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Coffee Conversations - 2021 3rd Quarter Review - PODCAST TRANSCRIPTION

JM - Coffee Conversations - 3rd Quarter review
October 20, 2021 at 10:37 a.m.

 

Editor's note: The following is the transcript of a live Coffee Conversations with Jennifer Ford-Smith, Deryl Kratzer, Will Lorenz and Adam Oaks. You can read the interview below or listen to the podcast here.

Heidi Ellsworth:
Hello, and welcome to Coffee Conversations. My name is Heidi Ellsworth and I'm with RoofersCoffeeShop® and we are so proud to bring our Coffee Conversations to all of you out there. Thank you for being on this morning. We have an amazing panel. We're going to be looking at third quarter, what's been happening, looking forward into 2022, and we've brought some of the best leaders in the industry on Coffee Conversations this morning to share what they're seeing and share some of their wisdom. So I am so excited about this morning. Before we get started, I do want to say a special thank you to Johns Manville. Johns Manville is our sponsor this morning, a leader in the industry. I have to tell you, I'm always so humbled by what Johns Manville's doing out there for their contractors, being a part of it, really helping to navigate so much of what's going on right now.

Heidi Ellsworth:
And so special thanks to them. Of course, you can always find Johns Manville on RoofersCoffeeShop in their directory and with their articles. Some videos are out there from the last IRE, so all kinds of good information to help you get in touch with them. But we are really honored this morning to have Jennifer Ford-Smith on the panel who is also in charge of the sponsorship. So thank you, Jenny, thank you for being here. We're going to have this, everyone introduce themselves. And so Jennifer, I'd love to start with you.

Jennifer Ford-Smith:
Oh, thank you, Heidi. It's great to see everybody's faces out there. Although I only see the panelists, anyway JM, I'm really excited to be a sponsor of this opportunity to have a very candid discussion about what's going on in the marketplace. For many of you that don't JM is over 160 years old and we have three divisions, but we are rooted in roofing. We started there 160 years ago making the very first shingle ever. So while we're not in the shingle business any longer, and we focus on commercial roofing only. Like I said, we're rooted there and we're really excited to be able to come talk about what we see in Q3 as well as what we see into the future of 2022. And I know that's certainly a hot topic on everybody's mind.

Jennifer Ford-Smith:
So just for myself, I am the director of product management marketing, and I also have responsibility for our owner services team, which is a relatively new organization within JM that we've been building over the last year. Prior to that, I did run our sales organization for the U.S., and I've been with JM for about 20 years. It's been a very good organization to work with. And many of our employees, one of my favorite statistics is that we have about 8,000 employees and the last we looked at it 1,500 of them have been with the company for more than 20 years or longer. So that speaks volumes to what a great company is. I'm happy to be a part of it. And like I said, I'm looking forward to our conversation today. Thanks Heidi.

Heidi Ellsworth:
That is great. Thank you, Jennifer. I'm just so happy you're here today and this is going to... Megan Elsworth is in the background, as you all know, and when we were practicing, she was like, "This is going to be the best Coffee Conversations ever." So this is going to be excellent. And to introduce, I would also like to have Deryl Kratzer with National Roofing Partners to introduce yourself, sir.

Deryl Kratzer:
Thanks, Heidi. I'm honored to be here again, especially with such an elite panel that you put together, I feel humbled, but I'm here, a little bit about NRP, we're a roll up of over 200 different partners that provide services throughout all 50 states, including Hawaii and Alaska. And we're focused on our client. We're focused on delivering results and we do it with passion and we do it with humility. So we're excited to be here and look forward to the conversation.

Heidi Ellsworth:
That is great. Thank you so much. It's going to be great. And I would also like to then introduce, Will Lorenz. Can you tell us a little bit about yourself?

Will Lorenz:
Hi Heidi. I'm Will Lorenz, vice president at General Coatings. So we manufacture spray foam and roof coatings. I'm also a president of the RCMA, the Roof Coatings Manufacturers Association representing around 80 supplier and manufacturers of roof coatings, acrylics, [inaudible 00:04:52] silicones, and [inaudible 00:04:55]. And so I wear two hats and proud to represent roof coatings here today, too. General Coatings were in the spray foam business. And we do both roofing and insulation products as well as the roof coatings. And so just glad to be here and be a part of this fun group and talk about the future and see what's going on.

Heidi Ellsworth:
I love it. I love it. Thank you so much for being here today and Adam Oaks with Estimating Edge, please introduce yourself.

Adam Oaks:
Thanks, Heidi. Thanks for including me and the Edge. So I'm Adam Oaks CEO of Estimating Edge. We provide [Indian 00:05:32] software solution for the commercial roofing market. So I didn't know how much Jennifer and I had in common. I come from a sales background, ran sales. Our business is all commercial and also our employees, the average 10 years, about 15 to 20 years, we're a 30 year old company. So it's neat to hear that. But our end solution starts with takeoff and estimating includes job, tracking employee time, tracking and really strong data, data solutions to help people win more work. That's what we do.

Heidi Ellsworth:
Excellent. Excellent. Thank you all for being here today. We've got some great topics in front of us. I want to remind everyone out there that this is a Q and A, questions and answers. We want your participation. So in your control panel, you can send a chat or a question to Megan as we go along. And if you want to come on the show, we'll bring you on. You can be on video if you want, or we can ask the question for you, or you can just be on audio. We don't care. However you want to do it, we want you involved. So please do not forget to ask your questions as we go through all this. So we are going to start with Adam and he has brought if you remember, from our last panel where we looked at what was happening on second quarter, we are now going to looked at what's happened since then. And so Adam, you have pulled some great data for us. Can you talk about this?

