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Coffee Conversations LIVE from IRE 2024 Sponsored by SRS! - Day 2 - PODCAST TRANSCRIPT

Coffee Conversations LIVE from IRE 2024 Sponsored by SRS! - Day 2 - PODCAST TRANSCRIPT
February 3, 2024 at 12:00 p.m.

Editor's note: The following is the transcript of a live interview with Sara Jonas from ICP Group, Piers Dormeyer of EagleView, Michelle Lane of Elevate and Kent Gardner from SRS Distribution. You can read the interview below,  listen to the podcast or watch the recording.

Heidi J Ellsworth: Hello and welcome back to Coffee Conversations. We are live at the IRE Show and we are live on the Coffee Conversation sound stage sponsored by SRS. We are, I'm telling you, day two Coffee Conversations, this is a power panel. You saw the contractors yesterday, all their great wisdom and information. Well today, this panel, so excited to introduce them and for everybody to go through those same questions that we did yesterday with the contractors and really have a great conversation around what's happening in the industry. My name is Heidi Ellsworth and we're going to get started. Remember that this will be on demand, so you'll be able to see it on our YouTube channel. You'll be able to see it on our website and also on your favorite podcast channels. So let's get started.

Hello everyone. I am so excited for today's conversation. Let's start out with some introductions. So Sara, let's start with you.

Sara Jonas: My name's Sara Jonas. I'm the VP of marketing for ICP Group, and we have a couple of roofing brands, including APOC here today.

Heidi J Ellsworth: Excellent. Piers.

Piers Dormeyer: I'm Piers Dormeyer. I'm with Eagle View, and we're best known for our roofing reports in the roofing industry. We fly a fleet of airplanes, we create these beautiful images that result in these 3D models that ultimately help contractors bid and build our roofs more effectively.

Heidi J Ellsworth: Yeah, that's great. And you all know I have a little special place in my heart for Eagle View. Michelle.

Michelle Lane: Hello, Michelle Lane. I am the Vice President of marketing and communications for Elevate, and many people may know this as formerly Firestone. So very excited to be here.

Heidi J Ellsworth: Really excited to have you, and Kent.

Kent Gardner: Heidi, thank you for having me. My name's Kent Gardner. I'm president of SRS Distribution and really excited to sponsor Coffee Conversations as well as our wonderful concert tonight where we have Dirk Spentley and Leonard Skinner. So excited to see everybody out.

Heidi J Ellsworth: Yeah, you can't really go anywhere without seeing SRS. It's pretty awesome. In fact, right here. Yes, and right outside. In fact, at the end of this Coffee Conversations, I have to just do a little plug. Megan Ellsworth will be playing at the SRS tent outside.

Kent Gardner: That's right, the Tailgate. That's right. We're excited. Excited to have her.

Heidi J Ellsworth: It'll be really great.

Kent Gardner: She was so good we're bringing her back for another day.

Heidi J Ellsworth: I know. It's so nice. Love it. Okay, let's get started. So I want to just start out with the show. I mean, what I'm hearing numbers wise, they've blown it out of the water. We have huge numbers. I want to just see what you all think and how it's going so far. So what have you seen with the show so far, Sara?

Sara Jonas: It's fantastic. From an exhibitor perspective, when we come to Vegas, it's kind of mixed feeling. A lot of people come, but a lot of people leave around two o'clock because they're going out gambling and having fun. I'm not seeing that this year. The show floor is packed and was packed all day yesterday and people are everywhere and really, really engaged. It's a really, really good energy. It's been great.

Heidi J Ellsworth: It's been really, I mean so many people, and when you walk into that show floor, wow, everything is just bigger than life throughout the whole show. Piers, what are you finding?

Piers Dormeyer: I mean, I think you're getting, it's been crazy busy. It's been a lot of fun. It seems like everybody's here, which is cool. And I think there's a little bit of this, if you've heard this term, this revenge travel, and it's like people are still getting back over COVID and all that pent up, hey, want to go to Vegas, see my friends, hang out and see what's new in the industry. So I think that the location certainly has something to do with it.

Heidi J Ellsworth: And I think there's a real thirst for technology too. I've been hearing a lot of, we had a class this morning and the contractors are like, what's going on with technology? So they're really looking for that from all the exhibitors, but especially the technology companies.

Piers Dormeyer: Tech is going through maybe almost another renaissance with the generative AI, that now everybody's familiar with open AI's, Chat GPT, but really that technology which has become accessible because greater cloud and compute costs and NVIDIA's processing power, it's just unlocking a lot of new solutions that are going to have a profound effect on contractors.

Heidi J Ellsworth: Yeah, yeah. We're seeing it every day.

Kent Gardner: That's the big difference in the show today is the technology. I mean, one of the questions I think you would ask is what's different about today versus previous times? And technology is insane, whether it's from a safety perspective for the folks that are getting on the roofs, to the contractor interface with distribution. I mean, it's been amazing.

Heidi J Ellsworth: It is, and you're seeing it in every booth. They're talking about it one way or the other.

Kent Gardner: Every booth.

Heidi J Ellsworth: It's amazing.

Michelle Lane: You're seeing it in all booths, but you're also seeing it with contractors, with manufacturing, everybody's starting to think about their own business and how they can really leverage that technology, which is super interesting.

Heidi J Ellsworth: Yeah, I mean, you hear it when the, well, you know what, that's trends. So I'm going to do that next. I want to talk about that more because we're hearing so much from the contractors. What are you seeing in your booth as they're coming in?

Michelle Lane: So yeah, I mean, just the energy, and I know Sara mentioned this, contractors are upbeat for the year. There is a lot of positive momentum. There's a lot of positive energy. I'm feeling it in meetings. I'm feeling it in the booth. We've had fantastic traffic. I know the numbers are up, which is fantastic to see. And people are here, they're engaged and they want to know more. So it's been fantastic.

Heidi J Ellsworth: It's so good. Kent, you have I think four different booths in there, and then you have the tailgater outside plus the concert tonight. Great exposure, but what are you hearing in your booths?

