Crisis Management 101

Crisis Management 101

By Sean Roth

Real Estate Editor

On Monday, Aug. 9, 2004, Hurricane Charley roared into Charlotte Harbor as a Category 4, 145-mph, destructive nightmare. For roofers. it was a nightmare of a different sort.

Demand for their business doubled, tripled, even quadrupled overnight. The volume was so high from Charley that today, almost 11 months later, blue tarps are still a common sight in hurricane-affected areas such as Punta Gorda.

How does your business cope when the demand rises that fast? As four roofers explain, you cope as best you can. You have little choice.

Families hardest hit

Crowther Roofing and Sheet Metal of Florida

Fort Myers

In the four months after Hurricane Charley, Crowther Roofing and Sheet Metal expanded in its three offices (Fort Myers, Naples and Sarasota) from 250 to 480 employees.

"I would say we were at 400 employees within two months," says Kevin Callans, division manager for the Sarasota office. "It was pretty overwhelming."

Callans says this type of hyper growth led to a lot of those new employees getting on-the-job training.

"We have a full-time training staff, but we had so much work our training staff and estimators became on-site managers," Callans says. "We were lucky we had ads that we had run looking for qualified people. (After the storm hit) our advertising and sales efforts went down to virtually zero. If they had job-site experience we sent them out. The others became assistant job-site engineers, which basically means they were van drivers bringing our workers there and back. You have to have supervision in the field."

For weeks after the storm, the company operated its offices seven days week and nearly around the clock.

"Everybody was working 14 to 16 hours a day," Callans says. "It was really crisis management. The 16-hour days lasted until Christmas. We were doing a lot of school and hospital work which dictated a lot of the after hours work," Callans says.

At the same time Crowther faced a big labor and timing crisis, the company was hit with a third whammy - a major industry-wide shortage of roofing materials. Callans describes the shortage as much more severe than any of the other obstacles.

"We had tile manufacturers quoting jobs 30 to 52 weeks out," Callans says. "They told us that pricing would be set when the tile was shipped not when it was purchased."

Roofing supplies came on the market in tiny spurts, and prices were up dramatically.

"One of the hardest problems was timing all of our work," Callans says. "Every day we would have to be ready to switch jobs as we ran out of materials or more supply became available. We had to be pretty adaptive to changing the products specs in order to meet projects."

Adding to the difficulties, the insurance company that covered Crowther's general liability insurance and other roofers statewide raised premiums.

"Just generally across the board everything went up," Callans says.

Callans says management's priority simply became: Coordinate everything as best it could.

"Our contracts were written as much as could to protect pricing," Callans says. "A lot of time we used the same type of verbiage as the material suppliers. But beyond that it was just a matter of making sure customer's knew that the price difference was being generated by the suppliers. We would show them the paperwork so they knew it wasn't that we were trying to put something over on them."

Today, the company is almost as busy as right after the storms, but it has adjusted to the changed environment.

"A lot of people who changed jobs never did go back to their original positions," Callans says. "Construction materials are still at a premium, and there is still a shortage. It has been great for business, but it is really time with family that has been the hardest hit. Things are starting to return to somewhat of a normalcy. I only work half a day on Saturday and no Sundays. I'm still working 14-hour days Monday through Friday though."

Callans expects another uptick in demand this month because recent heavy rains will expose problems from the storms that had previously gone unnoticed. And like almost all of his fellow roofers he is hoping for a hurricane free season.

Focus on continuity

Sutter Roofing Co. of Florida

Sarasota

Unlike a lot of local roofers, Sutter Roofing Co. of Florida does work statewide so it was affected by all four of the hurricanes last year.

Understates Doug Sutter, vice president for Sutter Roofing Co.: "It hasn't been easy. The most impact we felt was from Boca Grande on up the Peace River to Arcadia and other small towns in the center of the state."

Prior to each storm's arrival, Sutter said most of the company's work was focused on securing each job site.

