Defining whether or not a year was good or bad is often a matter of one’s perspective. What was a good year for someone in the Northeast might have been a bad one for someone in the Southwest. Listening to everyone’s stories and “averaging” them together, for lack of a better term, can offer a sense of how an industry is doing. Instead of making you go out and talk to everyone to find out how the industry stands, Roofing Contractor decided to save you the effort and bring the people to you with its annual “State of the Industry” report. Okay, we admittedly didn’t go out and talk to everyone about what’s in store for 2015. But aligning the stories you’ll find here with our Survey 2015 offers a good sense of what to expect in the year to come.
Also in this article:
Shaping The Future Of Your Business by Robert Tafaro
State of Healthcare by Karen D. Vines, Vice President, IMA Inc.
Regulatory Strains by Trent Cotney, P.A.
Industry Success is a Question of Leadership by Dave Harrison, Professor, Indiana University, Kelley School of Business
Slow and Steady Growth
Leading off 2014’s State of the Industry Report was the cautious optimism of leading economists regarding the growth of the domestic construction market — the roofing segment in particular. They were right.
While it wasn’t gangbusters for most (is it ever?), the market saw a steady, measured increase last year. Most respondents to our questions said that it was a time of uncertainty heading into 2014. Then, slowly, business began picking up as the year progressed, reflecting a growth in the overall U.S. economy. Essentially, as other companies throughout the nation realized they didn’t have to clench their wallets so tightly, they began using the cash at hand to commence repairs on their facilities. That same occurrence happened on the residential side as well. As budgets grew, so did spending.
That cautious optimism is still present heading into 2015, but most people foresee the spending to continue. No one really expects business to be soaring, but enough of a backlog was created in 2014 to give the industry a chance to breathe a bit easier now than a year ago.
So, as a whole, the industry was up. But what was the outlook for individual sectors specifically?
Kelly Roofing’s president, Ken Kelly, said he expects a lot of activity with his business in the low-slope market in 2015 for the reasons mentioned earlier: clients are now willing to spend money to fix the roofs that have been neglected for so long. But there won’t be so much work out there that contractors can expect business regardless of whether or not pricing is competitive. “Relationships, not price, will be the deciding factor for most customers,” he predicts.
But not all roofing types in the low-slope arena should expect to pick up, according to Pete Schmautz, operations manager for Star Roofing. “We’re continuing to see more and more roofs being specified with single-ply membrane,” he said. “The built-up market continues to shrink.”
As built-up shrinks, where’s the market heading? ABC Supply Co. Inc.’s Daniel Piché, vice president of national business development, said that it’s going to roofing membranes like single ply and modified bitumen systems. All are being led by TPO. “We expect to see PVC make some gains with new capacity coming on board,” he continued. “The demand for longer warranties will increase the layers or thicknesses of membranes used, and the readjustment of R-value calculations and more stringent ASTM standards will increase the amount of insulation required per project. Silicone products have emerged as a viable solution for maintenance and repair applications, at the expense of traditional acrylic-based solutions.”
CentiMark Corporation’s president and COO, Timothy M. Dunlap, said that TPO is gaining more of the market share because, “Pricing pressures and relatively low equipment costs have enabled entry into this market, making this roof system more of a commodity.”
That’s not to say there aren’t concerns with TPO. Sidney I. Hankins III, AIA, RRC, owner of Roof Design & Consulting Services Inc., said, “Recent studies have begun to suggest that white membranes may carry with them some undesirable consequences from moisture and reflected heat. This seems to be related to geographic locale.”
Scott Baxter, commercial sales manager – property management team with Interstate Roofing Inc., said that these possible condensation and ventilation issues can lead to an opportunity for the industry. He theorizes that part of the issue is the prevalence of under-insulated wood decks in the market. “This opens the door for the opportunity to sell more above-deck roof insulation to meet the energy code, which also reduces the potential for condensation in the roof system.”
Another area in low slope where the industry needs to exercise caution is in regard to adhesives. Contractors need to keep an eye on any changes in their formulation, according to Richard M. Nugent, CEO of Nations Roof. These changes can impact how they’re supposed to be stored, which can be challenging if not impossible. “Pay attention to all the codes, building and energy. You may not even be aware of the changes and can be taking on huge liabilities.”
