Balancing the Challenges of Success
Experts Weigh In on the State of the Industry
NIA Interviewed the following individuals for this article:
- Dan Bofinger, NIA Member Type: Distributor/ Fabricator
- David J. Cox, NIA Member Type: Manufacturer
- John Lamberton, NIA Member Type: Contractor
- Rudy Nigl, NIA Member Type: Contractor
- Randy Smith, NIA Member Type: Metal Building Laminator
- Rick Sutphin, NIA Member Type: Contractor
- Dana Vlk, NIA Member Type: Distributor/Fabricator
(see full bios at the end of the article)
1. How would you describe your sector to someone who is not familiar with your industry?
The mechanical insulation industry is a hidden part of everyday building and industry. Our work allows the world to save energy costs, prevent issues with machinery/equipment, and provide a quality living for a lot of skilled workers.
Metal building insulation (MBI) is a critical piece of the building envelope for the pre-engineered building sector. MBI allows this type of construction to be energy efficient while being aesthetically appealing.
Dynamic, interesting, and challenging.
2. What do you wish other industry sectors knew about your segment of the industry?
The value that insulation adds to a project—both new construction and maintenance. Also, the value of having a proper insulation design for the project.
3. Reflect on the last 12–18 months. What road bumps did you face? Were there new opportunities? Looking back, what surprised you the most?
As NIA President, I would say the construction economy was very strong and actually better than what we had imagined. Business was supposed to be good, and it was good, but one thing that surprised me is that I thought we would see less price pressure. It may have been because no one knew how sustainable this level of business was and wanted to make sure they got their share in the market. The industrial side of the business seemed to be stronger than the commercial side, though both were good.
My big surprise this year—and big challenge—was in transportation. We had to deal with transportation inflation. One positive is that I am seeing more calls for thicker insulation—particularly on the commercial side. Someone is clearly doing good job with the code bodies because we are getting calls for thicker insulation. We are also seeing calls for more insulation on the industrial side—this may be in part because of the increase in liquefied natural gas (LNG) facilities and thicker insulation used in cogeneration facilities. One challenge is that it can be hard for contractors to fit the increased insulation in the existing pipe racks. It’s important for engineers to make changes to their racking systems to create enough space between pipes to accommodate the insulation. I’m noticing a lot more building information modeling (BIM) being used as well.
I think the biggest surprise was the allocation of materials by the manufacturers. This was certainly a major concern when it first occurred and did have a short-term impact, but things smoothed out fairly quickly.
The largest challenge we faced last year was being able to have enough men at every job we were working at. There was a great influx of work, but with the ever-present shortage of skilled labor, we struggled for stretches to properly man each and every job. We learned to do a better job planning for upcoming jobs, and keeping the pressure on the mechanicals to get pipe/duct/equipment ready for us so we don’t fall behind.
The biggest challenge of 2018 for laminators was the volatile steel prices brought on by the tariffs. Looking forward: patience is still a virtue, and I expect market growth in an unsure climate.
The biggest challenges as a union contractor were: competing against non-union competition and manpower shortages. We need to work closely with our union labor partners to develop a competitive wage package in each market, and we need more apprentices in the pipeline to replace retirees and supplement current shortages.
4. Looking ahead to the rest of 2019 and 2020, what do you want to accomplish? Are there certain areas your business is focusing on? Are there any issues you are concerned about? What’s on the horizon for your business in 2019?
Well, we’re always concerned about a downturn in construction, and some of the forecasts are saying there could be some softness in the near future. If you’re in the construction industry, it’s advisable to watch the forecasts to determine how severe of a downturn there may be, and then make any necessary adjustments with operating expenses.
Like many in the industry, we’ve experienced our share of problems with hiring and retention. With the country at full employment, it’s difficult to recruit people and once recruited, it’s hard to retain them since there are so many opportunities. The big thing working against us is that the younger generation is not looking at construction jobs. The key is that when you get somebody new interested in the business, you have to keep them interested and challenge them career wise.
