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Missouri Policymakers Sending Gas Tax Increase Prop to Nov. Ballot

in Homepage Primary/Opinion

By Kerry Smith, Editor – St. Louis Construction News & Review Magazine

Despite a session wrought with issues related to the state’s former chief executive, Missouri legislators concluded the regular session with a measure asking for a 2.5-cent increase in Missouri’s portion of the motor fuels tax.

Missouri Chamber of Commerce and Industry President Dan Mehan said transportation infrastructure funding policy jelled in the final days of the 2018 state legislative session.

“With two weeks left, nobody thought it was going to happen. With two days left, nobody thought it was going to happen,” said Mehan. “We ended up sending to the voters for this November a proposition that will ask for a 2.5-cent gas tax increase for each year over the next four years. Missouri currently pays 17 cents, so we’ll add 2.5 cents to that every year beginning in 2019 if voters approve it on November 6th. We’re very pleased with the outcome.”

The state has not seen a motor fuels tax increase since the 1990s, Mehan said, and it is sorely needed to maintain Missouri’s transportation infrastructure. Since that timeframe, 39 states have elected to raise their own state motor fuels user fees. If November’s proposition passes muster with Missouri voters, the state is projected to generate $240 million annually for the next four years to help fund roads, bridges and more.

“We’ve got the second- and third-largest rail terminals in the U.S. and the seventh-longest highway system in the U.S.,” Mehan said, “yet we’re 47th in the U.S. when it comes to transportation funding. That doesn’t make sense. For Missouri businesses, we view infrastructure as an asset that we need to invest in and continually make better.”

Mehan and others – including the U.S. Chamber of Commerce and the Associated General Contractors of America – agree that the motor fuels funding mechanism has to change in order for federal dollars, which comprise the bulk of the fuel tax, to keep pace with the need for new and improved roads, bridges, rail and mass transit nationwide.

In January, the U.S. Chamber proposed a 25-cent increase to the federal portion of the motor fuels tax. President Donald Trump endorsed the proposal a month later.

According to the U.S. Chamber, inflation has eroded nearly 40 percent of the value of the user fee since it was last raised in 1993. Continual improvement in fuel efficiency equates to more drivers driving vehicles more on less fuel. The federal Highway Trust Fund, the fund fed by 18.4 cents per gallon of gas and 24.4 cents per gallon of diesel fuel, is in the red and projected to become insolvent within the next two years. Fixing America’s Surface Transportation Act (known as the FAST Act), a four-year transportation infrastructure-funding program, will expire in 2020; a portion of that act has been propping up the long-ailing Highway Trust Fund.

Sean O’Neill, vice president of congressional relations for the Associated General Contractors of America, said the AGC and its fellow stakeholders stand in support of the U.S. Chamber’s proposed 25-cent increase.

“We see an increase in the motor fuels tax to be the answer, at least in the short term, to address the long-term solvency of the Highway Trust Fund,” O’Neill said. “We understand that it has some political hurdles to get over, but we see a gas tax to be the most efficient way to do what we need to do to invest in our aging transportation infrastructure. Since 2013, at least 26 states have increased taxes or fees dedicated to funding infrastructure. States – Missouri among them – are doing what they can do, but it’s up to the federal government to make sure the funding mechanisms are relevant as fuel efficiency continues to increase.”

In Illinois, a proposal is afoot to more than double that state’s portion of the motor fuels tax. The Illinois Economic Policy Institute is recommending a hefty increase from the current 34 cents to 85 cents. The measure has met with fierce resistance from organizations including the national Tax Foundation.

Construction Industry Awaits Passage of Prevailing Wage Compromise

in Associations/Columns/News/Opinion

By Kerry Smith, Editor – St. Louis Construction News & Review Magazine

The Missouri Senate and House have passed legislation to modify the state’s prevailing wage law. Unless vetoed by a sitting Missouri governor, HB 1729 will become law and take effect in August, changing and simplifying the way wages are calculated for public works projects – and putting increased onus on contractors and subs to report their hours to the state.

School districts, cities and other governmental entities currently pay more than the state’s minimum wage for maintenance and construction work. As it now stands, the specific amount is determined by the type of work being done as well as the geographical location of the construction project, and there is no minimum threshold for the amount/size of project to which prevailing wage applies.

The bill also signifies a compromise in how prevailing wage will be calculated in rural areas of Missouri. HB 1729 also raises the construction cost threshold that construction projects must reach in order for contractors to be paid prevailing wage.

A consolidation of job classifications in the construction industry is yet another component of the proposed law, according to Associated General Contractors of Missouri (AGCMO) President Len Toenjes.

“This was a real team effort that included members from across our industry,” Toenjes said. “We had been preparing this compromise with the hope that when those (repeal) bills got to the floor, our legislation would be seen as a substitute for the repeal of prevailing wage law in Missouri. We have every reason to expect that the governor will sign it. The feedback that I’m hearing is that we stopped repeal of prevailing wage, which was our overall goal. This is a situation, as with any piece of legislation, where everyone is a little bit unhappy. But we were able to reach a point where we stopped the repeal and we did not negotiate against ourselves. We were realistic and honest in reaching this compromise.”