Adam Oaks:
Sure. I mean as I spoke about last time, it's always surprising to see the bids keep going up with all the economic fluctuations that are happening, but this is normalized data, and this is specific commercial roofing bids. And you can see 2019 in the yellow, 2020 in the green, and then more recently, 2021 in the red. And there's normal tracking with the summer months and so forth, but bids keep climbing. I guess the only real question for the team here is what's happening to all the biddings right? Where are the starts? Where are the delays? And I think that's what we're going to talk about today is what is happening to us after we bid those jobs.

Heidi Ellsworth:
Looking at this, the fact that you can see how far ahead we are between 2020 and 2021. And that it's just staying so consistent. Is really, has said a lot to me. So maybe we'll start, take this over to Jennifer, really talking about this as you're talking to the contractors. I know you just had some summits, I saw you at all the shows with the contractors. What are you hearing about bids and then also just job completion and getting through all that?

Jennifer Ford-Smith:
Yeah. When I look at the trends month over month for 2021, we really started out pretty slow in January and February. And then we took off in March and that would be expected because if you think back to March 2020, that's really when the economy shut down. So you would those high growth rates across the roofing membranes in polyiso. But to the point, it hasn't stopped. And I think people certainly have been concerned about getting supply. And so what we're really struggling with is what's real out there and what you would say panic buying, right? And we will continue, I think people are going to continue to be concerned about supply and continue to buy as much as they can.

Jennifer Ford-Smith:
And we certainly are working to make as much as we can available. We see a very strong Q3 and we are seeing strong growth well into 2022 based on what our contractors are telling us. So right now it's all about getting the material on the job site so that the work can be done and to continue that trend and growth and really where we're seeing it is there's some rebounding going on in the new construction realm, roofing we can usually normalize things because a lot of us do both reroofing and new construction. But we are still seeing a boom with, especially in building size with the big warehouses and distribution centers, so over the last 10 years if you just look at our historic size of job as a company, it has grown tremendously as the warehouse sector has continued to grow with more online buying and whatnot. So like I said, we see a real strong Q3 and four well into 2022, as long as we can get supply out there.

Heidi Ellsworth:
Right. So Deryl, looking at that from your side of the picture with 200 roofing companies out there and doing things, what are you seeing?

Deryl Kratzer:
Well, it's interesting the activity continues to be very strong. In fact, just to give you one quick example, one of the major big box retailers historically over the past three years is reroofed or recovered probably 100 facilities. Their goal for 2022 is to do 350. So you can see that is really ramped up and hopefully Jennifer, you guys will be able to make stocks that we can [inaudible 00:10:56]. One of the things we're seeing as well too, is a pivoting by our partners looking at different opportunities besides reroofing even making some changes relative to the type of system that's going down with the single price being so hard to come by, we're starting to see reemergence of some of the modified and some of the built ups.

Deryl Kratzer:
We're also seeing a whole big a switch over into a coding aspect of it, or just nothing more than just repairing it. When we did a practice brand, I told you about my 5rs of roofing, the repair, replace, recover, restore or reframe. Well, we're seeing a whole lot of the first three and that's kind of the pivot that I think everyone's made and it's service business is just going through the roof right now.

Heidi Ellsworth:
Yeah. I've been hearing the exact same thing, the service, just how do you keep the roof tight? How do you take care of your customers when you can't always get all the materials on the roof? But Will, what are you seeing because you have I mean, you're looking at both spray foam and codings and all of your coding associations as part of the RCMA.

Will Lorenz:
Yes, everything is strong on demand. I think that's the great news for all of us. I think the chat challenges that demand continues to outs strip supply. So there's no ability for the suppliers to catch up. They're running flat out and if they have any sequencing problems or problems getting enough raw materials, which we've all been facing, we can't meet up with the demand. So it's rolling the end into '22, which is going to continue to present strong opportunities for growth. But it's also going to be a challenge unavailability of materials. So I look at their three factors going on demand is still ahead of supply. And then the second thing, as I would say is our ports and our transportation is still functioning poorly. There's not enough truckers to get things delivered.

Will Lorenz:
There's not enough flow through at the ports. There's not enough storage space for the containers that are coming off the ports. So a lot of what would might catch us up is being bottleneck there. And then the third thing is there's some recent challenges with China and their energy policies over there affecting a lot of the raw materials that come out of China. I think most people don't know that about 50% of the chemicals and plastics, raw material come out of China. And with China having energy crisis, what they've done is they've reduced the energy available for the heavy industries and that's caused them to reduce their rates, which has reduced supply on a lot of the components that all of us use in their roofing business. And so it's going to have challenges that are going to ripple into '22, if not into '23, depending on when the Chinese decide to solve their problem.

Heidi Ellsworth:
Wow. And, globally, well you were talking about this before. Globally, I mean, China, but we have some other areas that we're just seeing some hard time getting the materials that we need.