Kent Gardner: Well, I'd echo what our partners here said. I mean, the enthusiasm and energy this year versus last year, because last year, if you remember, it was economic concerns. What did the future hold, those kinds of things. So everybody was really challenged with what was going to happen. And so last year we ended up finishing very strong. And so I see the contractors coming in with purpose, direction, motivation to finish a strong 23 and really kick off 2024.

Heidi J Ellsworth: Yeah. That's what it seems like we're hearing. So, okay, let's talk trends. So the trends that we're seeing with the show is good, but what are these contractors looking for as they're coming in? I'm going to switch around and start with you on this one. So what are some of the trends that you're seeing in 2024 that either are matching 2023 or maybe a little bit different that you're seeing coming in and that contractors are interested in?

Kent Gardner: Well, I'll go back to the technology piece. What we're seeing is a generational transition. The 50 to 60-year-old contractor that's transitioning the business to their 25, 27, 30-year-old, the millennial, they want a way to do business a little more efficient, a little faster, maybe less interactive from a communication standpoint, but through the digital technology that's available. And so the quest for that, the hunger to get that is really evident on the show.

Heidi J Ellsworth: I mean the technology, but you also have, and I just want to bring many cultures, I mean, as you're seeing with the Hispanic or the Latino community, and that really is overlapping with technology too.

Kent Gardner: Absolutely. Yeah. There was a time when people thought that the Latino contractor base didn't want to embrace the technology. And the truth of it is, in many instances for the non-Latino contractor, they're jumping over those guys because they really want to participate in that.

Heidi J Ellsworth: Yeah, yeah. Makes sense.

Piers Dormeyer: I'd also add that you're a hundred percent right. I also think that the buyers changed a lot, and I think certainly homeowners, but also building owners on the commercial side, they expect to see that technology being employed. The contractor that goes and brings a drone to a job site, it's crazy what the close rates do because people are just really impressed and they're not expecting that engagement that used to be spending two hours at your home in the middle of the week and getting educated. Less and less homeowners want to do that and it's wild.

Heidi J Ellsworth: And don't you think drones and technology is also attracting the younger generation to our industry that maybe before was not so cool?

Michelle Lane: I totally agree with you, and I just think about the pace of change and how we use technology in this business just to be more efficient. And I'm seeing contractors embrace that from an efficiency standpoint, but also thinking through a customer experience, similar to what Piers was speaking about, is how do you create a unique customer experience leveraging technology. It's just a huge trend.

Heidi J Ellsworth: Yeah, as I go, so Michelle, what are some other trends that you're seeing?

Michelle Lane: Yeah, I think Kent hit on one, it's just a little bit more focus on Hispanic speaking, drawing those folks into our industry, really paying attention to what the needs of really a big portion of the market is. And so I'm seeing that on the show floor. I also love seeing a bit more diversity in the business as well. I had a great opportunity to sit in on National Women in Roofing on Sunday, and just the energy of the women in this business is absolutely fantastic, and that is a definite trend that I love to see.

Kent Gardner: I'm excited about that too, because 10 years ago that just wasn't the case, and there's dynamic women that are running these businesses that inspire us to do better, and so it's really a cool thing to see.

Michelle Lane: Well, and I think if you think about the labor market and the challenges that everybody has, let's go for the entire pool of candidates that are out there and it brings more folks into the business.

Kent Gardner: That's right.

Heidi J Ellsworth: A lot more people.

Michelle Lane: Definitely.

Heidi J Ellsworth: There's a lot of people out there that could be part of this great industry that we hadn't been paying attention to in the past. Yeah.

Piers Dormeyer: I mean, I was sharing this with the NRCA folks yesterday a little bit, but there's this challenge with making this industry attractive, especially for Gen Z, bringing people in. And I agree that there's some optimism this year, and I think some of that has a lot to do with the fact that the recession that everybody was worried about last year didn't really materialize.

Kent Gardner: Correct.

Piers Dormeyer: And that's positive, but I will tell you that the roofing industry is about as resilient, I wouldn't say recession-proof, but certainly recession-resilient then just about, maybe take a company like a semiconductor company out of the conversation, but can you name a major tech company that didn't. And we're talking about big companies that are all over the news. So when you're starting to talk to people about coming into this industry and making yourself attractive to women, diverse hires, really focusing on the idea that this is something that you can build a career, you can have stability. There's a lot of earning potential. I think people are really starting to see that.

Heidi J Ellsworth: I think that's a great point. Sorry, something went down the wrong. I think that's a great point because I didn't even think about that. How many tech companies have laid off and we're not seeing that in our industry at all. That's wild.

Kent Gardner: Well, you know 15 years ago everybody would say, what do you do for a living? They'd say, I'm in roofing. And what do your kids do? Well, I'd never get them in the roofing industry, and that's just not the case. I mean, this is a dynamic 30, 40 billion dollar industry that everybody needs a roof over their head and clothes on their back, shoes on their feet and the roof is the number one thing you have to have. So I'm with you. I mean it is a kick-ass...

Piers Dormeyer: I love this.

Kent Gardner: It's a great industry.

Sara Jonas: It's a great industry.

Kent Gardner: It's a wonderful industry and I'm proud of it.

Heidi J Ellsworth: Well, I know I always say roofing is different, but I was here a couple weeks ago for world of concrete, it's not the same as roofing. It has a different feel. And Sara, yeah.

Sara Jonas: Yeah, it's not the same at all. Again, going back to this energy, which has always been here, I do feel like we're out of the hangover of the pandemic, and this feels back to normal, but there's always been something different. I mean, it's true, once you're in it, you're kind of in it. I had never met somebody in roofing who's like, I really got to get out of this industry. It's good, it's a good energy. Everybody who's in it is really really proud of it. I think that we probably, and it's starting to happen, we probably do a better job of figuring out how to transfer that out, take that energy out so that people outside of the industry see it, see the community that we have here. It's definitely felt at the show.

Michelle Lane: It is, and what I love about the roofing community is it starts here. You could start anywhere, but there's so many opportunities outside of the role that you may start in roofing and you can really go anywhere, whether or not you're starting at a manufacturer or roofing contractor and just starting to think about what you want to do next. There's just so much potential.

