With up to seven vehicles on the road every day, ABC Seamless of Northeast Ohio, a roofing, siding, sunroom, and window company, is definitely feeling the fuel pinch. Gas expenses for the Fredericksburg business will hit $70,000 this year, twice what they were last year, says Lorin Miller, company president. “The other side of the equation is that we find ourselves traveling farther for the work that we need,” he says.
BETTER PLANNING Gasoline costs — just $2.50 per gallon two years ago — have reached levels unimaginable a short time ago. In 2007, prices hovered in the $3 to $3.50 range before soaring to $4-plus a gallon this year. Few, if any, experts foresee a drop in gas prices.
The sudden spike has many home improvement companies, especially those that operate fleets for estimators or installers, scrambling to minimize the damage. Independent sales reps are watching monthly gas expenses double. “It's a perfect storm,” Miller says, noting the damaging combination of skyrocketing gas prices and the rise in raw-material costs for metal and asphalt shingles.
But, despite rising expenses, ABC Seamless has managed to maintain its profit margins. “The main reason is that we've tried to diversify a little more and sell more products to a smaller group of customers,” Miller says.
To minimize the impact of surging fuel charges, Gary Templin, co-president of Windor Inc., in Anaheim, Calif., has turned to better planning and scheduling for the company's fleet of 40 vehicles, which often travel several hundred miles. Windor also concentrates on markets and jobs that pay off. “It's not that we discourage business anywhere [in particular], we just need to be up front with our costs,” Templin says. “Most people understand that you can't put a truck on the road for two hours one way and not charge for it.”
PASSING ON COSTS Although many companies shy away from passing along such price increases to customers, those that don't may not be around in a year, warns Cliff Hurn, CEO of Legacy Roofing, in Redmond, Wash., which operates a fleet of 60 trucks for estimators, installers, and repair technicians. “If you're not adjusting your prices, you may go belly-up,” he says.
Building pricing into products and services can lessen the customer's sticker shock, Hurn says. To ensure fairness for both the company and its customers, Legacy Roofing uses cost-based estimating: All estimates are built on current pricing. “Keep an eye on your costs and make sure you're passing them along,” Hurn advises.