A key provision of HB 1729 is that it establishes $75,000 as the threshold or minimum project amount that is subject to prevailing wage rates. According to Toenjes, earlier bills advocated for a threshold as high as $500,000. “Under the current prevailing wage law, prevailing wage rates apply to projects from the first dollar on up,” he said. “There was a lot of back and forth debate on what this number should be. Particularly for construction projects occurring in rural areas – such as painting a classroom ceiling or installing a suspended ceiling in a firehouse – that project total is going to total less than $75,000. This threshold is not making rural areas happy, but we knew that ultimately we weren’t going to be able to keep it at zero.”

Increased responsibility for contractors and subcontractors to report their hours to the appropriate departments with the Missouri Dept. of Labor is a provision of the legislation. “Prevailing wage calculations under the new bill will be done solely on the basis of the hours reported to the state by these parties,” Toenjes said. “It’s critical that contractors report their work hours to the state because by law these hours cannot be reported by the unions or associations. The onus is definitely on the contractors and subs.”

In a related component of HB 1729, the number of occupational titles has been reduced to simplify calculating and tallying prevailing wage rates by position within employment sectors. “One of the things the House and Senate wanted to accomplish was to co-simplify the reporting system,” Toenjes said. “We went from 43 occupational titles down to 20.”

For example, where there had been three or four different related occupational classifications for jobs specific to millwrights and carpenters, and multiple categories for laborers, HB 1729 combines several related job classifications for simplicity and fairness.

“Prevailing wage calculations for each county and each occupational classification are going to be based on an average of all the hours that are reported for that occupational classification within the county,” Toenjes said. “If there are fewer than 1,000 hours reported (for a classification and/or a county, there will be a minimum construction wage that represents the average of all the wages reported in that county. The rationale of those who designed this provision is that it establishes construction wages that are consistent with a level of activity occurring in that county.” Prior to the new legislation, Toenjes said it had been a negotiated rate and that wages paid weren’t always reflective of the construction activity that was occurring.

The AGCMO’s next objective is to ensure that the new prevailing wage law, assuming it passes, succeeds in being implemented. “We want to see that it hopefully results in the promulgation of a system that is as fair as possible for everyone concerned, particularly for those who work in construction in rural areas of Missouri,” said Toenjes.

 

Missouri Legislators Reduce Cap on Historic Tax Credits for Developers

in Columns/News/Opinion

By KERRY SMITH, Editor, St. Louis Construction News & Review Magazine 

The Missouri General Assembly ended May 18 with passage of legislation that reduces the state’s historic tax credit program’s annual cap, requires developers to go through more hoops and arguably opens the process up to some arbitrary judgment as to which projects receive these incentives.

Spencer Fane Partner and Tax Credit Group Chairman Shawn Whitney said last Friday’s vote to cut the cap from $140 million to $90 million was somewhat predictable, despite ardent lobbying from the law firm, real estate investors, developers and Historic Revitalization, the nonprofit organization dedicated to revitalizing urban areas including downtown St. Louis. Whitney said the details of SB 590 remain to be discovered. The law takes effect July 1.

State historic tax credits are a valuable economic stimulus tool, according to Whitney, because they require four dollars in private equity before any one dollar’s worth of credit is awarded. HTCs spur economic activity, jobs and overall investment in restoring and redeveloping long-neglected urban areas, he said.

“We’d spent a lot of time hoping to get enough no votes so that Senate Bill 590 wouldn’t pass and that the historic tax credit program in Missouri wouldn’t be modified,” said Whitney, “but toward the close of regular session, it became a mitigation issue. The devil’s in the details, for sure. We’re working with our state legislators to really define what the law means,” he added.

Prior to last week’s passage of SB 590, Missouri’s total annual allotment of historic tax credit dollars was $140 million. While for many years that was ample, Whitney said, in 2017 Missouri exceeded the cap.

“SB 590 reduces the annual cap to $90 million,” he said. “The law does allocate an additional $30 million for high-poverty urban areas, those which qualify under the U.S. Census Bureau’s definition of qualified census tracts wherein at least 20 percent of residents are at the poverty level. That’s a really good provision. But in terms of the annual cap, we feel like we’re going to hit that $120 million number annually.”

More troublesome than the increased annual cap on Missouri’s historic tax credit incentives is the increased degree of subjective input SB 590 allows, according to Whitney. The Missouri Department of Economic Development now has heightened authority over who receives the incentive, as do elected officials whose districts and towns are applying for the state-funded credits.

“Getting through the cost certification process at the end of the development project is already difficult,” he said. “We’ve had projects in Missouri where the respective economic development departments approved our structure at the start of the venture but later changed their minds during the approval process. The entire process is pretty arbitrary, when what a historic preservation and development project really needs is reliability and consistency.”

Each project applying for Missouri historic tax credits is required to go through a net fiscal benefit review, according to Spencer Fane – one that is not yet defined within the new law. “We think that’s troublesome,” said Whitney. “There is a lot of ambiguity in the term ‘quality’ as it pertains to project development,” he said. “Quality truly is in the eye of the beholder. Another section of the new law that concerns us greatly is that input by local officials as to the importance of their proposed project – in whose district the proposed project is located – will now be afforded greater influence. Prior to the passage of SB 590, historic tax credits were by right, meaning that if your project was on the National Register of Historic Places and you rehabbed the building in accordance with the Secretary of the (U.S. Department of the) Interior’s standards for redevelopment, the historic tax credits were guaranteed. The type of language contained in this new law lends itself to what we dealt with in the affordable housing issues years ago,” he added.