Heidi J Ellsworth: It is crazy when I think about, I just was talking to a young lady who's a product manager, brought out a whole new product, and she's just so proud. She's in the booth and she's just showing this product and how they put it together and manufacturing and everything. And of course I'm like, do you belong to National Women in Roofing because we need you to come talk to other women about being involved in this. But I think it's all cultures. We are seeing a huge diversity. I think that's a great point.

I do want to kind of go back a little bit to the technology too, because one of the things that I'm hearing out there a lot is contractors who are saying, yeah, I need a job description, I'm putting it into Chat GPT, right?

Kent Gardner: Yep.

Piers Dormeyer: Oh yeah.

Heidi J Ellsworth: I need a business plan. I need a social media post. And when I first started with Eagle View, when you said, we're going to measure your roof from the air and it's going to be all technology, they're like, you have 10 heads and you're crazy. Now they're all like, yeah, I'm just going to throw a phrase into a thing and I'm going to get a job description. Not even thinking twice about it. What are you seeing that direction?

Piers Dormeyer: Oh, wow, this is a big topic. You're seeing so many, it's such an early stage at where large language model-based generative AI technologies are going to go and evolve. What you're talking about, we do that every single day. You're trying to create collateral, you're trying to do a number of things, really, really useful. I think we're seeing a lot of people talking to us about how they're engaging with customers, customer service, being able to scale, being able to respond back to customer needs, stay in better communication with your clients, especially on the commercial side of the business. You're seeing solutions like that being developed, but it's kind of endless.

And then there's this idea of a large image model, and this is some of the stuff that we're really interested in, or you're using the same types of these neural networks, deep learning models to really start helping you pull the information that you need out of something like an image or some other piece of content so that you can just get to the solution. So you're not actually having to do the work anymore. You're just effectively saying, this is what I want to know and here's the answer. And again, this wasn't possible until you had all of this innovation on the chips, on the wafers, on the silicon and the NVIDIA processing power is what is going to unlock an entire disruptive category. It's incredibly exciting.

Kent Gardner: Well, to tie into what Pierce said, you talked about they want to do a duty description, they want all those different things. Think about the time that they've saved where they can actually go out and do business generation activities, connecting with the contractors, selling more, understanding more of the products. The time that it saves, so I'm pretty excited about the efficiency we're going to get back to put back into our contractors. Very excited about it.

Heidi J Ellsworth: That's what we're seeing, that's exactly.

Piers Dormeyer: I will, not to interrupt you, sorry. But I will say there's one thing you got to be a little careful with, is you're starting to see these instances of things like GPT and large language models that are effectively a white label and it's walled off from the rest of the internet. So if you're operating your business and you have trade secrets and you have things that make you special and you don't want the rest of the internet to know about, you got to be careful. You're training your people to not put a bunch of stuff that you don't want being used to train that model for everybody else. So I wouldn't jump into it without a little bit of forethought.

Michelle Lane: Well, I would agree, and on that same vein, it doesn't take the place of human interaction, right.

Piers Dormeyer: No, that's right.

Michelle Lane: And you can't get complacent. So if you're utilizing some of these tools, just make sure you're paying attention. They can drastically improve your efficiency, but it's always great to have a second set of eyes on it, make sure your data is accurate and it's really communicating what you want to communicate.

Heidi J Ellsworth: Right. There's a lot of things out there like hallucinations I've been hearing and different things that you have to be very careful. And I think that is really part of the role of training, even from manufacturers distribution technology into the industry of how this is going to work and where it's coming from. And I realized I got so excited about talking about that, I didn't hear your trends.

Sara Jonas: Well, my trends really weren't focused on technology. What I'm seeing a lot of in there is actually people who are brand new to products that in my head, this is technology that's been out there for a really long time, but I have had a lot of people in our booth that are either new to the industry or just new to coatings, which was very surprising to me. So I don't know if it's, we've got a lot of newbies here. I did hear the event last night was really, really full.

Heidi J Ellsworth: Yes.

Sara Jonas: Great. Really, really great. Or if it's just people are seeing opportunities for expanding their businesses or maybe service departments. But I've talked to a lot of people that are new, which is great.

Heidi J Ellsworth: Yeah. Well, we've been talking about that on the coffee shop, is that we tend to go like, okay, well we got to talk about these. Sara, you and I have done it, talking about trainings. We need to be at the higher level, but not really. There's so many new people coming in, we need that one-on-one training because we are doing, I think, a good job of recruiting into the industry. And we have to remember that not everybody knows everything they, how to put on roof.

Sara Jonas: Yeah, yeah. But you know when you're in it, you're just thinking, oh, this is old [inaudible 00:18:10]. Everybody knows this. Everybody knows, but they don't. You're right. We need to keep the basics.

Heidi J Ellsworth: Yeah. One of the trends that I'd like to start with you, Sara too, and ask you a question on is sustainability. It's a big topic. Roof restoration is a big topic and a big trend. Talk a little bit about what you're hearing and seeing in that realm.

Sara Jonas: From a sustainability perspective we're seeing a lot of materials that are more, let's say [inaudible 00:18:41] products. Like we're seeing a lot with non-global warming potential chemicals or [inaudible 00:18:48]. So you've got your materials that might be a little bit more sustainable. In roofing, I think the biggest thing is what are you throwing away, what are you are putting in landfills. So that's where roof restoration comes into play. Can you extend the life and sometimes you can't, right, but can you and still keep the quality products or quality roof. And if you can't, what are your options. But I think what we put in the landfills in not just roofing, but just the construction industry, that's number one. That's big.

Heidi J Ellsworth: Putting if through that. Piers, I don't know how much involved you are, but you are always involved in everything. And especially, let me actually rephrase that, I'm going to actually push towards solar because you are very involved in that world. What are you hearing on the sustainability side?

Piers Dormeyer: I mean, solar is, it's been a challenging year. It is a challenging year in the solar industry, and it's driven by a lot of financing and really high interest rates. And we've seen legislation like California's net metering laws really kind of put some headwinds on the industry. But we see the pace at which the roofing industry is [inaudible 00:20:05] really leading rooftop solar in a lot of areas isn't something that's going to stop. We're really focused on trying to figure out how can we make our roofing customers more effective, more efficient.

