A Manufacturer’s Take on Where Roofing Is Headed with Kevin Somers

[00:00:01] Kevin Somers: What Claude or ChatGPT can do with data is absolutely amazing. So we can go back. We didn’t start off as a roofing company in 1917, but we can go back to the first roof we ever did and tell you what that system is, who the building owner is when that roof expires, membrane type, you name it.

[00:00:20] Todd Kavanaugh: Hey there and welcome to under the Roof, the official podcast of Baker Roofing Company.

[00:00:25] Kevin Somers: Todd.

[00:00:26] Todd Kavanaugh: I’m Todd Kavanaugh.

[00:00:27] Matthew Elban: And I’m Matt Elbin. And we’re here to connect the dots between field and office leadership and crew values in action.

[00:00:34] Todd Kavanaugh: In each episode, we dive into the stories, lessons and updates that matter to our team.

[00:00:41] Matthew Elban: From safety and career growth to company milestones and good old fashioned storytelling, it’s all about living out what makes Baker Baker. Let’s get into it. Hey there and welcome back to under the Roof, the podcast where we look at what is really under the roof of one of the oldest and most experienced roofing contractors in the industry. I’m Matt Elvin.

[00:01:03] Todd Kavanaugh: And I’m Todd Kavanaugh. Every episode we sit down with the people who actually do the work. That’s crews, that’s leaders, that’s partners, it’s customers. Today we’re going up a level all the way to the manufacturing side of the business.

[00:01:18] Matthew Elban: Our guest is Kevin Somers. Kevin is director of sales at Carlisle SynTec Systems. And before roofing, he spent about 15 years in professional architectural coatings. So he spent his whole career on the contractor side of the building products, first in coatings, now in roofing systems.

[00:01:36] Todd Kavanaugh: Kevin is the first person from the manufacturing side we’ve had in this chair. And it’s a perspective we’re really looking forward to hearing more of on the show. We’ve sat down with our own people, with our customers, with folks who even inspect our our work. This is the first time we get to look at the market from the manufacturing side of things. Kevin, welcome to under the Roof.

[00:01:58] Kevin Somers: Thank you for having me, guys. Looking forward to it.

[00:02:00] Matthew Elban: Thanks for being here. So before we get into any of the real questions, I always like to start it off the same way. What’s the last book you read and what stuck with you from it?

[00:02:11] Kevin Somers: I think the last book that I read, it was a reread, actually. It was Unreasonable Hospitality by Will Guidera. Not sure if you’re familiar with it, but it was a great read. I’ve tried to implement some of those things from the book into our customer experience. Team over here actually created an award at Carlisle SynTec for a Rep group of the year that demonstrates unreasonable hospitality in treating contractors and our distributor well.

[00:02:42] Matthew Elban: That’s awesome. That’s that. Fantastic book. Great read. Certainly worth a reread or even a re reread because there’s a lot of really great nuggets in there that you forget or miss or whatever. So the more you read it, the better off you are, I think. But fantastic book. Love that answer.

[00:02:56] Kevin Somers: It’s really competitive out there on the manufacturing side. And Carlisle SynTec is always trying to decommoditize the market, and one of the ways that we can do that is through the customer experience that we provide. So we have a fantastic team here in Carlisle, Pennsylvania and across the country trying to do it. So how you take care of your customer is very important. And that shows up on the balance sheet.

[00:03:20] Todd Kavanaugh: Awesome. Well, Matt and I are compiling quite the list of now, granted, I think Matt, you and I both read this book, so it’s one we don’t have to read now. Worth the reread, but worth the reread. Like you said, we’re compiling quite an array of recommendations on the podcast. So, Kevin, let’s start with some of the reasons why we really wanted you on the show. We see our own jobs, of course. We see our own markets and our own crew. From your seat, you’re looking at hundreds of contractors in every region of the country at the same time. So Sarda’s like really, really broad, really at the level of commercial construction overall. Like right now, what does that picture look like from kind of your seat of things?

[00:04:04] Kevin Somers: Great question. From 30,000ft, it looks pretty good on the new construction side, but that is driven by a couple of verticals with a lot of infrastructure build going on. Right now, data centers seems to be the hot topic that you can’t pick up a periodical or listen to a podcast without hearing about. Data centers. It’s trillions of dollars, probably going to double in size in the next couple of years. It’s drawing labor force away from commercial roofing. It’s drawing trucks away. It’s drawing, of course, the raw materials that go into other materials that go into construct. So if you’re familiar with Dodge New construction and their outlook, it’s actually fairly positive year to date. But if you were to back out data centers, it tells a different story on that end.

[00:04:55] Todd Kavanaugh: What is that story? Is there like a general kind of condition of the market that you see outside of those few verticals that are really driving growth?

[00:05:05] Kevin Somers: The other key ones, like institutional schools, there’s always going to be schools that get reroofed. There’s always going to be new schools that are built. So I’d say that is healthy. When you look at hotels multifamily, those have probably slowed a little bit. The warehouse like just rocket ship takeoff when we all began buying things online almost exclusively after Covid, that has definitely cooled off as well. Retail space as well too. People are returning back to work, but the office space has definitely cooled and then retails as well. So things shopping malls, standalone stores, it’s doing okay. There are pockets across the country with expansive population growth where it’s doing very well but overall very flattish to down a little bit over the previous years.