"That would really start about a week ahead of time," Sutter says "We would have to secure all the materials and just hope it goes the other way,"

After each storm, Sutter Roofing's call volume would spike from about five calls in a normal day to 50.

"Just like anybody we were getting lots of calls for residential work, which we don't do," Sutter says. "We already had a pretty big backlog of work; this just added to that. It was really just saying no to everybody except existing clients."

The company, which only works for select customers, wound up with all it could handle.

"We did about 18 post offices," Sutter says. "We also did a lot of work for Tropicana, W.G. Mills and the Desoto County School Board."

Over three months, the company grew by 50 employees to 250, mainly through newspaper ads it had started prior to the Hurricane season.

"Most of the people we added were laborers," Sutter says.

Even with all the extra demand, Sutter Roofing executives decided to focus on business continuity over quick growth. Work for its existing clients alone translated into a six-day workweeks for most employees and 12-14 hour workdays.

"It has meant lots of overtime pay," Sutter says. "But by far our biggest problem has been materials. We have taken some serious hits on the price increases, which we could not recover. Most of our customers have worked with us though as best they could to mitigate the price hit."

Sutter says the company was able to get through the price increase because of its long-term relationships with its general contractors and clients.

"We just wanted to maintain our same level but the hurricanes probably brought us another $4 million to $5 million in additional business," Sutter says. "In a normal year, we were probably going to be up 10% anyways, but with the hurricane our volume was up about 25%."

As for lessons learned, Sutter says if he had to do it over again the company probably would have said no even more than it did.

"It was not fun for a while there," he says. "We would of course be there for our existing customers. But this has been a good fire drill. We are still a little busier than normal. Our guys are averaging 50 hours a week instead of 60 plus. It totally changed the dynamics of our company overnight."

Shell shocked

PDF Roofing Concepts Inc.

Bradenton

After the impact of Hurricane Charley, Paul D. Furr, owner and president of metal-roof contractor PDF Roofing Concepts Inc., had to resort to one of the oldest rules in retail: First come first serve.

"It was pretty much mayhem," Furr says. "We were so busy before the hurricane that it didn't allow us to do much more work."

Furr says the hurricane gave metal roofs much more free advertising through its performance on the storm.

"They fared much better during the storm," Furr says. "Most had no damage at all. We have roofs that can handle the load of 160-mile-per-hour wind. So we had a lot of interest from homeowners in Hardee, Desoto and Charlotte."

A shortage of steel, which was already tight because of embargoes and Chinese demand, created many of the same supply problems as the shortages of roofing materials and insulation.

Furr now sits on a disaster preparedness committee through the Florida Roofing Sheet Metal Air Conditioning Contractors Association, which is considering new recommendations for roofers and the other construction industries.

Overall Furr says his company is still seeing heavier demand than prior to the hurricanes. "I would say our business is still up about 30%," he says. "I think people are in shell shock"

Don't overpromise

Amick Roofing Inc.

Bradenton

Tim Amick, president of Amick Roofing Inc., says his company lost some employees after the storm - not because of damage, but because of pay.

"Companies were even paying people in cash, doing whatever they could to get people," Amick says. "But I managed to keep most of my guys."

Amick says the increased demand led several companies to promise more than they could deliver.

"Some companies brought in salesmen that blitzed the area," Amick says. "It's really sad. Those companies know they can't put that many roofs up anytime soon. We tried to maintain pretty much our same level and not to oversell ourselves."

Overall, Amick's company saw about 20% to 30% increases in sales. But he says material shortages and price increases have eaten a lot of the potential profit from that extra work.

"We eventually had to pull out of Punta Gorda; there was just too much work here (Sarasota and Manatee counties)," Amick says. "But a lot of the work is still there. (Just after the storm) I went down there to do 20 inspections, and I ended up only getting to two or three because their neighbors would stop me and ask for an estimate. I would still do 20 in one day, but I might only get to three of the ones on my list."

As for the tile shortages, Amick thinks the market has become tighter than ever. Lead times, he says, have gone from eight to 12 weeks before the storms to a year or longer today.