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Coffee Conversations - State of the Industry Sponsored By NRCA - PODCAST TRANSCRIPTION

Coffee Conversations - State of the Industry Sponsored By NRCA - SM Register
September 13, 2022 at 9:11 a.m.

Editor's note: The following is the transcript of an live interview with Kyle Thomas and McKay Daniels of NRCA .You can read the interview below, watch the webinar, or listen to the podcast here.

Heidi Ellsworth:
Hello, everyone. My name is Heidi Ellsworth, and I am with Roofers Coffee Shop, and this is Coffee Conversations, our first episode of season four. We are so excited to be here. We have a phenomenal morning, this morning. We are going to be visiting with Kyle Thomas and McKay Daniels about the state of the industry, and that's the state of the roofing industry, straight from those in charge at NRCA.

Heidi Ellsworth:
So we're going to get started, but I want to remind everybody, this is conversations, so we want you to chat. Please ask questions in the chat, share your thoughts. If you want to put them in the question and answers box, that's fine too. We'll find you, however it is. We have Megan Ellsworth, our producer, in the background, who will be chatting with you and sharing information. And this is being recorded, so we will have this on demand within 24 hours so you can share with everybody who happens to miss it today. There's going to be great information all about what's happening in roofing, so let's get started. I am honored, first of all, to introduce McKay Daniels, who is the CEO of the National Roofing Contractors Association. McKay, welcome to the show again.

McKay Daniels:
Good morning, Heidi. So great to be here. Appreciate the invite. It's great to be back.

Heidi Ellsworth:
Ah, we've been so excited about this. We're so excited to have you on. I would love it, for those few people out there who might not know who you are, if you could introduce yourself and just a little bit about NRCA.

McKay Daniels:
Sure thing. A little bit about me, I've been the CEO of NRCA for just a few months now, but prior to that, I spent four years cribbing all of the notes I could get from Reid Ribble as COO here at NRCA. And prior to that, through a series of misadventures and bad decisions, I've been involved in government politics for the past 20 years, before coming to NRCA, so let me tell you, roofing is a heck of a lot better than politics right now.

Heidi Ellsworth:
Oh, I don't even know what to say to that because I agree so much, so that's so true. Well, McKay, thank you. I'm so glad that Roofing was the lucky group to get you, and thank you for being such an amazing leader for our industry and everything you're doing with the NRCA. And speaking of being an amazing leader, I would love to introduce Kyle Thomas. Kyle Thomas is with Thomas Industries, out of Mobile, and he is the chairman of the board for the NRCA. Kyle, welcome to the show.

Kyle Thomas:
Absolutely. Thanks, Heidi. Thanks for having us.

Heidi Ellsworth:
Kyle, I've worked with you on so many different committees, for so long. It's just so fun to see you as chairman and all the great things that you do for our industry. But can you, again, introduce yourself, talk a little bit about your company, and your role with NRCA?

Kyle Thomas:
Yeah, sure. A lot of you guys have probably heard this story, I've told it lots of times, but I'm a second-generation roofing contractor down in Mobile, Alabama, and like so many other people in our industry, I worked for the company all through high school and college, went to college, said, "I'm too smart to be a roofer," did my other things, and then here I am, 30-something years later, still in the roofing industry, so it's been a rewarding experience for me and my family, for sure.

Kyle Thomas:
And now, like McKay, I'm just a few months into my role as the chairman. I've been working for the committees and stuff with NRCA forever, as you know, the student competition stuff that we've done for so long, Heidi. So yeah, I'm just excited about the year. I'm excited to have the chance to go out and meet and see new people, new members, and introduce people to the NRCA.

Heidi Ellsworth:
Yeah, it's great. Also, you were president of the Roofing Alliance, so you've seen so much, to be able to bring all of that knowledge to this year. And 2022, going into 2023, we are in growth mode, so there's going to be a lot of great things happening, so let's start with that. Let's start. McKay, can you share with everyone out there, what's been happening with the NCA in 2022 and what you see as the state of the industry right now?

McKay Daniels:
Sure thing. Well, yeah, you talk about growth mode, and NRCA has been full steam ahead for well through the pandemic. We, on the team, and the leaders like Kyle and the volunteers who come to offer their guidance and input have been firing on all cylinders, all the way through supply chain, COVID, et cetera, so there's not a single department here at the team where they're not working on something proactively, if you will. Even our finance department, you think, all right, your CFO, they're just there, taking care of the books and making sure that the audits work. They've gone this past year and worked on a new 401K plan to offer to roofing companies, to lower their costs, lower their fees, make it so their employees are able to keep more in the investments rather than paying financial advisors and things like that.

McKay Daniels:
So department through department, there's examples like that, whether it's the risk department working on the fall protection competent training program. Our technical department is wrapping up on GT-1, a gutter metal certification plan that's now in the code, so that contractors are able to continue to fab their own metal. Our IT department's well underway on revitalizing our website to make it more user friendly, streamline it, and improve functionality, you name it. And education certification, I could do a whole hour just touting the amazing work that's going on by the team and the volunteers at NRCA. It really is remarkable. There's a lot of exciting things going on.

Heidi Ellsworth:
I don't think people really know how big NRCA is, too. I mean, when you were really looking at it, all those departments doing so many great things, Kyle, you've seen this over the years, the folks that work at... I'm just going to take a minute because we just have to say it. The folks who work at NRCA are amazing.

Kyle Thomas:
Oh, no doubt. McKay is a very modest guy, and he's going to push it back and say, "Our volunteers and our volunteer leaders." And we are an association that's driven by committee work, that is true, and our committees do a lot of the heavy lifting. But the staff at NRCA is absolutely amazing. They've done an incredible job. You look at the tenure, I think at, McKay, on your staff. If somebody's been there for less than 10 years, they're considered a newbie, right? I mean, it's-

McKay Daniels:
Yeah, I'm-

Kyle Thomas:
You can-

McKay Daniels:
... still getting hazed.