[00:05:57] Matthew Elban: So Kevin, kind of going back through your previous jobs that you’ve had, you didn’t come up through roofing. What were you doing before Carlisle had roofing come onto your radar? Everyone’s got that I got into roofing

[00:06:11] Kevin Somers: because story it’s not that great, but it is a funny story. And then I was told 10 years ago when I got into this industry that it’s a black hole you’ll never get out. But it’s a good black hole to be stuck in. And I have found that to be true in my 10 years here with Carlisle. I was actually born and raised and went to college in Halifax, Nova Scotia, Canada. I’m still a Canadian. I’m a green card holding permanent resident. But I’ve been down here since 1998. So first job go to school. I was actually an IT consultant. That’s what my secondary education is in is information technology. So think back to around your first emails and stuff through the middle of the 90s. So it’s pretty easy to get a work visa to come down here. I moved to Phoenix, Arizona. So I moved from one of the most northeastern parts of Canada to the southwestern part in Phoenix, Arizona. I did not like it Arctic to desert almost overnight and I was not that crazy about it. Plus the dot com crash happened after every boom. There was usually a crash and I juggled around three consultant jobs in about two and a half years. Nine, 11 happened in that time and that delayed my permanent residency a little bit more. But once I was finally able to attain my green card, I had run my own residential and commercial paint business through college back home in Nova Scotia. So I applied with that manufacturer and I started off as a territory manager or district salesperson. Worked my way up to vice president of the west after 16 years. But with the acquisition of my company, I and many others quickly Left that company, of course. I had just built a new house in Dallas, Texas, had nothing on the back burner for a job, but I knew that I needed to get out. So I took three months to work on the house and just first time I’ve not been employed in my life. Turned on my LinkedIn and Carlisle is one of the companies that reached out. And after five interviews I began as regional manager based out of Dallas, covering the south central United States.

[00:08:25] Matthew Elban: So 15 years thinking about walls of a building, now you’re thinking about what goes on top of it. On a recent episode of our podcast, the roof was referred to as the fifth wall. So when you look at buildings, do you look at them differently now than you used to?

[00:08:42] Kevin Somers: Oh, absolutely. I had never been on a flat roof in my life. I began in June of 2016, I believe, and first roof I was ever on, it was probably about 170 degrees. I thought to myself, what the heck am I doing in this industry? But in my position I don’t have to get on a whole lot of roofs. I’m not in a technical role, but definitely wanted to learn the industry, so I wanted to get on roofs. I also put myself through the inspector school here at Carlisle that all of our inspectors must go through to learn it. But it’s few and far between that I’m on a roof anymore. Maybe two or a year where a customer is showing off craftsmanship using Syntek product. But yes, I definitely look at buildings differently today.

[00:09:28] Todd Kavanaugh: Kevin, going back to your previous statement, it just made me think, I feel you’re paying a little bit from that move. I grew up in Vermont and moved to South Florida, so. So the delta was a little bit narrower than your delta, you know, between the Arctic and the desert. But it was quite the wake up call to move from a very temperate zone to like 95% humidity every day. And I didn’t like it either.

[00:09:54] Matthew Elban: This is our second Canadian we’ve had on the show. Where was Dave from? What part of Canada? Remind me.

[00:09:59] Todd Kavanaugh: They’re in Winnipeg, I think.

[00:10:01] Matthew Elban: Winnipeg. Okay.

[00:10:02] Kevin Somers: Was it Dave Smith?

[00:10:04] Matthew Elban: No, Dave Hardy, his name. He works for ThinkShift.

[00:10:08] Todd Kavanaugh: He’s the EVP of Brand Strategy for our agency that we use for branding. So yeah, that whole team is primarily from Winnipeg and highly recommend thinksheft. Great team. So, you know, I asked before we kind of got a little bit into your bio, I asked about the like, commercial construction as a whole. So let’s, let’s come down a level to us, you know, to roofing specifically, because sometimes they don’t always tell the same story that we’ve seen. Like whether roofing trails like general commercial construction. Not sure. But where do you see the strength of the roofing market right now?

[00:10:47] Kevin Somers: Geographically or by vertical or by vertical.

[00:10:50] Todd Kavanaugh: Of course, there’s the data center piece. Other verticals that you’re seeing that are strong, that may be aligned with what is happening in overall commercial construction. So I’m curious.

[00:11:01] Kevin Somers: The only other one of note, Todd, that I’d say would be health care facilities. So that can be hospitals, but also inclusive elderly care and homes like that, which is great. We make a lot of products that are ideal for those where you don’t need adhesives to put that roof on. Schools are always going to be good. There’s always new schools being built. Roofing is growing further in the south than it is in the north. The population moves closer to warmer climates. And that’s also one of the reasons why TPO has grown. The three major membrane types, epdm, PVC and tpo. PVC is just going gangbusters because of the data centers. EPDM is actually declining year after year after year. And TPO right now is approximately two thirds of the market because it’s white, it’s reflective, it’s cheap to install, and the population is moving south where those types of roofs are needed.

[00:12:04] Todd Kavanaugh: So it’s fascinating the dynamics and the inputs that drive the demand of our products and services. The migration of population to southern centers and the popularity of white membranes in the south is driving the expansion of that product. So it’s fascinating what some of those things are drivers.

