In 2009, our industry and the rest of the world’s economy entered an unexpected downturn. People were losing their jobs and families began to question how they were going to pay their bills. Our industry was particularly hit hard as roughly 30% of construction workers in Pennsylvania saw their jobs evaporate. Businesses closed and people’s life savings were called upon to support them through a tough time.
In Lancaster County we were insulated from the worst of the downturn but we still lost many businesses that had been viewed as vibrant just a view years earlier. At Warfel we saw our primary markets of senior care and private education stall particularly since the elderly selling their homes fuels the senior care market. Our projections for 2010 and 2011 anticipated that we could see a drop from $70-$80 million in revenue to only $15-$20 million. Others in the same predicament decided to precipitously reduce their workforce to accommodate the loss in revenue.
In our case, we developed a simple yet risky strategy to change our work mix drastically in an effort to keep our people working and to build a bridge to the end of the “great recession of the 21st century.” We shifted our estimating focus to pursue public schools. This strategy depended on our ability to execute differently on several key aspects of our business:
- Estimating had to compete and win against bid lists of 10-15 contractors.
- Project management had to develop new strategies to make money on their jobs.
- Our field forces had to show that they could compete with subcontractors that might not emphasize quality and service like they do.
- Our superintendents and project managers had to adjust to the multi-prime system of contracts (where we do not hold the contracts of the mechanical electrical and plumbing contractors) and still get things done.
Our peers in the construction industry saw what we did and marveled at our guts and success. Many had chosen to “sit this one out” and simply wait until the economy improved. One of our well-known competitors actually saw their revenues shrink into the teens as we had anticipated. Simply put, our people came through!
During this entire period (fall of 2009 – fall of 2012) our strategy also included one other key component. We didn’t want to change who we were as a company! We did not want to abandon the “Warfel Way” and we recognized that the public school market would challenge this sacred attribute of our company and our people.
In order to support this goal, our marketing and business development efforts never ceased during the downturn. As a matter of fact, our efforts were doubled or possibly even tripled. Even though we were talking with owners that had no plans to build (during 2009-2012) we continued to market our approach to work that we now identify as, “Clients for Life!” While many in our company were slogging through the public school markets projects, helping the company survive, upper management and business development remained focused on coming out of the recession in a strong position for future success.
Last week, Warfel enjoyed winning 7 project awards and the top safety award from the Keystone Chapter of the Associated Builders and Contractors (ABC). The night was filled with Warfel Construction Company employees marching up to the stage to accept their award and have their picture taken. We accepted more awards than any other company that night and I believe the recognition was well deserved. In reflecting on the night, I also realized these awards were the culmination of a strategy that worked! We had come through the “great recession” with some bumps and bruises perhaps, but our business model of “Clients for Life” is firmly in place and our public school work is now a thing of the past.
~ Ralph E. Simpson JR., CEO