Kyle Thomas:
Well, that's not going to end anytime soon, McKay. But no doubt, the staff has been amazing. And just a quick note, McKay mentioned Reid and trying to cobble together Reid's notes, our former CEO. Reid did a lot of things, as we know, for the industry and made a lot of impact on the association of the industry as a whole. But honestly, one of the best things he did was tricking McKay into coming into our industry, so we owe Reid a big thank you for coaxing McKay to join the association.

Heidi Ellsworth:
Yeah, I agree, I agree. So what are some of the highlights, Kyle, that you're seeing so far in your chairmanship with what's going out, what the NRCA is doing, and also, just the industry overall?

Kyle Thomas:
Yeah, so like McKay, I've been doing this for about three months now. It's been a busy three months. I mean, it's not overwhelming, but we've had a lot of travel. We've gotten to visit with quite a few manufacturers, quite a few contractors. We were able to go over to Germany, to the Dach and Holz trade show, the big European roof and timber trade show. That was really neat, to get to experience that and see that they're dealing with a lot of the same concerns, same issues, whether it's the economy, the cost of energy, manpower issues all across Europe, so that was a really cool trip, real good experience. I've been able to go to speak to a couple of different regional associations.

Kyle Thomas:
The biggest thing I've felt, right when we got back from the German trade show, so we had our midyear meetings in July, and like McKay said about everybody's firing on all cylinders, everybody getting back together, right, after the pandemic, and through all that, and the material shortages issues and supply chain challenges and all the challenges we faced, the energy and the feel of the meetings in and around July was really strong. And of course, we also got a chance to roast/recognize former chairman Rod Petrick at our installation dinner. That's always a big highlight, is getting to roast the former chair.

Heidi Ellsworth:
Yeah. That-

McKay Daniels:
Careful, Kyle, because not too far from now, you'll be the former chair yourself, so prepare yourself-

Kyle Thomas:
That's right. I'm hoping Lisa Sprick is not paying too close attention to what I'm doing.

Heidi Ellsworth:
I love it. Well, you know what, I want to get us right into it too, because we all know there's some big things that are going on out there, that we want to... with the state of the industry. So let's start with the biggie, as always. Let's start with you, McKay. What are you seeing around material shortages?

McKay Daniels:
Sure. We talk about that being the million or billion-dollar question, right? In general, I liken it that we are past peak frustration. Contractors are navigating it out there. They're working harder to achieve the same result than ever before, which is frustrating and tiring and can grind somebody down. But there is starting to be some inkling of loosening out there, and talking to both contractors and manufacturers, the lead times are a little bit shorter, but it is still a challenge that Kyle and contractors all across the country are navigating and grappling with.

McKay Daniels:
But the resourcefulness and resiliency of the contractors continues to shine through, because they figure out how to get the work done, and duct tape and patch it together to keep their operations flowing, to keep their crews busy, and so it's been challenging. But at this point, they're navigating it, and we're probably still six months plus, perhaps plus plus, until a new normal returns, but it is showing the early signs of softening. What are you-

Heidi Ellsworth:
What-

McKay Daniels:
... seeing, Kyle?

Kyle Thomas:
Yeah, yeah, I would agree. I think some of the big, long lead items, if you have a big ISO or tapered order or whatever, we're seeing the lead times reduce or shrink on that. One of the challenges that we're still facing though, is, our roof assemblies have lots of components. Well, if we get eight of the 10 components, we still don't have a roof assembly, so we still can't put the roof on, so there's still some challenges we're seeing.

Kyle Thomas:
I think like you say, McKay, the long lead time items are reducing and it's getting quicker, but it's still a challenge that you may not have certain fasters that you need, a certain cover board that you need. It's like you said, we're navigating it. We're so used to it that it's just, we're not complaining about it as much as we used to, we're just navigating it. But it still takes a lot more of your time as a contractor and energy, just to make sure you've got all the pieces and parts you need to keep that crew moving. So hopefully, like you say, within the next six months, we'll start to see that new norm really start to settle in.

Heidi Ellsworth:
I do want to remind everybody, please send in your questions. We always know there's questions out there on material shortages, labor. We're going to talk about it all. So if you have questions, be sure to send them in, in the chat or in the Q and A, either way.

Heidi Ellsworth:
On that material shortage, in talking to manufacturers out there, one of the things that's interesting is, it correlates with what you're saying, Kyle, is that they're seeing that they may just have one ingredient that they have a material shortage with, fiber from fiberglass. There's different components. I hear from different folks. They're like, "We can't get it in, we can't get it through the truck." Even though it's loosened, it still holds everything up.

Kyle Thomas:
Yeah, it's almost more frustrating if you have a whole five truckloads of ISO on a job site, but you can't start. That's even more pressure for us, because the general contractor/owner/whoever is looking at that, going, "How come you're not here, roofing?" And it's like, well, we don't have everything, we just have some of it.

Heidi Ellsworth:
Yeah. Well, and I've also heard a lot from contractors out there that they are... And Kyle, maybe you could continue to address this, when you say you're navigating it, it also means you're figuring out how to put systems together that maybe you didn't put together before, in different ways, or using different materials.

Kyle Thomas:
Yeah, we've definitely gotten creative with it, which that creates its own challenge, right, because we're still having to meet the codes and the performance requirements and all that stuff, and so yes, we're finding different combinations of systems. A lot of contractors, one of the things that I've heard anecdotally throughout the talks and visits we've had is, some contractors are just reducing the offerings that they're offering and saying, "Okay, we're going to do these four systems, and we're going to try to cobble together everything we need for these kind of systems," and telling the owners, "Okay, listen, I know you wanted that specific design, but here's your option. We can get this within three months or we can wait 12 for that."

