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

June 2013 Letter from the President Dan Welch

dan welch image2013 is off to a strong start in West Michigan.  Compared to the past five years, workforce availability has constricted as work increases in our market.  Those business owners who depended on subcontracting their work force  have seen the available pool dry up. If you train your own workforce, this is a perfect time to build your talent pool. Training is crucial to the success of an organization. If done correctly, it builds the future of the tile industry.

As you all know, The Ceramic Tile Education Foundation/Certified Tile Installer (CTEF/CTI) is a way of certifying your team.  I am a strong proponent of the quality-labor movement that is promulgating through the tile industry today.  In fact, the movement has just taken a giant leap forward with the advent of Advanced Certifications for Tile Installers (ACT), a joint venture between leading union and non-union industry associations to build a testing model for installers and business owners.  ACT will help true professionals market their business.

 Supported by National Tile Contractors Association (NTCA), Tile Contractor Association of America (TCAA), Tile Council of North America (TCNA), CTEF, International Masonry Institute (IMI), and International Union of Bricklayers and Allied Craftworkers, (IUBAC), ACT’s intent is to build a talent pool capable of installing tile and stone correctly.  Along with CTI, ACT will spearhead qualified labor in the tile trade.  You’d better be part of the movement, or be prepared to be passed over for highly technical installs.

This extensive program has been built over the past five months of this year, and the first group of installers showed off their talents by completing the inaugural ACT testing at Coverings. Union and non-union installers worked side-by-side to install the first four advanced modules for task-specific certifications.

I was fortunate to be one of these installers.  If you were there, you might have seen me on the show floor, toiling and sweating with the best of the best. Make no mistake; this program is not a cake walk. You must: install a single-coat mud wall and wire-reinforced mud bed; fix an unsuitable substrate; install large-format plank tile with minimal lippage; install a shower base with mud curb; and waterproof with both sheet and liquid membranes. It all took 3-1/2 days with ACT evaluators watching over your every move. I want to personally thank the participants for their dedication and vision to be the first of many, with an audience watching.  This was a very exciting program, and the comments I heard were all positive. 

As the NTCA president I want to thank TCAA, the IUBAC, the CTEF the IMI, and TCNA for their collective work and efforts to move this program forward. ACT truly took vision, desire, spirit, organization, teamwork, leadership, talent, and investment. It has truly made this endeavor a reality for the future of our great industry, for without these qualities we would all be drifting in an industry alone.

Tile installers can find ACT certifications popping up around the country, you can visit your local IUBAC and IMI training centers, visit the CTEF website at www.tilecareer.com, or call CTEF executive director Scott Carothers at 864-222-2131for an ACT program near you.

Sincerely 

Dan Welch

President NTCA, Welch Tile & Marble Inc.

April 2013 Letter from the President Dan Welch

dan welch imageRecently, I had a chance to spend a few days with NTCA member, Barry Kemna. While visiting a project in northern Pennsylvania, and on our way through Ohio, we stopped for dinner to meet with Vince Casey of Youngstown Tile & Terrazzo, Norm Barron of Barron Tile, and Charlie Renner from TEC.  Competing against cheap labor was the main topic of the night, but the discussion quickly turned to the glory days when quality labor and business ethics were abundant. We found ourselves asking, “What happened?” But what we were really asking was, “Why do we allow price to dictate our business practices?”

We’ve all had the opportunity to offer our services with “shades of gray.” Although each of us had a story to tell, we all agreed that the tile industry is being eroded by contractors who think they need to cut corners because if they don’t, they think others will. We all agreed that striving for “black and white” bids, proposals, and contracts is something our industry must take seriously.

Through conversations with other people, I’ve come to realize that when you choose to play in the gray because you think others will, it becomes much more difficult to return to the black and white. Over time, you find yourself unable to differentiate. You find yourself changed as a person.

The NTCA has invested in many quality labor programs: partnering with CTEF, creating CTI, ACT, and Five Star, to name a few.  Manufacturers and distributors have spent millions of dollars to provide solutions to difficult problems, funding countless programs promoting innovation and educating industry partners. And yet, many tile contractors focus on the easy solution: cut corners and sell on price.