“More states are adopting regulations to reduce emissions of Volatile Organic Compounds (VOCs),” said Jonathan Shepard, president of Mule-Hide Products Co. Inc. “Contractors, therefore, need to understand the nuances of the new low-VOC adhesives and how they are applied, and how they differ from the products they are used to working with.”
Tom Smith, president of CertainTeed Corporation’s roofing products group, said that the viability of self-adhered systems as an alternative to hot asphalt and other low-slope roofing systems needs to be considered. “Many states and municipalities are considering legislation to mandate cold-applied adhesive because it is cleaner, easier to install and lessens concerns of worker safety when compared to torch-applied roofing. In Canada, self-adhered systems have also recently been approved for use, so an uptick in demand is sure to follow.”
The COO for Karnak, Chris Salazar, sees regulatory involvement as the biggest challenge facing the industry today. “There are far too many overlapping and, at times, conflicting requirements and regulations. This is compounded by multiple authorities requiring certifications and documentation from contractors,” he said. “In fact, some regulations and changes are being implemented without any scientific data to justify the changes. Regulatory compliance has placed an enormous burden on manufacturers, but much more so on contractors. For example, a contractor in California has to deal with building code requirements, as well as individual requirements for 58 counties with a variety of specific limits and requirements for product compliance.”
Respondents to our industry survey suggested that the steep-slope market will be a competitive one for contractors in 2015. In some areas, like Portland, Ore., the market picked up significantly once lenders began loosening their restrictions, according to Scott Baxter, commercial sales manager – property management team for Interstate Roofing Inc. “The steep-slope market has boomed since the first quarter and is still busy despite the rainy season,” he said, advising that contractors should use caution when entering the condominium market due to the amount of litigation he’s seen in that sector in the Portland area.
Adding to the pressures of the small- to medium-sized contractor in steep-slope roofing are larger competitors. Ken Schwickert, senior vice president, national business unit – Tecta America Corp., said that he sees those smaller contractors’ capacity and competitiveness being squeezed. “This arena is growing for the larger players who have access to more efficient and cheaper labor,” he said.
To that end, differentiating your company from the competition will be a key factor in 2015, according to Nemeon Inc.’s president and COO, David O’Donnell. Manufacturers are looking to help contractors to differentiate themselves by developing enhanced product lines.
“The roofing manufacturers continue to make investments in higher-value products and new and improved technology to better market their products and systems,” said Daniel Piché, vice president of national business development for ABC Supply Co. Inc. “Most of the advancements incorporate improved performance (algae resistance, hail protection, heat reflectivity), enhanced aesthetics (higher definition colors, enhanced blend drops) or products engineered to increase speed of installation (better marked, wider nailing strips). Each of these improvements gives roofing contractors an opportunity to profit through differentiation and/or productivity.”
“New products like IKO’s High Definition shingles and our soon-to-be announced Stormtite synthetic underlayment gives our roofing professionals opportunities to differentiate and create new sales opportunities for their projects,” said Keith Lowe, vice president – sales, U.S. for IKO. “IKO is also excited to announce that we will introduce our latest product innovation in the first quarter of 2015. The product is called Dynasty, and we are confident the market will embrace the advantages it affords them and their customers.”
Tom Smith, president of the roofing products group for CertainTeed Corporation, said that contractors should expect interest in a new category of architectural “style” strip shingle. “[It] provides the affordability of a strip with the with the visual appeal of a laminate,” he explained. CertainTeed recently announced that its architectural style product, Patriot, will be available nationally in 2015.
Technology is playing a bigger role in construction, and that role is looking to get larger. “The trend of using technology and social media has gained widespread acceptability with a strong growth trend for 2015,” said EagleView Technology Corporation CEO and president Chris Barrow about technology in the steep-slope market. “In conjunction, manufacturers and distribution will continue to offer custom technology and increased access to technology partners. This will create a new level of ease of use.”
“We’re also seeing an increase in the number of contractors using tablets to help them better tell their story,” said Lowe. “This makes tools like the RoofViewer roof-design tool and IKO’s customizable in-home sales presentation a ‘must have’ for contractors who want to stand apart from their competition.”
Metal is known as one of the most environmentally friendly roofing options available due to its potential with energy efficiency, longevity and recyclability, among other benefits. However, like many environmental options, a higher initial cost is often associated with metal roofs. It’s one of the reasons why metal roofing was perhaps impacted more than any other segment during the recession, along with green building. But how are things looking for sustainability now, and how will that impact metal roofing?