And now from a sustainability perspective, obviously if we can harness the power that's free and available and we can do that in an efficient way and we can make it all make sense for all parties involved, then that's a really good thing. But I also think that just in the core business of when you're bidding a job, there for a long time has kind of been this idea that we'll just throw some extra waste on it and we'll make it work. And I think there's a couple of trends coming in where we are in a more competitive environment, it's harder to just build in extra waste. And building in that extra waste invariably leads to more wasted materials and it costs you money [inaudible 00:20:56]. So we're kind of working on both of those things.

Heidi J Ellsworth: Yeah, the waste factor. I know. What do you see?

Michelle Lane: Yeah, I'll touch on both of those things. So the waste factor is a huge initiative for us. It's a huge initiative for the industry. I think we all see the amount of material that comes off a roof and it's just we need to do better. And so how do we think about recycling programs, putting things together to even separate and causing less waste as an industry. I'll go back to something Sara said, just the materials is another one too. How are you thinking about recycled products, what actually goes into the product is a huge trend from a manufacturer and something we're paying attention to a lot. The last one that I'll touch on just from a contractor perspective is you're starting to see contractors that are seeing in specifications things like, I want to see an EPD on this product. I want to understand what's going on my roof. And so we anticipate more and more of that is going to occur as building owners get a little bit more astute and what products are going on their building.

Heidi J Ellsworth: And it's a huge topic at the NRCA and the Roofing Alliance meetings talking about sustainability, EPDM or EPDM, EPDs, sorry and environmental product data. But I do see before it was like it really doesn't affect us, but now it does.

Michelle Lane: It is, and contractors are getting asked new questions and what we're finding is just even terminology can be challenging, right. What is an EPD? What is an environmental product declaration? And so we're kind of starting there just with some of our contractors, educating on some of the basics because that trend is going to continue and they'll start to see more.

Heidi J Ellsworth: Wow. Kent, what do you see on the distribution side?

Kent Gardner: For us, it's really about the carbon footprint. We have 5,000 trucks on the road every single day, and so getting from point A to point B used to be with a map and I know where to go, but now when it comes to routing software, again, technology tying into it, getting from point A to point B, there can be a more efficient way to do it. And then at some point we're going to have to get with, and we started to do that on the EV type things that can deliver our product. And so that's a big push for us, just eliminating the carbon footprint.

Heidi J Ellsworth: That's something to be excited about.

Kent Gardner: It is.

Heidi J Ellsworth: To see EVs delivering roofing products.

Kent Gardner: Yeah, you already got the EV on some of the cranes and conveyors and things like that, the electric side of things, but still yet to be tested and it's heavy, it's big, bulky, 40 to 40,000 pounds. So that's got to be perfected, so initially we're starting with the routing, but eventually, especially as we continue to do more business in California, we'll have to jump on the EV side.

Heidi J Ellsworth: And I have to say, we talked about drones earlier and that was a big push a couple years ago, Amazon was going to deliver with drones, right.

Kent Gardner: That's right.

Heidi J Ellsworth: Are we going to see roofing shingles coming by drone?

Kent Gardner: I don't know, man. It's pretty [inaudible 00:23:39]. I'm not quite sure. Maybe, the Jetsons.

Piers Dormeyer: Yeah, I think if you can crack cold fusion or something and you can generate enough power, I mean you start thinking about a hundred pound bundle and what it would take to pull up through, I don't know.

Heidi J Ellsworth: There's no way.

Piers Dormeyer: That seems like that's a leap.

Heidi J Ellsworth: I definitely wouldn't want to drop it on anybody.

Piers Dormeyer: But I think we're seeing just so much more efficiency coming from things like drone-assisted inspections for example, is huge.

Heidi J Ellsworth: It's crazy.

Piers Dormeyer: But everybody's-

Kent Gardner: And from a safety perspective too, when you think about it, you used to have to get on the roof and measure it, draw out chalk, all that kind of thing. And now you can use a drone technology and your employees are safer.

Piers Dormeyer: But we had a guy come tell us something. It's just kind of crazy, but to go and do a roof inspection after a hailstorm and you got to send a couple of people, usually you're climbing up on a roof, you're crawling on a roof with chalk, you're circling these things and you're spending all day, several people, sometimes all day just to get that roof inspected. A drone can do a square in about forty-five seconds, and then the machine learning just tells you where all the hail strikes are. And I mean, how much time did you save. How many trips did you save. It's just, and again, this is all brand new stuff. This kind of advantage didn't exist years ago, so it's really exciting.

Heidi J Ellsworth: It's happening now. Okay, so let's talk a little bit on the other side. Let's talk about some pain points. So we have contractors out there going through some things. Kent, what are you seeing as some of the pain points that the contracting community is really dealing with going into 24?

Kent Gardner: Well, really it's product availability. I mean, we're still having challenges. I won't name the manufacturer, but we're still having challenges getting enough material to supply the demand.

Heidi J Ellsworth: Really?

Kent Gardner: And I think that will be in the foreseeable six to seven months, I still think we'll have those challenges. It's good for the industry, there's tons of demand, but just that product availability is really pain point.

Heidi J Ellsworth: Yeah. Which areas do you see the most?

Kent Gardner: Well, actually I'd say nationwide. The southeast is kind of loosening up because they're so post storm from the last hurricane that they've had. But you think about California, for instance, we were already struggling with getting enough material for the demand that was out there. Now they've just had this atmospheric river that's going on, and that's going to produce a ton more demand, and there's just not enough material to do it. So it's a big challenge for the contractor today, especially the steep slope roofing contractor.

Heidi J Ellsworth: And I think it's really interesting to that point, kind of bringing this on is that one of the pain points that is creating pain points is the extreme weather we're seeing.

Kent Gardner: It is.

Heidi J Ellsworth: All these storms across the country and different things are really putting material supply, labor, people moving, able to work or not. What are you seeing on the weather front?