I feel that quality will sell, and in the past, it did. Today however, we are in a battle of ethics with an attitude of “Buyer Beware.” I see undefined specs, unproven methods, and unethical labor practices that do not provide buyer protection or a fair playing field for tile contractors who provide “black and white” VALUE propositions.

How can we as NTCA tile contractor members resolve this issue?
Ask RFI (request for information) questions. Tile contractors need to point out undefined bid documents at the start of the bidding process.

Provide budgets that have specialty items listed as a checklist. Owners must see a defined budget number upfront. If they don’t budget for necessary specialty items, they have a hard time adding costs during construction.

Provide price breakdowns for unforeseen items like crack isolation, floor prep, specialty grouts and sealers, soft joints and pattern layouts.

Provide a proposal that speaks of quality and identify value investments with pay back.
Sell your company’s accomplishments (CTI, ACT, Five Star Contractor, and Trowel of Excellence).

This is the high road to success. I challenge you to work with your prime contractors to define challenges and provide value to consumers. The fact is, general contractors and construction managers have several scopes to analyze, and if you don’t discuss value, they can only make decisions based on price. Those who are successful – and who will continue to be successful – promote and provide value.

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

March 2013 Letter from the President Dan Welch

For 10 years the cost of an installed piece of tile has remained stagnant. The rising costs of fuel, health insurance, and education have accelerated dramatically. Workers are forced into longer hours for the same pay. As an industry we have done many things to help you with training, education, marketing, and business development. We have not given much attention to the issue of hiring labor. This topic may be controversial, but I believe it to be one of the major educational issues NTCA must tackle.

The old way

When I started in the trade as a helper, labor was purchased through an hourly method. You would be expected to be on the site at 7:00 am – 3:30 pm, Monday through Friday. Overtime, night premium, and holiday pay were all identified in an employee handbook. The work seemed to just appear and the company would operate without major issues.

Evolution of sub-sub

Many in the flooring trade have moved to sub-subcontracting labor. An individual or partnership operates only as an installer and provides that service for a predetermined price to a business that either specified the job, sold it, or was low bidder. The installer is paid as a separate company and issued a 1099 tax form at year’s end. This is a way many businesses can manage the costs of having traditional employees due to the fluctuation of labor over a period of time. It has become appealing to owners and employees alike. The business owners have more time to sell, while the tradespeople can work for other companies, decide which jobs they want to do, and concentrate on working and honing their skills. Both then can make money. The business owner may benefit from not having to pay as much in payroll taxes, unemployment taxes, health insurance, and other benefits that they offer to their office staff. If the tradesperson gets busy, he or she may hire a helper, for whom he or she will assume the burden of employment taxes and related insurance.

Today

Today, labor pricing has not adjusted for inflation. Estimators have current pricing for materials, tools, and equipment, but are using labor rates from 1997. Today’s workforce – in a down market – has no way of forcing more pay when they need to feed their families. The majority of commercial work in our area is earned through a low-bidder strategy – those who estimate labor at early-2000 prices get the job. But who’s ensuring that 1099 subs are covered for worker’s comp, unemployment, or social security? Who is responsible for their payroll taxes? Should they really be employees rather than independent contractors? Do you hire the same subs week in and week out, and does the majority of their income come from you?  Could you be at risk of tax penalties?

Legislation

As many of you have experienced, the federal government has cracked down on the practice of employee misclassification (1099 v. W2). Here in Michigan, the state is focused on eliminating employee misclassification in the construction trade. And with the Patient Protection and Affordable Care Act, who will be responsible for health care costs?

As an industry, we need to start the discussion.

Thank you,

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

February 2013 Letter from the President

dan welch imageThis month, I want to talk about certification. On April 30, 2008, I became the first CTEF Certified Tile Installer (yes, my card reads: CTI #01). I am proud to have been involved in our industry when this monumental task was accomplished.

