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Tracey Road Equipment: Expanding in More Ways than One

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By: Elizabeth Landry

Reflecting on the past 46 years that Tracey Road Equipment has been in business, the powerhouse company of today is almost unrecognizable compared to its humble beginnings out of one small shop in Syracuse, NY. It’s a testament to President Jerry Tracey’s can-do entrepreneurial spirit and hard work that he built the business himself from the ground up, beginning when he left community college.

“I graduated from high school, went into the Air Force and served in Vietnam. When I came home, I got the GI bill to go to community college, and from community college I started in the business of selling construction equipment. After four years, the company I worked for closed its doors, so along with one of my customers we became partners and created Tracey Road Equipment. A few years later, I bought out my business partner and I’ve been on my own ever since,” said Tracey.

Fast-forward to today and Tracey Road is a construction equipment and truck sales, collision repair, service, parts, and rental dealer with seven and soon-to-be eight locations across New York State. Although the company has expanded and changed throughout the years, Jerry’s strong work ethic as a first-generation business owner is now also reflected in his family members who are involved in Tracey Road’s day-to-day operations. His wife, Debbie, is Vice President, his daughter Christine Julka is the Director of Marketing, his son-in-law Rajan Julka is the company’s Chief Technology Officer, and his sister-in-law Peggy Kip is the Director of Finance.

Paired with the company’s development into a true family-owned business, Tracey Road also found a unique niche in the construction equipment industry along the way. Jerry’s experience in both the trucking and construction industries helped him build a company that offers everything his customers need to finish a job.

“We’re like the Home Depot of the construction transportation industry,” said Tracey.

Scott Collins, Executive Vice President of Sales, emphasized that this end-to-end service sets Tracey Road apart from its competitors.

“For example, let’s say an asphalt paving customer is going to go pave the roads. They can buy a paver from us, they can buy a trailer from us, a roller from us – they can buy all the equipment to do the job and they can buy the truck and the trailer to haul the equipment to the job. Nobody else offers that kind of support, that kind of a one-stop shop,” said Collins.

East Syracuse Expansion

The unique empire that Jerry began building back in 1976 is headquartered in the sprawling, state-of-the-art East Syracuse location. For about three years, this central campus has undergone a massive expansion, adding 35,000 square feet to an already existing 75,000-square-foot facility. The expansion is slated for completion in September of 2022, with an open house scheduled for October 6th.

According to Scott Thayer, Compact Sales Manager at Tracey Road, this expansion will benefit every part of the business.

“The expansion is going to help every aspect of Tracey Road Equipment. It doesn’t matter who it is, everyone is seeing extreme increases in equipment sales, in parts and in service. To keep up with that we had to add mechanics and we had to add space. Especially on the compact side of things – a lot of times [a small excavator] might be the customer’s only machine, and if they cannot get that up and running in a timely fashion, they don’t have another machine to fall back on. That’s where this new addition is going to help, in facilitating quicker turnaround times,” he explained.

As Thayer mentioned, the East Syracuse location expansion creates many career opportunities within Tracey Road. According to Jerry Tracey, the company has a partnership with the BOCES program that aims at helping to educate local students, while building connections with the future workforce.

“We provide a teaching facility for high school juniors and seniors for the diesel tech school. We provide busing for the children and do two classes a day. Some students go into the service shop, some go into the collision body shop, and some go into the parts department, so they learn every aspect of what’s going on,” said Tracey. One goal of this partnership is that these students may one day join the Tracey Road family as employees.

The East Syracuse expansion will provide many benefits for the company, its customers, and the local community, but Jerry was candid about the obstacles the company faced while navigating this expansion.

“Once we got approval from the town planning board, inflation started to hit and our building costs probably went up more than 30%,” he said, adding COVID to the mix also caused supply and building delays.

Tracey’s dedication to the expansion project has not gone unnoticed by the Tracey Road team. Jesse Weller, Sales Manager of the CE (Construction Equipment) Division, recognized that Tracey kept the project moving even when difficulties arose.

“I give Jerry a lot of credit for continuing to push the project and for seeing it through. It’s going to allow us to better serve the customer. We’re growing as a company. As you grow, you need to be able to support the equipment out in the field and we’ve outgrown our current facility,” said Weller.

Additional Locations

In addition to the East Syracuse expansion, Tracey Road is also expanding the company’s regional footprint through new locations. Tracey Road’s facilities are in East Syracuse, Albany, Binghamton, Queensbury, Rochester, Utica and Watertown, and that list is rapidly growing.

“We’re looking for a location in Buffalo right now and also in the Wilkes-Barre area of Pennsylvania,” Tracey said.

But the company’s reach doesn’t end there, either.

“We also have an online parts store that we’ve expanded our footprint into so we have an e-commerce component that will sell parts worldwide,” Tracey revealed.

Expanding into the worldwide market is something Tracey Road has initiated by utilizing the latest online technologies.

“We invest heavily in technology that is probably the most current and up-to-date to pull people to our website and get found nationwide and worldwide,” said Rajan Julka, Chief Technology Officer. “We have a fully dedicated marketing department, which is a little unique inside a dealership. Most dealerships don’t dedicate as many resources as Jerry has to it. We utilize various points of technology to help drive traffic to our site. We have gone from around 100 page views per month to almost 100,000 page views per month on our website.”

New Hitachi Excavator Line

Intertwined with Tracey Road’s physical locations and online expansion is an exciting development within the company’s new product offerings. Tracey Road was recently named one of only two exclusive dealers for the new Hitachi Excavator line in New York State. Hitachi ended a deal to manufacture and sell excavators with John Deere in 2021, launching the new Hitachi Construction Americas brand in March of 2022. With Tracey Road being one of only 14 dealers across the country to represent the new Hitachi Excavators, Tracey emphasized the importance of this expansion within the company’s product offering for its customers.

“Hitachi is the number one worldwide excavator manufacturer, so we’re excited about the opportunity it’s going to bring to us. We will be able to service all the John Deere excavator products along with the Hitachi brand,” Tracey said.

Compared to previous Hitachi models marketed under the John Deere brand, the new High Performance Hitachi excavators feature improved technology not seen in older machines. The biggest improvements include a 3-pump hydraulic system versus the older 2-pump system, a heavy-duty undercarriage and boom assembly, an Ariel Angle camera system, standard LED lights, ConSite Oil and a 4 year/4,000-hour full machine warranty. For Tracey Road’s customers, these new features signify better, longer-lasting performance and an increased return on investment.