Another new requirement in SB 590 is that developers must submit evidence of the capacity of the development to finance costs for rehabilitating the property. “Especially when you’re dealing with a reduced (HTC) cap, it’s difficult for the (development) industry as a whole,” Whitney said. “Due to the increased cost and risk level of historic redevelopment projects, often more projects are attempted than succeed. A couple of current (St. Louis-area) projects that received HTCs have not been able to move forward, yet those historic tax credits aren’t able to be allocated to other rehab efforts in a timely manner. It can truly be a chicken-and-egg issue.”

SB 590 also requires qualifying development projects to commence within nine months of being awarded historic tax credits, rather than over a two-year period as had been in existence prior. “What you’re likely going to see are more shovel-ready projects,” Whitney said. “Developers are going to have to spend a little more money preparing their project to obtain commitments from lenders and tax credit investors, but we think we can work through it. We’ll see as the marketplace plays out. SB 590 doesn’t contain any provisions that should impact the pricing.”

In contrast, he added, the federal tax credit provision – which now allocates a 20 percent credit over five years – may impact pricing, with investors often lowering their investments in qualifying rehab projects by 10 cents to 12 cents on the dollar.

“Having represented developers for nearly 20 years, I can attest to the fact that they’re an adaptable bunch,” said Whitney. “So long as Missouri historic tax credit issuance doesn’t become a political and arbitrary process, developers in St. Louis and across Missouri should be able to adapt.”

 

 

Planning Firms to Redevelop Washington Avenue Garment District into ‘Modern Epicenter of the Creative Economy’

in Columns/News/Opinion

By KERRY SMITH, Editor, St. Louis Construction News & Review Magazine

St. Louis’ Historic Garment District got a boost May 25 with city and nonprofit leaders announcing the next phase in this long-term, comprehensive redevelopment effort.

The east-west stretch along Washington Avenue from 18th Street to Tucker Boulevard was once among the largest U.S. clothing manufacturing hubs, second only to New York City. From the late 1800s to the early 1920s, revival-style buildings – designed by greats including Theodore Link and Albert Groves – bustled with activity in the manufacturing of domestic garments and related accessories. Post-World War II, a decline in garment production in St. Louis and elsewhere manifested in a series of vacant, multi-story, brick and stone buildings. Redevelopment so far in the district has included dining and entertainment venues as well as residential living options.

But thanks to 20 years of effort driven by what today is known as Downtown STL Inc., more than $6 million in public and private investment has been pumped into the Garment District and nearly all the buildings are occupied. The latest historic redevelopments include Paric Corp.’s restoration of the former CPI headquarters at 1706 Washington into Monogram – an urban living development – and Paric’s work-in-progress to repurpose the historic International Shoe Building at 1501 Washington into a shoe-themed boutique hotel known as Last Hotel. Together the two projects approach $100 million in development.

The State of Missouri’s adoption in 1998 of a tax credit for the redevelopment of historic buildings spurred the rehabilitation of large-scale renovation projects along the Washington Avenue corridor.

At Tuesday’s press conference, leaders from St. Louis City, Downtown STL and the Saint Louis Fashion Fund announced the city’s selection of New York-based Martinez+Johnson Architecture PC and development consultant BJH Advisors LLC as its choice to partner with St. Louis-based TAO + LEE Associates Inc. in leading efforts to continue rejuvenating the district in a plan that engages residents and businesses in the process. Downtown St. Louis Community Improvement District is funding $100,000 toward the planning and design work.

“Community engagement begins today,” said Missy Kelley, president of Downtown STL Inc. “Since 1998, more than 20 buildings here have been rehabbed, resulting in more than 700 new apartments and condominiums. And in terms of infrastructure, significant streetscape improvements along Washington Avenue have also been made.”

Once Monogram and Last Hotel are completed, Kelley added, all major buildings along Washington Avenue in the Garment District would tout redeveloped/occupied upper floors.

Linda Martínez, St. Louis deputy mayor for development, said the collaborative design venture is being propelled by a doable funding mechanism paired with a spirit of public involvement. “This is really about jobs and about the restoration of what was once a very vibrant area of downtown,” Martínez said. “This is not merely a plan. This is going to be a reality in the near future.”

Steven Stainbrook, associate principal and director of planning at Martinez+Johnson, said project partners are working to leverage the existing successes of the Garment District’s status within the Washington Avenue Historic District on the National Register of Historic Places to attract additional investment. “We want the Garment District to be a place where creative people want to be,” said Stainbrook. “We’re not here to start over. We’re here to continue the work that has already been done and to infuse fresh energy that coalesces around a vision. If we get this right in parallel with smart policy initiatives that build on the recent successes of the fashion incubator (Saint Louis Fashion Fund) and support development of a broader ecosystem of creative industries, we will have laid the groundwork for transforming this neighborhood.”

Martinez+Johnson was also part of the team that recently led the revitalization of New York’s garment district.