Will Lorenz:
That is true. I think people have seen that oil prices have surged up again. So again, all of our materials are affected in that oil sequence for the most part. But our ports in the United States have recovered from the COVID, but they're just all backed up. And they're just not the flow through to be able to get it out. And the rail services are full and the trucking, they need million more drivers. And so that's making a challenge about getting materials to contractors or out of distribution centers to locations. And it's just a persistent challenge. And I think the president is now addressing some of the issues with regard to the ports and trying to make Christmas happen. Well he is going to prioritize important things, holiday gifts, medical food, roofing supplies and chemicals are probably going to be lower on the list. So we may not catch up in the next fourth quarter, so.

Heidi Ellsworth:
I think everybody should buy local and let the roofing materials come in. So-

Will Lorenz:
There you go.

Heidi Ellsworth:
There you go. Well, so I'm really curious to follow that track too, on the trucking and the logistics. So Deryl, when you are visiting with your contractors, I've been hearing that there's been some great solutions where the industry is really starting to work together. Contractors are working together to figure out trucking going back and forth and a lot of different things. What are you hearing along that lines?

Deryl Kratzer:
No, I think you're spot on, I think the ability of the partners to actually collaborate together and be able to come up with solutions is probably I've ever seen it in years in the industry. So it's pretty exciting to see competitors even helping each other to make sure that we're able to get the supply that we need. The one thing that we're not even missing right now, and I think is a real concern is labor. Because in essence with this COVID mandate, you're starting to already see what's happening to someone like Southwest Airlines. I know many other companies and in any federal projects, you've got to be vaccinated. And unfortunately it's going to cause a real strain on already short labor force. So we're very concerned about that as well too.

Adam Oaks:
Yeah, I saw that 22,000 were added to the construction industry in September, but when you look at non-residential construction, we're way still way below pre pandemic levels. There's a long way to go.

Heidi Ellsworth:
Yeah. And Adam, yesterday I was visiting with actually the chief economist with Angie and they were talking about how other segments are actually, people are leaving. So they're having a lot of excesses out of other hospitalities, other segments. And that should be opening up people for us to recruit into construction. But I don't know if any of you are seeing that or Adam, if you've heard anything along those lines.

Adam Oaks:
Well, I can only speak for us. We're having people come from all sorts of industries applying for positions with us, but we're a technology company, not a roofing company, obviously supporting this industry. I'd be curious what Deryl's seeing on that.

Deryl Kratzer:
Yeah. One of the things that happened just in our local market right now is you've got Amazon just exploding on Amazon, you're giving people 15 bucks an hour, and it's just, what do you want to do? You want to get up on a roof in Dallas, Texas in the middle of the summer? Or do you want to work inside an air conditioned warehouse? It's pretty easy choice.

Heidi Ellsworth:
Yeah.

Adam Oaks:
It's the biggest bids. We come in our data centers.

Will Lorenz:
One of the bigger macro pictures is there's still about 15 or 18 million people that went out of the job market on a federal level. And that they're not getting back employed. They're choosing not to. And they could be in the roofing trade, they could be of trades that help make the economy role better. But people are choosing to pass on working right now. And that's unfortunate. We need it all across our sectors.

Heidi Ellsworth:
Yeah. Jennifer, what are you seeing with, I mean, you could look at it from both sides with all of your contractors, but also JM has huge manufacturing plants. I mean, you hire what? A lot of people.

Jennifer Ford-Smith:
Yeah. I agree wholeheartedly with Deryl and the other panelists, we're struggling with labor equally from a manufacturing standpoint, but, even in our corporate offices. I think, they're calling this time. The great resignation as Will mentioned, and a lot of folks are leaving because childcare is an example. They can't make enough money to cover that. And so you're opting to stay at home. We're seeing that in manufacturing as well. And what we're doing is looking at all the different policies that we have in place to try to be more flexible where we can be. And I know from a roofing contractor standpoint, that's really hard because you can't put a roof on, unless you're up on the roof.

Jennifer Ford-Smith:
Certainly for some of these more corporate roles, you can work from home and we're looking at all of those policies, but when it comes to running a line you got to be there. But how can we be more flexible with the way our shifts are configured or how can we be more flexible with vacation time? Because I think it does go well beyond just the salary portion of it as well, which is something we certainly are looking at. But we continue to struggle. And certainly with the mandate, we've certainly got feedback in some of our plant locations that being the company size that we are, that we may lose some people if we're obviously well over 100 in person employee company. And so that's a big risk for us as well. So very concerning.

Jennifer Ford-Smith:
I love what the industry's doing though, to come together with things like pro certification and really putting roofing out there as an honorable place to work. And I think NRCA is doing some great things to really try to bring that to the forefront with some of the stuff Reed is doing out there as well.

Deryl Kratzer:
Jennifer, if I could tag right on the top of that, also ABC is very actively involved in that as well too, for those of you who were able to be at the Best of Success. I know Steve Little and Tony Rader, they rolled out the new apprentice training program that been funded. And I think that's going to be the stuff that we're going to really see the need for going forward so that we're able to come up with a labor force that we need. But a lot of people don't need to go to a four university anymore to make the kind of money that they want to make [inaudible 00:21:23].

Jennifer Ford-Smith:
Yeah. And I was interesting, Heidi. I think we all of appreciate this, but I was watching the news this morning and they were talking about the trucking industry and the people applying look a lot different today than maybe they had done historically. And they had said they were getting a lot more young people applying and a lot more women applying to be owner operators. And they really promoted the fact that some of these drivers can make $120,000 a year if they're owner operators. And I think roofing has that same ability and we have great career paths and we have a great opportunity to talk more about that to the young folks that are entering the marketplace today.

