How is your work environment? One thing we see in the industry is the changing work environment for the contractors. It’s not a nice world. The contractor is doing all that they can do to turn a profit and get ahead doing carrier work. I have talked to many people that are getting out of the carrier work altogether. Especially tower climbers that are leaving the industry because of the horrible pay and work conditions. Here is what I know is going on, I made a list to help you understand.
- 90-day or longer payment terms – while the carriers see this as more than fair, it really hurts the contractors. Here’s the thing, when a contractor does work, they have to get the sign off from the carrier or OEM or GC. Then they have to wait 90 more days to get paid, assuming they aren’t set up on a milestone payment model. More on milestones later. The contractor may work for a month before the site is accepted, then once accepted they have to wait 90 more days to get paid. Does this sound fair to you? I wonder if that have the same terms for all their contractors, like IT, mowing service, utility companies, and so on? By the way, how often does the carrier want to be paid on their wireless contract? I believe it’s 30 days. Why don’t they push that out to 90 days?
- Reverse auctions – this is where the company, say a carrier, will spend a small fortune to hold an auction to get the lowest cost on a specific project or job. Lowest bidder wins. Hopefully, they understand the work and can complete it. If they don’t, then they don’t get paid, and the company saves more money because they bring in someone to finish it and only pay them for a tenth of the work while the first company gets nothing. This is bad for the industry because it sucks the margin out of everything. It’s great for the companies if you only look at the money, if you want quality work then you get what you pay for. Crap in equals crap out. That’s where this industry appears to be headed.
- Milestone payments – actually, this isn’t a bad way to do business because you get some of your money for the work you do. Several contractors would ask for money up front. They may still get it, but most companies refuse to pay up front for services. They may pay for the equipment, but not any services or for ramping up. The work environment has changed because there is not a lot of trust out there anymore. The milestone payment plan can get you paid when doing larger projects. If you do this much work, prove it, validate it, and it’s accepted, then you get paid for that portion. So that is a way the contractor can pay the workers for an ongoing larger project.
- Safety requirements – this really applies to anyone in the industry. Safety vendors are always checking, and they should keep contractors honest and safe. However, there are more safety requirements in the industry than ever. Yet, 90-day payment terms, dwindling margin, and less work means that it’s going to be hard to pay for all that safety gear and training while getting qualified people. Everyone seems to think that tower climbers will work for $10/hour. If they do, they won’t work there long. The work is hard, you’re away from your family for extended periods, and you could die any day on the job. Is all of that worth $10/hour to you? Not if you’re good at what you do. At a minimum, climbers should make well over $100K a year!
- Task breakdown – this is when the company breaks down each task and assigns it to a specific company. This sounds like a good idea because there are no hidden charges. However, now the PM has to manage even more contractors and ensure that the handoffs and timing are It adds delay to many projects whereas if you had one company do tasks A and B and C it could be done all at one time. The carriers have done this for years, and now they wonder why deployments take so long. That’s because their PMs are managing 10 times the crews they once were, and everyone has their own schedule and priorities.
- Big company contracts are no longer lucrative – remember if you only got that contract with a large carrier or OEM you would be set for a while. They would feed your business, and you would have work for years to come. Those days are gone. Now, to do work for a larger company you must have people dedicated to work bids, estimate, rebid, try to understand the complicated scopes and acceptance terms, get on calls to talk through the actual work, look at the insurance requirements, see what you will really make on an offer, and rebid several times. This is the reality. This adds tremendous overhead. Yet, in wireless, most contractors are very small. That’s why you have margin on margin. That’s why you have so many unscrupulous characters in this business. That’s how people are driven to bankruptcy. While the larger companies in wireless like to point fingers, they should look in the mirror at the monsters that they created and helped thrive.
- Competition thrives – this is true today, but the reality is service companies are leaving the industry. The carriers constantly get costs from the smaller contractors and use them to drive down the larger GCs costs to match the pricing they get from the smaller companies with little or no overhead. It’s not a fair comparison and one that eventually hurts the smaller companies because they will be pushed to do more for less.
I don’t mean to make it sound like doom and gloom. Most companies are figuring out how to navigate the waters and turn a profit. But it’s harder and harder. I would rather write books and consult. I respect and admire the guys that are doing the heavy lifting today. It’s so hard to get things done in the real world. Climbers often get the short end of the stick when it comes to getting paid. I see more and more people working endless hours just to maintain what they have. I see more and more health issues due to stress and poor exercise because they work endless hours into exhaustion. I see executives crying about margin after getting amazing bonuses. They know this is happening, yet they not only allow it, but they also promote it with these business practices.
Do I blame the larger companies? Not really. They see the larger picture. They have dividends to pay, they see the margins getting smaller, and the wireless plans have leveled off. They have to remain profitable to make new technology happen. They see the bigger picture. I get it, but all I am saying, be fair. Take care of the people who have taken care of you throughout the decades.
We are on the verge of growth years in 2018, 2019, and 2020. I hope we have the workforce to support it and I hope that it’s good for the workers to make some money to get ahead. I don’t know what 2021 will hold, but the chances are good that the work will start to taper off again for the deployment teams. Let’s make the most out of these next 3 years and prosper. Let’s figure it out.
Loyalty is fading away. I know that some vendors concentrate on a larger company, but the trust that was once there is fading. I think that a contractor may leave a job if they know another company will pay more or at least do a net 30, it’s worth working from someone else. Chances are the company that tried to get for less money, or net 90 will be back because their pool of contractors will dry up. Loyalty has been replaced with cutting expenses and higher revenue recognition. People walk off job sites for a reason.
There is an opportunity out there, but is it in this industry? I hope so. It’s not going to be easy to make money doing services for the larger companies, but if we’re smart and know when to walk away, we might be able to come out ahead in the long run. Let’s all work together to make that happen.
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