Bundling has always made sense when it comes to convenience and saving money for insurance. Trade associations bundle. Why pay multiple dues and attend several events when it can all be bundled into one payment and one show? Bundling for associations is not new and while it’s a clear choice for manufacturers and suppliers, even subcontractors see the benefits. An example would be a flooring contractor. Why limit your contracting to just carpet? As a bundled contractor, you can offer a portfolio of options. You can offer carpet, tile, wood, cork or even terrazzo flooring. Not just carpet. This just seems logical.
However, bundling has its drawbacks. For trade associations, locals can lose identity and get lost or overlooked in a sea of people. Most would agree that the best deals are made within small groups with a laser focus on a particular issue. In addition, better long-lasting connections are typically made, as well.
The Bad of Bundling
When it comes to subcontracting, bundling is easy—but does it work? Consider a subcontractor is defined as a specialty contractor and assume you are a drywall contractor. Now consider drywall work. You have a set of skills to do that work efficiently with expertise. You may see the opportunity to add lath and plastering to your portfolio but you lack that expertise. No worries, you can hire an expert. However, how do you know that person really is an expert? Because they said so? They worked for another company before? Not good enough. As an ex-plastering contractor, many employees left and went to work at bundled firms, only to eventually be let go because they were not what they purported themselves to be to the new employer: experts.
An “expert” is a term that has been bantered about, over-used and thus lost its true intent. This is particularly true for specialty craft work. What is it that makes them an expert? The person that walks on site and spots potential problems before anyone else can and provides cost effective solutions that function? It’s not merely reciting codes and standards. They can also spot true journeyman or professionals. I can lay tile but would never try to pass myself off as a journeyman tile setter. To a lawyer, drywaller or even a carpet contractor, I might look like a pro and even con them into hiring me to run that division but would come up far short. By the time they catch on, lots of money was lost and damage was done.
Canada has bundled flooring into one association. Most of the terrazzo specialists opted to drop out, as it failed to adequately cover their profession as experts. They needed specialized training at their craft and focus on their unique issues.
Are Benefit Bundles Worth the Cost?
The move to bundle has benefits but there are drawbacks, as well. Bundling then leads to branding. But are we really Kleenex or Coca-Cola? How can this help the sub or specialty contractor? The general contractor wants it because bundling streamlines his work schedule. But is there more to it than that? Do they see the leverage it gives them over the mega sub and more likely to finance bigger chunks of the project?
We have seen some bundled subcontracting work be forced into some bad deals. One example is to be leveraged into giving away sections of work to secure the job. In the wall and ceiling world, we see scaffold rentals lined out or specialty finishes thrown in to get the job. Then on site, the general will hold up huge draws to get more freebies. Is this good for the industry or what we want?
There are still many specialty subcontractors who do one trade and excel at it for a fair price and quality. The bundled contractor cannot match that. The quality or efficiency is rarely the same. More bodies does not necessarily mean great efficiency. I hope the birth of the bundled contractor does not result in the death of the true specialty subcontractor. We all work hard at our respective craft and it should not be diluted to a mere piece of a portfolio all to benefit a developer.