I remember executive director Scott Carothers stating, “I feel we are building the Model T from the ground up.” Over the years, certification has changed from the four-day class to a two-day evaluation, and eventually evolved into a very intense one-day certification with an online written exam. Many tough decisions were made to get this program streamlined without diluting the rigor of proper knowledge and skills testing. It also had to be marketed to our customers so they understand what it means to be a tile professional. Today, I feel that Scott and his crew have got it nailed.

Over four years later, we are now working (as an industry) with many new groups to bolster the program. Groups including the CTEF, IUBAC, IMI, NTCA, TCNA, and TCAA have banded together to offer advanced certification. From industry feedback, including our own, we know that basic certification does not necessarily mean an installer can confidently perform difficult installations like showers, mud-bed, wall mud, large-format tiles, and waterproofing. I am proud to say we can look forward to these advanced modules of certifications in the very near future. As a committee member working on the shower certification, I’m excited to be a part of this ground-breaking joint venture. My goal for advanced certification is not to make it difficult for tile setters to attain such certification, but to identify a standard for quality and build the confidence of our customers.

Welch Tile & Marble has succeeded in the tile industry by offering a professionally-installed tile job with quality, service and value in mind. Unfortunately, many of our projects are re-doing another contractor’s mistakes. Tile jobs are unique because they can initially be aesthetically pleasing, but soon reveal the installer’s lack of experience with loose (unbonded) tile, cracked tile, lippage, tenting, and leaking showers. This can happen in a few months, or it could take years. The unsuspecting consumer may hire a contractor who sells them on their ability, with few resources to verify his/her qualifications. The advanced certification program bridges this gap and helps protect the consumer. It also protects the qualified contractor who bids the job doing it right the first time.

If you are reading this article, you are the contractor we need. Your knowledge and experience is what sells. If you think low price is your only sales tool, think again. Consumers will pay more if they understand the value of peace of mind, and the cost of doing a job twice.

The CTEF is working very hard on your behalf to educate your customers. Tile should be a “life of the structure” choice. Certification is an easy way you can prove your value, provide peace of mind, and earn more work without sacrificing profit.

My advice: get involved, get certified, and provide knowledge and experience to support your ever-changing industry.

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

January 2013 Letter from the President Dan Welch

Thank you for the opportunity to serve the tile industry for the next two years!

dan welch imageMy name is Daniel J. Welch of Welch Tile & Marble Inc. (www.welchtile.com). It has been my pleasure to work with many of you, either through the NTCA Board of Directors, or on the Technical Committee. Wow, have we made great progress in the past few years! For those whom I have not met, I look forward to serving you as the first NTCA president from the great state of Michigan!

I am a second-generation tile contractor who learned the trade from my father, Richard Welch. During long days at his side with bucket and trowel in hand, he taught me the value of strong ethics, family-first leadership, and time-tested hard work. My father  provided me with the knowledge and leadership I need to survive and prosper in today’s tile industry, along with my family at Welch Tile: Aaron (field supervisor), Rick (estimator), Jennell and Marnie (office). I owe my success to their support.

Welch Tile & Marble is a specialty tile, terrazzo and stone contractor, installing both commercial and residential projects guided by our mission statement “People, Creating Change.” To me, our People are the most valuable resource we have. I believe we must Create relationships of trust, and embrace Change throughout all aspects of our daily lives, professionally and personally.

Over the next 25 issues I hope to provide common-sense articles focused on the relevant issues tile contractors face today. Welch Tile has been in business for 25 years and I assure you we have made our fair share of mistakes. Although this may not be the cheapest way to learn, mistakes are lessons you don’t forget. Along with our success stories, I will offer experience from the many business decisions that we have made – good and bad – to form what I think is a clear vision of the tile industry today. I believe that if we understand our past, and stay aware of our business climate, we can work together to provide a better future.

I want to thank our past president and my friend, Nyle Wadford for his past term and new responsibility as our Chairman of the Board. Nyle has provided strength in turmoil as this industry has adapted to great change. I also want to thank John Cox as he steps down as our Chairman of the Board. John, you have been a great resource and a beacon of leadership for our great organization.

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

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