Heidi Ellsworth:
And being really proactive with that and getting out there. And I mean, I know in our NRCA, Roofing Alliance, I'm hearing it across the board, and new training that's going on down in Arizona with Henry Staggs, he's working on training. There's a lot of different folks that are working on that. I think you're right. We have to come together and help support each other and then getting that into the pro certification. And that just makes everyone look great. One of the things that we're also seeing and that we're talking about is, and I have a question that's going to go along with this, that just came up. But one of the things that we're hearing is people are being, or people, roofing companies are being creative on switching on product systems, trying to figure out how to put there. So we did have a question that just came up that I thought was really interesting and it's from Steven Holman and he asked, "Is anyone seeing a trend in roof coatings using zinc, free water based acrylic coding technology?" So, well, I'm going to hand that over to you.

Will Lorenz:
Thank you. I think as a whole, first of all, roof coatings are up significantly over 19. It's hard to judge 20 because of COVID. But they're up dramatically and environmentally a zinc free coat is desired. I know that particularly in the West California, Washington, there's legislation and direction to be that get rid of heavy metals and so forth, make your coatings durable, but yet zinc free. And so I see the demand growing. I think that the challenges that right now on the roof coating, people are just trying to get enough roof coating whether it's acrylics or [inaudible 00:23:52] or silicone, and do the jobs. We're certainly seeing as Deryl pointed out where some owners are choosing because of the delays and availability of let's say complete reroof, they're choosing other options to extend the life, use roof coatings, and then get to it when they think it is either going to be more cost effective or able to be done in a swift more uniform manner, whether that's 22 or 23.

Will Lorenz:
So I think that's what we're seeing and acrylics are great part of that solution. And particularly if you have built up roofs, there are a great restoration system over there.

Deryl Kratzer:
Heidi, I also want to give Jennifer a little cover here because it's not just the roofing manufacturers, I mean, fastener, the isocyanurate, the different insulation needed so roofing and some of our partners that actually changing out the ISO for say a likely concrete where they can utilize EPS board to still get the great R value that's required in doing different type of systems that can eliminate fastener. So, I mean, they're getting creative and coming up with whatever they can to make sure that they can satisfy the need of the client because that, and the end of the day is what we all strive to do, focus on our client and provide them what they need.

Heidi Ellsworth:
Right. Jennifer, are you seeing the same thing with your contractors of different accessories or different substrates, or what's trying to work around some of this material shortages?

Jennifer Ford-Smith:
Yeah. I mean, and it's difficult because even in a fully adhered system you need a fastener. And that's becoming the bottleneck. So one of the things that we've seen some big clients who are desperate to get in their buildings and get them operational, most of them are new construction. They have metal decks. So they've been using our self adhered vapor barriers out there just to get a temp roof in to give them, buy them a little bit more time, because most of those systems can be exposed to UV for up to 90 days. So it gives them some ability to get the roof dried in and get their building operational while they wait for some of the bottleneck items, whether it be polyiso or fasteners to show up on the job site.

Jennifer Ford-Smith:
So that's an option that we've seen. FM doesn't let you adhere directly to a metal deck. But as an example, JM has a guaranteed systems that are non FM approved in that manner. So we have plenty of data that we're comfortable, that that works. So we're recommending if people want to get, started on their system, if they really clean the metal deck, they can use urethane adhesives to attach their I their ISO down to the deck and then build the roof from there. So that's an alternative and early on that may not have been the greatest alternative because you things use MDI.

Jennifer Ford-Smith:
But I think we feel like MDI is starting to free up a little bit more than fasteners, so that certainly can be an option. But yeah, because we sell systems and because so complicated as an industry when it comes to code approvals, it's been very challenging to find alternates. And so yes, you do see some folks asking to extend their warranties for a couple of years by coding the roof, if the roof's in good enough shape to do that. So we're trying to pull all, everything out of the hats that we can to try to give options out there and work with our contractors to keep their crews busy and keep them working.

Heidi Ellsworth:
Wow. That's great. Well, we have a question and I'd like to put this towards and it goes long along the same lines here, but I'd like to put this towards Adam. This is from Kyle Chrisman. Thank you so much, Kyle. He says could you comment on how innovation will affect the roofing industry given the current labor crunch? And so Adam, I know you're part of RT3 as are a lot of us, and this is really innovation and what we're doing to help the labor crunch is a huge issue.

Adam Oaks:
Yeah. I think the same thing when I think of technologies around what can we do about labor because this isn't going to end. So automation is what we're thinking here at Estimating Edge. And I was doing some research and we see that people are spending money in technology right now is digital collaboration, safety and wearables and BIM. And when you talk about models, that's going to play a part in automation mode solution. We've got coming soon. So what we're talking about at least on the preconstruction side is automating part of the estimating process, which would allow customers to do more with less people. And it is hard to find new estimators. We get calls every day saying, "Do you know what? An estimator that's looking for jobs" and just like that on the fields, no different.

