Building New Business in the Construction Industry

Despite the current economic recession, promotional products distributors report that business is holding steady when it comes to promotions for the construction industry.
May 6, 2008

By Liz Aull

On the surface, the construction industry appears to be in a state of considerable change. Even though some of the latest trends, such as the increase in defaults on subprime loans, aren’t exactly what anyone wants to hear, it’s not all bad news. For example, nonresidential construction has been growing at a healthy pace, according to the Bureau of Labor Statistics (BLS). Replacement of many industrial plants has been delayed for years, and a large number of structures will have to be replaced or remodeled soon. Construction of healthcare facilities, especially those serving the elderly, and schools is expected to grow significantly as well. This growth, coupled with standard building programs for the construction industry, can mean there’s still room for promotional products sales.

Outlook for 2008
Despite a slowing in the growth of residential construction, the industry is still a viable market for promotional products. Mark Yokoyama, director of marketing for ePromos Promotional Products, New York, recognizes that in a recession or slowdown in any industry, promotion is still very important. “Studies have clearly shown that businesses that continue to invest in these activities during a downturn not only do better while it’s happening, but emerge much stronger than their competitors who cut spending,” he says. “This makes the promotional products industry, if not recession-proof, at least recession-resistant.”

Joe DiCesare, owner of Proforma Alliance Printing and Promotional Services, Millington, N.J., says that his business with the construction industry is still strong, which he credits to having primarily commercial clients, rather than residential. Some smaller construction companies, however, are cutting back on promotional products. A spokesperson for American Promotions in American Fork, Utah, says business with contractors has been affected a lot, adding, “Some of them aren’t ordering at all.”

Mainstay Programs
Other promotional product distributors are simply finding that their orders are slightly smaller than in the past. Margaret Hunt, owner of Proforma Eagle Premier in Columbia, Ill., notes that some of her clients who placed $10,000 orders last year are opting for $8,000 orders this year. However, much of her business with construction clients involves safety and awareness programs for employees, which isn’t likely to go away, she says.

Hunt helps companies build and design safety programs to decrease on-the-job accidents, increase awareness of Occupational Safety and Health Administration (OSHA) regulations and improve the results of drug screens. She explains that most companies base their safety standards on five to 10 criteria, and they generally monitor employees once a quarter. The promotional products aspect of the programs comes from the incentive gifts that the employees receive for passing the tests, and Hunt sets up Web sites for those employees to select gifts.

Most construction companies are very motivated to increase awareness about safety — it’s a bottom-line issue. First of all, they’re definitely better off when they’re not paying workers’ compensation to injured employees, as well as wages for those employees who aren’t able to work because they were injured on the job. Secondly, their number of accidents affects the Experience Modification Factor, or Mod. This is an adjustment that is made to the Workers' Compensation insurance premium of companies that meet or exceed a certain size threshold, according to Advanced Insurance Management, a company that provides independent expertise to employers on workers’ compensation insurance costs. A company’s Mod affects its insurance rates and ability to bid on jobs, says Hunt.

Since a majority of Hunt’s business involves safety, most of the promotional products that her customers order are for construction employees. The gifts range from T-shirts and mugs to more expensive hunting chairs and knives. “Most of my customers want something they can use, such as a coat or tools,” she says. “Hooded sweatshirts and anything camouflage are also really popular.”



Target Markets
DiCesare finds that many of his customers hand out gifts at trade shows. For example, a contractor will solicit business from a large fire protection company. DiCesare works with segments such as general contractors, irrigation companies and fire protection companies, and his clients order a wide price range of products. For trade shows, they want items such as different types of rulers (such as an engineering scale) or tape measures. Clients that are working to attract the attention of larger companies also are likely to sponsor a high-end outing, such as a golf game, and need product for promotions. They might request golf “care packages” that include a six-pack cooler, tees, a towel and a sleeve of balls.

DiCesare’s clients also are interested in penetrating new markets. “For example, a client that’s mostly regional might be interested in going national to become a presence in a new market, like New Orleans with all of the construction going on there,” he says. “We create presentation folders for that client, usually a binder with its logo on the cover, very professional. The proposals are very comprehensive, a lot more than just an e-mail.”

Ordering 101
Depending on the client, there can be some seasonality to ordering promotional products. Smaller construction companies that do most of their business in the spring also will need their products in the spring. Those who target the decision-makers of large companies, such as DiCesare’s clients, will need holiday gifts. However, some clients have little seasonality. Hunt receives and renews contracts for her safety programs primarily at the end of one year or the beginning of the next, but purchasing happens all year long, since the safety programs run constantly.

As with most industries, the key to gaining new contacts lies in knowing whom to contact, and that often depends on the size and type of the company. “Much buying comes through marketing or purchasing departments, like any large company,” says Yokoyama. “There are a lot of small firms in the construction industry though, and in many of those cases the buyer is the owner of the firm, who is typically very hands-on in every area of the business.” Hunt also works with the purchasing department or the owner, although often her contact for a safety program is the safety director.

The construction industry can come with its own set of challenges for the promotional products distributor. For instance, DiCesare says that many clients realize they need promotional products at the last minute, despite the fact that a trade show might have been planned months in advance. “To alleviate last-minute concerns, I call certain clients every year to remind them of the upcoming holiday season,” he says. “I also call to find out when they’re attending events, so that I contact them in advance and get their orders.” Hunt learned that she has to meet clients on their own turf. “I can’t go into a warehouse wearing a power suit, and I have to accommodate their hours,” she says. However, once you’re in with a construction company, they can be wonderful to work with, she advises. Once they know you can do their T-shirts, they’ll ask you to do their holiday gifts and everything else.

Dean Bloxham, owner of Proforma Image Products in Logan, Utah, picked up new business from the construction industry in an unusual way. He was asked to do all the promotional products for an “Extreme Home Makeover” house in Logan. He worked with the builder and the public relations team to come up with apparel — primarily golf shirts, coats, hats and T-shirts — for the event. The builder and PR team wanted a color that would stand out and one that hadn’t been used before. Together, they chose a rust or Texas orange for all of the products. Bloxham set up to do large, quick runs and had to enlist the help of local embroiderers to get the project done. In the end, not only did Bloxham do a good deed by helping a needy family get a house, he also got himself some new customers. “All of the subcontractors were impressed with my work, and I got some of their business,” he says.

Liz Aull is a freelance writer in Atlanta and a contributor to Impressions magazine. She can be reached at liz@aull-image.com.

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