Peter Tao, principal of TAO + LEE commended the study that will gather public input for what the rehabilitated district will look like. “With so much construction activity and development in and around downtown, and with the near completion of the network of new and improved public parks, it is exciting to envision what the role of this district can be to enhance the area,” said Tao. “This placemaking planning study is very timely.”

Spring and Summer Selling: Make the Effort to Attend Prospect-Laden Events

in Columns/Sales
Tom Woodcock

By TOM WOODCOCK

Money is being spent in all directions to try and to gain an advantage in sales. Websites, digital campaigns, graphics, giveaways and promotional materials grab the lion’s share of the attention. Though these are, (add comma) at times, (add comma)  necessary, hoping these pieces will suffice, (remove comma) as your sales effort is overly optimistic. Still the most effective methodology is to get in front of people. But how?

There is a definite divide developing between those who hide behind marketing and promotion with those who use it to increase their opportunity to get around people. I really believe in some of the old, traditional, people-centric gathering functions. The difference is that I’ve always had a plan of attack for these events. What events?

Two of the most common, as well as the most effective, are associations and trade shows. I know. They’ve both been around forever. There is a reason for that. They’re effective. When worked properly, they serve as a great point of access to customers and potential customers. When I do seminars, I usually ask this question: “How many of you have to deal with a person when getting a project or making a sale?” Guess what? I usually get a 100 percent positive response. We all have to deal with people to get our opportunities.

The question is this: How can we maximize the effectiveness of attending these events? First of all, when it comes to associations, it’s critical that you select a couple active associations that are successful in bringing people together or are customer-rich environments. The more people in attendance, the greater the chance you’ll either secure a good piece of sales information or a direct opportunity with a potential customer.

Secondly, you have to dive in. Arrive early and review the nametags to see who’s coming. Stay late and milk it for all it’s worth.

Lastly, get involved. Committees, boards and volunteering for events put you in the limelight. It gives members a chance to seek you out for your ability to connect them within the association. I practice this firsthand. It really doesn’t matter if you feel awkward. Things will get comfortable as you move along. Go with the purpose of meeting people, as opposed to sitting back and criticizing those who are. There is an old saying in the association world: “You get out of it what you put in,” and it holds true.

Another misunderstood event are trade shows. They have been around since the dawn of time, it seems. Trade shows sometimes draw large crowds, sometimes not. They always involve people. Yes, it’s good to see new products and services at these events. You may even grab a great seminar. (I do a ton of them at trade shows!) The greatest value, in my opinion, comes from the people who are in attendance.

If it’s a customer-rich environment, you need to attend with the intent of making some connections. Introduce yourself during booth visits or at breaks in the seminar programs. Go with the purpose of walking away with at least three solid connections. Plan your attack, have your business cards accessible and bring a tool to jot down notes. Planning ahead will take your experience to a new level. I’m often amazed how one person can attend or work a trade show and say it’s a flop while another individual attended the exact same show and found it to be a tremendous success. It seems that perspective and attitude play a huge role with regards to results.

Lastly, there are business breakfast meetings, networking happy hours and luncheons popping up everywhere. They are worth the time if you qualify them first. Who is putting it on? From industry is the host? Are the times and locations generally convenient? If so, they’ll probably have higher attendance. Taking the time to include these opportunities in your event repertoire can produce significant results. With the weather improving, golf tournaments and barbecues pop up. Worked correctly, they can be big lead sources.

But all of this is useless if you don’t follow up on the information you secure from these networking opportunities. This is the biggest issue I find when training sales reps; they’re great at the event but then they never call their newfound contacts or take the next step. A lead is only effective when it is worked. Most leads go dead in 48 hours as people move on to new ventures.

Set aside a specific time to sit and make those follow-up calls. This takes discipline and few really take the time to pick up the phone. Most good sales people love the fact that so few individuals actually do follow up because it allows them to stand out that much more. It’s always easy to discount going to people-connecting events, believing they’re not worth the time or inconvenience. The highest percentage of people uses these excuses to bypass being involved. Sadly, this is a critical sales mistake. Easy to make, but just as easy to rectify.

I know that not every meeting or show is going to be a premium event, but you need to stay out there to catch the ones that are. Join the associations. Get to the meetings. Attend the trade shows and meet people.

This isn’t the most complicated of concepts. The biggest issue is making the time. If it’s a priority, you’ll make the time. The percentage of sales agents who do is woefully low. Getting around people is still a big lead producer. Finding events where people are congregating is critical. Surprisingly, if you put a real sales effort towards them, you’ll meet a ton of people. I highly recommend having a good schedule of people-laden events on your calendar. There you’ll meet someone who will be of value to your business. The strong ones tend to be strategically involved in your business transactions.

Tom Woodcock, president, seal the deal, is a speaker and trainer for the construction industry nationwide. He can be reached at (314) 775-9217 or admin@tomwoodcocksealthedeal.com.

Help Customers Learn How to Buy From You: Let Them Play the Hero

in Columns/Marketing/Sales
Stephanie Woodcock

By STEPHANIE WOODCOCK

When a company decides to amp up its marketing, the natural tendency is to tell everyone how great it is. We assume that if we make the marketing good enough and explain better than our competitors how great we are, our prospects will come running to buy our services and confirm our greatness.