Our focus this year is really building out our base for our industrial product portfolio. We made 2 terrific acquisitions last year (Pittsburgh Corning and Paroc), to expand our portfolio in the hot and cold markets. What I am seeing is that there are more closures of coal-fired plants—this means less insulation contracting work—for what is typically called flat work (boilers and pollution-control equipment). At the same time, we’re seeing a huge transition to natural gas and a great deal of work on natural–gas fired cogeneration facilities—this is more piping work than the flat work done at coal-fired plants. We’re also seeing more opportunities related to the upswing in natural gas transportation—like acoustical insulation for compressor stations. These very loud pieces of equipment must be insulated in order to get to the appropriate decibel levels.
I am proud to see that our country is reducing its dependency on foreign oil. I just read recently that the United States was a net exporter of crude oil and refined petroleum products in 2018, the first time this has happened since the 1940s. Natural gas has played a huge role in allowing us to be more energy independent, and not being held hostage to OPEC and geopolitical discourse as our nation has in the past. The shift from coal to natural gas is certainly an adjustment, as our industry was partially built on flat work for coal-fired plants years ago. But those days are over. I think there will be increasing opportunities in the industrial space as natural gas creates opportunities in both chemical processing and natural gas liquids.
Measured growth. The Irex companies have been increasing their service offerings and we hope tocontinue the success we’ve had in doing so.
We are continuing to slowly expand, so our biggest goals are to get new estimators/project managers up to speed and working efficiently to make jobs/projects turn out as good as possible.
2019 looks to be a flat year in overall growth. We plan to focus on educating customers and end users on the new energy codes and new methods to achieve them. One goal over the next year is to help contractors to upgrade the insulation systems to exceed local energy codes.
Backlog is strong and labor shortages will continue to be an issue. We are developing wage packages to assist in the securement of workers.
5. The issue of workforce availability is at the top of the list for many industry members. What traits do you look for in prospective employees? What do you think makes someone successful in this industry? What is your business doing to attract and retain new employees?
In our business, and probably in most businesses, we’re sales driven. So, the key is not necessarily finding a person with the background in our space, but having the right personality that can work with people and good communication skills, someone willing to learn. It’s more about personality traits than product knowledge traits.
Workforce availability is critical and challenging for our industry due to an aging workforce and skill gaps. We look for people that want to join our team and grow with us. Our values at DI include safety, partnership, integrity, respect, innovation, and trust. Living those values on a daily basis is mission critical to our company and our industry.
The shortage is a problem, not necessarily as bad for us, but it is for our customers, especially contractors. All the trades are competing for a shrinking labor pool. When looking at insulation contracting, one of the benefits is that you can sometimes work outside, and you get to travel to different job sites and do a variety of work.
Personally, I look for aptitude and attitude in new hires. Then it comes down to fit—whether a person’s personality, attitude, and chemistry fit the organization.
Yes, I feel that everyone, not only construction trades, is worried about the hunt for employees. We are looking at other comparable businesses, as well as other major employers in our areas, and doing a better job either matching or competing with their wages/benefits to make us as appealing as them.
There is a growing concern with workforce, especially in professional drivers.
Workforce availability is a problem; we are working with unions to develop more interest in the construction industry to attract workers.
6. What is your company doing to ensure knowledge is being transferred from its current leaders to the next generation of leaders?
We’re excited because we have some new younger employees at our business and once you recognize that talent, you have to find positions to keep them happy. We have some of the youngest branch managers ever in our company. We have also had good salespeople coming in and recognizing how the business works. It’s been pretty neat to watch some of the younger people come in and be interested in the industry.
We take the tribal knowledge from our more mature workers and facilitate opportunities to pass it on. We don’t have a formal mentorship program, but when people gravitate toward each other, we give them the opportunity to share knowledge. And then we have the basic training tools like NIA offers—web-based training and the Mechanical Insulation Installation Video Series. We also have some business development roles within our company that work on training.
