Phillippe Falkner is the Safety Director and Business Services Specialist with Ed Bell Construction in Dallas, Texas. Ed Bell is a heavy contractor that has been in business here since 1963. They do paving for the local DOT and local municipalities. We got Mr. Falkner's take on the top construction trends and how he thinks they'll impact the industry.
How will automated equipment change the industry?
We kind of went through a first renaissance with automating a lot of functions of equipment 20 to 25 years ago. We saw a lot of great gains to cost, quality, and just general scope of work and what we could accomplish in a given time period. Schedules were improved by that first renaissance where people were still in machines, but the machines did more for them.
As we move into this new next renaissance where machines are fully automated whether they're controlled remotely, where the machine has an AI, the machine has some sort of a pre-programmed system, etc., I think that is going to be something companies are gonna spend an inordinate amount of time and cost to figure out. And hopefully with great success because it solves some of that labor question. It solves some of the workforce development questions and quality questions. There's a commensurate quality issue that I don't think a lot of people are talking about because of the sheer volume of new people you're bringing in and the sheer volume of skill we've lost through whatever attrition: retirement, increased workforce need, COVID, or other factors.
Automated equipment brings a new baseline to creating better quality. It allows things to be streamlined. It solves those labor problems for a lot of things. Companies are going to be very excited to do it. We're very excited. Our owner has started soft committing dollars and different things as he sees the opportunity.
From a heavy highway perspective, automated equipment is a big challenge. If you look at some of the successes in automated equipment, they're in sectors of construction or in the industrial world where the type of work is really isolated to equipment driven functions. Mining, for example. I know there are mines in Australia and New Zealand where they're running a hundred percent automated down in the mine. There's not a human in the mine. They have a couple guys up top running some control aspects, but it's really all automated. That helps because there's not a lot of ground-based workforce there, right? There's not other guys doing functions outside the role of the equipment.
I think our biggest challenge for the industry and heavy civil and heavy highway disciplines specifically, is that many projects still need ground-based people. I think the automated equipment and automated driverless part that the world has really seen, especially related to the on road, it's in a restricted controlled environment, right? Nobody should be walking down the interstate. Does it happen? Sure. But nobody's in this controlled access zone.
The typical work site we all work on is not that controlled. I think there's gonna be a longer curve than we all expect because of the technological challenges that this machine has to understand and process. How is the 45 ton off road truck running at what you hope is 25 to 30 miles an hour and currently weighing 90 to 120,000 pounds going to be able to stop when the labor walks over in front of it? Is it an obstruction? Is it something I go around? Do I stop? What should I do? There's so many people and so much small stuff going on on the jobsite, so there's still a lot of challenges there.
I think it will make a dramatic impact on the labor force and the quality and schedule. I think we're all ready to spend those resources and spend those R&D efforts toward it. I'm positive about that. That being said, we’re a contractor that’s very safety oriented and has a great safety success record, so I'm going to be very reluctant to really dive in full first until I know that my guy is safe.
What would be the impact of automated payments?
This question is the one I'm least versed on, but I've done a little bit of research. Automated payments between the employer and the employee can make things happen on a more dynamic basis. As the market and the economy of this country changes, sometimes labor can have a direct impact. There's a much faster turnover of companies and entities. I think as new companies are born, we need to really try to fill these gaps from the older companies that have died out.
With inflation and supply chain issues, capital is a huge deal for your business. And capital's always a challenge, right? Even for companies that are more established and have a long history, cash flow is always king. Getting timely capital flowing downstream to employees, vendors, subs gives new companies, old companies, minority-owned businesses, etc. the flexibility to make better financial decisions. While companies like myself can afford to wait for weeks or a month for payment, I have subs who cannot. Maybe while I'm not sweating it, being able to have that cash in hand where I can move it down to a small business entity, a minority-owned subcontractor, a fresh startup or vendors who are fighting supply chain issues to be able to get material sooner is a game changer. They're able to get more aggressive on material because they can pay faster. Keeping that cash flowing quickly is going to answer a lot of questions for keeping businesses doors open.
Automated payments give us a competitive edge in the sectors where we're fighting for the same materials that the rest of other industries are fighting over as well. We get some feedback from certain vendors over there that say, ‘boy, if you can make a move now, or you can make a move today, or you can make a move before this update to EPI or rack prices or whatever happened, we can make moves’, right? Sometimes you just don't have that large volume of cash, especially if it's a subcontractor to do that. Maybe automated payments does something for us that allows that free flow of cash to get down there and help those guys make quicker decisions and make better moves and capture that resource before somebody else does. That would be the vision I would have for that.
So, automated payments have a lot of value. The thing I think that's going to be important is really getting information out about its benefits to companies midsize to large size who maybe cash flow is not a direct impact for them.We need subs, we need vendors, and we need partners. Just because your bank account may be flush and you're very fortunate for that doesn't mean those downstream aren't. That process may be just as important for them as anybody else.