[00:12:27] Kevin Somers: It’s kind of crazy. I wasn’t in the industry back in the 90s. I was in school and then started in commercial paint. But TPO wasn’t really a thing in the early 90s. But it came out and it started to gain a little bit of momentum. And then as we got into the 2000s, it had caught on and there’s a lot of population growth in the South. And then the financial crisis through 08 and 09. I forget what the administration called it, but it was something along the lines of Build back America. And there’s a lot of infrastructure being built. And that is when the cost and the ease of installation of TPO really, really took off. A lot of 10, 15 and some 20 year warranties. So earlier when we were discussing like, hey, what’s really growing right now? It’s data centers and these other verticals. What my company and other manufacturers will be gearing up for is the single Largest reroofing cycle in history post 0809 financial crisis. So new construction is always going to be a thing and we’ve been riding a wave here since COVID or so data centers will continue, there’ll of course be other new construction, but just that mass of reroofing that is coming is undeniable. So a lot of the products that we are trying to develop and innovate or modify existing products are perfect for the reroofing history or cycle that is coming up. The other thing is there’s a lot of new entrants coming into the TPO world right now. That’s not by accident, that is absolutely coordinated to come in to get in at the start of this reroofing cycle that is coming up. I mean capitalism, competition is great. Don’t know exactly how they’re going to go to market or what they’re going to do. But Carlisle SynTec, we’re, we’re still the innovation leader in the industry by far and we will continue to do that.

[00:14:23] Matthew Elban: So for a couple years now it feels like we’re being told this, that the industry is telling us. But two part story, right? Replacement work carrying the market, new construction maybe softer or is softening. Is that still. I feel like you just mentioned Nukon is maybe a little stronger than we’ve heard. What are your thoughts on that?

[00:14:43] Kevin Somers: It’s typically like it can go either way, mid single digits but it’s usually a 70, 30ish reroof versus new construction cycle. When I was talking about construction earlier, that was general construction, not roofing. Data centers are just mega projects that are just billions or even tens of billions. But it’s still they’ve got nice roof systems on them to protect those assets in the buildings. But it’s not a typical new construction warehouse build. The dollars that are involved so roofing is doing very healthy, but it gets skewed by the dollars that get associated with the data center project.

[00:15:20] Matthew Elban: Thank you.

[00:15:21] Todd Kavanaugh: Kevin. I want to go back to something that you said about this kind of wave that’s forecasted for the reroofing market. What do you think is driving some of that is just the age of the building stock real estate market pressure, deferred maintenance finally coming due? Or is there something else that’s the impetus wave age of the roof.

[00:15:41] Kevin Somers: That’s really what it boils down to is the age of the roof. So if your warranty expires, you add up the cost of those assets in the building. Not want to have a warranty on that roof. So when it started to spike 15 years ago or so, to estimate those are coming due, most of those roofs are doing fine. And as you know, you can re roof it or recover it with a second roof. Not a lot of them will be tear offs at this point, but it’s really just the age and the of the warranty on these buildings.

[00:16:14] Todd Kavanaugh: Do you think that a lot of manufacturers, yourselves included, have really been observing these cycles over the years and kind of know to look for them? So seeing a boom, whether it’s a new construction boom or a reroofing boom that happened 14 to 20 years ago, knowing that, okay, we’re going to be planning our business for that cycle to come due again. And is that something that is like a known within the manufacturing space?

[00:16:41] Kevin Somers: We’ve always played close attention to it. But I’ll say In the last 24 to 36 months as AI, another really hot buzzword has worked its way into our everyday conversations. What Claude or ChatGPT can do with data is absolutely amazing. So we can go back, we didn’t start off as a roofing company in 1917, but we can go back to the first roof we ever did and tell you what that system is, who the building owner, when that roof expires, membrane type, you name it. So we have dug, as others have, much, much deeper over the last few years with the assist from AI into geography, types of buildings, types of membrane, building owners, roofers, you name it. And it has been instrumental in helping us get out ahead of the curve and identifying where we need to put resources and capex.

[00:17:37] Todd Kavanaugh: Well, you know, I read a strat, a quote, it was in some article this week and it said good strategy is not about discovering the right answers but asking the best questions. And I think like when I think about AI and data, it really comes down to who has the best imagination on how to like connect the data to the right question to surface those answers that are there. But it’s knowing how to ask those questions. It’s always fascinating to me. I’m highly involved in some of our AI initiatives here at Baker Roofing and always hearing other use cases that always get me excited. I’m like, yeah, that’s a great idea to mine the data like that and look at it. So that’s really cool. Well, I know you mentioned the distinction between north and south. Do you think this reroofing boom that that’s coming, does it break apart by any other region that you see or do you kind of primarily see that as a North, south thing or is there like other pockets that you’re like, hey, we, we’re expecting growth in the Texas market or in California or some other market. Do you see that?

[00:18:38] Kevin Somers: Still heavily geared towards the South. That doesn’t mean that there’s not pockets of New England or the Pacific Northwest. Building codes always change too. So if you’re in an area where you jump from R20 to R38, that’s great. We love to sell polyiso. We have nine lines that manufacture it, so building codes can affect that too. But we have seen a change really in the last three years where EPDM has been on a pretty steep declination and PVC has been on a steep rise. And they’re due to two different reasons. EPDM is kind of the OG of membranes. It is still by far my favorite membrane. If I owned a commercial building, I would put a 90 mil UPDM fully adhered roof on that sucker with probably some ballast. And that thing’s almost indestructible. Those roofs will last forever. But the cost of EPDM and labor to put it down, but cost labor and the fact that it’s black. Our original EPDM was black. We do make a white version of it now, but there’s a cost and price differential in there. It’s not nearly a charity to black, but we invented single ply roofing with epdm, so we want to continue to sell it. But value engineering and the reflectivity and the cost of TPO has caused the declination in EPDM. Whereas PVC, its growth, it’s overtaken EPDM as the second most popular membrane in North America. It’s approaching 20% and it’s probably going to grow by a couple hundred million feet by 2030. And that is mostly due to data centers.

