LearnMH recently hosted its first international guest on the most recent webinar, held on Thursday, May 20th. Russ Stephens, co-founder of the Association of Professional Builders (APB), an international association that addresses challenges facing builders around the globe joined us for a thoughtful discussion. Based in Australia with clients in Europe, Asia, Canada, and the U.S., Russ sees the issues facing the builders in the housing market from a unique perspective which made him the perfect guest.
U.S. builders are struggling with soaring lumber prices and access to resources and other materials to meet consumer appetite for housing. As challenging as it is in the U.S., there are other countries in more dire positions. Access to materials and resources is at a crisis level and should be treated as such. Subcontractors unable to access lumber and other materials to do their job started shutting down, unable to meet their commitments. This is putting pressure on the contractors supporting the builders, disrupting delivery times, or worse, shutting down projects.
Russ doesn’t foresee any improvement for the next six months and recommends builders prepare to get through the crisis by doing three things:
- Reviewing their contracts and renegotiating where they can (with legal input)
- Managing customer expectations through healthy communication to maintain the relationship
- Move to weekly monitoring of cash flows to understand the impact on profit and losses, forecast more accurately, and react to changes quickly.
APB recently surveyed over 1,000 builders which provided some valuable insight that could help all builders. Most builders (60% surveyed) don’t understand all of their fixed costs. This can be problematic as change orders, and other activities delaying a project can add up.
Understanding the fixed costs per project per day will provide awareness of the actual cost of a subcontractor not showing up for work, or a delivery not completed. Builders are surprised when they determine the true cost. Other interesting findings from the survey included: Australian and New Zealand builders use social media more effectively than those in the U.S., most builders do not have a documented, repeatable sales process with 38% looking to implement systems to help them monitor effectiveness.
When asked what he sees for builders in the future, Russ believes there will be a large collapse in the industry in 2022 as the market cools down and the liabilities that come with the work-in-progress have greater impact on builders without enough cash on hand to cover the expenses. He is already beginning to see subcontractors collapse and believe this may happen as early as the end of this year.
Do you agree with Russ’ perspective? Are you experiencing the same challenges and if so, how are you dealing with them. I invite you to review the webinar and share your thoughts. WATCH WEBINAR REPLAY
Our next webinar will be on Thursday, June 1st at 11:00 AM PST / 2:00 PM EST. Our expert speakers include Manny Santana with CAVCO builders, and Devin Learny-Hanebrink of McGlinchey, who will be discussing the upcoming changes to the HUD Code and what it could mean for the industry. The webinar is free but you’ll need to register to attend.