What is the future of supply chain and electronic material ordering?
There are so many diverse things in our supply chain that happen at the global level, national level, and at a shockingly minute regional level. For example, I'm impacted by the supply chain now for expanding my fleet because I can't get chips, right? Me and the other million businesses in the United States right now. I have some stuff where we're having supply chain issues with highway striping, and glass beats have become some sort of complete unicorn right now where nobody can get them because there was a limited number of factories to start with. I believe it’s a United States domestic issue now.
The supply chain ties back into things like project management and scheduling software. It’s about really understanding what your needs are and getting that planning done well ahead of time. Planning and execution on a long range basis is still a challenge for the industry. I think we're a very successful contractor. I think a lot of our partners are very successful contractors. And we still talk about the level of minutiae we're talking about with the supply chain here. For some of these products, if we have a great grasp, six to eight weeks out, we're thrilled. And I think for years, that was sufficient. That was completely sufficient. But now you're like six to eight weeks is just so short. So inefficient on what you need to do to get ahead of these curves, that having some better material ordering infrastructure, having a better system is gonna be key to that.
I know for us, we're really looking at the small stuff. I know that my company and companies like mine are very limited on what we can do to impact Caterpillar making equipment, or like a large automotive manufacturer making cars to get down to me. But what we can do to help the people who make class beads, the people who make steel, the people who make some of the very specialized electronic components that go into signal lights. If I can give them better information on what I'm gonna need six months from now, nine months from now, 12 months from now, instead of coming up and going “I need this entire signalize intersection here in a month”. Well, used to that stuff was sitting on a shelf somewhere. No longer, right? I think that really having some long-range material ordering structure that flows from owners to prime contractors, to subcontractors, and then go through those vendors is gonna be really key to us, kind of getting ahead of the supply chain.
A lot of the supply chain thing isn't that it's not there, it's that it's not there when you need it. It still exists, but is it there when you need it? Aside from the fact we're getting automotive and a lot of heavy equipment chips made in these tiny factories, everything else that's supply chain issue for our industry right now, the stuff's still getting made. It just had a blip and it's still getting made. but now it's just trying to play catch up to the blip. And of course, every time the industry expands, the blip gets bigger 'cause the need gets bigger.
So, it's not a question of supply chain. It's a question of getting ahead of the supply chain. I don't think it's a void. I think it's just we're still trying to play catch up to this gap that existed in it. The way we've done business for 50 years, 20 years, the last five years isn't going to cut it anymore. We had minor supply chain disruptions the whole time we've all been building work and doing work, but they were so isolated and they were so short; these were all just blips on the radar. Even the steel crisis of 10 to 15 years ago was still a blip relatively speaking on the graph. I think that the way we've always handled this is not gonna be the way we handle it in the future. Stuff we never thought would impact each other is impacting each other every day.
Where do you see data science going? How do you see data science driving the future for the contractor?
Really understanding the unreal amount of data available to us in this day and age is just staggering sometimes. I have a particular passion for this. I actually moved roles within my company from being an operations manager and being a boots-on-the-ground guy to being somebody who specializes in data analysis, data science, aggregation of data, and process change. The thing that I've learned is, in my industry and heavy civil in particular, there's new technology that comes out all the time. But at the end of the day for us, concrete is almost the same as it was a hundred years ago. Steel is almost the same as it was a hundred years ago. Dirt's the same as it's been since the dawn of time.
There are minor technological improvements that come into our industry that way, but what we're building and how we're building it really hasn't changed since the '20s and '30s. There hasn't been really materially large jumps in improvements. At the end of the day, when our industry needs to move ahead and make these big jumps, the question is going to be, how do we do it leaner? How do we do it faster? How do we do it with less labor or less experienced labor? And how do we get that leg up on the competition of doing something? It's micro little increments of success that's really getting us ahead. And it's gonna be just complete encouragement, processing, and then process change with data.
I think that the companies that are really starting to put a value on that, that are really starting to put resources and parties in place and getting that data into the hands of decision makers to make minute process changes is going to be the only way that the industry improves in visible measurable jumps over the next 20 years. We're not gonna reinvent concrete or steel, or the way highways are built. Pipelines aren't gonna change dramatically that much, marine works are not going to change dramatically that much, but the question will really be how we can keep the traveling public moving and impact the traveling public less. How can we take less experienced workers and build equally or better quality products. How can we take the dollars that are given to us through private sector companies, but also through the government contracts and try to get the same amount of miles per dollar spent or better.