[00:20:21] Todd Kavanaugh: I’ve been in the roofing industry for about 23 years now, I think. And I remember when I got here, like EPDM kind of almost owns the name of single ply. Whereas like rollerblade owns, you know, oh, you’ve got rollerblades, inline skates now you’re just. And it was like, oh, it’s a rubber roof. And people were just saying that because it wasn’t built up right. It was, it was either built up, modified or rubber roof. Even if it might have been something else other than epdm. That’s changing a little bit. You don’t hear rubber roof quite so much anymore. At least down here in the south.

[00:20:55] Kevin Somers: You’ll hear some of the older guys

[00:20:57] Matthew Elban: gonna say, some of the older guys doesn’t matter what color the roof is, you’re gonna get told it’s a rubber roof and we just put some tar on it. And like that’s not gonna work long.

[00:21:07] Kevin Somers: Yeah, yeah, it is a great roof. And there’s not many manufacturers of EPDM anymore, but we’re doing what we can. We’ve tried to modify it. We have gray epdm. Right now you just drew a line kind of straight through the middle of the United States. It can get some of the heating properties by the black absorbing. And then the lightness of the gray too can be reflective when it is hotter outside, which helps the building owner.

[00:21:34] Matthew Elban: So a minute ago, Kevin, you mentioned insulation. Love to sell ISO when the R value codes change from 20 to 38 or whatever the numbers end up being. So that’s probably the one thing that doesn’t get talked about. Maybe as much as it should, nearly as much as the membrane. And it’s really a bigger part of the assembly’s performance than a lot of people outside the trade realize. So what’s changing on that side? I know that codes are changing and thicknesses are changing, but what else is changing on that side?

[00:22:04] Kevin Somers: Definitely codes and thicknesses. There’s not a whole lot more. There is new technology going into it. There’s different facers that can go on it to have things stick to it better. But where I think that the industry is going is going to be a greater R value per inch. I don’t know if I’m allowed to plug one of my own new products. We have a product out right now called Thermothin 7 that we unveiled it at Ire in February in Las Vegas this year at one product of the show. So you can get R7 per inch now. So that’s about 20% less. So think if Baker Roofing was doing some million square footer, it’s R30. You got 5.2 million board feet of ISO on there. Well, imagine how much your cost could be reduced with 20% less trucks loading could be easier on there too. It’s also great for cold storage or height restricted roofs even too. So there is a little bit of a premium on the price, but is more than offset by labor. So we’re only able to produce a finite amount of that product this year. Just one of our nine lines is set up to do it. So we will sell that out this year and then that will probably go gangbusters in early 27. And I believe the industry will fast follow on greater R value per inch. You also use shorter fasteners so there’s cost savings with that too. So it’s really a win, win, win between the contractor, the manufacturer and the building owner.

[00:23:40] Todd Kavanaugh: At the end of the day, it’s less material and therefore then less waste on the back end as well. I was going to ask you what kind of how you got there, but I’m sure that’s a trade secret, so we won’t ask you that question.

[00:23:53] Kevin Somers: Absolute trade secret. And I forget which one you brought up. Like the recycling, less landfill waste. I mean, obviously Carlisle other manufacturers, a lot of what we manufacture comes from a barrel of oil. So we all want to be great stewards for the environment and stuff. So there is a lot of thing going on with like some biochemicals that can substitute for like an oil derivative. So I think you’ll see some innovation through that. The only problem with that is, and I think it’s pretty obvious is that sustainability or environmentally friendly things that they cost more and they’re slower adoption to them. So everybody wants to do their part for the environment, but the time it takes and the money it takes to develop these takes a long time. There’s a cost with that that we need to pass along so there’ll be greater adoption of greener products. And on the back end of that, sending ISO to a landfill is not the best thing in the world. It’s what we have to do. Hacienda all other manufacturers have recycling programs, but I think you’ll see some R and D and Capex sunk into how to extract some of the stuff that is in discarded ISO out to be reused. And that would be fantastic for a hundred different reasons. And us and others have already started on that.

[00:25:11] Matthew Elban: Yeah, that makes sense. So in addition to maybe your thermothin7 being a pretty cool product and some innovation there, is there something else, a system maybe or an approach to roofing that’s quietly gaining ground right now that most people maybe haven’t noticed yet having

[00:25:29] Kevin Somers: to do with ISO specifically or just any roofing systems that gained momentum.

[00:25:33] Matthew Elban: Roofing in general, severe hail and very

[00:25:35] Kevin Somers: severe hail systems throughout much of the US like that red bubble in the middle of the country continues to expand every year. And those are very rich systems. Lots of ISO cover boards, sometimes multiple cover boards, and then a fleeceback system put down with glue that is great from a manufacturer side and really protects that building. But I’d say the biggest system that I have seen grow in the last few years is the induction welded systems. They have really become popular to knock out a lot of These buildings with there’s people laying down 400 squares a day with this induction welded system with a regular sized crew up on the roof. And it puts down a really good roof. It’s got all the FM testing that it needs. So cheap, fast and a good roof, you’re seeing a lot of folks go that way, especially if you’re a building owner.

[00:26:24] Todd Kavanaugh: Kevin, we’ll let you take a pass on this question if you want. So I would ask it and be like, ah, I don’t really want to talk about that, but I’ll fire it and we’ll see. So the last couple of years have been rough on input costs across construction. Not just roofing, but all across construction. Looking at what has really already happened already, whether it’s geopolitical or other again reasons why costs are going up. Where do you see the industry and let’s say commercial roofing or just commercial construction in general, where does the industry absorb that kind of volatility and when do you see it kind of passing it off the costs of that off to downstream and who kind of carries that at the end of the day? Does that make sense?