Equipment Rental Options

Not only are the new Hitachi excavators available for purchase from Tracey Road, they are also available for rent as part of the company’s vast rental offerings. In order to provide customers with flexibility and options to meet their needs, equipment can be rented on a daily, weekly, monthly, or seasonal basis.

Recent shipping and supply chain constraints mean customers rely on Tracey Road’s wide array of equipment offered for rent, enhancing availability any time customer needs arise. “We rent everything from skid steer attachments all the way up to 180,000-pound excavators,” said Greg Hulslander, Rental Manager at Tracey Road. Equipment and attachment brands available for rent include New Holland, Morbark, Hitachi and Sakai, as well as Astec, which encompasses the Carlson paver line, Roadtec pavers, mills and reclaimers, and KPI-JCI crushers, screeners and conveyers.

Renting provides a “try before you buy” option in which customers can use a portion of previous rental fees toward a down payment to buy the equipment later if it fits their needs for use in upcoming projects.

“Our goal with renting equipment is to make [our customers’] jobs more profitable by making sure they have the right piece of equipment for the job they’re doing,” explained Hulslander. “The customer is number one, and their satisfaction is the key to our success.”

Growth Through Relationships

Certainly, at the center of Tracey Road’s expansion efforts remains the company’s focus on customer satisfaction and customer relationships. Scott Collins explained that Tracey Road’s diverse product offerings allow their sales territories to stay relatively small. He calls this “customer-intimate sales” and emphasized that, at the end of the day, “people buy from people.” After all, Tracey Road may be expanding through facility additions, new locations, and new product lines, but perhaps the most important growth continues to be through building relationships.

Jesse Weller honed in on the company’s focus on relationships, saying, “Jerry built his business on relationships; that’s what’s very dear to him. We are a large company that is family-owned, and the owner is here 7 days a week and he is accessible to all his employees. Although we are a large corporation, we are able to maneuver like a small family-owned business.”

From humble beginnings to the ever-expanding large business it is today, Tracey Road continues to derive its success from investing in its employees and customers. Weller said, “I’ve been really impressed with how Jerry continues to invest in the business. He’s giving us the opportunity to grow through new resources that continue to make us successful and provide our customers with exceptional service.”

When asked about the ultimate focus of Tracey Road as a business, Jerry Tracey responded without hesitation: “We’re a family-operated business and our employees are an extension of our family. We want to make our customers our best business partners, building strong relationships and earning customers for life.”

How to Apply New Revenue Recognition Rules to Uninstalled Materials and Equipment

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Benjamin A. Sumner, CPA, Audit Partner, Dannible & McKee, LLP

It comes as no surprise that the COVID-19 pandemic has led to substantial economic challenges in the construction industry. Supply chains have been inhibited, leading to less than desirable lead times for equipment and materials needed to get projects completed. More recently, inflation has resulted in contract costs that are higher than originally planned. Many contractors have had to take measures to mitigate these challenges, such as purchasing equipment and materials earlier in the contract life cycle than in the past or placing bulk orders for materials in excess of what is needed for a contract completion to take advantage of volume pricing discounts.

While these strategies are excellent ways to help to control the impact the pandemic has had on profitability, it is important for contractors to consider the revenue recognition requirements under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 606 for upfront contract fulfillment costs and uninstalled materials when accounting for contracts, since the timing of revenue recognized in relation to these types of costs will likely be different than under previous Generally Accepted Accounting Principles (GAAP).

Under accounting practices prior to implementation of ASC 606 for reporting periods beginning after December 15, 2019 (calendar 2020), upfront contract fulfillment costs, including costs of production equipment and materials related to a specific contract, could be charged to job costs and included in the inputs used to measure the percentage of completion on the project, which ultimately drove the revenue recognized to date on the contract.

Conversely, ASC 606 requires revenue to be recognized to depict the transfer of control of goods and services to a customer and specifically calls for upfront contract costs to be recorded on the balance sheet and amortized to contract cost over the expected contract term. While under past practices, revenue would be recognized immediately for materials and equipment purchased specifically for a contract, when accounting for contracts under ASC 606, the materials and equipment cost is required to be charged to contract costs when consumed or installed, delaying the revenue recognized related to these costs.

The method of accounting for materials purchased for contracts is also different under ASC 606 than it was under previous GAAP. Prior to the implementation of ASC 606, accounting for the cost of contract materials depended on whether materials were purchased specifically for a contract, or whether it was general inventory available to be used on several contracts as needed. For materials purchased specifically for a contract, the revenue recognition method was like the previous method described above for upfront contract fulfillment costs, while general materials purchases were included within inventory in the balance sheet until segregated for use on a specific contract.

Under ASC 606, the cost of materials that are not specific to a contract would be accounted for in a similar manner as past practice as inventory on the company’s balance sheet. However, accounting for contract-specific materials under ASC 606 requires some consideration of the timing for when control of those materials has passed to the contract owner. In situations where materials are purchased for a contract or segregated out of inventory for use on a specific contract and billed to the owner but have not yet been installed, the contractor must limit the revenue recognized on these materials to be equivalent to the cost, effectively no gross profit may be recognized. Under ASC 606, recognition of the gross profit component of the contract price related to these materials must be withheld until the materials are installed. Accounting for these situations can be a challenge and requires coordination between project managers, procurement managers and accounting personnel to ensure the transactions are appropriately reflected in the contractor’s financial statements.

It is important for contractors to remember these key changes related to revenue recognition when accounting for their contract activity, especially in the challenging economic environment created by the COVID-19 pandemic.

 

Benjamin A. Sumner, CPA, is an audit partner at Dannible & McKee, LLP, a public accounting firm with offices in Syracuse, Binghamton and Albany. The firm has specialized in providing tax, audit, accounting, and advisory services to the construction industry since its inception in 1978. For more information on this topic, you may contact Ben at bsumner@dmcpas.com or 315-472-9127 x221.

Working in the Heat – OSHA’s National Emphasis Program

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Susan Geier Fahmy, Vice President, Director of Safety & Health Services, Lovell Safety Management Co., LLC.

On July 7, 2020, Tim Barber collapsed and died from heat illness on his second day of work at an upstate Western New York construction site. OSHA’s Heat Illness Prevention Campaign teamed up with the OSHA Region 2, Buffalo Area Office to produce an awareness video on heat illness prevention. Watch: Remembering Tim Barber: A life lost to heat illness at work.