I meet many talented professionals who work for trusted, experienced and longstanding companies. Immediately when I ask them about what they want to tell their customers, they come up with a list of comparisons. “Well, we do this and they don’t do that. We’re the best at this or that, we do this faster, they don’t have this software,” etc. Some just come out and say they are the lowest priced and that’s their selling point. I’ve seen quite a few companies even insist on putting these bullet points on the back of their business cards, lest we forget. (Please don’t do that.)

How do we get more business? The default is to tell the customer base what it is missing. This is especially the case if said company has been doing this for a long time. Company personnel state, “Well we’ve been in business for X number of years. We’re a family-owned business. We don’t gouge our customers. We strive for customer satisfaction. We have the best people.” While all this may be true, it is not where you start with your marketing plan; this becomes white noise in the world of marketing.

The harsh reality is that customers don’t really care about your business beyond how it can help them. How do your business offerings solve a problem and make life better for your clients? These are the questions we should be asking in strategic marketing planning sessions. How can we make the customer the hero, someone who is admired for great acts or fine qualities? What qualities about our customers do we want to highlight? What do we do that could make our customers’ acts great?

It’s a shift in messaging. But, when companies do it right, it’s powerful messaging that cuts through the rest of the “look at me” marketing. Our brand will grow when we define a desire for our customers. People want to hear about themselves, not about inanimate objects such as services, software or years in business. They want a story, and they want to be at the center of it. Great marketing tells a story and places the customer squarely in the middle of that story.

Have you ever been told, “Wow, that person is a great conversationalist”? Have you ever left a meet-and-greet thinking, “Wow, I really liked that person. I enjoyed that conversation.” That’s usually because that person asked a lot of questions about YOU.  You probably did most of the talking (no offense). You felt needed and heard. You got to talk about yourself, and you were listened to. Shocking, right?

The same interpersonal skills can be applied to a company’s marketing strategy.  We want our customers to feel needed and heard. We want them to want to come back –not because they are convinced that we are the best due to our fantastic marketing efforts (“We are the best! We are the best!”), but because of how we framed our branding message to help them understand the needs they have and the solutions we can provide.

One of my client’s main marketing objectives was to increase online sales and get customers set up with unique online profiles. This required a couple of steps and a learning process. Rather than telling customers how great the system was (“You must join, even if you aren’t a techie! You have to figure it out and join. Look what you are missing!), we created a digital assistant who both entertains and guides. We named her, gave her a personality and brand and set up contests. But most importantly, we found a way to find a need the customer had and kindly guided him/her through a process to fill that need. In essence, we showed people how some needs they had could be filled and solved by following these simple steps. Once a customer set himself/herself up with a unique online profile, he/she realized how convenient and quick the system was for ordering, checking inventory and more. We made the customer’s acts great by saving him/her time and hassle. Thus, the customer became the hero. He/she conquered his/her digital fears, completed his/her tasks, and had extra time for other parts of his/her job.

In any good story there is a hero, a villain and a guide. In business, the villain is the problem our customers face. Rather than our being the hero who swoops in and delivers a great product or service, let’s let our customers be the heroes who use us as the guide to a solution. We still have a great product and service. Rather than singing praises to the product’s or service’s greatness and longevity, let’s frame these great products and services in a way that helps the market understand a need and a solution. As a guide we can shed light on a new way of doing things that could make the lives of our customers easier and more enjoyable. Rather than trying to be admired through our marketing efforts, let’s try to shine the light on those who keep us in business.

Stephanie Woodcock is president of Seal the Deal Too, a St. Louis-based marketing, creative & communications firm. She can be reached at stephanie@sealthedealtoo.com.

The Epic Fails of Sales: Eat Your Sales Strategy Veggies or No Dessert for You

in Columns/Sales
Tom Woodcock

By Tom WOODCOCK

After 30 years of selling, managing sales efforts, creating sales strategies and working in sales consulting, I may have a couple things narrowed down. People love to corner me and ask me their biggest sales question, waiting for a pearl of wisdom.

The one thing about pearls is that they take a long time to form. I’ve witnessed virtually every sales technique and gimmick known to man. I often chuckle when a young, newly college-educated star gives me the inside scoop on how sales works in this day and age. I love their zeal, but I saw that back in 1982, my friend.

Everyone is looking for a new angle to avoid doing the tough stuff, trying to reduce personal contact and get greater results. Kind of sounds like an oxymoron (or just moronic). Apps, social media and website innovation can all replace genuine sales work, I’m told. Technology makes it so easy for the customer to do business with you. Well then, they just have to, right?