Kyle Thomas:
Like McKay says, as he's visited with contractors, he's learned that we're going to get creative and solve the problems one way or another, right? I mean, we're going to figure out a way. Somehow or another, we're going to put roofs on, because one of our biggest concerns, and we'll talk on that as we go through this bit, is the manpower issue, right? If we get into a challenge where we have crews available, and not materials, and those crews can't go to work, we have a big fear that we're going to lose those crews, not just from our company, but from our industry. So we're going to fight tooth and nail to not send people home, honestly. We're going to keep them working.

Heidi Ellsworth:
Right. Well-

McKay Daniels:
And-

Heidi Ellsworth:
Oh, go ahead, McKay.

McKay Daniels:
Well, and to pick up on your comment, Kyle, yeah, I visited with a very sophisticated contractor just a couple weeks ago, and they put out the edict to their sales team, "Go and sell these skews. This is what we're doing next year, and sell that and eliminate the 90% of the other stuff that we would've offered previously. We're just going to focus on doing this and doing this well."

McKay Daniels:
And Heidi, you mentioned the word trucks, and [inaudible 00:15:31], that is a key critical component, because you follow through the supply chain, the material shortage, supply chain disruption that's going on, the shipping and logistics industry still isn't... They've hired a lot of drivers, but the shortfall there is still very dramatic, and that's going to be an issue well beyond an ISO factory's ability to produce it. It's, can they get enough trucks there to ship it to Kyle and contractors across the country?

Heidi Ellsworth:
Yeah, the truck. I mean, it's just like, on every step of the way, it seems like there's some... And then, the manpower with the trucking, also, just like we have, labor issues. And this is really interesting, we have some questions coming in, first of all, from Tammy Hall. Thank you, Tammy. She's on the board of NRCA. What has been the impact on the industry from company closings due to the material issues? Has there been an issue or can you see if there have been any profit or loss? So are we losing roofing companies? Have you seen that? And if so, do you see recovery in any of these areas?

McKay Daniels:
That's a great question. At NRCA, obviously, members join, and from time to time, members withdraw and step away from the association. And when somebody says, "Hey, I need to take a pause," our membership team reaches out to them to try to have a conversation of, "Hey, what spurs this? What can we do better? Where did we fall short?" And it's been bubbling up in more and more of those conversations and responses of, "My company, I'm closing my business."

McKay Daniels:
And Kyle touched on it, of the industry, we supply labor and we supply materials to somebody that needs it to install, and if a contractor can't get materials, and they have to cut hours, or eliminate their staff, or the staff goes down the street, or leaves the industry all together and goes to drive for Walmart or Jeff Bezos or whatever, if you don't have materials and you don't have workers, you don't have a business. And there have been some shops that have closed because of this, because of the supply chain. But to echo Kyle's comment, the bigger concern is, you fast forward another year or so, and when the supply chain works its way through and supply and demand of physical materials is back into balance, the labor supply and demand equation isn't getting any better, and in fact, this is exacerbating it and making it worse.

Heidi Ellsworth:
Yeah, yeah, I mean, that's a great question, Tammy. And Tammy followed up that question, let me just put that in here, is, due to the labor shortages and competition, are you seeing price increases overall in the industry, as we are across the country? What percentage do you feel labor costs have gone up over the last 12 months? Kyle, you smiled.

Kyle Thomas:
Well, I'm wondering if Trent Cotton is listening and worried about a... It's just-

Heidi Ellsworth:
Yeah, we're not supposed to use that word.

Kyle Thomas:
So as far as the actual number, percentage-wise, I don't have one or know one. I know that the alliance has looked at and considered... In the past, as we look at research projects, one of those projects we considered was doing a wage and benefit survey to find out, what have wages done, not just in this last two or three years of COVID and supply chain issues, but maybe the last two decades, how have roofing wages changed?

Kyle Thomas:
But there's certainly wage pressure everywhere we turn because there's... I don't know what the ratio is exactly today, but two job openings for every available worker, or something like that. Walmart is paying over a hundred thousand dollars to hire a truck driver. The local fast food chain is starting at $18 an hour or something. Tammy, I don't know the number, percentage-wise, but anecdotally, if you talk to individual contractors all across the country, yes, we're paying more for labor. Like McKay says, I don't know how or when that changes because of just the demographics and the dynamics of the population and the amount of available workers out there.

McKay Daniels:
Yeah, yeah, the labor force participation rate is at an all-time low, and that's not likely to turn around anytime soon as you get 10,000 baby boomers every day, retiring. COVID sped that up a bit, but that was going on well before COVID or a supply chain. Our country does have a demographic problem on its doorstep right now that's quickly going to transform into a crisis. We've talked quite a bit about that at the association, and trying to... It drives a lot of what we are working on at the staff level and the association at large level with CTE, workforce, ProCertification. All of that stems from the fact that contractors need skilled, qualified labor, and so anything that we, as an association, can do to help a contractor be able to do what they do, B2B workforce, that's where we're focused on.

Heidi Ellsworth:
And I want to get to that. I really want to get to more on that, labor in the CTE, but I have two questions here. One of them is, and it's going back to the materials shortage or supply chain, is... One question was, do you see it better in any parts of the country compared to others? I know you've been all over the country, both of you. Is it the same across the US, or are you seeing pockets that are doing a little bit better with materials?

McKay Daniels:
Well, I'll jump in. And Kyle can correct me when I'm wrong, but I wouldn't necessarily... It's geographic based, but more what type of work you're doing. Resident asphalt shingles have been fairly stable. There was some issues with nails a while ago, but for the most part, if you're doing residential or asphalt shingles, you've had availability there.

