trends, implications, possibilities & solutions in commercial and institutional...
TRANSCRIPT
Trends, Implications, Possibilities & Solutions in Commercial and Institutional Markets
Market Analysis Commercial/Institutional
Total Commercial/Institutional US $262B
2014 T&B LP Comm./Inst. US Market Data
Electrical Spend $26B General Cont M/P Building $236B
Offer $2.6B No Offer $23.7B
$468M $2.1B
Mechanical
Plumbing
Structure / Finishing
Lighting
Devices
Wire/Cable
Value-Add
GAPS
Price
+7.2%
It’s a good time to be in this business.
Commercial & Institutional Markets $262B
Vertical Market 2013 Size 1-Year Forecast
3 Year CAGR
Stores & Shopping Centers $18B 16%
3.5%
Office Building $19B 8%
Hotels/Motels $8B 23%
Manufacturing $12B -8%
Educational $36B -4%
Healthcare $22B -5%
Other Commercial $17B 18%
Other Institutional $28B -7%
VOC...
“Competition remains fierce among contractors, with businesses submitting bids at, or below, cost in order to secure work.”
“We make or break the bank in the walls and in the ceiling on every project.”
“Labor is now 70% of my project costs.”
“Electrical and mechanical constructions are now considered high-risk industries due to low profit margins and a high labor component “
“It’s like we are constantly bidding against non-profits.”
“Jobs typically bid at 10% margin now only yield 2-3% margin on average.“
“We have seen a healthy uptick in activity in recent years, margins have not kept pace.”
“As we struggle to see a return to healthy profits, the focus is on operational efficiencies to ease the pain.”
Resulting in...
A Change in Philosophy Lean Construction
Driving New Techniques Prefabrication & Modularization
Utilizing Updated Technology Integrated Project Delivery (IPD) & Building Information Modeling (BIM)
Lean Construction... Adapting Lean Manufacturing to the Construction Process
Forms of Waste
1. Transportation (moving material/product from one place to another without adding value) 2. Inventory (material/product/information waiting to be processed) 3. Motion (excess movement and/or poor ergonomics) 4. Waiting (delays caused by shortages, approvals, downtime) 5. Over-production (producing more than is needed, not required) 6. Over-processing (adding more value than the customer is paying for) 7. Defects/Rework (re-doing the same job/task more than once)
Another waste is: People (untapped and/or misused creative resources)
Reducing waste, which is anything other than the minimum amount of equipment materials, parts, space and workers’ time which are absolutely essential to add value to the project.
Hospitals are very complex buildings. Electrical contractors make or break the bank within the wall and the ceiling of a hospital due to the intensive work needed to assemble the thousands of products
that route, support, protect, and terminate the electrical system. T&B, due to it’s strong ‘rough-‐in’ soluCons set, has direct influence over whether
an electrical contractor makes money or loses money on a hospital project.
T&B provides soluCons that support service entrance, underground, power distribuCon, but it is within the wall and ceiling where profitability can be found. NoCce in this applicaCon, there are very few individual sku’s involved. Simple metal framing support (Kindorf, Superstrut, and Cable Tray) at this stage is not as Cme consuming as within a wall and ceiling. Improvements in operaConal efficiency can be generated through the use Kindorf Trapnuts and Modular Framing. Also noCce the condensaCon in this area. Electro-‐Galv and Gold-‐Galv strut are the similarly priced as standard pre-‐galv strut yet offer significant improvements in corrosion resistance.
The electrical system becomes more complex as it starts branching throughout the building. Not only does a smaller in size but more diverse set of products emerge, but also the amount of unique items increase. This means a significant increase in touch-‐points and assembly, and man-‐hours. In this photo alone, we can see T&B’s value in bushings, metal framing, threaded rod, nuts/washers, conduit support clamps, ID products, cable Ces, mounCng bases, locknuts, and fiXngs.
The electrical system conCnues to become even more labor intensive branching throughout the ceiling. Man-‐hours conCnue to increase due to large number of products needed to safely route electricity, low voltage, gas, water, and heat throughout the building. Kindorf again can provide significant labor savings throughout the ceiling. Ty-‐Rap safely aids in bundling and supporCng cable. Steel City Boxes and FiXngs protect, couple, and terminate conduit and cable. Cable Tray offers up an efficient way of rouCng and support of cable throughout the structure.
