Selling against contractors who use illegals - Contractor Talk - Professional Construction and Remodeling Forum

duckdown · 01-01-2009, 09:18 AM

Many times, homeowners aren't around and therefore have no idea who is actually working on their home. In a declining economy with lots of job loss, many homeowners will choose solely based on price.

In this scenario, I have never lost a deal selling against other contractors. I almost always win them over by mentioning the following:

1. Illegals cannot be insured under workers compensation and therefore if they hurt themselves in your home, YOU are liable.

2. All of our employees are US citizens and can prove it. Additionally, all of our employees are also prior military (I was USCG) which appeals to the patriotic side.

3. I explain to them that it is difficult to have a warranty on work if even the federal government can't find them...

duckdown · 01-04-2009, 08:10 AM

I guess there are way too many contractors using illegals...

**joasis** · 01-04-2009, 09:02 AM

Quote:

Originally Posted by duckdown

In this scenario, I have never lost a deal selling against other contractors. I almost always win them over by mentioning the following:

1. Illegals cannot be insured under workers compensation and therefore if they hurt themselves in your home, YOU are liable.

2. All of our employees are US citizens and can prove it. Additionally, all of our employees are also prior military (I was USCG) which appeals to the patriotic side.

Great...I told a potential client exactly that....and he didn't care.

Let's look at the "other" side of the issue:

Most people will not knowingly accept liability, but are uninformed exactly what their liability limits are. Using the example above, I pointed out that I cannot bid against a guy selling buildings using an illegal crew to erect them...because I do have full insurance....he didn't care...his reasoning is simple...illegals would have a hard time in a courtroom here suing him if they fall of a building they are erecting...and he is "insulated" anyway since the GC is the cushion. Pretty smart, huh?

Now to the financial issue. I quoted a building for nearly 50k...and lost the bid by 11k. My first reaction is we are not comparing apples to apples....but he showed me the "competitors" bid.....the difference was in the labor....they cut my price for pouring and finishing concrete by 60%, and the erection of the steel by 45%.

Now, given his exposure...a week or so, and his thinking, just how would you propose to close that sale? I run a short crew....takes us a few weeks to knock a job like this down, barring weather. The other guy promises to be done, barring weather, in 4 days. His "crew" has nearly 15 guys.

The customer is taking the 11k savings, and couldn't care less about liability. I think I build a better building, but there isn't a lot of difference in comparable buildings....

Bob Mariani · 01-04-2009, 09:28 AM

I normally would not use illegals for the same reason. But on a job two years ago I need more help then I could find. Two of them did not follow directions and while I has getting them lunch one fell off the roof (45 feet). Sued me, sued the homeowner. Osha fined me 10,000 even though I had provided safety equipment and training. But the training was not in spanish and I lost the case. My insurance would not cover it. Lawsuits are still on going. Costs are now over $220,000. Workman's Comp... I live in CT.. the state filed a lien on my house now for his 69,000 in medical bills. Try fitting this. Doing anything wrong will never pay in the long run.

Merbs · 01-04-2009, 10:20 AM

I wouldn't even want to bid on a job where the owner doesn't care about the liability issues that could arise from using illegals.

duckdown · 01-04-2009, 10:57 AM

Quote:

Originally Posted by Bob Mariani

I normally would not use illegals for the same reason. But on a job two years ago I need more help then I could find. Two of them did not follow directions and while I has getting them lunch one fell off the roof (45 feet). Sued me, sued the homeowner. Osha fined me 10,000 even though I had provided safety equipment and training. But the training was not in spanish and I lost the case. My insurance would not cover it. Lawsuits are still on going. Costs are now over $220,000. Workman's Comp... I live in CT.. the state filed a lien on my house now for his 69,000 in medical bills. Try fitting this. Doing anything wrong will never pay in the long run.

Part of your defense better be figuring out how to encourage the federal government to deport him. Hopefully, he doesn't live in New Haven where cops protect illegals...

Mike Finley · 01-04-2009, 11:48 AM

In a world where I was coming to somebodies house to change a door knob there wouldn't be that much to talk about, only a few things, probably a list of 5.

In reality selling remodeling there are a list of 1000 things I could talk about, but if you try to talk about more than 10 of them you'll put your customer to sleep.

Yep, talk about illegals and insurance and the rest, the reality is the next person they talk to they are onto a dozen other things.

Customers don't have a nice, perfect little list of 3 things that they sit down and ask all 3 contractors and check them off one at a time and say okay... based on these 3 things you are hired.

No, in reality by the time they get to the 3rd contractor they have not talked about half of what they talked about to the first one... and are now onto 5 other subjects that weren't discussed with the 2nd one.

You seem to live in a very finite and defined world where you are constantly "winning over every time by this or that..." I need to get into that world where everything is 100% one way or another.

By the way it's a little confusing when you say:

"I have never lost a deal" then follow it up with "I almost always"

Is it never or almost?

lawndart · 01-04-2009, 12:29 PM

Bargain hunter's are every where. Everyone wants to save a buck, but they fail to realize that when hiring a contractor, they are paying for the SERVICE, and EXPERIENCE that he/she provides. That said if they are looking to purchase a tangible item like a TV. for example, and can get the same exact model for $200 cheaper at best Buy, over somewhere else then they would be smart to do so.

We are in the service business, and somehow over time the idea has been created in most consumers minds that all service based companies are equal. Therefore why not go with the cheapest price. All of us here know that is the furthest thing from the truth, therefore it is your job to teach this to your prospective client, and build a relationship based on trust.

Mike Finley · 01-04-2009, 12:35 PM

Bingo!

It's what we talk about here all the time. The issue is consumers with commodity mindsets. The answer isn't a 10 minute power point presentation of the perils of illegals.