McKay Daniels:
If you're predominantly focused in schoolwork, for example, and you needed 50% of your year's allocation during this two-month, three-month timeframe, that causes a lot of stress and friction with the contractor and the customers because the marketplace's calendar doesn't align to what a manufacturer or a contractor's calendar does. So I would say it's more system based rather than specific geography. Although, in the northeast, it's a nice, sunny, warm day here in Chicago today, but I joke that we've got probably eight more days of pleasant weather, and then it's going to turn cold, and so work will slow down, and so that will help ease some of the demands that the supply chain is having to deal with from the northeast. And so, hopefully, that shifts materials down to Kyle's neck of the woods and out west where you can go 300 days a year.

Kyle Thomas:
Yeah, I would basically agree with you, McKay. As we talk to and look at people all across the country, it's not necessarily the geographic. There's a big discrepancy across the country just in how contractors have dealt with it, the sophistication level of understanding. This goes back to some of Tammy's question about, with the price escalations, are we seeing contractor struggle with profits or having to absorb price increases?

Kyle Thomas:
But here, again, I haven't noticed it regionally, I just noticed that there's a dispersion in the sophistication of how contractors have dealt with and managed the price escalation clauses, or the lack of price escalation clauses. So yeah, I don't see it necessarily one region or [inaudible 00:23:54] better, but I agree with McKay. Selfishly, I hope it's a long, cold winter up north.

McKay Daniels:
And before we shift topics, I do think it's important to raise this point, especially for the contractors that are listening, and to further get it out there in the industry. I know Trent and NRCA Legal has talked about it some, and Kyle, you touched on it, but contractors are resilient and they'll go and figure out a way to get the work done.

McKay Daniels:
But it's incredibly, incredibly important that they're communicating with the manufacturers, with whoever holds that system warranty, and everything is, I joke, documented in triplicate, that if you're making a substitution of a material or trying a different technique or installation practice or what have you, that that is blessed 18 different ways and your legal counsel has reviewed it, because my biggest concern is, we're wrapping up, we'll say, the second or third iteration of this disruption of the industry. But the fourth chapter that we're going to experience is perhaps two, three, four, five years down the road where, if some of these substitutions start to fail, you don't want to be the contractor that doesn't have the backup to explain why that substitution occurred and that it was approved, so it's vitally important to check those boxes.

Heidi Ellsworth:
That's a nugget. That's good. That's something for everybody to be thinking about, working close. Kyle said this before, we do have to be very careful about talking about pricing. We don't want to do anything that's going to be illegal, but we do-

McKay Daniels:
I don't look good in orange.

Heidi Ellsworth:
Yeah, it doesn't look good. But there are a couple different questions here just about the inflation, the price escalation, and do we see... And I think, McKay, you talked about the supply and demand evening out, and so the questions out here are, do we see any positive in the future around that slowing down or stopping and balancing out?

McKay Daniels:
There's a famous, or perhaps not famous, but a joke that goes, how do you change a sad person's mood, make them happy, or a happy person's mood and make them sad with two words? And it's, things change, right? And the supply and demand is going to balance out, and this exponential, vertical line of price escalations coming on materials is going to change, without a doubt. And the time horizon is gray and fuzzy, a little bit, but it could happen quickly.

McKay Daniels:
Again, going back to if the northeast has a long cold winter, I guarantee that they are probably drawing down inventories of materials as we speak because they don't want to be carrying that on their balance sheet, on the books, or if they've got a line of credit, having to pay interest on something that's going to just sit in a warehouse for three months. And so, those little collective moves will have an aggregate effect on the industry, and I think you will start to see, at a minimum, some leveling off and just a little bit of a downtick, and you could see things change relatively quickly.

Heidi Ellsworth:
Yeah, you're hearing it almost every morning on the news.

Kyle Thomas:
Right. I think the big question is the timing on that, McKay. Rules of economics tell you it's going to happen, but I don't know how far out it is, because I know, here again, just anecdotally, what I'm seeing is, I'm still seeing prices are holding high, they're still quoting it, saying it's priced at time of shipment, not guaranteed for two months, three months, four months, or anything like that, so it hasn't changed yet. It will, but I guess the timing on that is the big question I see.

Heidi Ellsworth:
Yeah. And along that lines, again, with pricing and everything else that... Tammy just wanted to point out, Tammy Hall, that she would love to see an update to the 1017 wage and benefit report done by NRCA, that comes out. I'm not sure when the last time that that was out there, but NRCA has a lot of this research and documentation that can help people out there too, with these kind of reports, so I'm sure you guys know how-

McKay Daniels:
I just jotted it down. Tammy. Thanks for the suggestion. Without any specifics, I do ask both contractors, manufacturers, distributors, how they are navigating the labor supply crisis, and to a company, wages have been a factor in that. I mean, again, it's just basic economics of, if supply and demand and demand for labor right now is high and if you've got a rockstar person on your crew, you need that rockstar person to remain. And there's a lot of other things that go into worker satisfaction, beyond pay, but pay is blocking and tackling, and so the contractors, manufacturers, the industry is adjusting and adapting because they recognize the economics and the need out there.

Heidi Ellsworth:
Everything. And that was the 2017, sorry, I read that wrong, from Tammy, 2017 report. So yes, an updated one is going to be awesome. And I also just found out from Megan, our chat is not working very well, but the Q and A is working great. So if you have questions, just hit the Q and A instead of the chat. Megan's trying to figure out what's going on with the chat and get it fixed soon. It's just, you got to live in this world.

Heidi Ellsworth:
So let's move on to labor, because I think that there's so many initiatives that are going on right now between SkillsUSA, CTE, everything we've been doing with construction management. Giving some information back to everybody who's listening, what are some of the initiatives that you're seeing, let's start with NRCA, to get more skilled labor, talent into it, and how's that going? McKay, let's start with you.