We try to do a lot of sharing. One thing we do is “lunch and learns” with presentations. I recently presented internally on what’s changing in industrial markets—so I’m taking my 40 years of experience and trying to distill it to benefit everyone in our division—finance, supply chain, customer service, you name it. We have certain people become subject matter experts and then share that knowledge through presentations. I had an old boss that used to say, “If you want to learn something, do a presentation.” We tend to use that saying to promote learning among ourselves. We are particularly fond of having our recent college graduates in sales development take a topic like cryogenic cold boxes and present it to the rest of us.
Another big thing we do as a company is applied learning—we believe people do their best not by being told the answer, but by seeking the answer.
This is a bigger issue than some people realize. The leadership in our industry is rapidly maturing. It’s critical that we work at recruiting and training the next generation of leaders. We currently have a number of initiatives, either in planning or implemented, to ensure a smooth transition. These include a mentoring program, specialized training, and emerging leader groups.
7. Looking at long-term success, what do you think businesses need to do to thrive in the ever-changing industry? What are the requirements to prepare for the future?
I think everybody will agree, technology is such a huge part of our lives. In the insulation industry, while we’re maybe not the leaders in technology, we’re using it in business more and more. It seems that we’ve almost been forced into using it more as it’s become more ubiquitous, and less that we’re leveraging it to help our business. We need to look at how we can use it to help us in our industry.
First and foremost, we must all provide safe working environments for our employees; putting safety first in our industry is the right thing to do for our families and our success. Education and training are also important for achievement of our long-term goals. Ongoing education allows people to learn or enhance their knowledge of mechanical insulation in order to continue to grow, change, and engage in a variety of opportunities in our industry. Investments in safety as well as education and training will lead to higher retention rates in our companies and our industry. It is important to me that NIA provides programs for our members to support safety, training, and education to strengthen the mechanical insulation industry.
You have to look out for things that surprise you, and disruptions. You just never know who is going to enter an industry or create a product you don’t know about. For example, in the insulation industry we’ve seen the rise of new products that have done really well. There’s been some changes over the years and there are new technologies that are ever changing.
People that are buying our products are looking for a solution to a problem—it’s up to us to figure out how to solve this problem. We’ll have people who come to us looking for acoustical and thermal protection—so we’ll look at hybrid products or combining different products. It’s about creating solutions, not just selling products. You have to use a systems approach to meet needs and solve issues.
Safety! The industry is also becoming more demanding. Customers are asking more from their contractors than supplying insulation and labor. The paperwork side of the business is becoming a full-time job.
To prepare for the future, we must: (1) Groom the next generation of leaders/managers to ensure businesses prosper as they grow/evolve; (2) Teach/train the labor force so they can be counted on to do quality work in a timely manner and are able to help mold the next generation of labor we are working to recruit; and (3) Stay in our lanes, don’t try to grow too big or too quickly and outgrow our capacities.
It’s vital to attract and recruit younger talent for technical positions, mentor and groom the future leaders of the organization with a hands-on education, and plan for future energy-code requirements to help educate contractors.
Businesses must be developing talent both in the field and in the office. This includes job skills as well as soft skills training. Succession planning at all levels of the organization is important, as is multiemployer pension reform.
8. Is there anything else you’d like to say about the industry or forecast?
We have this association as the voice of our industry and it’s a daily process to improve the awareness of what we do with mechanical insulation and how it affects our lives. We need to stay the course there and keep getting the word out and do the work to get the recognition we deserve. I think the future of the industry looks good and insulation is such a necessary part of building and construction. Despite cycles with housing and other economic cycles, we still need to provide mechanical insulation for the nation so our buildings are energy efficient and comfortable.
I always try to tell people—this is a great industry with great people. I had an acquaintance who was part of a layoff and was thinking about leaving the industry. I told him his industry knowledge was invaluable and that the industry needed talented people like him. I’m glad to say he was able to find a new position because this industry has a lot of nuance—it’s important we hang onto talented people who know and have a passion for mechanical insulation.