Adam Oaks:
So we think we can eliminate up to 80% of the time. It might take to take off and estimate a project using some automation that's actually coming very soon. We should be able to announce something in the coming weeks. We're really excited about it. So we think that's the path that we can help. But actually going back to labor for just a second, we've hired five people in the last week. We've been hiring a lot of people lately. 50% of people who we're hiring are veterans and I'll speak, I'm a veteran. So I tell you what, there's a lot of people out there that don't know how to get a job in the private industry. They're retired, they've left after all these wars we've been having and they're out there. So if you look, you'll find some pretty good people at all levels that can help you in your organization. So wanted to throw that out there too.

Heidi Ellsworth:
That's great. That is exactly. Deryl, on both of those, I love that talking about hiring veterans and what Jenny said about more women, it's always a passion of mine get more women into roofing, but also what are you seeing innovation wise, technology wise, with your contractors? I know you're doing a lot with drones and I'd love to share how some of those things, what you're seeing and what's starting to help?

Deryl Kratzer:
Yeah, no, let me just address what you've just said about veterans and years about women. I think there's three of us guys in the office here at our corporate headquarters. So we are surrounded by women and I got to tell you, it makes a major difference in the thought process and the collaboration within this going on. So I think Adam, that's an outstanding idea relative to the veterans and the women in roofing. As far as technology, we pioneered ability through the drone technology, which the drone is nothing more going out and capturing the photos, but we've developed software in conjunction with a partner that we are actually able to cut 80% of the roof assessment out.

Deryl Kratzer:
So in other words, you can fly it, you can get all the dimensions, you can get every penetration on the roof and then, oh, by the way, we can identify the deficiency. So really the only thing needed from boots on a roof is someone to go up and cut a core because no matter what they tell you, that's up there, you always need to confirm that because half the time it's not what they said it was. And so that's one of the things that our partners are really utilizing to help them be able to do more with less if you will.

Heidi Ellsworth:
Yeah, one of the big things that I'm just waiting for, because innovation in the U.S. Americans, when there's a problem innovation's going to come in and it's that private's going to come up. So we'll, as we're looking at this robotics on the roof has to be a trend that we're going to be looking at in 2022. We actually had folks stop by our booth at IRE asking about some of those possibilities that they're working on. What are you hearing along that lines?

Will Lorenz:
Well, I think there's twofold, one, first I hope that we get a little bit more automated drivers so we can get the materials to the roof. So Deryl has the product there. We have all reservations about self-driving vehicles, but on the other hand they're necessary but as far as automation on the roof, I think that's where the current bottleneck really is. As far as innovation. Humans are capable of doing many things and observing many things. But I spray foam, we have robotics that get spray out things, coatings can be applied with machines that have been around for 20, 30 years. But basically we need to look at innovations that's going to replicate a lot of manual labor duties.

Will Lorenz:
And as I observe people on the roof, there's many tasks that people do. So you just can't have a seamer be just a machine because they do so many things in ensuring that it's applied right or sealed properly. And so we're waiting for that robot, if you will, to do, I've seen some videos of people developing ones that could install drywall well, if they can install drywall, this robot can get up on a roof and maybe shingle too. So we hope, but I think we're still five years away or so from a lot of those innovations getting there. The biggest thing is trying to get efficiencies on the employees so that they're trained well, so the defects are low, so they install things right the first time and then get their speed of installation up because we sequence all the things behind it. So they can their task efficiently. So that's the trend I think we're seeing.

Heidi Ellsworth:
Yeah. I keep hearing that too and talk a lot of people talking about the better application, the spray foam well, or codings tools to be able to put that together. And we're also we're seeing it in a lot of the single Pies, in the mod bits, in different machinery that laying that, what are you seeing Jennifer with your contractors? Are they trying to automate the rooftop?

Jennifer Ford-Smith:
I think innovation in our industry just comes and do time. I think it's hard in the roofing industry to say we're going to be an Amazon and be fully automated in two years. But if you just look at the history. If anyone has, and I have swung a mop that weighed 80 pounds with hot asphalt, that's 450 degrees. That's to see where we are. And that's how we evolved into single Pie Systems. And the early single Pie Systems had a lot of tapes and primers, which added labor, then you got into the thermoplastics. And so those are all huge innovations on improving labor. And I would say the latest ones in our industry, which are actually not that brand new are the high density, polyiso boards, because they're so much lighter as a cover board than a gypsum board or most recently the canister adhesives.

Jennifer Ford-Smith:
We've seen tremendous labor improvement on application methods with those types of canisters versus traditional adhesives. So I see innovation every year in our industry. It's just not that big robot that's taking, you still need that human element. But I have a lot of optimism that we have a creative industry and that every year we make a step closer to automating the labor process out there.

Heidi Ellsworth:
Yeah. Well, and I have to say we just John Walker, thank you for your comment. He said, "Absolutely contractors are doing everything they can to find other options." So the more creative, all the manufacturing, distribution, service providers, technology, the more creative it can be. I think the contractors are open to it. They're wanting solutions to come through. One of the things just to kind of change up the topic just a little bit, but I want to talk a tad bit about roofing restoration versus replacement versus Deryl's 5RS.

Heidi Ellsworth:
Because it feels like, and I really want to take it more from the owner's side of it, the building owners, facility management, what are they looking for right now? And what are you seeing as the trends? What is it feedback? I mean, Deryl, I'm going to start with you because you were, when we were talking about customer budgets, how are we doing that right now? So talk about some of the things you're seeing there and if there are any solutions that you're seeing from the contractors.