The solution woudl be educating customers in that there is peril in believing no matter who you hire the end result will be the same.

However, as said many, many times, if the customer is locked into that commodity mindset it doesn't matter what the hell you tell them, you aren't going to change it. You can sit there and talk and talk and talk away while they stare at you with eyes glazed over wondering when you will be done so they can get rid of you.

The solution for a profitable business is to market toward the customers who fit your business model and stop wasting time trying to 'educate' customers. That's futility.

lawndart · 01-04-2009, 12:50 PM

Quote:

Originally Posted by Mike Finley

Bingo!
The solution for a profitable business is to market toward the customers who fit your business model and stop wasting time trying to 'educate' customers. That's futility.

This is one of the single best pieces of advice ever given on this forum. If you want to make big money, you need to be in the right market. Save the lower end stuff for the guys that hire illegals, and focus your marketing in the right areas.

Here in NYC the companies that do custom work, are hardly feeling the effects of this recession. It's the other guys that are hurting right now.

duckdown · 01-04-2009, 06:09 PM

Quote:

Originally Posted by Mike Finley

By the way it's a little confusing when you say:

"I have never lost a deal" then follow it up with "I almost always"

Is it never or almost?

I was accurate in my choice of words and both parts of my statement are true. The almost part of the statement depends on repeat business (never makes sense to repeat yourself), referral business (I rely on others having talked about this) or work that is done on the properties own by law enforcement (they do their own checking). Of course, I could add in others that already know me like friends, family, other business associates, etc.

Max Nomad · 01-04-2009, 07:37 PM

Quote:

Originally Posted by joasis

Great...I told a potential client exactly that....and he didn't care.

Let's look at the "other" side of the issue:

Most people will not knowingly accept liability, but are uninformed exactly what their liability limits are. Using the example above, I pointed out that I cannot bid against a guy selling buildings using an illegal crew to erect them...because I do have full insurance....he didn't care...his reasoning is simple...illegals would have a hard time in a courtroom here suing him if they fall of a building they are erecting...and he is "insulated" anyway since the GC is the cushion. Pretty smart, huh?
...snip...

Not so smart on the customer's part.

Last time I checked, anyone -- illegal or naturalized citizen -- can still file a lawsuit. Matter of fact, they can win the settlement and even if INS is sitting right there in the courtroom waiting to snatch him after the judgment that person can STILL collect what he is due.

If I were an illegal and won a settlement 5 or 6 figures I'd gladly leave the country, too... consider it a very nice payday.

**joasis** · 01-04-2009, 07:55 PM

I don't like bidding against illegals, but that is just the way it is. The odds are that the job will finish without indecent, and the crew will make $70 a day each, and go on their way....the "client" will have his building, a typical one time event, and so what if I won't even answer a call from him? Do you think that will really matter?

Mike Finley · 01-04-2009, 10:13 PM

Joasis, how are you holding back the urge to contact INS and send them to those job sites?

**joasis** · 01-04-2009, 10:37 PM

I don't have time to sit and watch for the crew to show up....besides, this is a rural county...everyone knows everyone. To do that would be pure CS, and would not win any awards or accolades.

Work is slowing enough now to really get my attention, but I am not doing this work for the experience. It seems like I get about 1 out of every 4 or 5 I bid on now....last several months...problem is the phone isn't ringing. This new builder is moving here from Texas...and he has this "traveling crew" to do the erections. I can survive this guy, but let 3 or 4 more starving contractors move in here and see what happens.

THINKPAINTING · 01-06-2009, 07:22 PM

Quote:

Originally Posted by lawndart

This is one of the single best pieces of advice ever given on this forum. If you want to make big money, you need to be in the right market. Save the lower end stuff for the guys that hire illegals, and focus your marketing in the right areas.

Here in NYC the companies that do custom work, are hardly feeling the effects of this recession. It's the other guys that are hurting right now.

That may be true for you but we have many upscale customers who lost a ton of money in the stock market and are not doing anymore remodel or new work .

It does not matter if its custom, new , remodel or commerical
etc.....there is no work right now and not much down the pike unless things change.

If your booming in NYC great, but I personally know some very high end painting contactors who have squat for work in NYC, seems to me alot of guys on this board have lots of work, I've only been in business since 1974 and have survived slow times and hopefully will survive this one as well, but its going to be a rough one custom work or any work.

HousieG · 01-07-2009, 12:40 AM

Hi,

Just wanted to comment on the fact that you employ ex-service men. I think that is great, as many of them have difficulties finding post-service work.

HousieG · 01-07-2009, 12:44 AM

I understand the difficulties of competing against companies using illegal aliens, as it happens in my industry a lot. Also I used to work at a bank way back in the day and the amount of illegal construction workers that came in and cashed paychecks was astounding!

Scary because as you say, work done by illegal aliens is often not insured and therefore not protected against any issues that may arrise.

duckdown · 01-07-2009, 06:56 AM

I can tell you that if you are in NY or CT and don't have all your workers insured under workers compensation then you are going to be in for a big surprise in 2009. Both of these states are cracking down on contractors without coverage.

If you think you are saving say $5,000 by avoiding workers compensation, E&O and general liability, then you will be crying as the first fine is now $50,000...

boman47k · 01-07-2009, 08:47 AM

Quote:

Originally Posted by duckdown

I can tell you that if you are in NY or CT and don't have all your workers insured under workers compensation then you are going to be in for a big surprise in 2009. Both of these states are cracking down on contractors without coverage.

If you think you are saving say $5,000 by avoiding workers compensation, E&O and general liability, then you will be crying as the first fine is now $50,000...

But, what if the worker has all his "papers", and the contractor does "not know" his/her real status. In other words, is his a** covered? We all know this is going on.