Dan Bofinger, NIA Member Type: Distributor/ Fabricator
Dan Bofinger is the Regional Vice President, East, of Speciality Products & Insulation (www.spi-co.com), a distributor and fabricator specializing in the domestic and global distribution and fabrication of mechanical, industrial, commercial, building, metal building, and HVAC insulation systems; OEM products; passive fire protection systems; architectural/acoustical products and wall systems; and a wide range of specialty products. Mr. Bofinger is the President of NIA, a member of the NIA Board of Directors and Executive Committee, and a former Chairman of NIA’s Distributors/Fabricators Committee. He can be reached at email@example.com.
David J. Cox, NIA Member Type: Manufacturer
David J. Cox works in Strategic Business Development for Owens Corning, (www.owenscorning.com), a manufacturer of insulation, roofing, and fiberglass composite materials. Its insulation products conserve energy and improve acoustics, fire resistance, and air quality in the spaces where people live, work, and play. The business is global in scope, with operations in 33 countries and headquarters in Toledo, Ohio. Mr. Cox has 40 years of experience in industrial and commercial insulation marketing. He is the NIA Assistant Treasurer and can be reached at David.firstname.lastname@example.org.
John Lamberton, NIA Member Type: Contractor
John Lamberton is the Chief Operating Officer of Irex Contracting Group (www.irexcontracting.com), a contractor that provides various specialties, including installation and maintenance of mechanical insulation, sheet metal lagging, architectural finishes, passive fire protection, energy audits, and the removal of lead-containing materials, mold, and other hazardous materials. Mr. Lamberton is the Secretary/Treasurer for NIA’s Board of Directors, Chairman of the Education and Training Committee, Co-Chair of the Union Contractors Committee, and a member of the Foundation Steering Committee and Strategic Planning Committee. He can be reached at JLamberton@irexcorp.com.
Rudy Nigl, NIA Member Type: Contractor
Rudy Nigl is the Vice President of L & C Insulation, Inc. (www.lcinsulation.com), a contractor specializing in
commercial and industrial insulation in Wisconsin, southeast Minnesota, and northeast Iowa. For the last 30 years, L & C Insulation has been specializing in industrial and commercial insulation and firestopping. Mr. Nigl has been in the industry for 5 years and has expertise in leadership, project management, and estimating. He is a NIA Board Member, Chair of the Merit Contractors Committee, Secretary of the Young Professional Advisory Committee, and a MICA Board Member. He can be reached at email@example.com.
Randy Smith, NIA Member Type: Metal Building Laminator
Randy Smith is a Regional Manager for Distribution International (www.distributioninternational.com), an industrial, commercial, mechanical, metal building, railcar, refractory, and marine insulation distributor and fabricator. Mr Smith has 34 years of experience with metal building insulation, HVAC, commercial, industrial, mechanical, railcar insulation, and refractory modules. He can be reached at R.firstname.lastname@example.org.
Rick Sutphin, NIA Member Type: Contractor
Rick Sutphin is the Vice President of Labor Relations for Performance Contracting Inc. (www.performancecontracting.com), a specialty contractor offering services and products to the industrial, commercial, and non-residential market. He is a member of NIA’s Board of Directors and is the representative for the Western Insulation Contractors Association (WICA). He can be reached at Rick.Sutphin@pcg.com.
Dana Vlk, NIA Member Type: Distributor/Fabricator
Dana Vlk is a Senior Adviser for Distribution International, Inc. (www.distributioninternational.com), which fabricates and distributes insulation materials for the industrial, marine, commercial, and government sectors. Ms. Vlk is the current President-Elect for NIA, a member of the NIA Board of Directors and Executive Committee, and a former Chairwoman of NIA’s Distributors/Fabricators Committee. She can be reached at email@example.com.