“After taking a major step back after the recession, trends are indicating that commercial and residential buildings are looking to increase sustainability and energy efficiency,” said Aram Spendjian, marketing coordinator with Kingspan Insulated Metal Panels. “We see the industry moving from cavity-based roofing systems to single-component single-seam roofing. This is due to the fact that single-component insulation systems have higher R-values, superior airtightness and low thermal bridging. These all contribute substantially to higher energy savings in comparison to standard cavity-based insulation systems.”
These sentiments were echoed by MBCI’s president, Bill Coleman: “Customers, owners and architects continue to express interest in energy-efficient and sustainable methods of construction. As a result, we anticipate the demand to increase for products that improve a building’s energy efficiency, lengthen its life expectancy and lower maintenance costs.”
“In addition,” said James Bush, vice president of sales and marketing, ATAS International Inc., “energy efficiency of the roof assembly is becoming a crucial element with the integration of insulation and underlayment materials. This bodes well for metal, as cool-pigmented paint coatings used with the panels offer cool-roof technology due to their high reflective and emissivity values. Other technologies such as above sheathing ventilation can further enhance the energy performance of a roof assembly. As solar technologies continue to gain market share, metal is the preferred platform for solar systems as it is the only roof system with a proven service life that outlasts the PV modules. Furthermore, PV panels can be of a thin-film adhesive applied to the roof or a crystalline-type system that is clamp mounted to the vertical seams of the panel. Both systems do not penetrate the roof.”
“The toughest problem we face with the roofing industry is convincing contractors and architects the importance of a sustainable and energy-efficient roofing system,” Spendjian added. “When an architect or contractor wants to cut costs on the building, they typically look to the roof first to do so. This is because it isn’t visible to the public eye, due to the fact that it is on top of the building. The old saying, ‘out of sight, out of mind,’ comes into play.”
Along with metal’s use in the commercial market, residential is seeing an uptick as well. “As far as residential metal roofing is concerned, metal shingles and tiles have become prevalent in the industry in addition to traditional standing seams,” said Bush. “Re-roofing offers the greatest opportunities for contractors. Asphalt shingle products were predominately used on homes built in the late 90s and early 2000s. These products are now nearing the end of a useful life. During the remodeling process, homeowners often consider upgrades in product selection. Astute contractors should offer metal roofing as an option to homeowners during the consultation phase of a re-roofing project.”
“Metal roofing is a product that needs to be marketed and sold to a residential homeowner,” Bush added. “Successful residential metal roofing contractors realize that selling techniques and in-home consultation are the keys to success.
“As metal continues to gain market share in both the residential and commercial sectors, contractors that are not currently installing metal should take advantage of the many training programs that manufacturers offer. In addition, organizations such as the Metal Construction Association provide thorough training manuals and online educational programs to assist contractors in training their crew on the installation of metal.”
David O’Donnell, president and CEO of Nemeon Inc., had this to say: “The metal trend will continue, and more building owners and homeowners will see metal as a viable option when looking at their roofing options. If you don’t offer a metal roofing line to your customers, 2015 would be a good year to look into adding metal to your portfolio.”
What would life be like without a few challenges to face us along the way? Oh, that’s right, it’d be easy, and who wants easy? Wow, that many of you? Well, too bad. “Challenge” and “life” are synonymous in some cultures…or not. In fact, we’re pretty sure that’s not the case. But would you have been surprised if it were true? Challenges are a part of life, after all. That said, it shouldn’t be a surprise that many in the industry don’t expect 2015 to be all clear sailing.
Employment issues were, without a doubt, the foremost concern among most of the industry experts Roofing Contractor interviewed. “The past recession has put us in a tough spot. We lost a generation or more of trained workers in our industry,” said Kent Schwickert, senior vice president, national business unit - Tecta America Corp.
“Regardless of which unemployment figure you look at, we’re at a point where there are fewer people looking for jobs and very few of those people are interested in becoming a roofing installer,” said Keith Lowe, vice president – sales, U.S. for IKO.
According to Scott Baxter, commercial sales manager – property management team for Interstate Roofing Inc., “An extreme labor shortage is going to impact the entire country, in my opinion. This is going to drive up wages and make competition for experienced roofers fierce.”
