Air Date: 6-16-2017|Episode 464
We are back at the annual Violand Executive Summit and have lined up a great cast of restoration veterans and up and comers to discuss the topic “Restoration a Changing Industry”. 2017 marks the 30th anniversary for Violand Management Associates, who during that time, has grown to become a leading Advisory Services firm in the restoration and cleaning industries.
We are back at the annual Violand Executive Summit and have lined up a great cast of restoration veterans and up and comers to discuss the topic “Restoration a Changing Industry”. 2017 marks the 30th anniversary for Violand Management Associates, who during that time, has grown to become a leading Advisory Services firm in the restoration and cleaning industries. In the spirit of watching a company like Violand Management grow and develop over three decades, we thought it would be fun to explore how the restoration industry itself has changed during that time, sometimes for the good and sometimes for the not so good. We also plan to explore what this group feels are the potential future opportunities and where the industry is going. To help us do that, we have asked a group of Violand Executive Summit participants to help us out and have assembled a talented group of industry veterans and savvy rising stars in restoration. It’s great to be back at the Violand Executive Summit!
- Lee King -President After Disaster and current RIA Board of Directors member
- Wes Williams – Founder and President CJB in the Vancouver BC
- Scott Stamper – CEO Regency DKI and past RIA president
- Tom Laska – President ICC Restoration Minneapolis, MN
The Next Generation of Leaders
- Chris Yanker – Production Manager Buffalo Restoration in Bozeman, MT
- Jacelyn Carpenter – CEO Ideal Restoration, San Francisco, CA and RIA board member
- Grant Nitzche – President SERVPRO of Wheaton, IL
- Tom McMahon – Senior Project Manager McMahon Restoration Chicago, IL
Join us live or download the show later to learn more about how the changes in the restoration industry may affect your business and how current industry leaders and the next generation of leaders are adapting to the changes. LEARN MORE with IAQ Radio!
Restoration a Changing Industry
2017 marks the 30th anniversary of Violand Management Associates a leading advisory firm in cleaning and restoration. For the 4th consecutive year, IAQradio broadcasted live from the Violand Executive Summit in Canton, Ohio. The broadcast began with opening comments from Chuck Violand that the biggest obstacles facing those engaged in restoration are: increasing competition and more challenges in maintain margins. Successful business owners need to be sharper to better compete and succeed.
Broadcast featured a roundtable discussion of industry veterans and talented up and comers moderated by the RadioJoe and the Z-Man.
Nuggets mined from this episode:
What are the biggest changes you’ve seen during your tenure in the business?
Scott Stamper- biggest changes, playing field has changed no longer meet with an adjuster on site and arrive at a price, we knew how long it would take to perform a function. The level playing field that isn’t a level playing field. Now there is a unit cost that doesn’t take into consideration experience, differences in labor costs, overhead, etc. The challenge to a new business owner is efficiency in the “lean and mean model” being faster and better. The challenge to an older company is switching from the old operating model to the new. Every market is different.
Do you have any jobs that don’t follow a unit cost model?
Lee King: large loss division uses “time & material” format, those rates are applicable on larger scope of work isn’t accurately definable or verifiable on the first day and is subject to change. Engaged in contingency plan agreements, rates negotiated upfront. Challenge of finding employees, overtime sounds good on paydays, 5 year increments it was much easier to find people. Millennials are a real challenge.
Wes Williams: It’s a mirror image in Canada. Our key to dealing with millennial employees is to paint a picture explaining how they are saving the world and making an important difference by pumping water out of basement and they will receive an extra $100 for responding at 2 AM.
Tom Laska- More is required from water techs today. Before, they used to suck up water, take moisture readings and install drying equipment. Now they are required to put science behind it. And the tech’s science and the insurance company’s science on the project must match. Today water techs are advancing so fast they soon want and expect to move up in the company.
Z-Man- The 2nd law of thermodynamics hasn’t evolved or gotten more complicated- we’ve added unnecessary complication.
Scott Stamper- We’ve brought overcomplication on ourselves. Software programs now make the decisions for us, telling us how many pieces of drying equipment are supposed to be installed.
When the veteran’s entered the business 20-30 years ago did you get the If your company had the opportunity to bid on a $250,000 drying project in school versus would you be excited? Would your reaction be different if it was a smoke job, if so why?
Chris Yanker- There are many KPIs (Key Performance Indicators) to measure mitigation. Cleaning is viewed differently. Cleaning requires a different approach. We need KPIs for cleaning.
Jaclyn Carpenter- We would send the cavalry on the water loss. We would be less excited about the fire job. During the emergency response phase of fire restoration we assume asbestos and lead are present so our staff wears PPE. Once that has been resolved the labor rate drops dramatically. Expending that much labor is challenging. Pieces of the project such as quality control and odor removal can go awry.
Grant Nitzche- We have prevailing wage requirement in Illinois. On water projects financial assistance comes from the rental equipment billing. Fire jobs are strictly labor. You must pay your expenses on time and then wait for the money. 1.6 times cost is a typical markup. A 25% gross margin may be left after paying required fees. There are more complicated business questions of a large fire loss: do I want to be out of pocket, wait to get paid, have limited profit potential?
Tom McMahon- We would be excited about the water. We would reluctantly take the fire.
Z-Man was surprised that everyone would do the fire job.
Is fire restoration becoming a lost art?
Scott Stamper- I formerly would send techs to a 5-day hands on school where they learned how to remove particulate and remove odor. Today, too many people walk into a smoke/fire damaged building and think that spraying the sealer will solve everything. Our prior approach was that we would clean everything that was accessible and was structurally sound and then seal as needed. The art of cleaning isn’t as sexy as putting in a fan. Fire cleanup is labor intensive.
