Call a plumber or roofer and you might be talking to a prisoner
You’re getting ready to sell a home or
you’ve bought one. You’re looking
for plumbers, painters, roofers or
carpet cleaners to fix it up. You can search
the Yellow Pages or Google each trade, but
what the ads won’t tell you is who is behind
the work.
Subcontracting is an essential practice in
the building trades. General contractors hire
electricians, etc. Trouble is, it can be carried
too far and kept from view by many companies
that are not so much in the building
trades as they are in the marketing business.
The idea that a company stands behind its
products has been compromised by a trend
to run service departments out of call centres
where labour is cheap: think Mumbai or
Bangalore, India, or where companies want
to centralize their operations.
Many trades lend themselves to remote
management. Low capital investments,
minimal job training and lack of licensing
laws make it easy for anyone to set up shop.
The real problem for the companies that do
the work is finding customers.
The big ad that draws your attention to a
roofing business may lead you to a company
that farms out work to independent contractors
who do it. There is no criticism
intended about the practice, for it is traditional
and there are many good roofing
crews. But the company you call and the
crew you get may be different. The contracting
company may stand behind the work,
but you don’t really know who is doing it.
Even in businesses that require training
and licensing of journeymen, the number
you dial may lead you to a call centre in
another country. A major plumbing company
that serves all of North America sends
out repair crews, handles installations and
manages operations from the American
Sunbelt. But will you feel comfortable calling
to a town under the palms when your
furnace won’t start?
Marketing whizzes and efficiency experts
have figured out that deconstructing businesses
is profitable. Moreover, if the head
office is in a low-tax jurisdiction and the
call centre can be run with cheap labour in
Mumbai, there’s more profit to go around.
It’s not just India anymore. Several
American states as well as the U.S. Federal
Bureau of Prisons allow inmates to work in
call centres in the jails
run by private companies
or business units
of the prison system.
Federal Prison
Industries, a business
unit of the Bureau of
Prisons, advertises its
call centres as
“domestic outsourcing
at offshore prices.”
The inmates make a few hundred dollars a
month, not much for a regular job, but
arguably not bad when government covers
all accommodation and meals.
Helping folks in the slammer learn skills
is laudable. And most call centres are
staffed by people who are not incarcerated.
But don’t you want to know who you are
dealing with? After all, reputation counts
for more in a community than it does on a
continent-wide or international basis.
In the end, the best advice is to shop for
trades that have good local reputations.
They should be managed by people known
in the community and who have a vested
interest in their good names. There are, of
course, reputable companies running their
shops through remote head offices and call
centres in far away places. But when you
phone up in the middle of the night and say
that your pipes are leaking or that there are
burn marks on your electrical panel and no
power at all in your house, do you really
want to be talking to India or Georgia or,
who knows, a prisoner in
Oklahoma?
Regardless of the trade
you choose, Manitoba’s
Builders’ Liens Act provides
for a 7.5% holdback
of the contract price or the
value of work billed. In
B.C., the holdback in a similar
act can be 10 per cent of
the job’s contract cost or
invoice. The money held
back must be paid when the work is substantially
completed or abandoned. Each
statute is complex and should be consulted
before holding back money.
Holdbacks provide encouragement for
trades to do their work well enough so their
money is released, but that’s a short-term
solution. For the long term, a homeowner
should choose the right person or firm to do
the job right.
Andrew Allentuck is the author of Bonds for
Canadians: How to Build Wealth and Lower
Risk in Your Portfolio, published by John
Wiley & Sons Canada Ltd.
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