If companies are going to be pitted against one another in a kind of cage match, what can the smart business owner do to get a leg up on the competition? “Those businesses with the best people usually win,” said Brian Lambert, director of products and systems for The Garland Company Inc. “Our best contractors are made up of great individuals who care about their customers and take pride in their work. One of the biggest challenges I see for the roofing industry is finding those great people. As the economy continues to gain momentum, workers may be tempted to enter other trades or seek other opportunities.”
“We need to create and maintain a working environment where people want to go to work each day,” advised Lambert. “Competitive pay is important, but there are many other ways to create a healthy working environment. Workers want to be valued by their employers; they want a safe, challenging environment; they want to be supported and trained by their supervisors; and they want to be recognized for their contributions to the success of the organization. Those contractors who create this environment have an easier time finding and keeping good talented workers.”
Randy Adams, CEO for R. Adams Roofing Inc., said that more needs to be done to let potential workers know of the opportunities available in the industry. “All stakeholders, manufacturers, technology, media, construction trade associations and contractors need to pull together and let recent high school graduates and others know of the opportunities available in the roofing industry. While construction is an ‘outdoor’ business, the roofing industry provides an opportunity to earn a good income and provides for personal growth and career advancement.”
People want to be secure in their employment. Baxter said that companies with in-house training programs may have an advantage by training and retaining good employees. This tact has already been adopted by companies like Best Roofing, which has begun paying more attention to an individual’s character with the expectation that the roofing skills will be acquired through the company’s training program, according to the company’s president and CEO Gregg Wallick.
Manufacturers have recognized the need for proper training, and they have also been developing products that don’t require as much manpower to install. “Enhancing [a contractor’s] roofing system offerings with labor-saving systems and accessories, such as factory-made edge metal for single-ply roofing systems instead of field fabrication, will contribute to the increased productivity of their existing crews as well as help with crew retention and recruitment,” said Mule-Hide Products Co. Inc. president Jonathan Shepard.
Given the increase in how much information is consumed by customers through technology, devoting time to meeting that appetite for information can pay off for contractors — literally. “[Property] owners are looking for sophistication throughout the sales and marketing, production and warranty processes,” said EagleView Technology Corporation CEO and president, Chris Barrow. “That level of knowledge from customers will force contractors to understand how to incorporate technology into their business from CRM to reporting to social media. Changing demographics and expectations will cause companies to lose business to up-and-coming sales, marketing and technology-savvy companies.
“Consumers are looking for companies that use technology to communicate accurately, strongly and technically,” Barrow continued. “Contractors that set their companies up with these tools can use the proficiencies created to differentiate their businesses, increasing closing rates and improving profits. Ask the technology companies you work with to not only show you how to use the tool in operations but ask how to use it in every part of your business.”
But a technological product must align with a contractor’s need for it to be useful. It could be a waste otherwise, as the CEO for the National Storm Damage Center (NSDC), Trevor Leeds, explained, “A lot of companies pop up with new technology that they think is helpful. But they’re not from our industry, so they don’t understand our industry, and [that product] turns out to be a waste of money and time.”
NSDC’s executive director, Dave Carlson provided an example, “Like customer retention software management systems. When they were initially developed, they missed the mark. But when industry people got involved, they did it right and it helped track customers — and previous customers — better.”
“A lot of companies spend so much money and time to acquire a customer and then after they serve that customer the first time, a lot of them don’t track the customer effectively long term and they don’t have the recurring customer,” added Leeds. “The larger companies are doing a good job of using technology and are saving a lot of money and time.”
Carlson concluded, “Smaller contractors don’t think they need to utilize new technology, but they do. Some have been doing it the same old way and it’s worked, but the industry is always changing. It’s become very technical-based and a lot of people are not embracing it. They think they can continue working as they have for 30 or 40 years. They can’t. They have to change and evolve with new technology.”
Another challenge facing contractors heading into 2015 is a perceived increase in litigation, which isn’t helped by an increase in the number of regulations and codes.
“Regulation and a litigious society combine to create pitfalls for the unwary,” commented Christian Madsen, president of Madsen Roofing & Waterproofing Inc. “While the sophisticated and attentive contractor may have an edge in this regard over less professional competitors, there is no doubt that increasing resources must be dedicated to this issue. Vigilance and attention to detail are the watchwords of the day.”