Kent Gardner: Well, it has been pretty, I mean, last year was the most aggressive. I think, I was in a discussion today, and I think NOAA, I can't remember what that acronym stands for, National Oceanic Atmosphere, I think. Last year there were I think twenty-eight one billion dollar storm damage events, 28 or so, I could be a little bit off. But the average historically since 1980 when they've been tracking it is 7.3. So when you think about that magnitude of weather and storms, there's a lot of carry forward in 24 that's going to help out. And then we got the next hail season, it's just right around the corner. And so the weather has changed. And last year versus some of the previous years, it hit densely populated areas. So it is a good problem to have, I don't want anybody hurt. We rebuild America, that's what we all do. But it did hit the areas that are creating the demand and now the manufacturers are just not able to get the material.

Heidi J Ellsworth: Yeah, they're putting it [inaudible 00:27:25].

Sara Jonas: Just to tag onto that, somebody just had a conversation with somebody about NOAA adding a category. There were storms that created such wind force that they had to add a category six or something like that. So it's changing drastically. It's a little scary when you think about it. But yeah, just had that conversation about the weather and the impact that we're seeing.

Kent Gardner: And that's what we do. I mean, again, we don't want anybody hurt, but we do rebuild America. But it was an amazing year from a storm perspective, challenging year, and we're going to reap some of the rewards from doing that business, that repair work, carrying forward into 24. But we'll see how 24/25 goes.

Heidi J Ellsworth: Wow. Michelle, what do you see as pain points for the contractors?

Michelle Lane: Yeah, I mean, we've been talking about this for years, but we would be remiss if we didn't say labor.

Kent Gardner: For sure.

Michelle Lane: It doesn't seem to matter what the economic climate is. It doesn't seem to matter what the roofing climate is. There is never enough labor for the products they want to install. So I know the industry is getting very creative. We're kind of coming together and saying, how do we collectively solve this problem, but in the short term it's been a challenge. On the manufacturer side, we try to find products that can be installed with less labor to help that contractor out. Solving the challenge for getting more qualified labor, I know everybody's really focused on, but it is a challenge and not going away.

Heidi J Ellsworth: Yeah, it's not going away. Not anytime soon. What do you think Piers?

Piers Dormeyer: I definitely echo everything that I've heard already. And I'd say that labor is the perennial challenge, hiring people, finding people, crews. But I'll go back and there's kind of one that's bothering me a little bit, really related a lot to the prevalence and increase in storms and severity. The affordability of a roof for a homeowner or building owner is becoming a really challenging problem. And I think in certain regions, particularly where I'm from in Florida, you've got carriers that are operating loss adjustment expenses that are sometimes over a hundred percent and they're no longer renewing policies or they're just jacking up rates and they're forcing these homeowners to go out and put new roofs on in some cases when they don't necessarily need a new roof, just the carrier doesn't want to insure it. And that combined with a five and a half percent fed funds rate and the cost of financing and the increases in material prices and labor, you're just going to wonder how high you can push it up before people are just not going to be able to do it anymore. And then that's going to really push down demand. So I don't know that everything going up is completely sustainable.

Heidi J Ellsworth: Well, and insurance, I hear this over and over and over again, and now that, obviously in Florida, it's kind of started it across the thing, but we're seeing it in California now with the floods. We're seeing it throughout the west with the wildfires, and it is causing a lot of pain.

Piers Dormeyer: Yeah, it's a real problem. It's a potential train wreck and do I think it's catastrophic, do I think it's going to just implode the industry? I don't think so, but I do think it's something that we have to stay in front of.

Heidi J Ellsworth: Yeah. Yeah. So Sara, pain points?

Sara Jonas: I mean everything's kind of been said. You could say labor in every conversation. It's a thing and has been for a while. I agree. I think the supply chain challenges are going to continue, and I think depending on what happens weather wise, it can have a huge, huge impact. I remember ice storm going through Texas and just put everything to a halt for a little bit. So from a manufacturer perspective, when those things happen, we feel it too, obviously. But yeah, I mean, I agree with everything that's been said.

Heidi J Ellsworth: It's a lot of the same things that are going through and happening. Well, let's talk then a little bit about, we talked about the material shortages, but I'd like to talk a little bit about on the labor front, some of the solutions. CTE, some of the things that we're seeing, technology that's coming in to help find crews. And I'd really love to talk a little bit about the challenges of our new, and it's not new, but our building sub-crew culture. That has been something that has really grown. You go back a couple decades and everybody had their own employees for the most part, but that has now changed a lot. So starting just a little bit on some of the things that you're seeing with your contractors, but that you are also doing, you have several companies around some of the solutions or some of the things that are helping on the labor front.

Sara Jonas: Well, for us, huge focus is training, obviously. So the training could vary from coming in for a two day certification program at a training center or getting in field training on the job site. I'm just seeing out there a lot of creative ways that these contractors are recruiting and I think it's really interesting too that even five years ago you wouldn't necessarily think of roofing contractors having a big recruiting department, but now they do.

Heidi J Ellsworth: They do.

Sara Jonas: And onboarding is really, really key and really important and they've got really great schedules for training. So I'm seeing some cool things there. Of course I'm seeing, this is more from our industry, some really, really creative places that we're recruiting. We're trying to get people into the industry in every way that we can. And just in my mind, again, I said it like three times, the training is the most important piece of it. When you lose that, you put yourself in a worse position than if you didn't have [inaudible 00:33:27].

Heidi J Ellsworth: Yeah, because you can recruit all day long, but if you can't retain people and they don't know what they're doing or performing, it doesn't really matter.

Sara Jonas: That's right. That's right. Or if they go on a job site, they have no idea what they're doing, they're not safe. If they're doing installs incorrectly, then you've got a bunch of different problems. Your training is really, really a key piece of it.

Heidi J Ellsworth: Super, super important.

Michelle Lane: I think to that point on retention, just creating an environment that's good. I mean, we all talk about the roofing industry and how do you bust some of those stereotypes that this is an amazing industry, it's a great place to work, and a place that is not just for one particular type of person, but it's a belonging that everyone is really focused on. And whether or not it's buying lunch for teammates or focusing on career development programs, I'm seeing a lot of that too and I think it's really, really helpful.

