Stone Column

Walking the line

August 1, 2008
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With American stone industry companies fighting harder than ever before to turn a profit, we are seeing a number of approaches to offsetting the decline in sales these days. Some firms are lowering prices in an attempt to draw more business - although this seems rare among established stone fabricators. Other have changed their target client base, and they are aggressively going after new markets in an attempt to regain some lost business (i.e. remodeling work rather than new construction). Unfortunately, though, no matter what sales and marketing strategy is in place, the majority of U.S. stone fabrication shops will not do the same volume of business that they did a year ago (or even two years ago).

So with that being said, how are companies dealing with the loss in revenue? Invariably, they are being forced to look internally at cutting costs to remain profitable. The key, however, is making cuts that won’t place the company at a disadvantage down the road. It is a very narrow line that fabricators are required to walk these days.

In terms of equipment, cutting costs may mean holding off on machinery investments. Indeed, a number of fabricators have told me that they’re waiting to buy a CNC or waterjet until business picks up. The feeling is that if a fabricator isn’t able to use the machine enough of the time, the monthly payment on that new piece of equipment might sink (or at least severely damage) the firm as a whole.

On the other hand, some fabricators have taken the opposite approach. They feel that by increasing automation and efficiency within the shop, they will be able to reduce - or at least manage - their labor costs. It is clearly a bolder approach, but more than one fabricator has told me that this is their plan. The general thinking is that these investments will not only add efficiency, but they will also ensure that a shop does not lose its position of prominence in a given region. Cutting corners is rarely the way to gain - or even maintain - stature in the marketplace.

Expanding on the issue of personnel, there are plenty of shops out there that have ruled out major investments right now, and yet they still find themselves in a severe financial crunch. While these shops can be found in areas such as Florida and Southern California, where new construction has dried up, they can also be found in locations throughout the country. When these shops find themselves having a hard time just to make the weekly payroll, what steps can be taken before the layoffs begin?

I asked a group of fabricators this very question, and one mentioned seeking better prices on contracted services, such as phone service, medical benefits, insurance, etc. “You need to look at whether you can streamline any part of your fabrication to cut costs,” he said. “These are items we should be looking at anyway, but it seems to become more of a focus when times get tough.”

In any business - particularly stone fabrication - conscientious, skilled employees are at a premium. They are tough to find, and in a competitive market, they can be tough to retain. Once you lay off an employee, particularly a good one, the odds are you will never see that person again.

So when layoffs become unavoidable, most of the fabricators I spoke with told me that there is no “last one hired; first one fired” rule in place. Rather, the prime considerations are attitude, attendance and versatility. “ Seniority plays only a very small role in the decision,” stated one fabricator.

Unfortunately, though, dire financial situations are forcing some businesses to do more than trim away some fat. But before making those difficult personnel cuts, take one last look at your operation and try and consider other options - even taking on less desirable projects that you might have turned down a year ago. If the revenue allows you to retain your good employees, then it may be worth it in the long run. Remember that when you let go of a good employee, you are forfeiting a valuable asset and getting nothing in return.

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