[00:27:10] Kevin Somers: It does. And this year is a great example of that. Labor has been rising every year for a number of years. But in particular, what’s affected our industry the most this year is the cost of raw materials and then transportation. And if you’re, you’re good, I can touch on both of them for a minute because it’s. I live and breathe this stuff every freaking day of my life right now. And then we can talk about the absorption of it. Maybe at the end you can hit me with a couple more questions. But the transportation industry has been in a little bit of a recession for the last couple of years of years for a couple different reasons. But this year, and it is not, I’ll preface it by this, it’s not just the cost of diesel at the pump behind the reasoning why we are all. As a manufacturer, I have to push higher transportation like freight charges or fuel surcharges out there, as does everybody else. That’s industry wide. It’s countrywide, the shortage of drivers. It was an old aging force which is going out. There’s been some new English speaking restrictions put on CDL licenses and it’s been harder to get people into these schools to fill it out. It’s gotten to the point this year also there are insurance premiums. Think of like a doctor’s malpractice insurance just continuing to go up. There’s been a lot of massive what they call nuclear events and that’s a $5 million lawsuit or more. So if you think of those TV guy saying have you been hit by a big wheeler? Sue, sue, sue that it’s driven up their insurance rates. But at this time last year for every flatbed that was needed there were 25 loads that could be picked up. That has almost tripled this year. So there are not enough drivers out there which is driving it. But in order for us like we still cover and I don’t mean tarp, I mean get a truck under 99 plus percent which is like world class. I think the other manufacturers do a great job too. But you go to a broker and you pay more. We have to keep our roofers roofing, we have to keep our buildings protected. And there’s a cost that comes with that and that’s in transportation. So this year transportation costs have probably 2 1/2 x what they were and without giving away anything that still does not nearly cover it. So I’m absorbing that cost which that hits the bottom line in a negative way for sure.

[00:29:43] Todd Kavanaugh: It’s been one of those quiet systems that from the outside is easy not to think about in terms of distribution logistics, moving product from place to place, final mile that probably eats up so much time and resources on the manufacturing side of putting people in place to solve problems and to think about. And oftentimes it’s easy from our seat to just think about material. We just got availability and pricing and things like that. So it’s really interesting to hear about that side of the business. I was talking to somebody else about that recently and hadn’t just put much thought into how much goes into it from your side of ensuring that is a well oiled machine and stays moving.

[00:30:32] Kevin Somers: The other part to that that a lot of people don’t see is they’ll see what mine or another manufacturer’s freight surcharge is this year. And I said it’s 2 and a half, 3x what it was at this point last year. But the single ply manufacturers, we don’t buy a whole lot of crude oil directly in a barrel and dump it into our TPO or EPDM machine that goes to a refinery, it gets worked on and processed, it gets sent to a secondary location and then a tertiary, maybe more between we get those feedstock items that come into our plants that we then do dump into our machines. So there’s a bunch of miniature supply chains within oil to Carlyle, Syntech, tpo. There’s a lot in there and there’s costs that occur at each stage through that. So it’s kind of exponential by the time you get to the end of it. But a lot of people just see, oh, they’re charging more for that last mile or the final delivery. But those inter supply chains are what build up the majority of that cost.

[00:31:35] Matthew Elban: Kevin, I’ll just say working with a lot of contractors across different markets. What do you see about the labor situation from that vantage point that maybe someone who’s just a local contractor might not see even about itself?

[00:31:48] Kevin Somers: That’s a good question. And we’re talking about on the labor or on the roof labor right now too, Right? Like the installers. Okay. I don’t know anybody that says, I have so many people, I have so many crews willing to work that I don’t know what to do with it. High, high demand. I’ve seen some really creative approaches into recruiting roofers, which is great. We need it. The NRCA has helped everybody with that as well. We’ve also seen a great spike in sub labor as well. So there’s a lot of smaller. It’s funny, we see a lot of consolidation from PE and like, some of the bigger guys getting really big, but we’ve also seen a lot of smaller sub labors get in, and they don’t always get a license from one of the big manufacturers because the prime on the job would be, you know, a baker or another large roofer. So there’s been a huge increase in sub labor, But I’m happy to report that the quality of installation has not suffered. That’s always our concern. But I’d say that’s what they might not see is the vastness of sub labor that is being used out there. And if you’re a contractor and you think, man, I’m doing terrible, I can’t find enough people, you’re wrong. Everybody is looking very, very hard for good, experienced labor right now.

[00:33:05] Matthew Elban: Makes sense.

[00:33:06] Todd Kavanaugh: Do you think it’s because of what’s happening from a demand standpoint to roofing that’s putting more demand pressure on the existing crew resources? Or do you think that there’s just simply not that maybe crews are leaving or that there’s just not as many people filling holes in crews as either move out, retire? What do you think is that dynamic there that’s happening? Is it demand pressures or is it like the softening of the labor market too?

[00:33:36] Kevin Somers: It’s both of those things. And there’s a couple other things too. We mentioned data centers again. That’s probably the hundredth time I’VE said it on this podcast, but they’re drawing a lot of labor in there too. So just the general labor to work on that. I mean, if you know how to install a roof, you’re a smart guy or gal, so you’re probably going to fall over. Some wages are higher and those things have to be built with such speed. Some of those things can have 1300 laborers on them with a very good per diem. So think of people chasing like an oil boom and going to work in the fields. That’s what some of these mega projects are drawing. So some of it is going temporarily to like a prime gc. But a number of roofers have told me that people have been there for a while. We’re in the technology age right now, that the gig economy of driving Uber or Uber eats or hey, I can get up when I want. I get to sit in my own car. I work the hours that I want to do. I can have my weekends off. And by the way, it’s not either freezing cold or like Texas hot outside to be doing manual labor. I think some people had switched over to stuff that’s more conducive with their. How they want to personally set their. Their daily and weekly schedules.

