain features: diesel, tow package, long bed, etc. Of course, we are looking closely into each of these features as we search. The details are readily available via the dealer’s “window sticker.” So, if the truck doesn’t show a trailer hitch, we need to factor that cost into the price of the truck, or choose not to consider it at all. Stop and think about the last vehicle you purchased – were you looking for the cheapest vehicle? Or, were you picking the type vehicle based on need, size, comfort, options, gas mileage, color, and overall value? I’m guessing you considered more than just price.

So what does your company’s “window sticker” look like? Is it chalk on the window? Or, a complete window sticker with a CarFAX® report? Your proposal is doing a disservice to your customer if you do not offer options. Pick options that can solve key performance issues such as: cleanability, chemical resistance, crack isolation, waterproofing, etc. These line items on your proposal offer the customer a choice. If they can live without something, then they can choose to save up front cost.

Don’t get caught in the price game. Set yourself apart by selling your projects, not just pricing them. Spend the time and money to provide your customers with something different. What is the best value in a tile assembly? Peace of mind that comes from knowing what you paid for.

Sincerely,
Daniel Jay Welch, President NTCA,
Welch Tile & Marble Inc.

 

President’s Letter – August 2013

dan welch imageI don’t know about your company, but August is typically an extremely busy month for our business. Work has to be done for the upcoming school season and many are finishing projects before the end of the summer. It just gets crazy!

This year is no exception. Our staff is pushing with everything we can to make this season’s rush.  This August is no exception for me either. Welch Tile tags January and July to finalize wages and benefits along with any profit sharing for staff. I just finalized a small incentive gift, and as always look through the list, check it twice, find out who was naughty and nice.

Calculating profit sharing can be challenging, since inevitably the bonus may not make everyone happy if staff gets to comparing incentives or judging who deserves what without having the whole story. But even with those disputes or confrontations, I feel privileged we are talking about profit sharing again after surviving the challenging economy of the last few years. I pray the bottom line is that we all are excited about the future.

2013 is a recovery year and – for all of you who are struggling – I see a glimmer of light at the end of the tunnel. I see a number of changes in the overall construction climate that point to possible better times ahead.

2013 is the first year we have not dealt with an increase in health insurance rates. 2013 is the first year we believe we will hit and exceed our sales goals.  2013 is the first year we have a sizable backlog of work. 2013 is the first year we are short of craft workers. 2013 is the first year we are hiring multiple permanent employees. 2013 has gained many new customers and old ones calling for work to be completed because their staff or other installers are not keeping up.  Many subcontractors are pleased with the construction climate and  are discussing price increases with new bids.

This is all good news but you need to keep up with this change and be ready for more in the future. Welch Tile’s staff discussed our future workload with our supervisors in late June.  We were all optimistic about the future but not banking on it totally.  We still don’t see the big projects that sustain future employment needs and we still require out-of-town projects to keep our staff working steadily. Wage increases now may not be sustainable and we must be responsible as this economy teeters on our financial future.

The cost of living has sky-rocketed. Food, gas, hotel stays, goods, and services are all increasing prices. Company revenues are rising but are needed to pay for the past years’ losses or to keep up with depreciating equipment and vehicle needs.

Training and education are performance indicators that show me the shift has started; our superintendents are stretched out on smaller projects managing fewer people, requiring new future leaders. Along with new helpers, I believe training is the key to thriving in this new market.

2014? It’s anyone’s guess, but let’s train and educate to be prepared.

 

Dan Welch
Welch Tile & Marble
President NTCA

July 2013 Letter from the President Dan Welch

Wow, I’m half way through my first year! Where does the time go?  Like most of you, I continuously get stuck in the day-to-day, sometimes feeling like I’m neglecting what is most important: our people.

Last month, Welch Tile lost one of our company’s best – John Lovisa, 59, – to cancer. John was the perfect employee and friend. He grew up in the terrazzo trade, learning under the guidance of his father, and developed a passion for the craft. His work ethic was second to none. He would light up when you talked terrazzo with him. The amount of experience and history he possessed can never be replaced.

On my way to Coverings, I was fortunate enough to have the time to stop and see John in the hospital, for what would be our final visit. When I arrived, the hospice nurse was telling him that he would not make it home again. I don’t know if I helped any, but I told John that there would be terrazzo in heaven for him and his father and they would be there installing together once again. His characteristic smile hit his face and those eyes lit up.  “Do you think so?” he said.  “I am sure of it!” I replied.  Fittingly, his patient room was finished in the tile that we installed a few years earlier, and our conversation shifted to the work, his life with Welch Tile, and the good times we had on the jobsite. I took time to thank him, said my goodbyes, and headed off to Coverings.  He died two days later.

Life is fragile and time is precious. As you read this, I’m sure you are thinking about experiences with your coworker “Johnny” and how we all should take time to share together.

The Welch Tile family all receives the TileLetter magazine to enjoy at home just like you and the NTCA family. I suggest that you do the same with your coworkers. As I write these articles and hear feedback from coworkers, business associates, and friends, I am more convinced that this magazine ties our industry together.

We’ve implemented a few other things that work for us at Welch: we try to have a company event each quarter, including sledding parties twice (that’s over snow for you Southerners), roller-skating, golf, bowling, and a picnic at the beach. We are currently planning a trap-and-skeet shoot for next quarter. At first, our events had limited participation, but word spread and more families joined the fun. One of our workers said, “Dan, keep planning. Just because we are not there every time, doesn’t mean we don’t want to be. The timing isn’t always good for us, but it may be the next time.”

Don’t get discouraged when you plan events and people don’t come. The word will spread. Newsletters are one way to communicate. We offer “lunch trivia” in each monthly issue, giving the first person to answer the question correctly a paid lunch for their team at the jobsite. This takes very little investment and pays big dividends to staff.

Make sure your company is a place others will want to work. Take the time to enjoy time with your coworkers, friends, and family.

Sincerely

Dan Welch

President Welch Tile & Marble / NTCA

In loving memory of Johnny Lovisa, Welch Tile & Marble
johnny

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