Kyle Thomas:
Well, let me start, if you don't mind, then I'll kick over to McKay to-

Heidi Ellsworth:
Okay, fine. I'd love you start, yes.

Kyle Thomas:
I'll let McKay fill in the details. I'll set the table. But this year, it seems like we're really starting to see, a lot of stuff that NRCA has been working on for a long time is really coming together right now. We've got the ProCertification program, which we initiated as a tool to bring people into the industry. Of course, it was also to recognize the existing workforce as professionals, but also, as a tool to bring people into the industry to offer them a career path.

Kyle Thomas:
And then, the CTE initiatives, we've been working on, the SkillsUSA stuff, we've been working on, the NCCER education stuff, all of that is now coming together. And all of those, we knew as a leadership team years ago, were going to take time, right? They're a long-term play, but this year might be, really, a big year for us to see a lot of these things come to fruition. And I'll let McKay fill in some more of the details of all the stuff that we've been working on and how it's coming together.

McKay Daniels:
Yeah, we've really tried to focus on the labor supply chain, and that starts with the raw material. Just think of labor just like any other component of a roof system, the raw material being that unskilled, untrained, perhaps uninterested potential recruit out there, a raw material waiting to be refined into a skilled, contributing person in the industry. We need to be able to go and harvest those raw materials better than we currently are, and that's where former Chairman Sabino... This was and is his passion project of career and technical education, and he started a committee at NRCA focused on this topic a number of years ago. He brought on staff to really focus a dedicated, concerted effort on it. And I look at it as broadening the funnel, of getting more potential recruits to show up at Kyle's door, and how can we do that?

McKay Daniels:
The second aspect, though, is, once that new recruit shows up at Kyle's door, how do we make it so Kyle's equipped to get him or her up and running as quickly as possible and for that employee to enjoy their time and find fulfillment in their time as a new team member on Kyle's staff, rather than feeling a second-class citizen amongst the team or being hazed or what have you? Improving retention of those new recruits is also vitally important because you go and think about it just like attracting a customer, right? It's far easier to keep a customer than to get a new one.

McKay Daniels:
If you've got somebody that said, "Yes, I want to join your team," you need to do everything possible to keep that person engaged and growing on whatever path they're interested in. And so, we're producing all sorts of training, and it's TRAC, Training for Roof Application Careers, to help get that person up and running in a more quick and efficient way so that they're enjoying their job more, it flows right to the bottom line, and they're producing much more quickly. And then, you follow that all the way through to a qualified trainer program. We've found that often is the case, if you've got a new employee, the foreman on the job site would be the one that would previously be tasked with shepherding them along or training, but-

Kyle Thomas:
Hazing.

McKay Daniels:
... Kyle's smiling because... Here, you can fill in the punchline, Kyle, that's-

Kyle Thomas:
Well, right. I mean, that's been our challenge the whole time, is the foreman has got so many tasks. He's got safety, he's got production, he's got quality, he's got all those things on his mind, so the last thing he wants to do is to train a new kid, right?

McKay Daniels:
And so, we've tried to present the path of it. That foreman is focused on other things, but somebody on that crew, somebody on your team should have some skills and tricks, if you will, some tips and tricks to be able to train that new kid better, faster, again, make them feel a sense of purpose and a sense of belonging.

McKay Daniels:
Study after study shows that, especially kids these days, I'm talking like an old person now, want to have that fulfillment. They want their job to matter, they want to have purpose. And if you're able to provide purpose and a path and a vision of why what they do matters, that's 80% of the hurdle right there, and so getting them up and running more quickly and demonstrating that career path is a big part of that, that they recognize this isn't just a job, this is a career or a potential career and it's a family-supporting, American Dream quality career, and getting that message out... again, it goes back to the funnel, getting that message out in a broader way.

McKay Daniels:
And to a certain extent, perhaps that involves changing roofing's brand, right, because we're competing for labor out there, not just against other trades, but against Amazon or whomever. And so, continuing to work on improving the industry's brand all feeds into that virtuous circle of getting more bodies to join us. And Kyle, you said it perfectly, this is no quick fix. This is no two quarters and we've solved it all. This is a long term play, because it's a long term crisis. These problems didn't pop up overnight and they're not going to be solved overnight, but that doesn't mean we don't go after it with full gusto.

Heidi Ellsworth:
I can remember when this really started, I think it was probably about five or six years ago, maybe even longer than that, Kyle, when everybody was like, "We got to do something, we got to do something." And at that point, we said, "It's not a quick fix and we're late to the game," but today, there's been so much happening and so many great things that people want in... roofing respect, professionalism in roofing, bringing in not just college, but vocational, starting down... I mean, in junior high, grade school, contractors are doing that across the country, to change that brand up, so you're seeing it everywhere.

McKay Daniels:
You want to know one of the best-selling products? And this isn't to smirch... The NRCA sells hundreds of products and services out there, but one of the most common things that I see come through on our internal reports are these children books on roofing.

Heidi Ellsworth:
By Karen, yeah, Karen Cates. They're great. We have them on our site too. I love it, and she does great, and we need more of that.

McKay Daniels:
We got to get them while they're young.

Kyle Thomas:
[inaudible 00:37:19]. That's right, that's right. We-

Heidi Ellsworth:
Well-

Kyle Thomas:
... have a great story, we really do. We have a great story, but we just haven't been the best at learning how to tell our story.

Heidi Ellsworth:
Mm-hmm. We're getting better, I think. I mean, we're-

Kyle Thomas:
We are getting better, yeah, yeah.

Heidi Ellsworth:
... getting a lot better.

Kyle Thomas:
Much better.