Gas, water, electric, and low voltage all come together throughout Cght spaces, while modernizaCon of buildings require new methods of rouCng technology throughout. Hook and Loop cable Ces can safely help bundle and route cable, without damaging or causing interference in data transmission. Kindorf conCnues to add value with the addiCon of Wire Hanging systems seen in the top le\.
Steel City plays a significant role in operaConal efficiency as electricity branches into the walls. Boxes, fiXngs, brackets, and conduit create numerous ‘touch-‐points’ that require significant labor-‐hours to piece together.
Complexity and ‘touch-‐points’ conCnue to increase inside rooms and even a single wall.
IdenCficaCon increases the Cme and effort that goes into bringing power and data to a locaCon.
One stud cavity. 5 locaCons for power and data. 10 unique skus. 23 screws. Significant Cme dedicated to material handling and assembly. MulCplied by 100’s someCmes 1000’s of locaCons on a single project.
Solutions Lean benefits each part of the labor unit
Installa'on 60% Job Layout 10% Material Handling/Cleanup 10% Non-‐Produc've Labor 5% Supervision 10% Tool Handling 5%
Lean Results Example... T&B Steel City Lean Improvements over a 3yr Period Reduced Material handling costs by $125M
Reduced average lead time from an out of stock item from 16 days to 5.
Reduced cycle time by an average of 65%
Reduced Raw Material and WIP by $5M, Increased inventory turns form 11 to 50.
Reduced Finished Goods inventory by $6.4M, Increased turns from 4 to 12.
In-Stock % improved from 82% to 98%+
Freed up 75,000 Square Feet of Floor Space.
Productivity ($ value output per employee) increased 68.5%
Reduced labor efficiency variances by 70%...or $50M per month.
Changed a 40 Year old operations philosophy.
Lean Construction...
Founded in 1997 Significant growth past 5 years Rosendin Elec CEO joined the Board 2 years ago. Training 1,200 contractors annually in 24 Cities 66% of the Top 50 Electrical Contractors have committed to Lean Construction
LCI Membership Growth
Electrical contractors that achieve a net income as low as 2% to 3% have the ability to double the bottom line if they can realize a 5% to 10% improvement in labor productivity.
Lean Construction Example... Berg Electric St. Rose Hospital
Las Vegas, NV
$156M / 225,000 sq ft
Better Material Flow Labor Savings Install Reduced Waste Reduced On Site Inv.
New Techniques... Prefabrication & Modularization
40% of electrical contractors now consider prefabrication and modular construction a core part of their strategic initiatives. On average, for electrical contractors, 12% of their total annual labor hours were committed to prefabrication. The average goal was to raise that to 32% in the next 5 years. 81% of contractors surveyed had their own prefab shops and 33% of the one’s that didn’t said they had plans to do it.
New Techniques...
Atlantic Yards Development
$120M Mix-Use Modular Tower in Manhattan General Contractor Skanska 930 Modules Built offsite in Brooklyn Delivered on Flatbed and Installed on site Skanska training contractors on Lean process 70-90% less waste Getting closer to the General Contractors
Updated Technology... BIM and IPD 82% of contractors utilize BIM in some form. (i.e. 3D,multi trade collaboration) 21% of US Firms now have full engagement in BIM. (i.e. 4D, IPD) Over the next 2 years, contractors expect their BIM use to increase 50%. Demand for more detailed models increasing significantly.
Customers will download over 8,000 T&B BIM Models in 2014
Solutions... We are Lean Manufacturing Experts and can share our Expertise. Athens, TN Manufacturing Facility - 100+ Years of Electrical Industry
WINNER of Industry Week TOP 10 Manufacturing Plant in the nation out of all industries.
Our Prefabricated solutions and proprietary cloud based configurator technology can save a contractor 40% or more on his typical rough-in installation costs.
T&B offers the most advanced BIM Models in the electrical industry and is constantly expanding and improving it’s offering.
Thank You.
Questions? Comments?
Next Steps...