OSHA has launched a National Emphasis Program to protect millions of workers from heat illness and injuries. Through the program, OSHA will conduct heat-related workplace inspections before workers suffer completely preventable injuries, illnesses or, even worse, fatalities.

“Tragically, the three-year average of workplace deaths caused by heat has doubled since the early 1990s. These extreme heat hazards aren’t limited to outdoor occupations, the seasons or geography. From farm workers in California to construction workers in Texas and warehouse workers in Pennsylvania, heat illness – exacerbated by our climate’s rising temperatures – presents a growing hazard for millions of workers,” said Secretary of Labor Marty Walsh. “This enforcement program is another step towards our goal of a federal heat standard.”

Hazardous heat exposure can occur indoors or outdoors and can occur during any season if the conditions are right, not only during heat waves. Occupational risk factors for heat illness include heavy physical activity, warm or hot environmental conditions, lack of acclimatization, and wearing clothing that holds in body heat.

Construction, especially road work, roofing and any other outdoor work has been listed as an industry where workers have suffered heat-related illnesses and where OSHA will focus.

As part of the National Emphasis Program, OSHA will initiate inspections in over 70 high-risk industries in indoor and outdoor work settings when the National Weather Service has issued a heat warning or advisory for a local area. On days when the heat index is 80 F or higher, OSHA inspectors and compliance assistance specialists will engage in outreach and technical assistance to help keep workers safe on the job. Inspectors will look for and address heat hazards during inspections, regardless of whether the industry is targeted in the NEP.

Heat-Related Illness: Know The Signs

It’s important to know the signs of heat-related illness—acting quickly can prevent more serious medical conditions and may even save lives. If an employee has symptoms of heat-related illness, a supervisor should be notified immediately. If able to, move the person to a shaded area loosen his/her clothing, give him/her water (a little at a time), and cool him/her down with ice packs or cool water.

  • Heat Stroke is the most serious heat-related illness and requires immediate medical attention. Symptoms include: confusion, fainting, seizures, very high body temperature and hot, dry skin or profuse sweating. CALL 911 if a worker shows signs of heat stroke.

  • Heat Exhaustion is also a serious illness. Symptoms include: headache, nausea, dizziness, weakness, thirst and heavy sweating. Heat fatigue, and heat rash are less serious, but they are still signs of too much heat exposure.

To Prevent Heat Illness:

Nearly 3 out of 4 heat illness fatalities happen during the first week of work. New and returning workers need to build tolerance to heat by taking frequent breaks and working shorter shifts in the heat to start. Dangerous heat exposure can occur indoors or outdoors, in any season. Ensure that your employees take “it easy” on the first days of work and take time to get used to the heat and build up a tolerance. If a worker has not worked in hot weather for a week or more, their body needs time to adjust.

Follow the 20% Rule — on the 1st day, don’t allow employees to work more than 20% of a shift at full intensity in the heat. Increase their time by no more than 20% a day until they are used to working in the heat.
Provide cool drinking water – encourage workers to drink at least one cup every 20 minutes, even if they are not thirsty.
Rest breaks — allow workers time to recover from heat in a shady or cool location.
Dress for the heat — have workers wear a hat and light-colored, loose fitting, breathable clothing if possible.
Watch out for each other — encourage workers to monitor themselves and others for signs of heat illness.
Look for any signs of heat illness, including fainting, dizziness, nausea, and muscle spasms, and act quickly — when in doubt, call 911.
Offer training on the hazards of heat exposure and how to prevent illness.
Develop an Emergency Plan on what to do if a worker shows signs of heat-related illness.

 
More resources are available on OSHA’s website in English and Spanish and there is even an app to download to your phone to calculate the heat index and provide recommendations based on your risk level.

Check out www.osha.gov/heat for training and other educational resources.

Susan Grier Fahmy, CSP, is Vice President, Director of Safety & Health Services at Lovell Safety Management Co., LLC. You may contact Lovell Safety Management at 1-800-5-LOVELL or visit online at www.LovellSafety.com.

The Challenges of MWBE Certification and Recertification

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Joseph T. Schuler, Esq. & Diana Plue, Esq., Sheats & Bailey, PLLC

New York State has set guidelines for State Agencies to utilize Minority and Women owned businesses (“MWBE”) at certain rates when awarding government contracts.  NYS reached its goal of 30% utilization in 2021.  That statistic, however, fails to illustrate the realities of the MWBE program.

NYS has a 30% utilization goal to help MWBE businesses, but NYS is making it difficult to become and remain certified.  There has been a drastic increase in recertification denials over the last eight (8) years.  Recertification denials have increased each year and nearly doubled since 2019.  NYS has made the certification and especially the recertification process increasingly complicated.  Businesses are finding it harder to obtain and keep their certifications. 

Upon denial, a hearing on appeal offers hope to many companies.  The NYS Division of Minority and Women Business Development (“Division”) would not generally consider evidence introduced during the appeal explaining the woman-owner’s qualifications.  A recent Appellate decision, however, has ruled that NYS law requires the Division to consider all testimony and evidence presented on appeal.  Matter of Scherzi Sys., LLC v. White, 197 A.D.3d 1466.

The Division originally denied the company’s WBE recertification based on the husband, Mr. James Scherzi’s, minority ownership interest and involvement in operations.  The Division found Mrs. Dana Scherzi did not make decisions pertaining to the operation of the business, hold adequate managerial experience or technical competence to be able to operate a software business, and failed to show she contributed money, property, equipment or expertise proportionate to her equity interest in the business. 

Upon initial appeal before the Administrative Law Judge, Dana and James Scherzi testified about Dana’s role and contributions towards the company.  After hearing the evidence, the administrative law judge recommended the original denial be overturned.  The Division’s Director instead upheld the original denial, limiting consideration of the facts to those materials provided in support of the application and disregarding the hearing testimony.  Dana appealed the Director’s determination to NYS’s Third Appellate Department, arguing the determination should be annulled because the Director refused to consider testimony introduced at the administrative hearing when assessing the regulatory factors for MWBE Certification.