Deryl Kratzer:
Well, end of the day, the client wants a dry environment. And so whatever we can do to provide them that, that's what they're all in for. We've got customers right now that recognize the shortages, recognize how the material prices is just quite frankly, you don't even know what it's going to be by the time you get it shipped to you. So you can't really plan for it. So we have a lot of major customers that are saying, "Can you buy me two? Can you buy me five? Can you buy me 10 years? By either doing coatings or doing restoration of flashings or reinforcing the penetratio. I mean, think about it. 80% of roof failures is around the perimeter and around penetration. It's not the membrane.

Deryl Kratzer:
So if we can focus on those areas and buy time and get them the two, five or 10 year warranty they're looking for, then that's what we're doing. And I think if you can be able to offer that to a customer, then you're going to have them for life because they're ultimately you have had their best interest in mind. You've got them a dry environment, you've done it in an economical fashion. And then when things turn around, then you've got a customer for life.

Heidi Ellsworth:
I agree. So Will, what are you seeing along that?

Will Lorenz:
Well, I think the same thing that Deryl's seeing, which is, they've got an existing roof up there, it's likely have a fair amount of insulation. If they tear off that roof, they're going to have to move back up to code. And as we've seen code has moved up insulation requirements. So again, it's a double challenge on the availability of those isocyanates, polyiso boards or EPS boards. So if you've got an existing roof system and you can put a recover system on it with, let's say spray foam on top of it, add some insulation, seal up the deck and then put roof coatings on top of it, or if it's just a good roof in pretty good condition, but it's at the end of it's service life restoration systems over membranes are built up or metal waterproof it, weatherproof it, keep it running.

Will Lorenz:
And then it can be done at the end of that service life or whenever the client has the funds to be able to do it. I think there's still concern coming into '22 and '23 that our people going to occupy back buildings again, come back into corporate headquarters and if they don't get there are those entities that own the buildings going to spend the amount of money on maintenance and root roofing and other things to maintain it like they would if they had a paying client in it. Certainly warehousing has gone crazy because I think everybody's taken the toilet paper effect where they're going to stock up on everything and control their own warehousing. So warehousing is taken off, but really where's commercial real estate and those building is going to be and I think that's where codings and spray foam are great alternatives because they can give that person an extension on their roof life without having to worry about whether they're going to have a client and to be able to pay for the upgrades.

Heidi Ellsworth:
Yeah. And Jennifer, I know you work with building owners all over, you have great relationships. What are you hearing from them on? And especially I would think service and maintenance.

Jennifer Ford-Smith:
Yeah, I think for the most part we are working with people to extend the life of their roof if it makes sense, but to Deryl's point, people are looking in on the new construction side, they're looking for just some certainty and it's just a really uncertain time. They want to be watertight. They want to know what their budget's going to be and they want to know when their material's going to arrive. And we've just really amped up the communication and it's just communicate, communicate, communicate. And we've had some of our bigger national accounts that once upon a time it was a very secretive process. And we've asked them to be as open as possible because the more visibility that we have coming from them that it helps us plan together.

Jennifer Ford-Smith:
And so that's all I can reiterate with folks. I may not be able to just give you a solid date and a solid price of something that's going to happen in July of 2022, but the more visibility and the more we can communicate and work as a partner, I think it'll mean success for both of us. So yeah, it's certainly been a really challenging time from that standpoint.

Heidi Ellsworth:
Yeah, really it's about communications. Communications and creativity is really what it's all coming down to across the board. And so I'd like to, and maybe Adam, we can start with you on this. I do want to get you guys all have such great insights about what's happening on the federal level. With regulations and with everything that's going on. And so we're getting a lot of great comments and a lot of great questions and it's going back to, how do we get more people? How do we hire, how do we get them back to work? Workforce is leaving, what do we need to do? So Adam, maybe some thoughts on legislation, what we're seeing happening in D.C. and also regulations.

Adam Oaks:
A couple of things one, I think Will mentioned federal governments getting involved with ports. So moving them to 24 hours is going to be impactful and sometimes that's what it takes. But the other thing that we're seeing right now is gas prices. I think we all know the petroleum effect on our products and as those products go up to $100 a barrel, which seems to be likely that's going to cause another problem in the supply chain. So I think opening up the reserves, finding a way to keep those prices down is going to have a big impact on helping us get through this that we're clearly going through into next year. So those are a couple things that I think would be important.

Heidi Ellsworth:
Yeah. Will you're really involved with roof pack and to NRCA as is Jennifer and Deryl. So I wanted all of you, so Will, what are you seeing?

Will Lorenz:
Well, I think we've got the infrastructure bill kind of hung up in Congress again, it's dysfunctional again there, no matter who's in charge. And so I know there's pieces in there that could benefit the roofing industry sustained demand into '23 and '24, if we are doing federal projects for all of us in roofing. And it's really hopeful that that thing can pass and provide some stability. Again, these are big dollar items. So the effects on the economy long-term are going to be challenged, but we need that infrastructure. There's a lot of things that, again, if the trucks can't get over the roads and the bridges, they're not delivering to the job site, so we need to maintain those things and we need to have a balance there.