Heidi Ellsworth:
Yeah. I want to go back, because we had some people come back with questions, so we do have some really great questions, and I think it's interesting, from Scott Shufflebarger in Richmond, Virginia. Thank you, Scott. He said, given the current issues with the supply chain, so it's going back to supply chain, do you foresee adjustment or movement towards more domestic production? And I think with all of the visits that you're making to manufacturers, this is such a great question. So are we going to see more coming back domestically to help in the future?

McKay Daniels:
I'll give the short answer of yes, and then give the longer version of, but it will take some time. I just saw a headline that China has got some 60 million people under lockdown again, or even still. And if you're sourcing your components or materials from parts of the world that can shut down with the stroke of a pen, with no moment's notice, as well as then, are contingent on shipping, freight, rail, trucks, being able to reduce those variables is in a manufacturer's long-term strategic interest.

McKay Daniels:
And there was a number of components of the infrastructure bill that will help that in some capacity. I call it the mansion bill, that just passed recently. There's provisions in there for domestic production and growing manufacturing here, as well as then, the CHIPS Act, which is throwing literally tens of billions of dollars at the semiconductor industry to build here. And while you don't think semiconductors and roofing go hand in hand, I'd be curious to take a poll of how many folks out there are short on trucks in their fleet or are driving older trucks because they couldn't get a newer one to replace it, and that's that type of thing. It's not just roofing, but roofing is... Over time, we'll see an impact of onshoring or nearshoring.

Kyle Thomas:
Yeah.

McKay Daniels:
And that's going to also, again, hit the labor market, because the more we bring back, the more labor they need. Yeah. Sorry, Kyle.

Kyle Thomas:
Well, no. I'll just echo what McKay said. I think that the two big crisises that we've seen here in the past few years, the pandemic and the material shortages, both of them are going to have some long-term effects that are going to affect the culture and society of America, I think. We've talked about the shift of people not working or working remotely instead of in the office. That is not going to go away. That's going to be a long-term effect coming out of the pandemic crisis.

Kyle Thomas:
Now, the pendulum always swings, and there's going to be a certain amount that returns back, but there's going to be... The idea and the concept that you can effectively and efficiently work remotely is going to stick with us for good now, I think. And I think that the supply chain shortages that we've been through, the lessons that we, as contractors, have learned, and the lessons that distributors and manufacturers have learned are going to stick. And so, the whole is just-in-time inventory dead kind of thing, it probably is. To a certain level, the manufacturers are going to try to onshore and take more control of their own destiny, for lack of better terms, with what they can provide for their customers.

Heidi Ellsworth:
Yeah, I think so. We've got some great comments coming in here, so I just want to make sure... So couple things, and these go... One question was... Well, we had two. I'm going to put them together. One from Patrick Hanley, what roofing components are contractors in need of most to complete projects? So go ahead Kyle, maybe what you're seeing there.

Kyle Thomas:
The two things, just, that I'm hearing the most struggle with shortage-wise is still the high-density cover boards. The gypsum high-density cover boards are still a challenge, I think. And I'm still hearing that fasteners can be a challenge, especially if you have a big, tapered insulation system where you need 18 and 20 and 22-inch fasteners. Those are a challenge. So that's the two biggies that I've heard. McKay, I don't know if you've got other...

McKay Daniels:
Fasteners would be, yeah, one, two, and two and a half, probably, in the top three.

Heidi Ellsworth:
Mm-hmm. And David Smith also asked about the growth of spray foam in the industry, and I've heard this a couple... that this is an alternative product that a lot of contractors are going to, in spray foam. Let's start with you, Kyle, again. Have you seen any growth in that area?

Kyle Thomas:
I haven't, and that may be one of those regional things. I don't see a lot of spray foam in the southeast. Now, spray foam struggled early on with supply chain because it was in the same raw material struggles that the ISO manufacturers were having, the NBI and that kind of stuff, so they struggled early on with the same issues that the ISO manufacturers struggled with. But I guess, just from my little bit of time, I have not necessarily seen a lot of growth in spray foam, but McKay, have you seen or heard much from other sectors?

McKay Daniels:
Some, but again, it's the contractors. Contractors and manufacturers have been forced, in a lot of ways, to experiment and innovate and be willing to try something new. If they've not done it before, they're willing to give it a shot. We were talking about it before the show, Heidi, on roof codings, which puts in a similar thing. If you couldn't get all of the components to do a full system re-roof, but you had a client that said, "I need this and I need this now," maybe you hadn't been as quick in your past life to go to a codings for a solution. But now, the market is asking for it and contractors are being there to fit the needs of their customers.

Heidi Ellsworth:
Right, yeah, and that's what we're seeing too, across the board. I think those are great questions, and David, I will say that the spray foam association has just joined Roofers Coffee Shop too, so we'll probably be getting them on here at some point. So Jennifer Ford Smith with Johns Manville, hello, Jenny, thank you, has a question for you, Kyle. You mentioned you and other contractors have had to be creative and try new products you might not have otherwise used in the past, which we were just talking about. What is the best tool or tools that manufacturers can provide to support training your teams on new technologies that you're using, and have you used a product that you will now stick with rather than going back to what you did before, and why? Great question.

Kyle Thomas:
Typical of her to throw a good, hard question at me. Thanks. As far as the tools, I mean, you guys, honestly, you know, I believe, just pull your customers closer, right? I mean, the training and stuff, JAM's done a great job. They've done a great job in supporting NRCA's ProCertification and qualified trainer programs and stuff like that, so I think, to big extent, maybe just continue to do more of the same. Continue to pull your clients and your customers closer, stay close to them, communicate with them. My experience with you guys is that your field technical staff are very good at what they do, and they can come to our job sites, our warehouses, our offices, and do the training. I would say, be creative on your end of what new products you're bringing out. But also, of course, be conservative because we don't like to experiment, right? We don't like to learn what doesn't work.