The record from the hearing in the Scherzi appeal shows her husband originally started the company to do freelance work, but he did not have high aspirations for it, claiming he “never wanted to run a company.”  The company took off once Dana Scherzi left her career in Corporate IT to join it.  Her contribution in the form of expertise showed she contributed in proportion to the required 51%, but this was only resolved after a hearing, appeal, remand, and finally, a successful hearing.

This issue was the limited scope of review in appeal hearings.  The Director denied certification after determining “testimony at the hearing, that was not part of the application, [wa]s insufficient to meet the substantial evidence standard, as it would be improperly considered facts not in evidence; and, therefore, irrelevant.”  Matter of Scherzi Sys., LLC v. White, 197 A.D.3d 1466.  The Third Department reversed, however, finding it is not only appropriate for an agency to consider the testimony offered at an administrative hearing, but the agency is required to consider the record as a whole pursuant to the State Administrative Procedure Act § 306(1) and CPLR § 7803(4).  That is particularly the case where “the hearing testimony at issue did not constitute new evidence previously unavailable at the time of the application but, instead, served to explain and clarify technical terms and documentation.”

The Scherzi case also confirmed that the woman-owner’s equity contribution to the Company did not have to be monetary to establish her proportionate ownership interest.  Contributions in the form of expertise that directly grows the business may be sufficient to justify ownership interest.  The Director was wrong not to consider the testimony regarding how her expertise grew the business.  The court also implied a company should not be automatically disqualified from WBE Certification simply because a woman owner shares some managerial tasks.

The Court’s decision has strengthened the appeal process by affirming an applicant’s right to explain and expand on the application material in the appeal hearing and requiring the Division to consider all testimony and evidence presented on appeal.  The Court’s decision is also important for confirming that ownership interests can be acquired by means other than a monetary contribution.  Applicants whose initial application or recertification application have been denied should appeal the decision by requesting a hearing rather than submitting papers only.

While this subtle change in the law is recent, the appeals process seems to have been broadened to admit more explanatory testimony.  For those dismayed at the abuse of the MWBE system, this change should ensure that genuine women-owned enterprises can prove their eligibility.  The MWBE certification process is ever-changing and has many twists and turns. 

The attorneys at Sheats & Bailey, PLLC are experienced with these processes, and always ready to lend a hand to applicants facing certification, recertification, or appeal.  For more information or assistance navigating the MWBE landscape contact Diana Plue at Sheats & Bailey, PLLC, Tel: (315) 676-7314.

The information provided in this article is not intended to serve as specific legal advice for any particular situation.  Competent legal and experienced counsel should be consulted.

Is Construction the Obvious Solution to Young Workers’ Career Crises?

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By Hannah Sabitoni, Laborers International Union of North America Health and Safety Fund

Lazy, entitled and technology-addicted are some of the adjectives you may see used to describe Millennials (those born between 1981 and 1996) and Generation Z (1997 – 2012). Despite the stereotype that this group doesn’t want to work hard, they make up nearly half of the current workforce. As the “Great Resignation,” an unexpected surge in retirements and an aging workforce drive up demand for labor, employers need to find ways to appeal to and recruit these younger workers to stay afloat.

“From new infrastructure funding to plans to replace outdated lead pipe service lines, the construction industry is booming and won’t be slowing down anytime soon,” says LIUNA General Secretary-Treasurer and LHSFNA Labor Co-Chairman Armand E. Sabitoni. “Young people are growing tired of spending thousands on a degree to graduate without any guarantee of a job and a career in construction offers an alternative to this path. LIUNA members get fulfilling careers, they get to work on meaningful projects and can build a better future for themselves and the country.”

The construction industry has been facing a worker shortage, and one projection estimates the industry will need 2.2 million more construction workers in the next three years to keep up with demand. At the same time, the overall economy is seeing masses of people quit their jobs in favor of gigs that pay more, offer better benefits packages, and provide a better quality of life. In other words, younger workers are tired of being underpaid and undervalued and are rethinking what they want – and how much they’ll tolerate – in a career.

In many ways, a career in construction seems like an obvious answer to the pleas of fleeing Millennials and Gen Zers: it provides a stable income without college debt and has a relatively low barrier to entry. LIUNA members and other union construction workers receive comprehensive training, phenomenal health and retirement benefits and career advancement opportunities. In addition, union construction workers enjoy the benefits of collective bargaining and advocacy on the job as well as safer work sites. For generations that value security, high wages and fulfilling work, this sounds like a match made in heaven. Yet a recent survey showed that only three percent of young people currently consider a construction career as an option.

Why the Disconnect?

Cultural factors and stigma surrounding the skilled trades are at least partially to blame for younger generations not yet thinking about construction as a career choice. Growing up, Millennials and Gen Zers were told the only way to make a living was to go to college and get a white-collar job. In this narrative, the skilled trades were meant for people looking for a backup plan. In contrast, older generations like Gen Xers and the Baby Boomers grew up seeing the successes of unions and blue-collar workers.

Gen Zers and Millennials are said to value openness, flexibility and independence at the workplace. They want to feel heard and valued by their employer for their unique perspectives. To those born before 1980, this can come off as entitled, opinionated or lazy. Conversely, Gen Xers and Baby Boomers are said to work long hours and value self-reliance and practicality. On the flip side, younger workers may complain their older colleagues are rigid, close-minded and too traditional.

The problem with this type of thinking is that it’s rooted in stereotypes that aren’t necessarily true or helpful. Differing attitudes across generations are most often a product of circumstances, not age. For example, older Millennials entered the workforce during the Great Recession and therefore place a higher value on job security than Gen Zers. Similarly, older Gen Zers entered the workforce in the midst of a pandemic and therefore prefer flexible work arrangements and digital communication.

Another potential reason for the disconnect is that construction is hard, physical work. A career in the skilled trades is demanding and, as with any other industry, comes with its own physical and mental health risks. But despite these risks, one report found that construction workers are among the happiest employees.

While younger generations want to feel satisfied and fulfilled in their everyday work, they also put a high premium on their health and safety. A lot of young workers aren’t willing to risk their health for the sake of a career. This is an opportunity for construction contractors to call attention to health & safety programs that address young people’s concerns and show they care about workers’ well-being.

How Can the Construction Industry Answer the Call?

The more that young people rack up thousands of dollars in student debt and barely make enough to cover their bills post-graduation, the more they question whether the college path is right for everyone. Younger workers are realizing they don’t have to follow the traditional 9-5 corporate lifestyle to achieve success, and researchers predict interest in the skilled trades will increase in the coming years. It’s now up to the employers to address young people’s concerns, show how trade work aligns with their values and adjust their recruiting strategy accordingly.

