2 min read October 2022 — Labor shortage continues to be a big challenge for businesses, especially at the entry level, said Richard Perko, president and CEO of Lee Company, a leader in home, facilities and construction projects. “We’re trying to figure out the new formula for entry-level employees and to be honest, it’s been difficult to nail down,” he told Invest: in an interview, while adding that the company remains on track for one of the best periods in its history.
What are the major challenges you are facing now in your business?
We’re still on track to have one of the best periods in our company’s history. Some of that success has been muted by the unprecedented inflation we are experiencing, as well as severe challenges in the labor market we are facing. We are also monitoring the potential for international issues to affect our country and subsequently our businesses.
How has the influx of people and businesses coming to Middle Tennessee impacted your business?
The demand for our service offerings has been incredible, especially in-home services due to the influx of new homeowners to the region. We’ve had to work on promoting our brand more because, even though we’ve been here almost 80 years, no-one knows us when they move here, so we have to work harder to earn their trust than our legacy base of customers who know us well. On the commercial side of our business, everything from healthcare to manufacturing, to higher education is booming and we’re involved in supporting all of these. New companies like our full service approach and regional footprint.
What separates your company from other competitors in the market?
A lot of our competitors, especially the newer ones, simply focus on gaining market share. We’re all about customer loyalty. We’re not looking to just sell something to our customers. We want to be there in support of them throughout the life of their facility or home. Our 80 years of experience and our workforce, which is the most experienced and highly trained in the region, are also key differentiators. In addition, we have state-of-the-art technology platforms that most of our competitors do not have. In the end, it’s all about capability and trust and our customers trust us to deliver with that capability time and time again.
How are you leveraging technology to improve and grow your business?
We use software that allows us to provide “visual findings” on our projects where we can show the homeowner or the facility manager what we’re doing, providing insight and verification of what we’ve done. We also have a series of platforms that allow us to monitor the health and operations of these facilities, 24/7.This technology platform comes together in our virtual support center, where we have experienced senior technicians who are able to support a wide variety of technical issues for our clients without ever setting foot onsite. Some of these folks are nearing “typical” retirement age and, physically, it’s tougher for them to work on the job site, yet they have an incredible amount of experience we need to retain in the industry. This virtual support center allows us to retain these highly skilled employees and leverage their skill and experience to support less experienced technicians remotely. We also can help customers directly through that same technology and support center.
What trends are you watching closely that are affecting your business now?
Supply chain and availability have been a problem, but it seems to be improving. There are other issues, especially around fuel expenses for our large fleet of service vehicles . We use millions of dollars’ worth of fuel annually and we’re always closely watching the price of fuel, but especially right now. We do a lot of hedging to mitigate that issue, as well as utilize strategies to minimize technician drive and idle time. We are also watching the automotive industry closely as they seem to be fully committed to an electric future. Given the improvements in battery life, this is doable for us in most cases, but with few exceptions, we have yet to see substantial investment made in the electrification of the types of service vehicles we need.
What are the most active sectors for your business in the region?
We’re seeing continued growth and strength in the Downtown high-rise apartment and condo sector. We are closely watching this sector to see if it slows, as this is typically the first to do so entering a recession, but so far, it remains robust. Healthcare is increasing. That was expected due to the large number of people coming to the region. Healthcare providers have pent up demand and needed to get beyond COVID so they could get back to their strategic plans. Higher education infrastructure is another growth sector. And we’re most excited about significant manufacturing being created in the counties surrounding Nashville. Greenfield office projects are the negative outlier as everyone tries to figure out what office looks like, post-COVID, but other than that, the region’s economic outlook remains strong from where we view it.
How is your company managing the labor shortage challenge?
I think overall we continue to find ways to meet our needs. We have 1,700 workers, which is a record, but like many companies, we also have some “great resignation” issues. Our exit interviews suggest that these don’t tend to be so much “company-related” or even “culture-related.” Most are not going to competitors, they are changing careers altogether. They are simply people who have reevaluated life during the pandemic and found that they want to do something different. Of course, we have also been the beneficiary of this scenario, as people in other industries are making a similar change to join ours. Where we are really struggling is at the entry level. We’re offering unprecedented starting wages but it’s not just about money. We’re trying to figure out the new formula for entry-level employees and to be honest, it’s been difficult to nail down. No longer does the old formula of good pay, plus good benefits, plus good culture deliver. Today, entry-level employees are looking to craft a career around their lifestyle and if they have to, they’ll take multiple ‘gig’ jobs to make that happen. They are less concerned about job security than previous generations, relying on their ability to string together a livelihood as they see fit. That approach does not match easily to many of our traditional job descriptions or our customer’s expectations. We continue to explore ways to meet this new employee paradigm, while still meeting our mission to serve our customers.
What is your outlook for the construction industry in Middle Tennessee over the next three to four years?
Despite talk of recession, I’m still bullish on the region and on Nashville. I think our local economy has a lot of runway ahead yet, with a lot of positive things going on in the construction sector. I do, however, think we’ll start to see some things change. At some point, we’ll start to see the mix of work change in various sectors as inventory adjusts to demand. But I think overall we are going to continue to build in a big way here for many years to come.
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