Heidi J Ellsworth: It is, and that is kind of a new, really building, making culture first.

Michelle Lane: Exactly. Yes.

Heidi J Ellsworth: Has been I think phenomenal. What do you think, because you're involved with a lot of groups.

Piers Dormeyer: I will say, first of all, I think it's improving. And I agree a hundred percent. We have to tell that story about why this is attractive. Why would you want to be involved in this and being proud of, you said it, I love this industry, proud to be in it. But conveying that, I think Dr. [inaudible 00:34:46] at Clemson University really tip of the spear, there's a roofing class in the construction college at Clemson. Major brand, I got a chance to go out there and guest lecture with a bunch of those kids that I was lecturing to, they didn't have this chip on their shoulder. They wouldn't have enrolled for the class in roofing if they had some, you know what I mean? So I think we start with that. And I just got an email from Cal. Poly, they want to do the same thing.

Heidi J Ellsworth: Awesome.

Piers Dormeyer: I think that really, we need to tell that story. You can take the course, the Clemson course is available through the alliance and you can get a certificate. So it's becoming legitimate. It's not just some trade activity. It's a legitimate profession. There's science behind it and it's really lucrative, really lucrative.

Heidi J Ellsworth: The student competition this morning was great. I was able to sit in on that and you were there, right, Michelle?

Michelle Lane: I was.

Heidi J Ellsworth: It was amazing.

Michelle Lane: That was amazing. I was really impressed by what those students brought. Problem-solving challenges, how they responded to some tough questions from the judges. So just super cool. And they had a lot of energy around the projects and it was amazing to see.

Heidi J Ellsworth: I thought it was. I unfortunately had a class that I was moderating, so I had to leave halfway through. So I'm really excited for the awards tonight to see who wins. It's always a big deal. And they're going to be here on the soundstage actually at 3:30. We're going to interview all the schools.

Kent Gardner: That's great.

Piers Dormeyer: Super cool.

Heidi J Ellsworth: That's kind of cool. That's kind of cool. Speaking of schools, first of all, Ken, what are you seeing from the CTE vocational schools and also your recruiting?

Kent Gardner: Yeah, sure. Well, first of all, just from a recruiting standpoint, I think everybody said it. I'll say it in a, just got to make it a great place to work. You mentioned career pathing and those kinds of things. So we had a tough time with the driver team, the helper team and all that, because we load the roofs and there's a helper that catches that hundred pound bundle and sets it around. And so if they have a vision for the future, a destination, it makes that two or three years when you're doing that job, a little bit different because you know you're going to grow and grow throughout a company. So that's pretty neat. From a contractor standpoint, there's been, through technology, some different marketplaces. There's a couple other solutions out there where you have a labor crew where they can access that labor crew, different geographies throughout the country. So we've seen that start to pick up a little bit because labor's been so challenging. I don't really think it's a challenge of people wanting to do the work, but are there enough people in the area that you need them to do that work in. And so we're seeing some of that marketplace technology help out quite a bit [inaudible 00:37:25].

Heidi J Ellsworth: It was interesting this morning during the class that I was moderating was on language barriers. And it was interesting, both the contractors who were presenting on that both used 100% crews, sub crews and they were talking about how they involve them in the culture of their company, but yet they can't tell them what to do. So it's this really fine line of how do you engage the inclusive but also stay within the regulation.

Piers Dormeyer: All the challenges with hiring and finding people that in some cases, that's the only solution in order to meet the needs of your customers and grow your business, scale your business. I mean, we have some underlying things that we need to shift before any of that shifted to an employee-based, like not subcontract model. But I think right now we just have to work on the challenges and how do you make that work and still maintain the quality, the training, the safety aspects of the industry. We got to really think about that.

Heidi J Ellsworth: Kind of goes back to what you said, training, using the technology to communicate and put those [inaudible 00:38:30]. Kent you are going to be at, we're going to be at Skills USA.

Kent Gardner: That's right.

Heidi J Ellsworth: In July and that's a big initiative of the NRCA Vocational Schools, CTE training. And let's talk just a little bit about advocacy, what we've been doing with Roofing Day and really trying to get more into the vocational schools. And Michelle, you're nodding. Talk a little bit about what you're seeing.

Michelle Lane: Yeah, I mean part of what I was exposed to in some of the NRCA committee meetings is just how effective it can be if you get involved in the community level. And I've seen several contractors that are just reaching out to their local communities, talking to their career in trade schools and just making things happen. And I think the more we can do that as an industry and just getting a little bit grassroots, it's going to be super effective for all of us.

Heidi J Ellsworth: Ken?

Kent Gardner: Yeah. So I think back going to school, high school in the early eighties, I think everybody had a vo-tech school, they had that. So you could turn a wrench, you could swing a hammer, you could do all those kinds of things. And we went away from that for quite some time. So with the skills USA, I mean, we're all in and all vested to get that done because it really is a great job. And if you think about it from an hourly perspective or the persons that are going to do that work, they can basically command any rate they want to command because nobody else is going to do the role. So if we can continue to build on the attractiveness of this industry, talk about developing those skills at the ground level in the high schools and those kinds of things, I really feel like we can make our own breaks from a labor perspective. We've also done some reach outs to some Fort Worth ISD and some things like that to talk about what they're trying to do with their vo-tech type offering, the CTE type offering. So I think there's a momentum shift to go back to what that vo-tech was back in the early eighties. I see it.

Heidi J Ellsworth: We're seeing it all over Roofing Day, I mean, I know most of us, I think a lot of us go and are working on Roofing Day, but that is a big push between immigration, between CTE, the Perkins Act, all of that that is going on. And so the importance of the industry having a voice and stepping up. Piers, what do you think, I'm going to come over to you.