[00:34:48] Matthew Elban: Yeah, you can’t fault people for some of those things. Right? Like, people want to be in somewhat control of their time, what they’re doing with their time, et cetera.

[00:34:58] Kevin Somers: Trades in general are down too. If you look at the numbers, the indices that come out that say how many, I’m going to quote it wrong, so I won’t do a number, but it’s way over 100,000 construction workers that the industry is short right now. And that’s not roofing specific, that’s construction in general. When you look at where new construction is going with some of these data centers and other projects, the number of welders, electricians, plumbers, that is needed is just staggering. So they are trying to get people into unions, they are trying to get people into trade and vocational schools. I remember before I moved to beautiful Carlisle, Pennsylvania four and a half years ago, I had to have an electrician do a couple things. And was talking to him and he had two apprentices and he said, I will pay for your entire school. And he told me the salary that he was paying them. And I’m like, if I was 18, I would be becoming an electrician. I’d have no student loan. And to come out making well into six figures, pretty good gig.

[00:36:02] Matthew Elban: I’ve heard that quite a bit H Vac would Be another one that I’ve heard is a good place to get into. Talk to me about the career itself. Somebody wants to start on a roof at 22, what does that path in front of them actually look like? What have you watched people build?

[00:36:18] Kevin Somers: So working for a roofing contractor, you mean not here at Carlisle?

[00:36:22] Todd Kavanaugh: I don’t want to be in the industry.

[00:36:24] Kevin Somers: Well, from a roofing contractor’s perspective, I don’t know if I would be the best to answer that one, but I didn’t really meet a whole lot of people on the roof. I usually get in at the pm, foreman, back office, staff, and I’d say there’s definitely a generational change coming through. Even here at Carlisle, we call them the class of 84. We probably have more than a dozen people with 40 years of experience that are all retiring within a two year period. When I look at my competition, I see the same and there’s lots of change. There’s with roofing contractors, we have that next gen coming up. They’re young, they’re smart, they know technology better and they want to light the world on fire, which is great, but that’s a different level of relationships. It’s a different type of knowledge and a different type of strategy. So always on alert for where we need to change. But even here at Carlisle, we’re under a new president, we have a new vp. I know other manufacturers are the same, but from a roofing contractor standpoint, it’s the second gen and the young up and comers that we are interested in training, education and doing more than just offering a great price. We are trying to build that relationship with them for the decades that we enjoyed before so that we don’t lose that business and continue on for another generation.

[00:37:49] Todd Kavanaugh: I’ll just plug something that was said in a previous podcast because this is an area that we’re always trying to promote is the trades specifically for us roofing, but the traits as a viable path. And you said it yourself like that. If you can start early, I look at these young people and you can go and start working at a contractor or at a manufacturer, something in the roofing industry and continue to work hard and grow like you in a couple years, while all of your peers are stepping out with probably big college debt, you’re going to be out of really good compensation and you’re going to have a really good career path. Pretty much anywhere you go in the country, you’ll have a job. It’s one of those things. But I think there’s a perception that we have to continue to try to break about the trades. And who was it, Matt, that said we can’t expect people to respect what we do until we respect what we do. And Reed Ribble. That’s right. I thought it was Reed Ripple. Yeah. Who said that? So anyway, I could stay on here forever and keep talking about this, but I want to move to maybe just a slightly lighter note to still talking about people in crews for you. What is one of the most impressive things, Kevin, that you have seen a roofing company pull off on the roof? Just one of those kind of cool stories that might be interesting to hear. It doesn’t have to be Baker Roofing to be somebody else. But what’s one of those cool stories that you’ve seen a roofing company pull

[00:39:17] Kevin Somers: off is in the actual roof installation or just mean how they just something

[00:39:22] Todd Kavanaugh: that you saw and you’re like, wow, that’s really cool. How they did it, where they did it, what they did.

[00:39:27] Kevin Somers: Tell you this earlier I mentioned that Carlisle is by far the most innovative of any manufacturer. We’re also public with 3% of our sales go towards research and development. So we always want to do that. But I’ll tell you what, roofers are where we get our best ideas from. Because roofers are the ones that are in the muck installing this stuff every single day. And we call it VOC for voice of contractor. That hey, what’s not working with your TPO or your adhesives or your machines, whatever. And when you really dig in, necessity breeds innovation. That some of the best ideas and the best products that we’ve come from, that we’ve got have come from like these. Nobody said, hey, you should invent this. I’m going to get a patent on it. But the need for labor savings, the need to cut costs, the need for safety on a roof that some of the things that the roofers have come up with have just been absolutely amazing. And it’s actually come to fruition where there’s the development of that product by us or others. So it’s just great collaboration between manufacturer and contractor on what our industry needs. For one of the myriad of reasons. I really like seeing that sometimes you hear prisoners invent things or, you know, they break out somehow. And I think to myself, that is the most ingenious scheme that they just came up with. But they came up with it out of necessity. I relate that to roofing. Sometimes with the best inventions are coming from the people that use it and know it the best and say, hey, why don’t you and then we have a giant team that will go after that to vet it out.

