It has been a harrowing 5 months for me as a contractor. This has mostly been on the residential side. We have dealt with an incredible shortage in labor. Lack of access to materials. Financing issues like I've never encountered before and all out fraud. People always ask- but what exactly does that mean?
Shortage of Labor-General labor guys are not cutting you any kind of a deal. They want to work on things that make them the most money today. Small jobs are not getting done because they won't show up. There is such an enormous amount of work out there that they can pick and choose what they want to do that day and they're doing it based on what pays the most quite literally today. A lot of guys are like "this is awesome we're flush with work." A lot of other guys are terrified and socking it away as fast as they can. You're also dealing with guys that are severely depressed. Some have gotten sick with Covid or otherwise. Tons of substance abuse issues are cropping up. Labor is not at it's finest. People are home all the time so they're houses are getting a lot more use. Things are breaking down left and right. Jake who used to be a waiter is now a painter.
Materials shortages- I've been waiting 3 months for 7 pieces of siding. 2 months for a piece of replacement carpeting. For months in Chicago, the only place you could go to LOOK at tile was home depot and Menards. We can't find deck boards, treated lumber or fence panels anywhere. Unless you go really early in the morning and stand in line. The shipping and delivery times are often extraordinary. What once shipped and arrived in two weeks in now 7.
Financing and payments- And here comes my word of warning. If you are a general contractor or subcontractor where you are on a draw- or they are paying you on progress -you need to be on high alert right now. I do not trust checks, wires, escrows or credit cards right now. Certified funds only. Checks have bounced, I've had wires reversed after the fact. A wire is initiated, you get notice of the wire initiation and in between the time it's initiated and arrival the payor reverses the wire. I allowed a client to pay with American Express. After the fact they stopped the charge.
And most importantly, if you are sub getting drilled into the ground to work faster so the GC can get a final pay be very cognizant of how your payment comes to you. There are General's out there right now that are very well aware they're going to go bankrupt. If your payout is not separate from theirs stop and rethink how you're going to get your check. Do some renegotiating on the spot to cover yourself before you drown yourself in expenses and Dad files for a BK.
There is this perception that everything is great right now. Perception is obviously subjective. What I am seeing right now on the street and from buddies and our own books is not positive. I've seen too many people get wiped out in years prior because they didn't cover their own payment separately from the GC. It's a very hard idea to sell and puts subs in a precarious situation because you want to work for GC's and you don't want to be difficult at a time like this but you also don't want to be bankrupt at a time like this either. Extraordinary times call for extraordinary precautions.