Not so fast, Padawan! We are still human, the last time I checked. We are communicators by nature. We still like to talk to people we like…some more than others, but we all do. Companies spend gobs of money on methods they are sure will work, or are told will work, only to remain exactly where they are with regard to revenue and profitability. Why is that? My Facebook page is killer and I have a gazillion likes! I’m number two on Google under my trade! I even Instagram all my projects! Plus, you should see my website. Then thud. Same old, same old. Here are the most common errors I see:

  • Saying, Not Doing – Yeah, this is number one. Many people talk a good game but few enact the techniques necessary that develop into action. They don’t see people, make the phone calls, follow up, join associations, create a sales strategy or properly negotiate. They usually revert to selling by price. They’ll often talk a good game but they have no game. Sad but true. The easiest step of doing what you know to do is skipped.
  • No Plan – Could you imagine building a facility without a plan? Well, how can you build an effective sales effort without one? I mean, where are you going to go? Who are you going to talk to? What are your goals? How will you attain them? Where do you need to improve? These are not easy questions for many to answer. Many owners and reps I meet with have an epiphany when I discuss developing a sales plan. I feel like a genius, when in reality this is 101 to an effective sales effort. So if steps one and two are missed, good luck! Throw that dart into the ocean and hope you hit a fish. Better yet, bid until your little estimator brain falls out on the floor and dies a slow death. Estimating is not sales. Discounting is not selling. Giving away the house is not business development. Having a sales plan can eliminate the pricing game.
  • No Competitive Difference – If you’ve ever been to one of my seminars, which I’m sure you have (wink wink), you know this is foundational to everything I teach. If I’ve trained you one on one, you’ve seen me with a blue face because I’ve told you this until that occurs. If you do not give me, the prospect, a reason to choose you over a competitor, why would I spend more to choose you? Even if you were the same price, why choose you? Why would I change from my current supplier I trust and choose you? This is the baseline, folks. You first must know what makes you the better choice, and then know how to communicate that effectively. Low price is not a competitive difference; it’s simply math. Any caveman or cavewoman can lower their price. My five-year-old is at this stage in his mathematical skills. “If I charge $3 but the other guy is charging $2, if I go to $1.50, can I have the job?” Find out what makes you different from the competitor and sell it.

Those are only three of the common errors, but they definitely occur the most often. Lord knows, I try to convince thousands of construction industry professionals of these truths. Some have heard it over and over again, but to no avail. I regularly get asked to speak on sales at events and privately to companies. They’ll bring me back multiple times over the years and ask if I have something new. In actuality, they need to hear this stuff again…and again…and again. I still see these same mistakes made everyday, but now with new techniques. Facebook pages that say the same things as their competitor’s page. Social media posts saying exactly the same things. Websites that are merely plug and play templates because the businesses are plug and play. Yikes. New formats, but the same gruel served up only microwaved.

As companies come into the new construction season, they’ll scramble to spend marketing dollars to get attention. Not that they shouldn’t, but to what sales effort are these efforts attached? What’s the plan to capitalize on the interest created? Is there a clear separation defined? Will the sales effort and follow up be done or merely talked about?

It’s tough to be the person who has to tell a company that just dropped $20k on a website that it’s meaningless if they don’t have a detailed sales strategy. It doesn’t always get me an invite to the company BBQ.

There is no denying that if you eat your sales vegetables, dessert will soon follow. Companies love when revenues and profits increase but struggle to format a way to achieve that end. Regardless of the fact, it’s there for the taking. If you sell properly, it’s all low-hanging fruit!

Tom Woodcock, president, seal the deal, is a speaker and trainer for the construction industry nationwide. He can be reached at 314-775-9217 or admin@tomwoodcocksealthedeal.com.

Contractors Rely on Mobile Device Management to Protect Client Data, Control Usage

in Columns/Technology

By KERRY SMITH, Editor, St. Louis Construction News & Review Magazine

As the amount of sensitive project data transmitted from construction sites is increasing exponentially, so is the need to remotely manage and protect that information.

Mobile device management or MDM has been in existence for years. Security software that is capable of monitoring, managing and securing employees’ mobile devices – namely their smartphones – is and has been a reality within a myriad of industries. But for the design and construction industry in particular, tracking who is transmitting what from where to whom in real time is critical.

“If you have mobile device management capability, it means that the owner of the device – the construction company in this scenario – has full access to its intellectual assets,” said Brad Hagemeyer, a technician with St. Charles-based eTech Solutions. “It puts you, the owner of the smartphone, in control with regard to what information is being shared and with whom. If necessary, at a moment’s notice you’re able to wipe sensitive data from the phone, selectively delete information from it, remove contacts or even render the device inoperable,” he added. “And all this can be done remotely in very little time.”

Hagemeyer says that Apple keeps device owners and operators at arm’s length when it comes to accessing and controlling data. “That being said, however, Apple does allow remote managing of the device in terms of usage,” he said. “And with an Android device, you’re able to tap into an unlimited range of mobile device management applications.”

For construction companies whose mobile devices are held by project executives, project managers, estimators and many others, MDM is a necessity in order to protect the privacy of client data. And in a human resources context, MDM enables a firm to ensure that the devices are being used only for what the company intends, according to Teresa Whitcomb, chief financial officer at St. Peters-based Blanton Construction.

“Our customer security is very important to us,” Whitcomb said. “Although the construction industry in particular has a more transient workforce, we still need to enable that communication and also to monitor usage. MDM allows us to restrict mobile device usage from sites that are not work-related, to monitor and control bandwidth usage and to be able to lock down and secure data in the unfortunate case where we do have a termination. Keeping company assets – smartphones and tablets – secure is essential, especially in our industry where so much of the information sharing that we do takes place at the job site.”