Kyle Thomas:
The second part of your question, I can't think necessarily, off the top of my head, of any new product or assembly that we've done, that we'll stick with. I think in the big picture scheme though, and this all feeds together with the same conversation we're having, is anytime we can find assemblies or systems that truly are labor savings, that reduce the manpower required, those are going to stick with us over time, and so the concept of spray foam growing because maybe you can cover more roof with few man hours. So I think you'll see maybe more mechanically-attached, single-ply designs because it may be fast or less labor, and you don't have to wait for adhesives, or you don't have to pay for the price escalation of low-rise foam adhesives and stuff like that. Some of those products have seen some really significant price escalation over the last couple of years, so big picture-wise... But those trends have been continuing, right? The trends towards mechanically-attached designs versus adhere designs for cold savings have been going on for years.

Heidi Ellsworth:
Yeah. McKay?

McKay Daniels:
And to piggyback a little bit on it, just yesterday, I was talking with an NRCA member who, due to supply chain, went and got a component from a new provider that they'd not worked with previously, and they're paying 30% more to use this new provider, but now swear by them. And you hear it from, in less dramatic terms, talking to folks out there of, "Well I had been solely with X, Y, Z system or manufacturer, and supply chain forced me to branch out and try different ones, and now I've got relationships and experience with these other systems, or other techniques, or methods," and it'll remain part of their toolbox. They may not use it on every job, but it's now part of their repertoire, and it wasn't before.

McKay Daniels:
To also put the exclamation mark on Kyle's statement for the manufacturers, material shortages have been the bottleneck for the past year, but you fast forward another year from now, hopefully, or so, and we will probably be back again to labor being the bottleneck for the industry. That will be the governor and the cap on our growth and a contractor's capability, so anything that manufacturers or distributors or other entities in the industry are able to do to reduce the demand for contractors' time and labor is going to pay dividends. That's going to be a friction point for the foreseeable future, and so anything we can do to reduce that friction is gold.

Heidi Ellsworth:
It's, yeah, really important. I can't believe we've... such a great hour so far, and we still got some more time, but I just wanted to bring this back up because we had some questions here, one from LeeAnn Slattery, talking about the labor and what they're doing. ATAS has been really involved with Let's Build Construction Camp for Girls and similar camps out there where they are bringing together young people to learn. As we talked about earlier, NRCA is very involved with SkillsUSA and a lot of these other... getting the very young folks in.

Heidi Ellsworth:
Kyle, maybe you could just... a little bit about the CTE with SkillsUSA. I know we talked about it a little bit earlier, but just to... what our involvement is there and the construction management schools, just to show how the contractor, everybody who's listening, and manufacturers today can get involved.

Kyle Thomas:
Oh, boy. There's a lot of room for growth at SkillsUSA. Like you said, Heidi, we realize how late we were to the game, right, so we're finally making some headway with SkillsUSA. What we really need, I think, now is for some of the contractors, manufacturers, distributors, to champion it in their own states because SkillsUSA is a state-driven... and then it pushes up to the national level.

Kyle Thomas:
A plug for NRCA, we've got staff dedicated to it, we've got lots of resources for it, so if you're out there listening and you have a passion towards the CTE stuff, contact our staff. We can really help you connect with schools in your area. We can help give you toolkits to reach out to the CTE schools in your area. We can help hook you up with SkillsUSA contacts in your area. There's a ton of room for growth there, because like I said, we were so late to the game.

Kyle Thomas:
And you know my passion for the student competition and the college outreach, so I'll spend the rest of our time talking about that if I'm not careful. But what the alliance has done with that and the NRCA has done with that and what, really, the group at Clemson University has done with the college-level courses that are available, and they're available to universities all across the country for free, is just an amazing outreach that we've been able to accomplish. Being, as I keep saying, late to the game, but as late we were to the game, I think we've accomplished a lot in a relatively short timeframe on that.

Heidi Ellsworth:
Yeah, and we just did a podcast with two of the professors from the construction management, so that will be coming out soon. We also had Bill Good and Allison LaValley on that podcast, so if you want to learn more about what's going on there... And I'm going to make a pitch right now. For everybody who's on this, and we have a lot of people on today, who are going to the IRE show, please attend the student competition. It is the best thing you can do. Every year, Tim and I sit there and we watch it. We love it, and so I want to encourage everybody. Shameless plug for everything out there.

Heidi Ellsworth:
And then, the other thing too is, we have talked a lot about the labor issues and what's going on, and the NRCA has done so much through Roofing Day in D.C. with immigration, with CTE, with the Perkins Act, with all of those kind of things. So McKay, I know your pass is a little murky in this, but are we going to have Roofing Day again next year?

Kyle Thomas:
You're writing his wheelhouse.

McKay Daniels:
Yeah, my parole officer will let me talk government and politics for two months, and then I got to turn it off. No, in my past life, I've worked for two US senators, two members of the house, and I've had hundreds and hundreds of meetings with constituents and lobbyists on every topic under the sun. And it's important for the listeners to realize, everybody out there has every... Think of anything. The home soap people that sell, they have a trade association, they have lobbyists. The florists, they come in. Look at everybody. Everything is there, making their case and educating members of Congress and their staffs on their industries and what issues are important to them. It's imperative that the roofing industry have a loud, unified voice in the halls of Congress.

McKay Daniels:
The ability of government to help your life or harm your business can't be undersold. It really can't. And unfortunately, in Washington, D.C., numbers matter and unanimity matters, and so it's important that we get a strong turnout at Roofing Day. And you might think, oh, it's D.C., I have no business being there, I've never been before, it's boring, politics offends me, or what have you. Whatever hang up or reason that you have in your mind, there may be some truth to that.