Millennials and Gen Z can be part of the change they want to see in the construction industry, including more open discussions about formerly taboo topics like mental health or social issues, prioritizing safety and health above a finish-at-any-cost mentality and breaking down the stigma surrounding these jobs. Meanwhile, employers and unions can work to better market apprenticeship programs, robust benefits packages and comprehensive health and safety plans. If there’s one lesson to draw from recent trends, it’s that workers are an employer’s biggest asset and should be treated as such.

Our economy is in a unique moment where five generations currently make up the workforce, so finding common ground and learning to adapt is the best way to attract and retain talent going forward.

The Three Elements of Managing Risks.

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By Paul Coderre, CSP, ARM, OneGroup


Construction is a tough business. The work is tough. The people are tough. The competition is tough.

When considering risk management in construction, it can feel like a challenge to that toughness. In reality, you have worked hard to build your business. Your efforts provide for your family and for the families of your workers. Protecting your business is part of that effort. Risk and its outcome present a real and substantial threat to the business you’ve built.

In the risk management field, we look at threats to an organization’s ability to thrive; further, we’re looking at potentials that threaten an organization’s ability to even survive. Whether the threat is a lawsuit stemming from New York State’s Labor Law, workers’ compensation costs, the cost of putting trucks on the road, or even OSHA fines – the dollars can be big and the impact severe. In the day-to-day grind of bidding and building, investing the time and effort required to manage risks often takes a back seat, but that’s when bad things happen.

So, you may be wondering… Whose responsibility is it to manage the risks faced by your company every day, and how would that be accomplished? What does a solid risk management program look like? I’ve been in the risk management, safety, and loss control field for over 40 years, and I can tell you that protecting your company from risk has very little to do with a traditional safety program. I’ve walked into many a contractor’s office or job trailer and been handed the site safety plan. I’ll look it over and then ask the Super., “Can we go out and see how you’re really doing things?” Most of the time, what I see is very different from what I read. Safety (or risk management) is not a program, or a binder; it’s not a toolbox talk, or computer-based training, or even an inspection. Construction Risk Management is based on the decisions that you, and every one of your employees, make every minute of every day that you are onsite. Safety is someone securing a ladder, checking a ground, or using the right tool for the job. Each of those things stem from a good decision made by the employee. Your risk management challenge is giving them the information to make the decision and holding them accountable to making it.

Managing construction risks depend on the decision you make in writing your contracts (and signing those of others). Managing risk fails when your site supervisor walks past the shaky scaffold, or the subcontractor failing to use their PPE, or allowing the employee to operate that piece of equipment without knowing if they were capable. Managing construction risk is highly dependent on how you, your supervisors, and your site managers respond to an incident, whether it’s an injury, or a near miss, and whether it involves your employee or a subcontractor.

Now, let’s talk about the three key elements of managing construction risks:

  • Preventing of incidents
  • Responding to incidents
  • Managing incident outcomes

Prevention

Needless to say, an incident that doesn’t happen doesn’t cost the organization time or money. However, in order to be confident that the risk of an incident has been minimized, we have to be confident that our employees are making the right decisions every day (i.e., wearing their PPE, erecting the scaffold securely, only accepting well-written contracts… the list goes on). How do you do that? Remember when I said that risk management isn’t a safety program? It’s not. That’s just a book. Prevention of incidents is dependent on every one of your employees knowing what is expected of them and using that knowledge to make decisions every day. Minimizing incidents on a construction site requires that each of your employees apply the safety concepts they’ve been taught. It also relies on your managers and supervisors holding every one of your employees accountable to those concepts every day. So no, safety is not a program or a book; it is a system of defining expectations of conditions and behaviors, and then holding people accountable to the application of those principles. The written program is just a way to make sure everyone is using the same concepts.

Response

The next critical piece of managing risks in construction is how you (or your management team) respond to an incident. Again, we’re talking about any incident – whether an injured worker, a vehicle accident, or a subcontractor incident. The process of responding to the event can mean the difference between a minor disruption and a major claim.

The critical factors in responding to incidents are:

  • taking care of people
  • communicating with whomever needs to be communicated with
  • identifying the real cause of the incident
  • taking steps to prevent it from ever happening again (if possible)

Number one, taking care of the person is a responsibility, not an annoyance. Getting an injured person the medical care they need quickly and efficiently provides you with a host of benefits, including getting the person healed quickly and preserving a good employee. Failure to take care of an injured worker or subcontractor can easily result in long disabilities and lawsuits, not to mention low morale and turnover.

Fast and complete communication within your company and with the insurance carrier is the second critical response factor. Incidents in the field need to be communicated to management and administration quickly so that response can be coordinated. Involving your claim-person immediately upon notice of an incident can help establish appropriate care and preserves the evidence needed should a claim or lawsuit come about.

Managing Incident Outcomes

Claims and lawsuits are common outcomes of accidents within construction operations. Workers’ compensation claims run the gamut from minor incidents with no lost time to debilitating and even fatal incidents. Your ability to manage the claim process depends on the information you gather throughout the claim and the relationship you have with your adjuster.

When an incident occurs, that information should immediately be communicated to your office person who manages such situations. An incident report with all appropriate information about the injured worker, their injuries, treatment, etc. needs to be given to your office so that it can be provided to your claim professional. This allows that person to work with you to determine the best course of action in managing the claim outcome. Your office staff should be actively involved with your claim professionals to provide updated information and to continue managing the claim to achieve its most favorable outcome.

Regular claim review meetings, or periodic claim discussions regarding the status of an injured worker or a liability suit, provide you with an opportunity to contribute information, as well as get information on where the claim is going and what the outcome may be.

In addition to the initial claim report (to get the carrier involved), identifying the true or root cause of the claim, and implementing controls to prevent reoccurrence, is critical both from the standpoint of managing your OSHA exposure to fines and managing the long-term risk to your company. From the OSHA standpoint you’ve seen the new fine structure. No one can afford citations, let alone “willful citations.” Very recently, a roofing contractor was fined over $1M in response to an employee falling from a roof that resulted in a fatality (and that doesn’t even contemplate the labor law case that’s sure to arise).