Piers Dormeyer: Well, I just think the skills USA partnership is just, I mean, such a great idea and such a no-brainer. And I think it kind of comes back to this giving someone a path, a big fan of the vo-techs. I went to one, really great, and it's an awesome experience, but I think we don't have that path to get training in the trades, give someone that opportunity. And there is a little bit of legitimacy that goes along with that and really creates some confidence for somebody to go into this roofing industry as a career. Because I still think we have this problem where people go into four-year degrees not getting any value out of it, coming out with hundreds of thousands of dollars in student loans and never doing anything. And if you're not going to be a lawyer or a doctor or an engineer, the chances are maybe you should be looking at some of these other pathways. So I think it's really, really great that NRCA is really pursuing that. We're excited to be part of it.

Heidi J Ellsworth: I know.

Kent Gardner: There's another thing with the diversity piece too. So we started with [inaudible 00:41:46] diversity, not just for women, but for the Latino contractor, those kinds of things. They have kids. Those kids are going to college. Those kids don't want to be part of the sub crew that maybe their father was before, and they want to run a business. They want to do certain things. And so I think if we as an industry embrace the diversity that the industry should represent, I think that too will help us offset the labor shortage for sure.

Heidi J Ellsworth: Yeah. Yeah. I think it's so important. Sara, training, it all comes back to training.

Sara Jonas: It does. It does for sure, which is out there in a lot of different ways. I think the NRCA has done a great job of framing out and drawing attention to the fact that we need these paths. It's exactly what you said, we need very clear paths. If you want to get into this industry this is exactly how you do it. I agree with you, it very much has to happen locally and I think we're seeing that, and I think the contractors are the ones that are driving a lot of that. I think that's really great.

I can't help but think of my family. My dad was an electrician and he was very, very involved in the apprenticeship program. And then when my brother graduated high school, it was just, he actually went and did something else and then he finally said, dad, I just want to do what you do. And it was a very clear path.

Heidi J Ellsworth: I love that.

Sara Jonas: And there was a process and a way to get into it. It was very known. And I think we have to get to that point where it's just very, very obvious and it's very known and it's available everywhere. And that's why I think the grassroots case is really, really important.

Heidi J Ellsworth: And really continuing to communicate about roofing, that that is an option. And that it's okay for parents. I mean, I think sometimes you got to get to the parents as much as you have to get to the students.

Michelle Lane: I agree with you. But I think that culture shift is happening because they're seeing a lot of what you're describing. They go to college for four years, they come out with tons and tons of debt, and it really wasn't what they wanted to do in the first place. So I think it's about kind of embracing what you really want to do and what that right career path is. And I do see that changing even with some families out there kind of thinking differently.

Heidi J Ellsworth: So true. So I would like to shift this a little bit to everyone's favorite topic that we have no idea what's going to happen, and that's the economy. So with the economy, looking at 2024, I can say I have heard certain areas of the country, little soft, other parts of the country going crazy. And then I also hear certain groups of contractors going crazy, other groups of contractors, little soft. So I would really love to have all of your perspective on what you're kind of hearing from your contractors and what you're seeing around the country and just kind economy wise with hopefully interest rates going down. Kind of a little bit of a crystal ball if you want, Sara.

Sara Jonas: Yeah, crystal ball. I mean, I'm hearing the exact same thing. I'm hearing some are doing fantastic and then some a little soft. I just came out of a room with a group of contractors and every single one of them is very, very optimistic and positive about this year. And I think overwhelmingly, there are pockets, which I think you're always going to have pockets, but overwhelmingly I'm hearing more optimism than I am concern at this point. But again, it's a crystal ball, so I'm not going to put that out there as gospel or anything.

Heidi J Ellsworth: It is, who knows, even economists, you go listen to all these economists and they don't know for the most part either.

Sara Jonas: They don't, you're right.

Heidi J Ellsworth: Piers, how's your crystal ball look?

Piers Dormeyer: These economists, why don't you take a shot at it.

Heidi J Ellsworth: Come on Piers.

Piers Dormeyer: Yeah, okay. If I had to give you my opinion, I would be very neutral. And I think on one hand there are some signs out there that are pretty positive. I think depending on when, who knows, but it looks like we're going to have some rate reductions. I don't know that we get back to the free money that we were at a few years ago, but I do think that we're going to get a little bit lower, we're going to balance out, and then people are just going to adjust to this kind of new normal. And whether that's, whatever that is, I don't know what it is, but I think there's going to be some improvement. I also think there's some tax improvement in the horizon, which is also probably a good thing. But we're also hearing quite a bit about credit card default rates are through the roof. People are scared. Prices are still really high. So you're seeing inflation start to taper off. The prices haven't come down from where they went. It's not like you're seeing things just all of a sudden get easier for people. So I think, I would say that I'm generally an optimistic person, but I do think we have to be really careful.

Heidi J Ellsworth: Watching your numbers, knowing where we're at. Michelle?

Michelle Lane: Yeah, so interest rates are interesting. I think we're seeing a leveling off right now, which is good news for the industry. I don't think we're going to see anything from what the Fed has indicated that it's going to go down anytime soon. So I think I'm optimistic that we'll get back to more of a normal rate of growth. I do see a little bit of growth this year specifically in the commercial business, but in the commercial business, you always have new construction, but you always have a very, very robust re-roof business. And I do believe that there's still some pent-up demand from 2020, 2021 that's out there. And so I think that's going to help drive a pretty good year for contractors.

Heidi J Ellsworth: And I want to just ask you kind of what you're hearing on the side of commercial properties, as in office space, leases, there's been a lot of talk about that kind of things hitting the wall at the end of 24, 2025.

Michelle Lane: Yeah, I mean, things were getting pushed. That was no secret, right. Jobs were like, hey, we think it's going to go, and it just keeps getting pushed, right. It never really starts. So I do see that going, this whole idea of building a building and then a tenant will magically come, that isn't happening anymore. And so just getting really specific and making sure you have that tenant in place. And so it's just a little less speculative than it was before. But new construction is still there and it just depends on the industry. Office space is down. There's plenty of office space to go around in a lot of places, but there are areas that are still thriving.

Heidi J Ellsworth: Yeah, that's interesting. What are you seeing with your contractors?

