I live and work in the rather sickly Detroit metropolitan market. Every time I drive by a flooring store, granite shop, plumbing showroom or contractor’s truck, I wonder how they are doing. What steps have they taken to cut costs? How long can they keep going if conditions don’t improve?

Most markets are not as tough as Detroit’s, but all are suffering. I heard an interesting term that describes our extended economic downturn: the “new normal.”

How do construction pros navigate in these “new normal” conditions that have lingered way past temporary? Clearly, this downturn is not a “dip,” “correction” or “slowdown.” Like an unwelcome, messy houseguest, these conditions are here to stay for a while.

Rather than continue hoping for an economic rebound to save the day, many pros are changing their businesses to reflect the reality of our “new normal” conditions. But how they are changing? I asked Clear Seas Research to conduct a survey* among our Building Materials Panel, a cross section of pros who read BNP Media’s construction trade magazines, Web sites and blogs.

This survey garnered 364 respondents, so it definitely touched a nerve. After analyzing the results, I identified five tactics construction pros are employing to survive the “new normal.”

1. Cut Overhead.38% of respondents say they reduced staff, 28% say they reduced hours, 16% cut benefits and 16% cut compensation. Interestingly, 38% also said they are “not focusing on reducing overhead.”

2. Reduce Benefits.The 16 % who are cutting benefits are hacking 17 different areas: 401k plan, 43%; medical insurance, 39%; holiday pay, 32%; dental, 29%; personal/sick pay, 29%; supplemental benefits, 23%; vacation pay, 23%; family medical leave, 21%; flexible spending accounts, 21%; employee assistance programs, 20%; life insurance and AD&D, 20%; bereavement time, 14%; and five forms of COBRA or disability coverage, 12% each.

3. Minimize Work Vehicle Expenses.These motorized workhorses won’t be receiving the same pounding they endured when times were good. 40% of respondents are improving route mapping; 39% are driving less; 30% are seeking fuel discounts; 21% are using GPS to improve driving efficiency; 17% are investing in vehicle maintenance; 13% will stock less inventory; and 13% will switch to smaller vehicles.

4. Increase Marketing.We asked this open-ended question: “What changes will your company make in light of the current market conditions?” 38 respondents wrote that their company is increasing its marketing and advertising. Another 14 indicated they would tap into new markets with new services/products, seven said they would “get more aggressive,” and four wrote that would increases sales efforts. While some respondents are focused on cuts, it was energizing to see that many are being proactive in attacking their “new normal” market.

5. Employ New Services.Another open-ended question provided more inspiring results. We asked, “What new products or services will your company offer to become more competitive?” Respondents’ answers demonstrated a high level of creativity, flexibility and resourcefulness. Here are some of their comments.

“Switched to more green products.”
“Bid smaller projects.”
“Add cleaning services after installations.”
“Bid more services in our quotes.”
“Selling service contracts.”
“Switched to IP phone services.”
“Offering incentives to customers for purchases.”
“Adding a handyman division.”
“Bought our own delivery truck.”
“Offering radon testing.”
“Added apartment remodeling and insurance work.”
“Bring in a new line of siding”
“Added solar installations.”
“Added midnight electricians.”
“Added engineering services.”
“Added IAQ, UVC lights.”
“Add certifications for geothermal, solar.”
“Added hardwood repairs and services.”
“Developing Web site.”
“Adding drain, jetting, video inspection services.”
“Adding cork, bamboo and laminates.”
“Expanding to regional clients instead of local.”
“Adding fireplace units.”
“Installing outdoor wood furnaces.”
“Adding granite installations.”

The list of services being introduced by construction pros this year was quite amazing. For those of you proactively developing new skills and business opportunities, the future (albeit scary) looks very exciting.

Carpe diem!

*To obtain a copy of the survey results, contact Kelly Clinton at clintok@clearseasresearch. Results from this study are copyright © 2009 by Clear Seas Research. All rights reserved.