Kelly Roofing’s president, Ken Kelly, added, “The last six years have encouraged frivolous lawsuits, expanded regulations and fostered a sense of ‘entitlement’ throughout society. Shelter and protection will be a theme in 2015, as contractors try to find ways to limit their exposure to the onslaught of activity against them.”
Sidney I. Hankins III, AIA, RRC, owner of Roof Design & Consulting Services Inc., suggested that the industry should take a proactive approach as opposed to a reactionary one. “The roofing industry must become more involved in the creation and revision of technologies and regulations either by personally participating or by supporting organizations which represent your interests,” he said. “Manufacturers have already invested millions to influence emerging issues as well as to develop products which will keep pace in the marketplace.”
That sentiment was echoed by Richard M. Nugent, CEO of Nations Roof, who said, “The only thing you can do is stay up to date and get involved with local and national government.”
As written at the start, these are but a few of the many voices in the industry. Likewise, their thoughts are but a few of the possibilities. Unforeseen events have impacted the profession for both good and ill in the past, which would likely be a cause for the experts interviewed here to revise many of their thoughts. While one can’t predict what exactly will happen with 100 percent accuracy, there are ways to prepare and secure your business for the unexpected. The pieces of advice in the preceding text are but a few. Your thoughts, and results, may vary.
So, are you truly ready for 2015?
By Robert Tafaro
2014 was a tale of two roofing industries. In commercial roofing, early optimism led to a solid year by the standards of recent years, although commercial construction is still 30 percent below its historical average (KeyBanc). The residential roofing industry started with promise but never quite lived up to expectations. A hard winter and an improving economy led to early optimism and significant buying by roofing distributors. The anticipated residential demand never fully appeared and led to correspondingly weak pricing, negatively impacting manufacturers, distributors and many contractors.
The industry will need to learn from 2014. We expect that roofing distributors and manufacturers will be more cautious in their approach to winter ordering, hopefully leading to a more balanced level of demand throughout the year.
The short-term economy continues to be hard to read. As optimists, we can point to encouraging signs throughout the last year. Existing home sales and housing starts continue to recover toward historical norms, while overall repair and remodel spending has been forecasted to reach its previous peak by the end of 2014 (Joint Center For Housing Studies Of Harvard University). We all hope that these trends continue and accelerate — but we know that the pace of recovery during the last few years has been uneven. In 2015, the roofing industry’s cost base will continue to be challenging. While the headline price of oil has fallen, input costs — particularly for asphalt and polymers — have not fallen in quite the same way, reflecting the costs required to modify today’s asphalt to ensure that it delivers roofing of consistent quality. Likewise, despite lower fuel prices, trucking costs remain stubbornly high due to heavy demand for flatbeds and a shortage of drivers (due to restrictive changes in federal regulations).
The shorter-term may be harder to read, but the longer-term prospects for the roofing industry remain clear and positive. Our industry provides an essential and non-discretionary good. Moreover, the structure of the housing and roofing industries has some good prospects for improvement. There are 43 million homes in the United States that are more than 33 years old, (Census Bureau, John Burns Real Estate Consulting LLC) and the population-adjusted level of housing starts is lower than it was in the 1970s, (Census Bureau) implying that new construction will have to rise. Of course, not all the fundamentals are positive, such as the quadrupling of student debt to $1 trillion throughout the last 12 years, (LEK, FRBNY Consumer Credit Panel/Equifax data) delaying many first-time buyers and some remodeling projects.
The good news is that, each year, all parts of the roofing industry become more professional and more willing to adapt to new realities. Indeed, we can all shape our futures in 2015 by addressing current trends.
In commercial roofing, it continues to be important for the industry to adapt to the ongoing growth of single-ply roofing and to the greater acceptance every year of the benefits of cool roofing. Manufacturers and contractors will need to offer more differentiated, value-based systems in TPO as well as in PVC, which has been resilient in the last few years. Sustainability standards (e.g., LEED and Health Product Declarations) are becoming increasingly important to architects, given that these standards provide a level of transparency for and validation of different systems. At the same time, value-added services such as maintenance continue to be important to property owners, requiring that contractors develop a clear value proposition around their maintenance offering. In 2015, solar will have even greater importance for commercial roofing, as costs have become clearer and the permitting process more standardized. In this environment, it will be important for contractors to line up the right financing arrangements and to ensure they install a roofing system that withstands the higher heat typically generated by a rooftop solar system.
