New Model For the Remodel Business
Projects Are Smaller, Cheaper in Downturn
Thursday, February 12, 2009; Page H01
Frugal is fashionable when it comes to remodeling, according to William K. Millholland, executive vice president of Case Design/Remodeling. The effects of the economic downturn have trickled down to the Bethesda-based home improvement company, where business has slowed and 20 employees have been laid off, leaving a staff of 275. New projects are coming from homeowners who are staying put and taking the opportunity to make their homes more comfortable.
Case, which was founded in 1961, also owns Case Handyman Services, a franchise operation with 39 locations all over the country. (The local charge for the Handyman service is $97 per hour.) Millholland, who has been with Case since 1990, says the company is reacting by changing the way it does business.
"Remodelers traditionally suffer during economic downturns, but not as much as home builders or car dealers," he says. "People are trying to stretch a dollar, and they are not embarrassed about spending less. They almost celebrate it. As long as we are proud of our work and its quality, this is okay for us, too."
We spoke with Millholland at Case headquarters last week about the new remodeling reality.
What changes have you seen in your business in the past six months?
We have seen a fairly dramatic decrease in the average project size. We still do kitchens and baths but are doing them less expensively. There has been a significant drop in what people want to invest or are able to invest in their homes. People were accustomed to ever-increasing home values and were able to pull money out in home equity loans. Now, these are harder to get. Clients are slowing down and taking longer to make decisions. People are buying their own kitchen appliances. In some cases, they are doing their own painting. They are stretching the budget as much as they can.
How has the Handyman division been affected?
That business is stable. Homes still need to be maintained. We are doing $500 to $1,500 projects, things like fixing electrical problems, plumbing, caulking, winterizing and replacing gutters after ice storms. We install grab bars in bathrooms a lot and put in dog and cat doors.
When will this all get better?
We used to pride ourselves on the ability to predict the future. The world has turned upside down, and our ability to project where we will be six months to a year from now isn't there. There are no recognizable signs that it's hit the bottom. When you are faced with this, you try to get creative and do more small-scale things: universal design, energy-saving improvements and sustainable, green design.
What are the most requested projects?
The kitchen is still number one, whether it's adding a new one or just a cosmetic cleanup. Bathrooms are a close [second].
What projects, if put off, could actually damage your house?
You can put off a new kitchen, but loose bricks or stones on your stoop or water infiltrating the basement or attic is dangerous. Water issues not only damage the house but can develop into mold problems. You should not put off electrical issues, such as bare wires and overloaded panels. Address roofing issues, gutters and downspouts, and have your furnace cleaned and inspected annually. The majority of homeowners don't spend until there is a problem.
Are many homeowners knowledgeable enough to do maintenance themselves?
Every generation is less and less into DIY. Compare what your grandparents knew how to do, to your parents and then you. And what do your kids know? I can't imagine my daughter painting a room. Every generation, people do less. Remember when people used to change their own oil and tune up their own cars?
Is there any bright side to this?
Back in the summer of 2006, it was so busy we were backed up six to eight months waiting for kitchen cabinet deliveries. Building permits could take months. Now it's easier; we don't have a backlog. If you call our Handyman service before noon, we can usually come the next day. You can get a better deal now. We are getting better prices from all of our suppliers and subcontractors. Money matters. Everyone's pencils have gotten sharper.