Kent Gardner: Well, my crystal ball is more like a snow globe right now. I'm a little more bullish than I embarrass on it. I think the age of the housing stock is pretty old and continues to get old. The life expectancy of a roof is anywhere from 18 to 20 years. And we were under built, I mean, I think you could argue anywhere from three to 5 million homes are needed, especially when you've got the household formation going on and folks want to get out, but they're not going to go to a 7% or an 8% interest rate. But my first interest rate was 8%. And so when you get down, and I think if you get to a six, sub six, maybe, then things will trip and their parents or whoever's next to buy a home will say, hey, that's really not that bad. The standard new norm at 6% or so is pretty good with the perspective of what we had when we had our first home. So I'm a little bit optimistic about it. I don't know what the Fed's going to do. You would anticipate at some point when the Fed does drop their rates, that new construction will start churning even more, and that whole cycle will start to complete. So I think the benefit in my estimation is probably going to be 2025 for that piece, but I'm a little more bullish than I embarrass on it.

Heidi J Ellsworth: Yeah, I like bullish personally. I like that.

Kent Gardner: I was in a meeting with a company today and what they said [inaudible 00:49:29] was going to be at in 2024 was about 2% higher than what it finished in 2023. And I don't know what they were drinking, I don't know if they had too much caffeine, but I'm pretty excited about their numbers. Let's see that.

Heidi J Ellsworth: That's what we want to see. That's what we want to see. Well, man, I love this. This is just so great. So I'd like to kind of final, or as our final round of question here is kind of talk about your advice from each of your areas to the contracting community. What are some things that they should be aware of, thinking about, maybe doing in 2024 to navigate all of these things that we've talked about and what are some of your advice to help them see success and continued success from your perspective? So Sara?

Sara Jonas: Training.

Heidi J Ellsworth: Training.

Sara Jonas: Tap into the resources that you have with your manufacturers, because everybody has a training program, and we're all here to help. So let us help you training. Keep everybody trained, make it a part of your culture.

Heidi J Ellsworth: Safety and product.

Sara Jonas: Absolutely. Absolutely.

Heidi J Ellsworth: Safety and product are so, so important. Piers?

Piers Dormeyer: Yeah. I think that there's so much going on and so much change that I think it can feel quite daunting. Where do I start, what do I do first, should I be doing this, should I be doing that? I can't tell you how many conversations I've had with people of like, should I get into solar or should I do this or that? And I think the answer that I always have is don't try and do it all on your own. So there's so many resources, Penn Scott resources, your supply chain can be your consultants that you can talk to these people, you can reach out, you can kind of get some perspectives, help break these things down. NRCA has a ton of resources that I think people just need to really tap into and reach out to those people to help you sort through and prioritize what it is you need to be thinking about.

Heidi J Ellsworth: Local associations.

Piers Dormeyer: Totally. Totally.

Heidi J Ellsworth: And I think about all of the benefits that each one of you offer to your contractors, training classes, sales, product, you name it, you're right, you're not alone. There really is an amazing community.

Piers Dormeyer: Your supply chain partners are just a wealth of resources.

Heidi J Ellsworth: Yeah. [inaudible 00:51:59]. Michelle.

Michelle Lane: Yeah. I'm going to build off of the change comment because I think this industry historically hasn't been really forward-thinking and ready for change. And I think you're seeing everywhere that change is happening. I think my advice would be embrace the change. How can you leverage some of the new technology, how do you leverage new things, but use your resources that we talk about. Get educated. See what works for your business, because one thing that your neighbor might be doing might not be good for your business, and I think just educate yourself and know what works for you. But be open to that in the future.

Heidi J Ellsworth: Education. Kent?

Kent Gardner: I'd say be proud of our industry. I mean, enjoy the fact that we are a more diverse industry, and that if you're operations, HR, finance, I mean, you name it, you can be a part of this industry to help it excel. So be proud of it. Number two is embrace the technology. We are in a certain spot, but the destination is still so far outreaching. Don't try to be a great company. Don't try to be a great business where we are, try to embrace where we're going to be as well. And if you indoctrinate the two, then you'll be ahead of the trends, you'll be ahead [inaudible 00:53:09].

Heidi J Ellsworth: Because change is coming that fast.

Kent Gardner: It's quick. So rapid.

Heidi J Ellsworth: And it's going to happen one way or the other. You're either kind of in or you're being left behind.

Kent Gardner: That's right.

Heidi J Ellsworth: Really.

Kent Gardner: But the big one is the pride in the industry because I think through, like I mentioned, 15 years ago people are like, I'd never get my kid into roofing. That's just not the case. The more people say that, the more people don't hear what this industry really is. It's a beautiful, wonderful industry, and so I'm proud of it. If my children wanted to be a part of this, I'd bring them in wholeheartedly. Welcome arms. Get them over to Elevate, get them with Piers, get them with everybody. Let's do it.

Heidi J Ellsworth: My kids are a part of it.

Kent Gardner: That's right.

Heidi J Ellsworth: I never thought that would happen, so that is great. Well, I just want to say thank you to you all. Great wisdom and yes, the contractors and manufacturers, distributors, technology, it's pretty close you guys. It was very good. A lot of the same topics, really how important it is, but I always go back to roofing respect, which is one of our themes, and I think that's exactly, I love leaving it on that note of having respect for our industry and for each other and just continuing to grow it because together we continue to get through these harder times and everyone needs a roof, so thank goodness for that.

I want to encourage everybody who's watching this to check out the directories on Roofer's Coffee Shop for SRS, for Elevate, for Eagle View and for APOC and ICP. So much good information, resources, training. You can find them, you can find these folks. I think coming together and using all of those resources that we have is just so important and kind of hearing what's coming this year, so I really appreciate you all. Thank you so much.

Kent Gardner: Thanks, Heidi. We appreciate it.

Heidi J Ellsworth: Thank you. Thank you, and thank you all for watching. Hey, we are going to have some more interviews coming your way after this coffee conversations, but like I said, check out the directories, see what's out there and be sure to share this. It'll be live on demand, I should say we're live right now. It'll be on demand on our website, on our YouTube channel and throughout our podcast channels for sure. We are on the Coffee Conversations live soundstage sponsored by SRS, and we are so proud to bring you this live Coffee Conversation. We will be back soon with a lot more interview...



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