Will Lorenz:
So that along with just again, federal oversight on relations that could impact starting with the chemicals and plastics industry that feed into the roofing products, we need smart regulation there. We don't need overregulation. And I think that will help allow us to invest more in the United States. I think there's a reason why China and everything became the source for a lot of our petrochemicals business is because it was cheaper and easier to put it in there, less regulation, lower cost. And so we need to build back in America here. And the government has to be less of an obstacle to that and allow us all these industries, whether they're producing isocyanates to be able to manufacture those back here in the United States so that we can make polyiso and other products.

Heidi Ellsworth:
Wow. Yeah. Deryl.

Deryl Kratzer:
Yeah, I think your comment relative to the NRCA and the roof pack and what [inaudible 00:44:50] doing is huge because one of the things that we also look at is part of bringing our 200 plus tier one contract together and across sections so that they can become the boys of the national market. In that way we can talk to these politicians. And if you think about it, you've got thousands of employees and that's what politicians listen to. So we need to get actively involved. We needed to make a difference. We need to make sure that the issues that we're dealing with are being addressed. And I thought that what the NRCA did with regroups leadership was outstanding. So we just need to make sure that we support that, we continually get involved because the roof pack, I think can really make a difference.

Heidi Ellsworth:
Yeah, they do a great job. Jennifer, you've been very involved with roof pack.

Jennifer Ford-Smith:
Yeah. I would just say we talked about the product side and what's being done from that standpoint, but from a labor standpoint, I would also just say the NRCA, roof pack, pro certification, all of that stuff, you get out of it, what you put into it. So I just encourage this audience and others to get involved and participate in National Roofing Day in D.C. We've been doing that the last couple of years, we get four to 500 people there. It does have an impact and it gives our industry a voice. And there are organizations or universities that are really trying to bring roofing curriculum, like Clemson University into the fold. And so participate. They're looking for educators and you guys are experts out there. And then finally the trade schools are a place we're really trying to tap into and encourage folks to join our industry. And we all have them in our backyard. And so I just, again, encourage anybody out there to get involved because we do get out what we put into it.

Heidi Ellsworth:
Yeah.

Adam Oaks:
We gave some free licenses to Clemson University for training estimating on roofing. So we're happy to do that.

Jennifer Ford-Smith:
Yeah, that's awesome.

Heidi Ellsworth:
I think one of the other big trends that as we're talking about everything today, I like to have my takeaways and what I'm really hearing too we already talked about communication, creativity, but collaboration. Really working together, whether that's through the NRCA or your local associations, or right here, talking about it and working together to try to find solutions. And it was interesting on Amy Braybrook has a question and I just, I love your question. Amy, thank you for pulling that in on her thing is going back to everything we've talked about all the creativity of new products, new different types of systems, technology. And her question was, "Do you see contractors going back to their first choice products that were pre COVID and pre all of this, or is this really making a shift in how the systems, how they're doing labor, everything, do you see an ongoing shift in the market?" Deryl you're nodding, I'll start with you.

Deryl Kratzer:
It's such a great question. People remember who were with them in the hard times. So my immediate answer would be, they're going to remember who supported them during this time and they're going to remain loyal to them. So I think it's a great question. And one that only time will tell if I had that crystal ball and I wouldn't have to work anymore. I can invest in the market, all that kind of stuff. But at the end of the day, I think it's a great question I think that's something that we'll throw out next week at all of our partners as well, too, just to get their feedback on that as well.

Heidi Ellsworth:
That's good, Adam you were going to say something?

Adam Oaks:
Yeah. I mean, Deryl said at an earlier meeting that you'd moved a ton of your work for the service side, a huge percentage if I remember right. Just because of everything that's going on. And we're meeting with a customer national roofer and I mean, they're changing a lot of their business right now, and they're not expecting to go in a different direction after this is over. They see where they want to fit and where they want to continue to be more profitable instead of changing what they're doing. We're working on an R&D project with them now and how we can help.

Heidi Ellsworth:
So really and to Amy's question again, that's just so good. It's really about a lot of roofing companies are finding better solutions that they're incorporating and they are changing their businesses. They're going forward. However they're doing that. And Jennifer, I know we talked about this on at IRE and there's actually a video out there of you and I talking about this, but to Deryl's point, it's really about showing up and really being there and being at where the contractors are and taking the calls and communicating really strong. What are you seeing with that?

Jennifer Ford-Smith:
Yeah, I think there's an appreciation. I think for any manufacturer to get up there and just take those tough questions. While they're tough, I think people appreciate that people are being transparent and sharing and educating and communicating on what's happening and what we're going to see in the future. And so I think as far as people changing, I think this also gave people an opportunity to change, maybe even the application methods or products that they might have once been hesitant to use, but now they're available and the other stuff's not available. And so you might see a shift, subtle shifts.

Jennifer Ford-Smith:
You're still going to use a cover board, but you might use a high density cover board, or RhinoBond system, you may have been hesitant to use that kind of system and maybe it was more available in your market and you were going to shift to that. So I do think people may change because the environment forced them to try new things. And as far as a relationship standpoint, I think going back to my previous communicate, communicate, communicate, that's all that we can do in these times to continue that partnership with our contractors.

Heidi Ellsworth:
Yeah. I really think so. Will, I would love to hear your take on this on the shift. If you see contractors shifting, or and staying.