Lee King- The trend in industry away from cleaning is the result of downward price pressure to find a more effective and faster way to clean something. Nothing will replace manual cleaning and manipulation. We want to be sure to remove the odor, so we use manual cleaning followed up with a sealant,
Wes Williams- 25 years ago the industry was perceived as the expert, who explained the situation and dictated actions. Now the insurance industry is the professional and dictates scope
Would you feel differently if you got hazmat rates to do the work?
Jaclyn Carpenter- That’s the problem, the labor rate is too low. On fire projects we assume asbestos and lead are present and perform emergency response in PPE.
Tom Laska- On fire restoration projects we’ve introduced industrial hygienists into the mix. To avoid potential liability in multifamily properties we want to know what is present in the soot and ash in wall cavities. On fire losses we need to put science into play, so we know at the end of the day whether there is a risk to occupants.
What can you’re company do better than the competition?
Wes Williams- Staff adjusters must handle so many claims per month. Their files are reviews by supervisors, we help the adjuster meet objectives in their jobs.
Scott Stamper- Business is a marathon not a sprint. We want to be relevant. We discuss “concierge approach’, what can I do to help you? We look for better technology to become more efficient and do a better job. The insurance industry doesn’t understand that even though the large job may come once a year, I still need the staff trained to handle it and the specialty equipment.
Jaclyn Carpenter- We’re selective about taking on clients. We ask new potential clients, what do you hate about the current restoration company you are using? Poor communication is the most common answer. We’ve tried to bottle and sell communication. When a large loss occurs the property manager has: their tenants yelling at them, their bosses yelling at them and flack is coming from all directions. If they don’t have answers they look bad. We give them the tempo and timing of the communication the way need the way they like it. It’s like special colored M&Ms for every client. Use checkpoints to ensure communication about process and procedures.
Tom McMahon-Training only takes you so far. New companies don’t know what they don’t know, they lack the experience of working through the problems that years of industry experience provides.
Chris Yanker- We are our own competition. We’re focused on putting our heart in. “They don’t care how much you know, until they know how much you care.”
As an old dog, what advice do you have for younger pups?
Lee KIng- Establish well thought out, clear, concise, easily understandable, procedures at all levels; finance, marketing and operations. Train, train, train. Schedule bimonthly meetings with staff, pick a subject and hammer it home. Entropy is when things go from order to chaos, without procedures we will be living proof of entropy.
Wes Williams- Develop a culture around the millennial mindset. Give them a cause purpose and something to sink teeth into. Paint the picture in front of them. Give them the why, and reason why they are up at 2pm sucking water.
Tom Laska- Get to know what the client wants. Ask questions: how do you want us to communicate, what do you like best? We don’t know unless we ask. Ask questions, don’t take the answers for granted. By asking the right questions, the people we are helping will help us help them.
What percentage of your annual volume is program work or comes from TPAs
Tom McMahon- 50%, Tom Laska- less than 2%, Grant Nitzche 2-3%, Wes Wiliams- 20%, Lee King- 15-20%, Chris Yanker- 4%, Jaclyn Carpenter- 0%, Scott Stamper- 1.4%
Z-Man- While I wasn’t surprised at a Violand management event that thye attendees knew their numbers, I was surpreised at low low the percentages were. I anticipated that the veterans would be less dependent and the younger firms more dependent.
Where does downward price pressure come from if you aren’t doing program work?
Scott Stamper- While I know that some sitting at this table are the exception, the industry has adopted a single pricing platform. There’s no evil conspiracy. If you look at auto repair and insurance property repair, all models and year of the same make cars are the same while properties are uniquely different. Contractor decision making has been taken away. We need to get back to having adjusters and contractors meet on site and agree on scope. Taking care of customers, the insurance carrier and the property owner. Business is a marathon not a sprint. You can’t retire off every job.
Chris Yanker- Price pressure is self-induced. We aren’t rental companies, we are service providers. We must communicate to the client, the carrier and our employees why we are providing the service. There’s a problem when our only communication is the line item price. Put the art back to restoration, focus on the end service product not the price.
What drove the insurance companies, heighten awareness needed to do all this complicated stuff?
Tom Laska- The manufacturers have sold their products to the insurance industry. Yanker-
What are the current opportunities; you see in restoration?
Tom Laska- Trying to align with the commercial market. There are more and larger opportunities there with fewer headaches
Grant Nitzche – Differentiate by providing great customer service.
Wes Williams- Delivering info to insurance company quickly so they can determine coverage and make needed decisions. Quicker answers and faster flow of information. We use a software that allows photos to be sent to adjusters.
Lee King- Don’t try to do more things. Do what you do well, even better. Focus on doing the core services better.
Chris Yanker- Continue to build trust with everyone we do business with. Tell the accurate story, with integrity, removes risk.
Jaclyn Carpenter- Build trust. Be a trusted adviser to commercial clients. A contaminate is a contaminate, it doesn’t matter is its soot, mold spores, asbestos fiber, etc. Use engineering controls and remove it. Be the solution. Bring in experts when needed.
Tom McMahon- Provide education for clients and insurance carriers.
Scott Stamper- Drying to what a computer tells you reduces the value of service.
IAQradio would like to acknowledge Jeff Jones, VMA’s Director of Sales and Marketing for his assistance in organizing and coordinating the broadcast.
Z-Man signing off
In what year did the NFL Hall of Fame open in Canton, Ohio