[00:41:07] Matthew Elban: We did a paver project one time and I remember the way we estimated this project was using a dolly, like a, not a fridge dolly but just like a regular dolly. You go to Home Depot and purchase one of these. And I remember we estimated you can put a certain number of pavers on it before it would break because of the weight and all this stuff. And we sold the job and the crew gets out there to start working. And day one we got from that job and these guys were getting nothing accomplished. And I asked one of the project managers what’s going on. They said, well, they’re trying to figure out a faster way to do it because the way that we estimated this, this is going to take fore day two. They had figured out a faster way to do it and finished that thing in about half the time. And it had to do with welding certain parts onto it, bulking up the wheels or whatever, all these different things they did. But you know, invention out of necessity. They would have killed themselves working on that job for that long but figured out a way to make it easier and it was less work for them.

[00:41:57] Kevin Somers: So yeah, I’ve also seen some high profile jobs. If you think of some of the new like collegiate stadiums or professional sports stadiums that are being built, that is not a flat, wide open roof with like no penetrations. You see these super steep barrels or domes and stuff out there and the way that they’ll do their sheet layouts, I don’t know who comes up with it. They must be using CAD or AI or a combination of both. That’s got to come to our design services team to approve all those details and tie ins and flashings and stuff. There’s some really cool stuff out there. And those roofs are extremely technical to roof and not every roofing company can do it. So I do like watching those really odd high profile jobs get roofed and then nerding out and getting into the weeds on how did you do that? Because it’s definitely not a standard installation.

[00:42:51] Todd Kavanaugh: I thought that when there’s probably a small group of us here in the US when you’re watching whether it’s football or I guess primarily football now and they’re showing the shot of the stadium from like a 3/4 overview kind of rotating around and I look at those roofs and I think gosh, that is a complicated job and most people are just seeing a stadium but we’re looking at like wow, that’s pretty spectacular.

[00:43:16] Kevin Somers: We have to create and approve hundreds of different details because it is just a one off project. You know, angle iron and weird rivets coming in on. Like you said, those movable domes and stuff, those are headaches. Luckily that’s not my department. I’ve just got to make sure that we sell it and deliver it on time and they get invoiced correctly and everything. But the technical part of that, it is difficult.

[00:43:41] Matthew Elban: Yeah. I spent a lot of time on Saturdays watching Premier League soccer matches over in the UK and oftentimes showing that building and I’m like, well, the stadiums over there are way different than they are over here, but they also rain quite a bit more over there than it does over here. And then you watch certain stadiums that have spent millions of dollars on their roof and are still like my team, still just. It floods out every time it rains in the middle of a match. So cracks me up. But let me know if you need me to go over there and check one of those roofs out, try and find some solutions. Happy to do that. Catch a game while I’m at it.

[00:44:13] Kevin Somers: So it’s an interesting market. We do operate over there under CCM Europe. I have lots of friends and colleagues over there and the market is very different over there where PVC is the most popular and it’s the cheapest and TPO is the least popular and the most expensive.

[00:44:29] Matthew Elban: It’d be interesting to do a podcast over there, Todd.

[00:44:33] Todd Kavanaugh: Yes.

[00:44:34] Matthew Elban: We need a sponsor to get us an on site at maybe one of these famous football stadiums and we could do it like as a halftime show or something. That’d be pretty slick.

[00:44:42] Kevin Somers: So we have done some shoots over there. You guys will definitely need an escort. So I will accompany you.

[00:44:49] Matthew Elban: Yeah.

[00:44:49] Kevin Somers: Over to Europe to get that done.

[00:44:50] Todd Kavanaugh: If anybody’s listening over in Birmingham, we’re your team.

[00:44:54] Matthew Elban: Manchester as well, not City. Anyway, wanted to chat for a quick second. About. I think you sat on a panel at the National Roofing Partner Leadership Summit. Did the room agree on where the industry was headed or was that more of an argument discussion Thinking about like consolidation, succession, ownership, things like that.

[00:45:15] Kevin Somers: On consolidation. It was another big year of consolidation, not just on the contractor side, but on the distribution side. This is Kevin speaking. I don’t have the data behind it. I kind of see the consolidation. It will continue, but I think that it has slowed a little bit. So if there was a bell curve, I think we might be over the peak a little bit. On the contractor side of things. There’s definitely some success stories and there’s Definitely some non success stories in there, but I think it will continue. And that partially has to do with what I mentioned earlier about next gen taking over. There’s some people that might not have a great succession plan there or they just want to have a very comfortable retirement. So the multiples that these folks are getting paid on their businesses, they’d almost be foolish not to take it sometimes. But like everything, there’s diminishing returns after a certain point. I don’t think we’re ever going to get to the point where there’s five mega corps out there that, you know, dominate 75% of the industries. But we’ll continue to see it, but I see it slowing. These PE firms will move on to the next best industry where they can grab their EBITDA dollars and kind of change the industry.

[00:46:32] Todd Kavanaugh: Kevin, last real question. Somebody listening runs a building portfolio or runs a roofing company and they’re trying to read this roofing market and make decisions on it. What is kind of the one thing you would tell them to watch that maybe they’re not watching for?

[00:46:50] Kevin Somers: It’s the cost to run the business. You could be a great installer or said another way, like the president of the company when I started said, usually it’s a business guy that becomes a roofer or it’s a roofer that becomes a business guy and owns it. And you’ll know pretty quick after five meetings or after five minutes of meeting with this person. But it’s not easy to be successful in commercial roofing. So it’s building a team around you that’s both the people that install it. You need a strategy team, you need a great finance team. It’s not just we can install a roof really good. The most successful companies such as Baker are very deep on those departments that they have within the organization, from estimating to marketing to payroll, you name it, and the culture that comes with it. It’s not just win a job, install it, make money, move on. If you’re in it for the long haul, that team that you need to build it is not easy to do and it takes some time.

