Plumber Poised for Construction Boom

After weathering the economic downturn, long-standing plumbing company eyes new construction opportunities in northern Nevada.
Plumber Poised for Construction Boom
The Ira Hansen & Sons Plumbing team includes (from left) Taylor Echevarria, Adam Heil, Ian Hansen, Ira Hansen, Alexis Hansen, Tracy Cobb and Steve Messmore. Photography by Tom R. Smedes

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When the economic bust hit Nevada in 2006, residential service became the bread and butter for Ira Hansen & Sons Plumbing. While that end of the business represents 75 percent of the company’s work today, owner Ira Hansen sees new commercial construction as the future.

Hansen, a master plumber, established the firm in Sparks, Nevada, after working in the industry in a variety of capacities, eventually specializing in new construction in both residential and commercial projects, while providing traditional plumbing service for residential and light commercial customers.

“In a small market like we are in — Reno/Sparks — with up to 400,000 population, it is a very competitive market and you will find most service shops use the service side to pay overhead,” Hansen says. “So there is not a lot of profit in it. If you compare a service shop price-wise in Las Vegas, San Francisco Bay Area or Sacramento (California) they will have a higher profit margin simply because of supply and demand. Here we don’t have that big base and we have a lot of guys chasing the same work.”

Hansen built his company around commercial and residential new construction because the market was strong. The company worked in many tract home subdivisions as well as commercial buildings. From 1996 to 2006, the company contracted with over two dozen home building firms, and from 1999 to 2007 their extensive list of commercial projects topped over 24 major building sites.

“Everything was going crazy,” he says. “I could not hire quality guys. The minute a guy would get laid off or be fired from one company, he would be hired by another firm. The demand for housing tracts was great. I found I was in a terrible business model because with so many people and projects, you lose control.”

Hansen had 40 employees on the payroll, and his hands were full trying to find the personnel to fill the bill and keep a demanding situation under control. In fact, just before the bottom fell out, he had decided to drop residential housing and concentrate on commercial new construction and renovation.

“I was pretty much a one-man shop until about 1992 when I hired a guy with some experience in bidding tract housing. We did almost exclusively housing tracts with standard service and repair work as a secondary backup. Then when the economy collapsed, service was the bread and butter, and has and will remain so.”

The company typically operates within a 60-mile radius, but in some instances will travel up to 150 miles if a project is big enough to warrant it.

Ira Hansen & Sons today operates with a fleet of four Chevrolet and GMC box trucks. Their cameras are from General Pipe Cleaners and RIDGID. They have a RIDGID jetter and locator, and use many other RIDGID tools.  

Promotion is largely through the company website, which is handled by Hansen’s son, Jacob, who serves as an outside business adviser.

The right people 
Hansen eventually realized new residential construction was not a profitable venture for his firm, primarily because so many in the business were hiring illegal workers and paying lower wages. His policy has always been to hire American workers, and the higher wages made it impossible to compete.

“Our prices are higher and we cannot make a nickel on the residential jobs,” Hansen says. “Housing tracts are made up of piecework, and they pit laborers against each other. The person who gets the job hires friends, or cousins working for minimum wage. That is the reason I abandoned that work even before the depression.”

In commercial construction, the tendency is toward hiring more qualified technicians who receive higher pay, so the playing field was more level.

“With commercial construction you have an opportunity to make a good profit if you have good quality personnel to perform effectively. What we found as we expanded in that hot market is it was difficult to find the quality personnel to perform quality work. By scaling back to 15 on the payroll from 40, we actually had less work, but a higher profit. It was a headache to find the quality guy, rather than in desperation taking anybody off the street and putting him on a job just to get it done.”

When the economy hit bottom, Hansen says things were so tough that he saw 30 or more mechanical contractors bidding for a single commercial construction job.

“Many of those guys were incredibly desperate to get something going. They were bidding way below cost just to get something generated. They were bidding $30,000 on a $50,000 job. I don’t see that happening now. I think the market has stabilized. It is supply and demand and we are close to where we can see it becoming profitable again.

“Our company survived the bad economy for several reasons,” Hansen says. “We had a long-term reputation in business and had relationships with contractors and suppliers. And from that network there was an inner core that helped keep the community together. That was No. 1. Then we had to scale back. Hated to do that but we had to lay folks off to cut back on overhead.”

Of course, circumstances ruled the day, and the situation required some major re-evaluations in order to keep the doors open. The staff was cut to 15, and eventually pared down to the current seven. However, Hansen is optimistic that things are changing in northern Nevada.

Answering the call
As opportunities in new construction pick up again, the issue of finding qualified technicians accelerates.

“You think about it,” Hansen says. “We had a seven- to eight-year window with no work and no apprentices in training. There was no work to train people on. There is going to be a real shortage of quality labor with a generation gap. With the huge downturn in that depression window no young people entered the market or the workforce. In new construction I think you will see a real strong demand for labor and there will be the shortage of younger guys. Most people I seem to hire are of my generation. I was born in 1960. It will be interesting to see how that plays out in the coming years.”

Hansen’s ideal candidate is someone with some kind of training and experience in new construction, with a record of sticking with the job.

“I look for a married man who wants to provide for his children — in ages 30s or 40s. The ‘golden guy’ will have about 10 years of work experience. I’ve hired women over the years and had some who were very good.”

Hansen is focusing on new commercial construction because it offers the potential for more profit, and because his experience managing the company has steered him in that direction.

“With commercial new construction it differs from new residential because you use a lot more metallic piping — less plastic. There are larger sizes. A lot of volume goes through the systems. Standards are high and more complex. There is not the repetition you see in new home construction.”

With this type of project, Hansen says a small project can usually be finished in three to four months, while some larger jobs might last up to a year.

“There is a lot of pressure to get those jobs done,” he says. “That is so a business can open. If they are not open, they are not turning a profit. Everything we do is a cost to them. Their goal is to minimize the cost, expedite the process. Open the shop and start selling whatever they are going to sell.”

Building for the future
“As the overall economy picks up there will be diversity. The northern Nevada economy has improved and there is demand for growth, so it is logical to follow in that direction,” Hansen says.

He notes the current demand for labor in northern Nevada is intense. “There is no unemployment among journeymen-grade plumbers at the moment.”           

The arrival of Tesla Motors’ gigafactory has had a big impact on the overall picture. The factory is located in the Tahoe Reno Industrial Center, which developers are trying to build into the largest industrial park in the United States. With the expansion of a 12-mile stretch that will connect Interstate 80 and U.S. 50, there will be extensive benefits to the entire region.

“I think Tesla is a big jump-start for it. That has pulled a need for a tremendous amount of labor out there, employing several thousand people. That in itself is driving up home values,” Hansen says. “People are getting out from under financial problems. They can borrow again. It has had a stimulating effect over all.”

He points out that Tesla is a multibillion dollar project that will totally change the local economy.

“We will have a real serious manufacturing base. Something we have never had here. We have had small manufacturing bases but in this case it's a big huge operation. The rising tide floats all boats. Tesla’s introduction into northern Nevada will dramatically improve our economy and bring big changes. We have been dominated by gaming for so many years. That has been wiped out by Indiana gaming. That market is way down from what it was. Consequently we need something new, and that big driver will be Tesla. Tesla will attract a whole plethora of smaller but still substantial businesses, all of which will need to be built. We’ll need laborers and we will see a massive influx of capital in Nevada over time.

“When Tesla first started there was a surplus of labor guys hurting for work. With Tesla that evaporated and they started bringing people in from out of state just to meet demand. Right now there is a strong cry for quality workers.”



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