In residential roofing, upselling and a focus on quality become even more important when demand is less than anticipated. The designer shingle category has shown resilience and even growth in a relatively low-volume year, providing an opportunity for more contractors to emphasize these products in order to differentiate themselves. In repeated consumer studies, homeowners show a preference for contractors who take the time to expose them to more than just the standard fare in shingles. As a result, more and more contractors are reviewing and reengineering their in-home selling process and placing more emphasis on influencing all decision makers, including the female head of household. They are also adjusting their “good, better, best” offering with more differentiated products, such as those centered on affordable color upgrades and designer-type shingles. Hand in hand with a strong value proposition is the need to have a strong pipeline that opens up new prospects to convert. Contractors will increasingly need to develop a clear lead generation approach, and to ask themselves if they know where their leads are coming from and if they are partnering with manufacturers or other third parties that give them access to affordable leads. At the same time, a gently reviving economy is leading to increased homeowner interest in financing. Successful contractors will need to come to grips with financing as a tool to close more sales and pick the option most appropriate to them and their customers.
Across both residential and commercial roofing, the adoption and use of information technology is becoming increasingly critical, whether it be for commercial lead generation, in-home selling or back office efficiency. Shaping the future requires that we all work on and master each of these three areas from year to year, as adoption of technology is becoming an increasingly important differentiator for all of us. For instance, many contractors are recognizing that technology is a key success factor for closing sales. These forward-thinking contractors are relying on partnerships with manufacturers and other third parties to provide them with the most up-to-date tools.
We cannot predict the short-term outlook for the economy and industry, but we do know that our roofing industry benefits from strong American values, including hard work and a dedication to the betterment of all those in the industry. These strong values will enable us to shape our industry toward a positive future.
Karen D. Vines Vice President, IMA Inc.
The Affordable Care Act: Is Your Company Ready?
The countdown for enforcement of the Employer Shared Responsibility Mandate, aka Play or Pay, is so close for many employers that it’s palpable. The IRS handed employers a gift in the summer of 2013 when it delayed enforcement of the mandate until 2015. Then in February 2014, the IRS issued guidance creating another potential delay, until 2016, for employers with 50-99 full-time equivalent employees (FTEs).
While employers collectively breathed a sigh of relief, some may have taken these delays too literal by halting their ACA preparations. The constant political noise, regulatory shifting and mid-term elections may have been distracting, confusing and could have created a sense that the employer mandate will fall by the wayside before the enforcement date.
While the future of provisions within the ACA may continue to see implementation tweaks and impact from the shifting political winds, what should you do now if you haven’t made moves to be compliant with the employer mandate?
As the saying goes, knowledge is power. Compliance with the ACA is complex. Employers need to understand numerous elements of technical implementation guidance, how these impact their business and what action steps should occur. Here are two of the most critical action items:
Step 1: Understand if IRS-controlled group regulations will impact your company. For affiliated entities where common ownership under controlled group rules is present, the entities are required to be combined for purposes of counting FTEs. The combined employee count will be used to determine if the entities will be treated as applicable large employers subject to the employer mandate, even if individually any entity has fewer than 50 FTEs.
Step 2: Understand how to calculate FTEs. The IRS-defined calculation process will determine whether or not your company is subject to the employer mandate for 2015 and if special transition relief under the 50-99 FTEs IRS guidance will be available, potentially deferring enforcement until 2016. Non-traditional workers deemed to be common law employees using IRS guidance must also be counted, along with seasonal employees in many instances.
Other items that should be on your readiness checklist:
- Understand how the penalties under the employer mandate will be assessed and what you need to do to eliminate or minimize penalty assessments if your company will be offering health insurance.
Pay Penalty Protections
- Have an annual open enrollment
- Offer Minimum Essential Coverage to at least 70 percent of full-time employees (IRS defined process) in 2015; 95 percent in 2016 and forward
- Availability for employees to enroll dependent children
Play Penalty Protections
- Offer coverage that meets Minimum Value threshold
- Offer coverage that satisfies one of the three IRS Affordability safe harbors
- Understand the IRS guidance and complete process for determining full-time employee status, handling re-hires and employee transitions between employment classifications.