[00:47:52] Matthew Elban: Yeah, I think that’s some great advice. One more fun one before we let you go 15 years on the walls, nine on the roof, can you settle it for us? Which one do people actually notice and

[00:48:03] Kevin Somers: which one actually matters between walls versus a roof? What matters all matters both from a structural part. But I’ll say that the walls probably like they get the attention because you can see walls from the ground or from your car. Not Too many people get to see the extreme amount of skill and time that goes into a roof. And I think I know that. I was. When I got up on a roof and learned what goes into it, I was blown away. The men and women in our industry that install those things, I commend them for the temperatures, the manual labor, and everything else. But I think the walls get all the praise because you can see them from everywhere. But structurally and from a protective standpoint, they’re both extremely important to protect both the people and the assets in the building.

[00:48:55] Matthew Elban: Safe to say it’s all in your perspective, right?

[00:48:57] Kevin Somers: That’s right. I will say this. I do prefer this industry. I Wish the first 16 years of my career I hadn’t been in roofing. Carlyle is a great company. I get to work with great people like Baker Roofing, my distribution network out there, and the independent sales reps that we have. And then the team in this building out here are the absolute best team that I’ve ever worked with. And I’ve probably got 10 to 15 years or so left in me. I hope I spend them right here working with great people like yourself.

[00:49:27] Todd Kavanaugh: I love what you said earlier. It is a great black hole to get stuck in, because you’re right. We all get sucked in here, and it’s a nice, cozy place to make a career. I’m not sure anybody has ever called roofing cozy before.

[00:49:39] Matthew Elban: I guess you might be the first. You are a trendsetter.

[00:49:42] Todd Kavanaugh: So, actually, the very last question Kevin would like to leave people with is just a little bit about yourself. What’s on heavy rotation for you right now? That could be music, podcast, audiobook streaming. What’s something that Kevin likes to put on? Maybe not necessarily to, like, educate yourself, but what, like, what helps you wind down.

[00:50:04] Kevin Somers: That was good. So I’m pretty active outdoors. I like to do stupid long runs. I am on airplanes and in buildings quite a lot. So anytime I can get outside and away from electronics, I try to do it. So I run and hike quite a bit. And I’ll give you a peek if I’m driving down the highway in my truck. You know, I’m Gen X, so I still love 90s anything, whether that’s 90s country, rock, rap, grunge, you name it, I will listen to it. But probably a little bit of a fun fact about myself is when I started running really long distances ago, it was back when there was. I think they were called ipods, like the little thing with the. Whatever.

[00:50:49] Todd Kavanaugh: Nanos.

[00:50:50] Kevin Somers: Yeah. And there’s actually, like, EDM or, like, house music that actually Apple came out with it. I saw it one time by mistake, and it said like, hey, what mile or what pace do you run miles at? And every runner that is going to run a distance, like, you’ve got to train and you’ve got to know your stuff. So I put it on, and before that, I would just listen to anything, whatever was close, but started listening to this and just had great runs. And it helps you control your breathing and your pace and everything else. So I’m usually good for three or four hours running every Saturday and Sunday. And it might sound a bit ravish if you took my AirPods out and

[00:51:31] Todd Kavanaugh: listened to I don’t run that much. When I run is when, like, the beat is going with the cadence of my stride. I’m like, hey, I’m just hitting it now. And then that, like, the song changes. Then I find out how tired I am, you know?

[00:51:44] Matthew Elban: But my son has been training for. For soccer, and so he was doing a lot of running this past summer as he get ready for his college season, and he said the best music to run to is horror. Scary music at night. Yeah, you’re terrified. You’re just taking off sprinting.

[00:52:00] Kevin Somers: So I haven’t heard that one, but I would say that probably I’ve got a mix again. I love country music, even the newer stuff. So I’m Morgan Wallen. I’ll listen to Post Malone, but I tend to find myself going back to the 90s, and then as a good old Canadian boy, I will listen to the tragically hip any chance that I get. If you haven’t checked them out, check out their double album called you’d Favorites. There’s a lot of good tunes on there.

[00:52:29] Todd Kavanaugh: Nice. Gavin, thank you so much for your time. This has been really good. This has been awesome. Good.

[00:52:36] Kevin Somers: Love it. Happy to come back if you’ll ever have me.

[00:52:39] Matthew Elban: Absolutely. So that’s it for this episode of under the Roof. A big thanks to you, Kevin, for giving us a look at this market from a vantage point that we don’t always get to see. So thank you.

[00:52:49] Todd Kavanaugh: Yeah, I know why we did this one. Everybody in this industry typically just sees it from their own slice. Our crews see their jobs. Our customers see their buildings. We see our markets once in a while. It’s really cool and worth climbing up to a level and asking somebody that kind of sees the whole thing.

[00:53:05] Matthew Elban: If this was useful, share it with somebody who’s trying to plan around the market and follow the show. That way you won’t miss an episode. We have a lot more of these conversations coming up.

[00:53:14] Todd Kavanaugh: And remember, we always like to close with this. We shall do good work, at a profit if we can, at a loss if we must. But always good work. Thanks for being with us on under the Roof. That wraps up this episode of under the Roof. Thanks for joining us and being part of the Baker Roofing family.

[00:53:35] Matthew Elban: If you liked what you heard, share it with your crew, hit the follow button and keep the conversation going.

[00:53:40] Todd Kavanaugh: Wherever you work, we’re here to keep you informed, inspired and included. Because the more connected we are, the better we work together.

[00:53:50] Matthew Elban: And as always, we’ll leave you with this. We shall do good work, at a profit if we can, at a loss if we must. But always good work. See you next time.