We’ve noticed a few new trend(s) in our city and it isn’t for the better.
What some contractors are doing to cut costs and stay competitive despite increased products cost, gross overhead or poor management is getting creative with labor costs.
Here are four new cost-cutting systems employed by some contractors that you may or may not want to endorse.
Running one-person crews is the #1 one way to cut labor cost.
No matter how experienced or great an installer maybe or think they are, working alone drastically increases the risk of sub-par work or worst, personal injury due to fatigue or rushing to complete the project promptly.
Companies are running skeleton crews for the typical day to day operations, but employing subcontractors during peak seasons.
This system allows for multiple savings, i.e., fewer company vehicles and tools, WCB, insurance premiums, overtime wages, etc.
Subcontractors aren’t necessarily evil, but a considerable drop in quality is commonplace.
Also, future warranty issues have a big question mark.
Piecework structures are undercutting journeyman wages.
Experienced technicians are opting to work for companies that pay fair hourly compensation. Leaving behind apprentices to work unsupervised.
Another concern, workers are paid a set amount regardless of the number of hours worked. Not all but most people abuse this type of system and quality sacrificed.
Commission based service techs
Commissions instead of hourly wages are compensating service techs. Technicians being paid a percentage portion of the repair bill only!
This structure is driving up repair costs; some techs are charging absurd prices or even worst, charging for parts that don’t need replacing.