McKay Daniels:
But also, people have a lot of fun. They find it fascinating and interesting to meet with the staff and the members of Congress and to see and learn a little bit about how the process works. It's not intimidating. Goodness, you're talking to somebody like me. If I'm scaring you... You're a roofing contractor. People, to a person, come back with a very positives experience and story to tell. And we've tried to do some different things this last year that we're going to be continuing going forward, which is adding more programming, and getting additional speakers, and not to have them be boring or monologues that just drone on and on, but speakers that maybe tell you a little bit behind the scenes, how the sausage gets made, or economic updates, or OSHA updates, or things that are interesting and relevant to the industry, we've really tried to boost. And that's going to be an important part, going forward. For your own benefit, as well as the good of the industry, please, please, please attend Roofing Day in April. You'll have a lot of fun and you'll feel-

Kyle Thomas:
Yeah, if you don't mind, Heidi, I'll continue to plug and give a little bit of an outsider's perspective, because I was that guy that says, "I don't like politics, I don't want to go get involved in all that," so just echo again, what McKay said. Don't be intimidated. NRCA, the staff up there, they take the intimidation factor out of it, they simplify it. The appointments are made for you. Don't get too wound up about having to know every detail of everything in the position paper they give you. The biggest thing you're doing is, you're making a presence, you're getting to know your local representative.

Kyle Thomas:
And just real quick, one short story, we meet... A lot of times, it's with the staffers, not necessarily with the actual representative or congressman, but that's fine. The last time I went, the staffer that I met with in that office was the same staffer I'd met with the year before, and he remembered our issues from the year before. Now, whether he remembered him or whether he did the research coming into the meeting, he put the effort into it either way. It was a pretty impressive thing. It impressed me and realized that even if that exact position paper or that exact bill didn't pass that year, we're starting to build that relationship, so now, they know us, we know them. I think that's a big, big factor.

Heidi Ellsworth:
Yeah. I-

McKay Daniels:
Yeah. The relationship-building component is important. Think about it, even in your own companies, right? you're out there. Politics is a people business just like roofing, just like life, and so developing that relationship and that familiarity, and that takes time, is important. And more than anything, that's the biggest, for me, takeaway, is that roofing is now on that staffer's radar and mind, whereas, I guarantee you, beforehand, that wasn't the case, where it's on that member of Congress's radar or mind.

McKay Daniels:
And a number of contractors have gone out and had those meetings, and then they follow up, and the member of Congress is now coming to their shop, which you want to talk about a boost for the team and being recognized for what you do and the value of what you do as part of a roofing company. Come have US senator, a member of Congress, come and spend a couple hours with you and be able to tell your story. It's very powerful for not only the owner or the principal of the company, but for the entire team.

Heidi Ellsworth:
Yeah, and the brand of roofing. It all comes back together. So we have a question on here, and we're going to take one last question, and it's from Wendy Marvin, Good morning, Wendy. Thank you. Can you mention what an NRCA member looks like and can smaller companies join? Oh, Wendy. Perfect question. Thank you. So Kyle, you want to start?

Kyle Thomas:
Okay, great. Well, I'll start and let McKay... What does an NRCA member look like? Like me, right? I mean, we're a medium-size company. We're not a huge company. Yes, small members, small contractors can join. We have more members in our lowest-dollar volume membership category than any other, so it is a common misconception that we need to try to continue to dispel, is that it's a group for big commercial contractors. It's not. We have tons of resources for contractors that are strictly residential. We have resources for every contractor out there, I guarantee you. There's so many resources that we offer, that we don't have time to... We can't get into all of them. But they look like there's a lot of disparity in what the members look like. They're as diverse as anything else.

McKay Daniels:
Mm-hmm. Wendy, I'll send you flowers later for the question, because it's great, but without a doubt, the NRCA membership is the full spectrum of contractors, but as Kyle said, the vast majority of our members are smaller shops. It's a small shop, small crews, and doing their business. The majority of our members are involved in residential. That's a misconception that's out there as well, that, oh, it's just big guys doing skyscrapers or commercial work, and that's not the case either. It's, in fact, just the opposite. The vast majority of our folks do both commercial and residential, and they do tend to be smaller.

McKay Daniels:
And especially for a smaller shop, we offer information, resources, tools that you wouldn't otherwise be able to develop on your own. You're out there, trying to navigate the material shortage, trying to navigate hiring, and getting your crews on time, and having all the stars aligned so that you can get that roof done on time and on budget. Let us help you take some of those burdens and make them a little bit easier. We can't make them go away, but we can give you some skills and best practices and materials and resources so that you're able to navigate them a little easier, as well as then, a network of contractors who aren't competitors, no antitrust stuff or no threat of competition, but can have a peer network to share best practices and to ask the questions of, hey, I'm encountering this, have you seen this? And there's no new issues out there. It's just, you haven't encountered it yet, right? And so, let NRCA help you make those new issues become old issues in a hurry.

Heidi Ellsworth:
That's great. Thank you. Thank you, McKay. Thank you, Kyle. This has been the perfect first episode of season four. Thank you so much for being here today and for all your wisdom and for everything you're doing for the roofing industry.

McKay Daniels:
Thank you for having us, Heidi. It's great to spend a morning with you. Who needs a cup of coffee when you can wake up with Heidi and Roofers Coffee Shop?

Kyle Thomas:
[inaudible 01:01:07]-

Heidi Ellsworth:
Roofers Coffee Shop, there you go. Thank you so much, and thank you all for listening. We're right at the top of the hour. Please join us two weeks from now for Caught Doing Good. This is all about what roofing contractors are doing for their communities, for the industry there. We're catching all those contractors out there who are doing great things. So it's sponsored by ABC Supply and today's episode, thank you very much, was sponsored by NRCA. So we love you guys, we love having you on the show, and we're excited for all of you to share this out. It will be up on demand in 24 or less hours, and we will see you two weeks from now on Coffee Conversations. Thanks.



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