- Prepare for the new employer reporting requirements. Required to be completed by all applicable large employers for calendar year 2015, even those qualifying for 50-99 transition relief and employers not offering health plan coverage. Reporting will also be required for self-funded small employer plans.
If you are an applicable large employer (50 or more FTEs), whether you’ll be up to bat for enforcement of the employer mandate in 2015 or you qualify for the 50-99 transition relief, there are a number of steps on the pathway to compliance. The enforcement date simply speaks to the sense of urgency and focus you’ll need to create.
By Trent Cotney, P.A.
Many contractors would state that the biggest problem facing the roofing industry is lack of skilled labor. However, I believe that the increased expansion of government regulation and intervention has created a chilling effect on the roofing industry. In particular, the rapid rise and expansion of OSHA enforcement and regulation has put many roofing contractors out of business. In my opinion, OSHA’s primary concern is no longer safety, and has shifted to meeting internal quotas, thereby creating a de facto tax on the construction industry.
In addition to the increase of OSHA regulation and enforcement, almost every federal agency from the Environmental Protection Agency (EPA) to the U.S. Citizenship and Immigration Services (USCIS) has increased the number of audits and fines on roofing contractors. For example, under the current administration, the number of USCIS audits has increased dramatically. In addition, the EPA has ramped up enforcement of its lead certification and testing requirements.
The role of the federal government should be to help and assist contractors to grow given the impact of construction on the national economy. However, this recent big government trend has done nothing but hurt contractors and the growth of the industry.
Watch Out For…
Although there will likely be new and modified regulations governing beryllium and silica, the change that may cause the most damage to contractors is the requirement that employers notify OSHA of work-related in-patient hospitalizations, amputations or losses of an eye within 24 hours. Under the previous rule, OSHA’s regulations only required that an employer report work-related fatalities and in-patient hospitalizations of three or more employees. Prior to this change, employers were not required to notify single in-patient hospitalizations.
The new rule went into effect on Jan. 1 for work places under federal OSHA’s jurisdiction. Employers are now required to notify within 24 hours of the hospitalization, which makes it incredibly difficult on employers to manage work-place injuries. In addition, this will inevitably lead to an increased number of citations given that OSHA will inspect every incident surrounding the need for hospitalization regardless of the cause or nature of the injury.
Author’s note: The information contained here is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.
Trent Cotney is Florida Bar Certified in Construction Law, General Counsel; a director of the Florida Roofing Sheet Metal and Air-Conditioning Contractors Association (FRSA); a director of the West Coast Roofing Contractors Association (WCRCA); and a member of the National Roofing Contractors Association (NRCA).
By Dave Harrison Professor, Indiana University, Kelley School of Business
The toughest long-term problem facing the industry is attracting capable and insightful leadership. This problem isn’t new, but over time the consequences of inadequate leadership may become much worse.
Developing the next group of leaders and entrepreneurs is an industry challenge. The complexity of business continues to expand. Strategy that delivers value is more complex. Insight into best practices in financing and logistics is becoming more critical. Attracting and maintaining great talent is a continued struggle. Excellence in communication capability is even more important in relationships with customers, teams and vendor relationships.
The question remains, will the industry attract leaders that can thrive with these challenges?
This future leadership challenge is especially true with a workforce that has become quite diverse. For years, an entrepreneur in roofing could be successful with a strong knowledge of installation, adequate business skills and an ability to earn trust in his or her community. But 10 years from now, with more than 70 percent of the workforce Latino, won’t being bilingual be a requirement? Won’t business and leadership skills that are much more advanced than adequate be required? And will simple one-hour sessions at trade shows be adequate enough?
To deal with these leadership development challenges in other industries, it is the norm for entrepreneurs to have a strong corporate advisor(s) (similar to a board of directors) to maintain an outside view and to challenge leadership teams in order to assure they don’t become complacent. In the roofing industry, isn’t that concept rare?
The reality is, while individuals may want sole control without challenge (most entrepreneurs), company results are typically far superior when there is a healthy tension in strategic planning through debate, discussion, exploration of a variety of options and disciplined implementation. The framers of the U.S. Constitution understood this concept more than 200 years ago, which is why they built in a balance of powers concept that would assure debate, generate more options and require compromise leading to superior overall results. Will our industry adopt similar vision as our forefathers that lead to our nation’s ability to adapt and thrive?