This devastating accident proves the importance of establishing practices to prevent such incidents. Failing to eliminate or minimize the possibility of reoccurrence of an incident doesn’t make sense. Sometimes closing the barn door after the horse ran out is important, because there are more horses in the barn. It is in the organization’s best interest to dig into the events and decisions surrounding an incident in order to find and prevent those things from happening again.

Overall, risk management in the construction industry is not “having” a safety program. Success in managing risk is about using the tools (i.e., a safety program, training, consistence, accountability) to foster the right decisions among your employees; every hour of every day that they’re on your job site.

For more information, please contact Paul Coderre, Vice President of Risk Management Services at PCoderre@OneGroup.com.

Glass Doctor of Syracuse has a Clear Advantage Over the Competition

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Aaron Look, Owner of Glass Doctor of Syracuse and Watertown has been in the glass business for 22 years, first working for a local glass company and then starting his own business in 2004. With two locations in Syracuse and Watertown, Glass Doctor performs full-service glass work for home, auto, and commercial customers either in their shops or onsite with a fleet of mobile glass vans. A locally owned and operated company, Glass Doctor prides itself on creating both a family-friendly workplace and an exceptional customer experience.

Family First Work Environment

One of Look’s main goals as an entrepreneur is to create a business where his employees are happy, and that means putting them and their families first. “I don’t want to own a business where there is no community,”

says Look, “the reason I wanted to be an entrepreneur was to employ people, give them a career, and put them in a position that’s good for them.”

Glass Doctor follows a Code of Values which includes Respect, Integrity, and Customer Focus. These values inform how they operate and how their employees conduct themselves on and off the job. By creating an environment where employees feel respected and valued, Look says they will enjoy coming to work. “If your employees are happy, then your customers will be happy too.”

Frank Watson, Director of Sales and Marketing for Glass Doctor has been with the company since 2019. Watson says Look understands the importance of family because it’s important to him as well. In fact, Look’s mother Katie has been working at Glass Doctor in billing and accounting for the past six years.

Look maintains an excellent relationship with his 14 employees by going out on jobs when they need an extra pair of hands. He also will work with employees to make sure their schedule meets the needs of their families, such as getting home in time to be with their children after school. “He focuses on the future and wants his employees to be healthy and happy,” says Watson, “and in return, his employees work hard for him.

Specialized Knowledge and Expertise

Look prides himself on having the best people for the job. “We use the term specialist instead of technician,” says Look. Expertise is at the core of being a specialist and Glass Doctor employees are trained to answer any question a customer may have. If an employee does not know the answer immediately, Look says, someone in the organization will. All Glass Doctor specialists focus either on flat glass or auto glass and while a job may require someone to cross over to another area, they try to keep specialists within their area of expertise. “The lead specialist on any job is an expert,” says Watson, “we only hire the best.”

The Right Tools for the Job

In order to do a job right, Look believes you must have the right tools. Glass Doctor specialists can do a job onsite using mobile flat glass and mobile auto glass vans.

The vans are mobile workstations, completely stocked with all the supplies a specialist needs to complete the job successfully.

Auto glass vans are equipped to do work on the road, but Look says, he does not send his specialists out in challenging weather conditions. “I am not going to put my employees in an environment where they can’t perform their job properly,” Look says. In instances of heavy rain, snow, or extreme cold, customers can bring their vehicle to the Syracuse or Watertown shops to have work done, or specialists will come to their home or business if they have a garage. “We can do work inside our shop or in their garage. We can supply heat if we go to a customer site and we bring all the tools we need. We try to accommodate our customers as best as possible,” says Look.

Glass Doctor’s flat glass vans are set up with lighting, work benches, and heaters. Specialists can work right inside the van, regardless of weather. “We have the newest technology and our specialists have the best tools,” says Watson.

Exceptional Customer Experience

Look’s second goal as a business owner is to provide Glass Doctor customers with an exceptional customer experience, which begins with excellent communication over the phone and continues when the Glass Doctor specialist arrives at the job site. All of Glass Doctor’s vans are fully wrapped with company branding and are clean and presentable. Glass Doctor specialists are in full uniform and wear a badge to easily identify them. Specialists are also drug tested and background checked. The specialist will lay down a branded Glass

Doctor doormat and put on boot covers before entering a home. “Our service starts on the phone, but where we really shine is when we are in the house,” says Look.

Watson says every Glass Doctor specialist is a sales representative for the company. “They are the ones doing face to face with customers and contractors. We understand the importance of doing a great job, doing it on time, and if there is an issue, we address it and make it go away.” Solving problems for customers is a key part of how Glass Doctor operates. “If we are supposed to complete a job today, we have to deliver when we promise a certain time frame. Delivering the product on time is as important as a fair price,” says Watson.

Look wants his customers to be 100% satisfied with the end result, calling customers personally to thank them for their business and see if there are any issues he can help resolve. “I can’t sleep at night if someone is upset with our work,” says Look. That customer focus is essential to Glass Doctor’s company culture. “It’s great to have growth,” Watson says, “but the key to growth is to retain the customers you already have. It goes back to making a commitment, doing what you promise, and following through. You have to keep those customers happy that made the phone ring in the first place.”

A Clear Advantage for Home, Auto, and Business

Glass Doctor specialists are able to customize and install glass products for home, auto, and business customers. For homeowners, they make tabletops, design  and  install  frameless  and  semi-frameless

showers, insulated glass units, foggy glass, glass handrails, and replace windows and glass doors. “When a customer breaks a window,” says Look, “they think they have to replace the entire window. In reality, they might just be able to replace the glass and that can save them time and money.”

Glass Doctor Specialists do all auto glass, windshield glass, door glass, back glass, and ADAS calibration for cars, fleets, and trucks. Glass Doctor guarantees their windshield replacement for one year, something that sets them apart from their competitors. “If we replace a windshield for you and something happens to it, whether it’s a day later or 364 days later, we will replace it for free,” Look says.

In the last five years, the auto industry has changed remarkably and in the next five years, Look predicts at least 90% of new vehicles will have Advanced Driver Assistance System (ADAS) features. ADAS features include auto assist, lane departure, and forward collision alert, for example. These features are controlled by a camera behind your rearview mirror, says Look, and when a car windshield is replaced, the camera has to be uninstalled and remounted after the work is done. “When you reinstall the camera,” says Look, “you need to ensure it is recalibrated so that the safety features will work properly. We can do ADAS recalibration in house, so drivers do not have to go to the dealership after their windshield is replaced.”