Will Lorenz:
Yeah, I think they are. I think they're going to continue to look at labor being scarce and more expensive. And so they're going to look at systems or methodologies to install that roof system that can keep them dry, that cost-effective, and it enhances their profitability. So I think that's going to be part of the changes as well as I think there's still going to be an under current of a trend to go to pre manufacturing of things. And in many parts of the globe, people pre-manufactured a lot of housing and roofing and so forth, and they bring it to the job site. So I think the roofing industry has to be aware that that's going to be a trend where they're going to try and control it at a location, and then just bring in, build on job site rather than construct on the job site from scratch. So I think that's going to be a big trend going forward, whether that's five or 10, 20 years out, but it's still going to be there.

Heidi Ellsworth:
We just actually through our T3, we visited Boxabl in, where were we Vegas? I can't even remember. Yeah. Vegas. And it was amazing. And it was exactly what you're talking about Will, of prefabbing a cube is delivered onto your property and it becomes a house or a caseta or whatever and you can build them like Legos. So that's it, that is spot on. And again, innovation, people are coming together. I love how fast these hours go and I hate it at the same time because there's so many questions, but I want to thank Kyle Chrisman. I want to thank Mike Kicks for your questions. Hopefully we got to them and talking about getting back to work and getting the labor force in there.

Heidi Ellsworth:
The last question of the day I'd like for all of our panelists is I would just like you to share, looking into your crystal ball into 2022, what are your top one or two pieces of advice for the roofing contractors? What should they be looking forward, what should they be thinking about going into 2022. And I'm going to start with Adam on the technology front.

Adam Oaks:
I mean, we're all busy. We're also all waiting for material. There's ups and downs going on right now. And construction industry frankly is in last place when it comes to investing in technology. And I'm not saying that just for our business we got out of it, but invest in areas that can help you automate, help you get data faster, get the data you need to make better decisions. That's where the investment has to be as you move or competition will squeeze you out because without the data, without the knowledge, without the robotic, whatever it is in technology, you'll fall behind. And that's the biggest investment you can make.

Heidi Ellsworth:
Yeah, that's it. Jennifer?

Jennifer Ford-Smith:
I would just saying no one would have predicted where we are today, a year ago. And so I think we got into some bad habits as an industry. And I think that my advice for all of us is just to protect yourself and make sure you're having those conversations and honest conversations. Trent Cotney has some great resources on the NRCA on how to protect yourself with times like this that are uncertain. We have no idea if there's going to be another hurricane and if it's going to drive further inflation and material shortages. And so I think we got complacent in certain areas and we weren't protecting ourselves. So I do feel that's maybe going to be one of the things that change and sticks is that people are going to be looking at the contracts they write and the way they look at how they do business with owners quite a bit differently moving into the future.

Heidi Ellsworth:
Yeah, that's really great, Deryl?

Deryl Kratzer:
Yeah. My advice would be stay close to your customer, go to the customer with a clean slate, listen to them, they'll tell you what they need and then design something that will accommodate their needs. Focus on the client.

Heidi Ellsworth:
Yeah, first thing, Will?

Will Lorenz:
I think as we've done, stay close to your suppliers our raw material suppliers have been our lifeline and allowed us to serve our contractors and our distributors. And so that relationship is long-term and important and it'll sustain you. And then the next thing is, I think it's what we're hearing today is still going to be what we're going to see next year. So we're going to be tight. So get used to the challenges and become more efficient and more agile in this difficult supply market, which has really grown because we've got excessive demand and that's all good for all of us, demand is it.

Heidi Ellsworth:
That is so true. And I would also just on that last piece all of these wonderful, Will, Deryl, Adam, Jennifer, they're all available through their companies, through RoofersCoffeeShop, through their directories, through information that is constantly being put out there. And I want to say too, to Jennifer's point Trent Cotney, and we were talking earlier about the search for estimating, Cotney is doing estimating training. There's just so many areas out there, but really going into 2022, the closer you can stay, the more research, the more information. And we try to bring that every single day, not a plug for CoffeeShop, but really that's where you got to be talking to all of these experts, all these great folks. So I want to thank all of you so much for being here today, for your wisdom. We had some great comments on good stuff. Thank you. Thank you for everything you're doing. And I personally want to thank every single one of you for being here today.

Jennifer Ford-Smith:
Thank [inaudible 00:57:25].

Heidi Ellsworth:
Okay. I also want to thank Johns Manville because they are our sponsored today. You heard Jennifer again, this is a great opportunity to be able to get with this amazing manufacturer, be able to find information on the site. And I just appreciate them so much for being a part of RoofersCoffeeShop and really bringing all of this to you today. So again, Jennifer, thank you very much. And we are excited because we just keep the Coffee Conversations coming. And the next one that we are going to be having will be on October 28th right before Halloween. And it is where roofs go to rest. And it's all about recycling of asphalt shingles. And our friends at Owens Corning are bringing this to us. They have a whole initiative, roofs to roads. And we're going to hear all about that. I'm super excited about that.

Heidi Ellsworth:
We're just going to keep all this information coming through and making sure that all of you have it. So don't forget, if you didn't get your questions answered today, we will be reaching out to you to make sure you did get your questions answered. This was recorded. So it's on demand. Feel free to share it with whoever you want out there, because we want to make sure that everybody gets this great information from our panelists and ongoing on trying to stay ahead of what's happening out there with materials and labor. So again, I'm going to say thank you to all of our panelists for being here today and thank you all for being with us and watching Coffee Conversations. And we'll see you in two weeks. Thanks a lot.

Will Lorenz:
Thank you.

Jennifer Ford-Smith:
Thank you.



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