Subcontracting Made Easy
If you happened to be in the New York metropolitan area last October, you may have seen a display truck driving around emblazoned with an American flag and the words "Norman A. Brodsky" in large letters. A lot of my friends saw it. Several of them called to ask whether I was running for office. Those who looked at the truck more closely realized that the sign was actually a huge poster from Ironworkers Local 361, which wanted the citizens of Brooklyn to know I was using a nonunion, out-of-state subcontractor to do some of the work on a new warehouse I was building.
The local was no doubt trying to annoy me, but I actually think it had a point. My neighbors should know what I'm doing -- and why. You might be interested as well. There are some good lessons here about loyalty, keeping your word, and not giving in to intimidation.
The story begins in 1996, when I realized I had to build a warehouse for my records-storage business. I hired a general contractor, and we agreed that we would put up what's known as a preengineered building -- essentially a giant erector set that can be adapted to fit a customer's specific needs. Among other things, it would allow us to finish building the warehouse in four months -- fast enough to avoid the potential calamity of having thousands of boxes show up with no place to put them.
Our first task was to hire subcontractors. Since I'd never built a warehouse before, I let the GC handle the process, although I watched closely. I also made it clear that I didn't believe in always going with the lowest bidder. Of course, I didn't want to spend more than I had to, but you often can pay less in the long run by choosing somebody who charges more. A smart subcontractor can save you money by being more efficient, by avoiding mistakes, by figuring out how to cut back on expensive materials you don't really need.
As the project progressed, the union workers fell further and further behind.
Overall we did pretty well. I've built five more warehouses since then, and I still use many of the subs I had on the first job. But one turned out to be a disaster -- the company in charge of erecting the steel framework and putting up the roof and the siding. Like most of the other subs, it was a union shop. In fact, the guys on the job were members of Local 361. I don't know whether they or their bosses were to blame, but as the weeks went by, they got further and further behind. When I'd confront the company's owner, he'd say, "Okay, okay, I'll have more people on tomorrow." They'd show up, work half a day, and we'd fall further behind. (Officials at Local 361 declined to talk to Inc. for this story.)
It was frustrating, in part because I had so little leverage. I was paying a fixed price, and there were no penalties for being late, a lesson in itself. Meanwhile, the boxes kept coming. As it became clear that the builders would miss the deadline by several months, I bowed to the inevitable and began looking for leased space where we could store boxes after we ran out of room. Unfortunately, this was not a short-term proposition. We'd have to spend about $500,000 to put up racking. With that large an investment, we couldn't walk away after a year or two. I wound up signing a 10-year lease on a warehouse about a mile away that cost me $120,000 a year, or $1.2 million altogether -- money I wouldn't have had to spend if the subcontractor had finished on time.
So you can imagine my state of mind two years later as I started planning for the second new warehouse. This time I decided to hire the subs myself. When I looked at the companies bidding on the steel work, I wasn't thrilled. "Isn't there anyone else?" I asked the GC's representative, Carmine.
He thought for a moment. "Well," he said, "I do know some other people who can do this work, but there's a problem."
"What's the problem?" I asked.
"Well," he said, "they work from sunrise to sunset."
"Why's that a problem?"
"Well," he said, "they sometimes work seven days a week."
"That's not a problem, either."
"Well," he said, "they sleep in trailers on your property."
"Really?" I said, smiling. "We've got plenty of space around here. Bring the guy in. I want to meet him."
A few days later, Carmine showed up with Walt Conklin, who looked like a member of ZZ Top. He had hair down to his shoulders and a full beard. If you saw him on the street, you might think he was a mountain man from West Virginia -- and you wouldn't be far off. He's from Virginia.
After talking to Walt for 20 minutes, I knew he was the guy I wanted. He was very bright and direct, and he knew his business. He said he and his men had put up a number of preengineered buildings and explained how they did it. Later, I followed up on his references and looked at a couple of jobs he'd done. Everything checked out.
But it was his passion that sold me. The best salespeople I've known have all had tremendous passion. They can't sell without it. They have to believe in their hearts that their product or service is the best for the customer. They usually have great follow-through, too -- because with passion comes pride, and with pride commitment. I could see Walt had all three.
On the agreed-upon day, he and his crew showed up in battered pickup trucks, towing the two trailers they would be living in until the project was finished. There were eight men, all Virginians, and they apparently used the same barber as Walt. They had names like Blue Jeans, Slim, and Rufus. During their breaks, they sometimes went fishing in the East River. I stopped by once to ask how the fishing was. Rufus said, "The water fishin' ain't so hot, but the land fishin' is good."
"Land fishing?" I asked. "What's land fishing?" He held up a rat that had gone for his bait down by the river's edge.
They were characters, all right, but boy, were they good. They knew all the tricks of the trade. On the first building, the ironworkers had hoisted one piece of steel at a time. Walt's guys put the structure together on the ground and lifted it all at once. The process was safer and faster, and the joints were tighter. So not only did their experience save us time, but it also improved the quality of the product.
They were extremely hard workers as well. They would put in long hours for nine days straight, then go home for four days -- a 12-hour drive each way -- before returning to work another nine days. They obviously loved what they were doing, and they knew how to have fun as well. At one point, Walt asked me if he could bring his boat up from Virginia. He returned from his next trip home with a pontoon boat that he put in the river -- and took us all for rides.
On the job, they could hardly have been more professional, and they finished way ahead of schedule. It had taken the ironworkers about eight months to complete their work on the first warehouse. It took Walt and his men 10 weeks to do comparable work on the second.
I was very happy, and Walt was one of the first people I called when I got ready to build the third warehouse...and the fourth...and the fifth. I had such confidence in him and his people that I didn't hesitate to go on vacation in Maine last July, right as they were starting work on the sixth warehouse.
It was there, the next Friday afternoon, that I got a call from my foreman, Mike, saying that representatives of the ironworkers' union had shown up.
"What do they want?" I asked.
"They want to meet with you," he said. "If no one calls back today, they'll start picketing tomorrow." I knew what that meant. They wanted to pressure me into kicking Walt and his crew off the job and hiring a union subcontractor instead.
Next month: Why the Union Can't Win.
Norm Brodsky is a veteran entrepreneur whose six businesses include a three-time Inc. 500 company. His co-author is editor-at-large Bo Burlingham.
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