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Burak cuts labor costs to improve business

January 1st, 2009 / By: / Awnings & Shades, Feature, Management, Marketing, Perspective

Ed Burak improves the bottom line by shaving time off labor costs.

“The greatest expense for our business is the labor—shaving time off labor is key to our success,” says Ed Burak, president of Hudson Awning and Sign Co. Inc. in Bayonne, N.J. Burak, who runs the company with his wife Lynda, took on the role as president in 1979, after his father died. Prior to that, Burak worked as an accountant in the funeral industry, then as manager of a construction company. His accounting experience working with contractors gave him the vision to create a company that would seek commercial projects and leave behind the “ma and pa” type business he had inherited. “The things that I learned as an accountant working in the funeral industry are some things that I still use now in the awning industry,” Burak says.

Burak shifts company focus from residential awnings to commercial awnings

He began turning the company around by shifting its focus from residential to commercial awnings. When Burak took over Hudson Awning, approximately 90 percent of the company’s revenue was residential and 10 percent commercial. Today, he estimates that 85 to 88 percent of the company’s revenue is commercial, with the balance being residential. “I felt that residential wasn’t the best place for us to make money, and I felt commercial was a great entrée for us,” he says.

After Burak changed the company’s focus, cutting labor costs became a primary strategy. He began to implement changes in how the company was run, from how it handled its employees to how it designed and tracked projects from inception to completion. “You can have the most beautiful-looking design, but if you’re not going to come up with a number at the bottom that winds up in the bank, you’re not going to be in business very long,” Burak says. “So, the bottom line is what we look for—but on the path to the bottom line involves a lot of creativity and looking at a job and making recommendations for ways you can find cost-cutting areas within that job.”

Job costing

Burak implemented a job costing system in order to track project efficiencies, which he finds especially helpful for larger, long-term projects. The company can have 10-15 jobs running simultaneously in various stages of production. “Job costing gives us a better handle on where we are with a project,” Burak says. “We can pull up a cost to see if we’re on track with materials and labor and see if it fits the percentages of where our general manager believes we should be at any given point.” Burak developed the first job costing system for the company and later contracted a consultant to refine the process.

The process of tracking projects includes the use of digital cameras and GPS systems. Before a project is begun, the lead person on the project takes photos of the building on which the awning(s) will be installed. Any anomalies and potential problems in the building structure that would require adaptations in the design and installation can be identified and planned for before the project gets underway.

Throughout the life of a project, Burak tracks the workers’ travel time to and from project sites through the use of GPS systems. By tracking exact travel times, Burak is able to differentiate between travel time and on-site time, which contributes to accuracy in estimating and bidding future projects.

The employee factor

Although there are 30 people who work at Hudson Awning, technically, the company doesn’t have any employees. All of the company’s employees, including Burak, are leased from a leasing company. “Leasing our employees minimizes our workman’s comp costs and minimizes our benefits costs because we’re plugged into thousands of other companies,” Burak says. It also eliminates the need for HR and payroll departments. “We’re taken out of the loop on a lot of the day-to-day operating questions,” he says. “The fee per employee is minimal, and all the checks are paid by the leasing company.”

The fact that the employees are leased improves the bottom line for the company, but in every other way they operate as members of the Hudson team. “It’s no magic business lesson that the people you have on your staff are the key to your business’s success,” Burak says. “We are a microcosm of any town in the United States: We have the same problems—good things and bad—compressed in a 15,000-square-foot area.”

Staying ahead of the curve

Part of Burak’s expectation for the employees is that they stay on the cutting edge of new methods and technologies. Burak encourages ongoing education for staff and believes continuing education credits should be required for those working in the awning industry. “I think it’s critical for our industry to thrive,” he says. “Introduce your production staff to new methods—otherwise you can’t stay ahead of the curve.”

Staying ahead of the curve for Burak also includes being willing to look at how the needs of his customers might be changing in regards to the awning industry—and for the commercial market in particular. He expects to see even more demand for automated shading and mesh systems. “There will always be a need for retractable awnings and house awnings,” he says. “But on the commercial landscape, I am really concerned about aiming our company in a direction to take advantage of the change our industry is going through.”

From changes in product lines to time-saving techniques and technologies, Burak keeps his focus sharp—it always gets back to the bottom line. “The concept of looking at the bottom line can sound rather hard, but that’s where you have to be,” Burak says. “Especially in this economy, because there are no federal bailouts when it comes to an awning company.”

Sigrid Tornquist is a freelance author and editor based in St. Paul, Minn.

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