For business customers, Glass Doctor specialists install glass for storefronts, tabletops, commercial doors and provide lock repair and maintenance, emergency service, and board ups. For large office and commercial buildings or apartment buildings, Glass Doctor offers an apartment advance measuring service. Look explains that large commercial buildings have many of the same window size. “We measure them and manufacture some in advance, so when a window is broken, we can go and replace them same day, instead of having to wait a week or more to have one made,” Look says.

Building the Future for Glass Doctor

The home shower business is Look’s next focus, hoping to double or triple his business in the next year or two. “We come right to your home with samples and provide a full CAD drawing of what the shower would look like. There is so much customization that is possible with shower glass,” says Look.

A recent project included 70-80 showers for the lofts at

300 East Washington Street in Syracuse. “We are available to work with contractors and builders when they need to build out showers or mirror work,” says Look.

Since 2020, Look says they have experienced 600% growth in their business. Look attributes their massive growth to hard work and the right employees. Things have been going so well, they are considering opening a third location in Utica.

Watson says, “Glass Doctor supplies the best technology, the best tools, new vans, and safety protocol for specialists going into people’s homes. We take the extra steps to make people feel comfortable and want to do business with us.”

Glass Doctor has locations in Syracuse and Watertown. For more information, visit glassdoctor.com/syracuse-ny.

Sarah Arnold, Insurance Agent and Glass Doctor Customer

Sarah Arnold is a Glass Doctor customer and an insurance agent. When Arnold and her

husband were building a home, she chose Glass Doctor to build her glass showers. “They were fairly and competitively priced. They are easy to work with and educated me  on  all  the  glass

options available. I was extremely impressed when the owner came to do the install himself. It’s clear that they want every customer to have a great experience.”

Arnold says any time she has an insurance client in need of glass repair whether auto or home, she doesn’t hesitate to refer them to Glass Doctor. “They are professional, timely, and clean,” she says, “Glass Doctor is great to work with.”

Key Considerations in Valuing a Construction Company

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Deborah E. Finch, CPA/ABV, CVA, CDA, Dannible & McKee, LLP

As the owner of a construction company, there are many possible reasons for needing to know the value of your business. Whether you are contemplating a sale or merger, planning for internal ownership succession, considering gifting stock to family members, or obtaining financing, determining what your company is worth is one of the first steps in the process. Just as importantly, understanding how your company is valued can provide valuable insight into the measures that you can undertake to enhance the value of your business over time.

Traditionally, there are three primary approaches to valuing a business

  • Market-based approaches, which look to transactions involving the sale of similar companies in the same line of business in order to derive multiples of sales, earnings or other metrics to apply to the company to be valued.
  • Asset-based approaches, which value a business based on the fair market value of its assets less its
  • Income-based approaches, which value a business by looking to the future earnings or cash flows it is expected to generate in the future.

Market-Based Approach

Since most construction companies are closely held businesses, obtaining information on transactions that have occurred in the market can prove difficult. So too can obtaining the necessary information to determine the true comparability between two construction companies before applying valuation multiples under the market approach. As a result, most valuations of construction companies focus on either the asset approach or the income approach.

Asset-Based Approach

For construction companies with significant equipment and facilities, such as a highway contractor, the asset-based approach may yield the highest value in a transaction. In addition, since many heavy equipment contractors are required to be the low bidder on many of their contracts, they are often poor candidates for employing an income-based approach.

In determining value under an asset approach, the company’s financial assets, such as accounts receivable and unbilled contracts in process are revalued based on the amount that is likely to be realized in cash. Similarly, tangible assets are revalued to their fair market value based on the current cost to acquire or reconstruct a replacement asset of comparable utility. After determining the fair market value of the company’s financial and tangible assets, the existing liabilities of the company are subtracted from this value, resulting in the entity’s Adjusted Book Value.

In some instances where significant intangible assets value may exist in addition to the value of the company’s “hard” assets, these intangible assets may also be separately valued and added to the Adjusted Book Value. Examples of intangible assets include contract backlog, name recognition/reputation, a trained and loyal workforce, and strong client and vendor relationships. These intangible assets are generally reflected as “goodwill” in the context of a business valuation. Valuing the goodwill component of a construction company is generally accomplished through an income approach such as the capitalization of earnings.

Income-Based Approach

For general contractors or specialty contractors with fewer assets and a higher reliance on credit, the income-based approach is generally preferred. This approach to valuation is based on the company’s expected future annual returns to an investor. Where reasonable future cash flows of the company can be projected, these future cash flows are converted into current value. This is accomplished by discounting the future cash flows to today’s dollars using a discount rate based on the risk inherent in an investment in the company. In essence, the discount rate reflects a safe rate of return, plus an additional return that will compensate the investor for the risk of achieving the projected future cash flows.

As an alternative to discounting future cash flows, historic earnings or cash flows can be adjusted and capitalized. Where earnings are used in lieu of cash flows, the earnings measure most often utilized is EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). Regardless of the measure used, the company’s historic earnings or cash flows must be “normalized” in order to reflect the benefit stream an investor can expect to receive in the future. Typical normalization adjustments include owner’s compensation and fringe benefits, related party transactions, and nonrecurring or extraordinary items. Once an average annual earnings stream has been determined, this amount is converted into value by dividing it by a capitalization rate (a derivative of the discount rate) that reflects risk and future growth.

As you can see, there is no single approach or simple formula to valuing a construction company. Just as every construction company is unique, so too must the analysis

of the company be in order to select the best valuation approach, discount or capitalization rate and other valuation adjustments. Engaging a professional with the experience and expertise in valuing entities in the construction industry is critical to arriving at the true value of your company.

Deborah E. Finch, CPA/ABV, CVA, CDA, is a tax partner at Dannible & McKee, LLP, a public accounting firm with offices in Syracuse, Binghamton and Albany. The firm has specialized in providing tax, audit, accounting and advisory services to the construction industry since its inception in 1978. Debbie has extensive experience providing business valuation and succession planning services. For more information on this topic, you may contact her at dfinch@dmcpas.com or (315) 472-9127 x160.

The Critical Role of Apprenticeship and CTE Programs in the Construction Industry

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Earl R. Hall, Executive Director Syracuse Builders Exchange

Labor shortages continue to plague the construction industry both regionally and nationally, with such issues happening long before the COVID-19 pandemic. Although the pandemic has increased the shortage of workers, the long-term solutions to solving the labor shortage in construction remain complex. Two such solutions which have proven to be effective are the apprenticeship programs offered via the many local building trade unions and the Career and Technical Education programs offered by local school districts.