In the event that a device is unintentionally lost, stolen or damaged, MDM allows for near-immediate lockdown of the device, according to Hagemeyer. “MDM also makes it possible for contractors to monitor the location where the mobile device is being utilized,” he said. “For example, with MDM a company can track whether a particular worker is transmitting data from where he is supposed to be at any given time and within geographic parameters. Mobile geofencing is the use of GPS or RFID (radio-frequency identification) technology to create a virtual geographic boundary, enabling software to trigger a response whenever a mobile device enters or leaves a particular area. If the worker assigned to the device is supposed to be at a particular job site from 7am to 3pm but leaves the job site at 2pm, by tracking the device’s most recent IP address, the geolocator can send a message to the manager that his worker has left the job site.”

Hagemeyer and Whitcomb said there’s often a misconception with regard to mobile device management that its purpose is to act as “big brother” with regard to surveillance of the nature of the data being transmitted. “That’s really not what MDM is all about,” said Hagemeyer. “As a third-party monitoring agency, we cannot see the actual data and we don’t want to see it. Unlike computer systems, our monitoring software does not remote in and see screen shares of information. What we monitor for construction companies and other clients depends upon the degree of control they want to have over the devices they own, devices that are a company’s intellectual assets. A big facet of what we do for contractors is to control the use of their devices for activities that are directly relevant to their employees’ work. If that device is also being used to stream YouTube videos, Netflix or anything like that which really racks up data usage, we have the capability of knowing about it instantly and restricting the device,” he added.

Monitoring and controlling a contractor’s entire fleet of mobile devices can translate into significant telecommunications cost savings in the short term and long term, Hagemeyer says. “If the company is paying $3,700 a month, for example, for usage of its mobile devices, initiating MDM and taking control of those company-owned assets can immediately spell significant savings,” he said. “In this scenario, we were able to reduce the firm’s telecom bill by approximately $2,000 or 54 percent.”

Whitcomb says employing MDM is a wise human resource strategy for any company, particularly one whose daily scope of work includes large amounts of sensitive data being transmitted remotely from and to job sites.

“Working with eTech Solutions and using (Cisco) Meraki software has enabled us to restrict our band width usage to what is necessary for performing work-related functions,” she said. “It has also enabled us to restrict mobile device usage from sites that are not work related. All of us have done it…we’ve unintentionally left our smartphone somewhere. There is sensitive data and contacts on these phones that we wouldn’t want out in the public. MDM gives us the ability to be able to lock down that phone anywhere at any time instantly if necessary.”

Fueled by E-Commerce Fulfillment, Industrial Bulk Distribution Development Momentum Continues

in News/Technology

By Kerry Smith, Editor – St. Louis Construction News & Review Magazine

Speculative industrial warehouse and distribution construction remains alive and well across the St. Louis MSA, as evidenced by new construction activity and high-tech robotics upgrades.

Kadean Construction of Fenton is building “Building 5,” a 769,000-square-foot speculative building in Lakeview Commerce Center, Panattoni Development’s 750-acre bulk distribution park in Edwardsville. Kadean Construction President Mike Eveler said the construction project, which includes 80 loading docks with clearing heights of 36 feet, is the mirror image of a twin warehouse that his firm completed in 2017 within Lakeview. Eveler anticipates construction of Building 5 to wrap up by September.

“This is the second building we’ve built recently at Lakeview Commerce Center,” he said. “In addition to constructing Building 5, we built its sister building, Building 4, which is occupied entirely by Amazon.”

Although Building 4 was completed in 2017, Kadean is already performing major technology upgrades for client Amazon as the e-commerce giant embraces the very latest advances in fulfillment/distribution technology.

“In 2017 they (Amazon) invested approximately $23 million worth of tenant improvement work (in Building 4) as well as heavy and electrical distribution,” said Eveler. “Much of this investment was related to robotics within the facility that hold the product and move it around.”

As innovations in e-commerce order fulfillment occur at a pace that’s nearly as swift as that of e-commerce product delivery itself, serving forward-thinking industrial clients like Amazon is also a dynamic process, according to Eveler. “About six weeks ago, Amazon contacted us to request additional work specific to fulfillment robotics,” he said. “We’re already tearing out some of what we built (internally) for them in 2017 to help them upgrade with the latest technology. Upgrades and modifications in their robotics system alone represent about $1 million worth of work,” he added.

The scope of work Kadean is performing includes upgrades of the Amazon Robotics (AR) field, a type of invisible electronic track network upon which automated guided vehicles travel. The robots travel over the AR field picking up an entire upright shelving unit known as an inventory pod, bringing it to a technician at a fulfillment and packaging station and later returning it to its designated storage area. Kadean’s work includes removing the existing AR field and picking stations as well as installing new power and data requirements for the new field and picking stations, and related electrical work to accommodate Amazon’s automated storage and retrieval system.

Kadean works in tandem with Panattoni Development in other industrial parks across the St. Louis MSA such as Aviator Business Park in Hazelwood – the 155-acre park on the site of the former Ford Motor Co. plant at Lindbergh and Interstate 270.

Mark Branstetter, partner at Panattoni, said his firm has developed approximately 1.7 million square feet in Aviator and has equally that much ground available for future development.

“We are about halfway through developing Aviator,” Branstetter said. “It’s interesting…although Lakeview and Aviator are relatively proximate – some 15 miles from each other – their respective user groups are markedly different. Lakeview in Edwardsville attracts the larger, regional distribution centers, whereas Aviator in Hazelwood attracts more local infill.”

Although e-commerce is a prominent driver of bulk warehouse and fulfillment development nationally and regionally, Branstetter said e-commerce isn’t the only factor propelling the construction of these types of buildings.

“A big topic that receives attention is indeed e-commerce,” he said. “It’s certainly a big trend, but it’s not the sum total of what’s driving development in this industry sector. E-commerce is actually a very late trend, just in the last decade or so. Companies are trying to optimize their supply chain, be it location or size orientation. But once they’ve optimized their locations across the country, firms are then working to optimize the inner workings of their processes, again with the consumer at the forefront.”

According to the results of an annual industry outlook survey published in January by Modern Distribution Management, Amazon sold seven billion items last year, serving 70 percent of U.S. households.

New Tax Law Largely Brings Good for Construction Companies

in Finance/Homepage Primary/News

By Kerry Smith, Editor – St. Louis Construction News & Review Magazine

Tax attorneys and CPAs across the St. Louis region are continuing to study the details of the nation’s new tax law, the Tax Cuts and Jobs Act, enacted nearly four months ago.

For contractors and other construction industry players, the news is overwhelmingly favorable – especially for S-Corps, LLCs, LLPs and other corporate entities whose income flows directly through to their balance sheets. But for developers seeking to rehab historic buildings, implications of the new tax law are arguably more restrictive.

Construction companies who purchase qualifying assets such as equipment are no longer limited to a maximum amount of $500,000 in terms of the cost of qualifying assets placed in service during that tax year. The new tax law does include a higher expensing limit of $1 million. Also part of the new law is the ability for contractors to write off the entire cost of the qualifying assets – new and used – that they purchase through what is known as bonus depreciation, according to Steven Dumstorff, senior tax partner at Kerber, Eck & Braeckel LLP. This part of the new law is slated to last until 2022 and then phase out 20 percent for each year following.

“Essentially any hard asset that a construction company buys can basically be written off now, where previously there had been limits,” Dumstorff said. “For example, a contractor that is building an expansion or putting in a new plant is now able to write off every hard asset it buys for that project. The new tax law has really opened up the spigot of what’s eligible to be written off,” he added. “We’re still poring over it and talking with our clients, but overall it’s very good news for contractors and others.”

The first major overhaul of the tax code in more than 30 years, TCJA offers a significant tax savings in the form of a qualified business income deduction or QBI, according to Philip Speicher, attorney/shareholder and federal tax law expert at Mathis, Marifian & Richter, Ltd. in Belleville. “On a broader scale, there are significant tax reductions for owners of construction businesses,” he said. “For owners of construction companies operating their businesses as pass-through entities, the top corporate tax rate has been reduced from in the 35 percent range to a flat 21 percent rate.”

Additionally, the rates for most brackets have been lowered and the income range for the bracket has been increased, said Speicher. “While pass-through income will continue to be taxed at ordinary income tax rates, many small business owners will be eligible to deduct 20 percent of their qualified business income or QBI starting in tax year 2018. In other words, some pass-through entities will only be taxed on 80 percent of their pass-through income. This is a real advantage in the new tax law for companies operating as an S-Corp, LLC or another structure wherein the business’s income flows directly to its balance sheet.”

The QBI takes into account real estate and equipment ownership for purposes of determining the amount of the deduction that is available, according to Speicher.

Another one of the major changes inherent in the new tax law is the availability and tax treatment of certain governmental incentives tied to economic development. Speicher said if there’s an amount that a governmental entity contributes to a particular project and agrees to refund a portion of the cost of that project within the parameter of an incentive such as tax increment financing (TIF), the new tax law likely won’t impact such an agreement. “But if there’s an economic development incentive that is actually paid by the governmental entity – such as a city or county – directly to the construction company, it used to be that income wasn’t considered to be taxable income for the contractor…now it will be under the new tax law,” he said.

Robert Berger, CPA, tax partner and director of real estate and construction services at Anders CPAs + Advisors in St. Louis, says another notable tax law change involves federal tax credits such as those being accessed by a number of developers seeking to rehabilitate classic downtown St. Louis buildings into lofts, boutique hotels and more. The rules on how the federal historic tax credit is paid to developers have changed, arguably not to the developers’ advantage.

“Under the new tax law, the federal historic tax credit reimbursement must now be spread over five years rather than accessed during the first year,” Berger said, adding that the change might deter this sector of development in and around St. Louis. “This is a pretty big deal to those operating in this market,” he said.

Another drawback of the new tax law, as it pertains to construction firms in St. Louis and across the U.S., has to do with the income tax deduction often used by contractors that had been known as the domestic production activities deduction. That deduction, which allowed nearly all construction companies to deduct an amount equal to 9 percent of their net income on work performed in the U.S., disappeared with the new tax law in 2018, Speicher said.

Berger urges contractors and others to seek out their tax accountant and attorney to talk through the nuances of TCJA in order to take full advantage of the opportunities it offers, and to understand all of the impacts of the new law on their business.

“I would caution business owners to pause before they make any quick judgments on the new tax law according to their business entity choice,” Berger said. “This is still a pretty brand-new law. We’re all still getting our arms around it. If companies make a decision to change (corporate structure) too rapidly, it’s not easy to rewind.”

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