There is a renewed focus on apprenticeship and training programs by the trades across upstate New York. Apprenticeship programs combine classroom and industry-related instruction provided by the union, with on-the-job learning provided by employers. All apprenticeship programs are registered with the New York State Department of Labor and governed by a Board of Trustees which include both employer and union representation.

Capital investments into new or existing apprenticeship and training centers can be seen right here in central New York. The North Atlantic States Regional Council of Carpenters Local 277 built a state-of-the-art training center in 2018 in Syracuse. During 2021, the union recruited 250 apprentices and new journey men/women into the union. As a result, the union is planning to expand the training center to not only accommodate the new apprentices, but to provide the delivery of additional training and education.

Apprenticeship programs remain attractive to young men and women as they provide a career pathway without having to incur debt to pay for the training and education. The “learn while you earn” concept is a delicate balance of providing apprentices with required training and on the job work. As a trustee on many of these Funds, I see firsthand the immediate benefit of this model for both the career-minded apprentices and those employers who hire them.

Pre-apprenticeship programs attract candidates who may  explore  the  construction  industry  at  a  very elementary level while deciding if it is a career for them, and if so, what trade is of most interest. In central New York the Syracuse Builders Exchange has partnered with Syracuse Build’s Executive Director Christopher Montgomery to place those students who graduate from their pre-apprenticeship program. Graduating students may be placed directly into the workforce with a construction industry employer or may be placed into one of the many union apprenticeship and training programs to further develop their careers.

Career and Technical Education (“CTE”) programs have increased in high schools throughout upstate New York. As a member of the Syracuse City School District’s CTE advisory board, I witness the impact such programs have on impressionable, young students who see themselves entering their chosen career upon graduation from high school. Although the Syracuse City School District’s CTE program was the first of its kind in upstate New York, the model developed by the Syracuse City School District is now being reviewed and considered by other school districts.

While construction, welding and electrical are just a few of the career pathways offered by the CTE program, new offerings such as Construction Management will be delivered to students in September 2023 when the new STEAM (science, technology, engineering, and mathematics) school opens in downtown Syracuse. The Construction Management curriculum is being developed by a committee of executives of construction management companies from throughout central New York.

While no one solution will solve the labor shortage issues plaguing the construction industry, initiatives such as apprenticeship and pre-apprenticeship programs, and CTE programs in high schools provide employers with optimism that the next generation of construction worker is actively being recruited. The question is, will there be enough workers to fill all the positions anticipated over the next few years? Most likely not.

Case Study: Caught with his Hands in the Till?

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Annette Malpica, Vice President, Director of Claims & Legal Counsel, Lovell Safety Management Co., LLC

In recent years, employers have seen a rise in the number of claims for work-related occupational repetitive    stress    injuries     (“RSI”).     Occupational diseases, unlike accidents, which occur suddenly and unexpectedly, usually develop over an extended period. The increases in occupational RSI claims were most notable after the 2007 Workers’ Compensation Reform legislation set in motion increases in the weekly rate of compensation, from $400 in January 2007 to $1063 a week as of July 1, 2021. It is not uncommon for RSI claims to be filed by employees who claimed no lost time from employment, continue to work without any limitation, and require minimal medical treatment. The cost of RSI claims ballooned post reform. NYCIRB’s State of the System 2021 Report found that permanent partial disability (“PPD”) claims accounted for over 73.4% of losses, even though they represented only 18.6% of the claims filed in 2021.

The RSI case of JT is not unusual. JT, a laborer for a construction company, filed an occupational disease claim in 2019, after being terminated from employment. He alleged RSI to both elbows, hands, and bilateral carpal tunnel due to jackhammering and shoveling. According to his doctor, the injuries occurred within two months of the claimant’s employment. The claimant never received any treatment, surgery or lost any days from work during his employment since the diagnosis of occupational injuries occurred post-termination. He is seeking $145,000 in a schedule award. The Workers’ Compensation Board (“WCB”) must determine whether the claimant’s conditions meet the legal requirements for an occupational disease entitling him to a schedule loss of use award (“SLU”).

Repetitive Strain Injuries as Occupational Disease

Workers’ Compensation Law § 2(15) defines an “occupational disease” as “a disease resulting from the nature of employment and contracted therein.” Occupational diseases that meet this legal standard are compensable under the WCL. In Goldberg v. 954 Marcy Corp., 276 N.Y. 313 (1938), New York’s highest court defined an occupational disease as:

[c]onditions to which all employees of a class are subject, and which produce the disease as a natural incident of a particular occupation, and attach to that occupation a hazard which distinguish it from the usual run of occupations…

Occupational RSI are often diagnosed as: carpal tunnel, tendinitis, bursitis, or cubital tunnel syndromes. Symptoms range from pain or tenderness, stiffness, or joint restriction, tingling or numbness, cramping and swelling of the extremity.

Claimants who had established RSI claims may be entitled to permanent partial disability or, SLU awards. The skyrocketing cost of SLU awards was an area of contention that the 2017 Reform legislation attempted to address by requiring updated Impairment Guidelines.

The 2017 Reform Legislation and Skyrocketing Cost of SLU

The 2017 Reforms directed the WCB to create new SLU impairment guidelines (the prior guidelines were issued in 1996) to reflect “advances in modern medicine that enhance healing and result in better outcomes.” Unfortunately, the 2017 Guidelines represent a missed opportunity to modernize the system. The new guidelines produced SLU outcomes comparable to the 1996 Guidelines with some clarification regarding ranges of motion and other special considerations. The Guidelines, however, lacked objective measurements, were subject to manipulation and failed to adequately reflect medical advancement in treatments. Had such factors been considered, they would have often resulted in findings of minimal or no permanent loss to a claimant’s earning capacity.

As for JT, whether he was caught with his hands in the till or ultimately awarded a SLU based on his disability, one thing is for certain – the ever-skyrocketing costs of occupational RSI.

Annette Malpica R.N., Esq, is VP, Director of Claims & Legal Counsel at Lovell Safety Management Co., LLC. For more information on workers’ compensation, contact Lovell at 1-800-5-LOVELL or visit online www.Lovellsafety.com.