You have an infrastructure bill here. That's one of the largest in history and we're going to get less miles per dollar out of it than any bill in history. And it's because of the supply chain, labor force issues, and general inflation; there's a million things that are just chipping away at that. How many miles per dollar are you able to get? I think these process changes are what's going to make that better. I think the huge hurdle we have as an industry, and I'll tell you my company's as guilty of it as anybody - you can hire all the data scientists. You can purchase all the software you want. You can have all the data, but until you create a corporate system on your side and partner with owners and partner with subcontractors and vendors to take that data and make process changes, it doesn’t matter. Garbage in, garbage out, right? I can take your software and have this myriad of software that tells me everything about how to bid a job, how to manage a job, how to manage a fleet, how to manage a safety department. And it gives me more data than I can wrap my head around. But if I don't take it and tomorrow go make change with it, I've wasted all my money with it. I've done nothing.
Software and data analysis has never once gone on its own out into the job site and made something better, right? It taught a manager what needed to be changed. I still think there's a huge leap that needs to happen in our industry and a number of others where we think we're going to hire a smart guy to do analysis or buy a product or buy a software to do some data aggregation analysis, and we'll get a dashboard. We're going to get a report. Now, everything's fixed. We know what's going on. And that report and that dashboard stayed right on this monitor right here, and nothing happens. I think there's still a big leap from funding and understanding and creating and improving data science and then crossing that line over to applying it and making process change. And then going back, because it's not plug and play. I don't see something in software, tell me something's wrong and I fix it. And then I get to go home forever and we all have a glass because everything's great and it's never a problem again. You get the next day and you go back and you start over and you rerun that process again.
And I think that there's still a lot in our industry to be understood about not data science and what it can do, but what does our industry need to do with it? Our industry as a whole is competing with other industries for talent, for labor, for dollars, whether it's private sector dollars or government dollars, or whatever it is, we're going to fall behind until we take this data and learn how to be better and faster and do things more efficiently in the world at large.
What does the industry need to do to engage employees more?
Boy, I would've had a radically different answer to this question 24 months ago. The world has changed.
I have spent a lot of time through our trade association, a lot of time through my company, other companies and just talking to people at large about how the workforce has changed. It's not increased. It's not decreased. Those have happened, but people's goals and people's desires and reasons to be at work have changed so much over the past 24 months, and to some extent mine included. Why we're here doing what we do has changed so much and how we get those people to be passionate about what they do is changing dramatically. It’s changing faster than even the most progressive people on employee benefits and employee engagement. How do we take and build teams? What do we need from people?
I still think there's a vast question of what do I need from my people today as I did 24 months ago, because the world's changed and supply chain's changed and the technology's changed and the product I'm producing has changed and why I'm producing it has changed. I think every time we finally are able to get our little heads wrapped around this little bit of change we need, the employees have moved on; the employees move faster than companies do. I don't think enough C-levels and owners and executives understand that, that your employees move faster than you do.
And you don't wanna accept that. And you know what? What's his name? The famous physicist, Neil deGrasse Tyson. He has this great thing that says “You know what? The awesome thing about science is you don't have to believe it. It's true whether you believe it or not.” Employees are going to move faster and change what their needs are and what their desires to be at their company are faster than most companies keep up with. And the part is when managers get upset and go, I just can't figure it out. And I just don't understand why they're like this and I just blah, blah, blah. It doesn't matter. They're still doing it. What you think you want is irrelevant.
We don't engage our employees enough as equals. We don't talk to our employees enough. And I'm not talking about a manager talking to a manager. I'm not talking about a president talking to a VP. I'm not necessarily talking about a foreman talking to an operator. I'm talking about the entire management structure communicating downwards asking, why are you here? I'm not talking about what you make because there's some baseline to that about pay structure and all that. I'm not talking necessarily about benefits like healthcare and retirement and different benefits and vacation. Why are you here? Why do you stay here doing what you do? I think our industry still looks at a lot of these guys and say, “well, they're here because they need a job”. Dude, every one of our people could be making a comparable wage over at the large, big box retailer we all buy from all the time. Why is he here? And it's not necessarily, why is he a contractor A versus contractor B because an operator’s cutting the same grade and the same equipment no matter what, right? So, why is he here? Why is he doing this as opposed to doing something else? Why are you building roads? For some people, it's a family business. Some people, they just have a great curiosity for the engineering behind it. For me, the cool part is that I get to build something that wasn't there before. Some people it's a passion for doing something that feels important to the community. I help get people places. I think if we understood why people are here more, you'd be able to keep them because it's all about how you communicate with them.
The military traditionally has done a very good job communicating with their men. I think we could take some lessons from that. You have to keep your people informed. I think that our industry has a big weak spot on keeping our troops informed. Not always necessarily what to do and when to do it, but why we're doing it. Understanding why they're here to do it can motivate them to get them engaged to participate in it.
It's hard to do that though. At one point I personally had 25 direct reports and 325 employees that reported to me. Every one of those people have different reasons for getting up every day and coming to work at our firms. And you know what? Six months from now, a third of them will have a different reason because they have life changes. Life changes faster than any of us want to deal with. I think that you have to expend resources, time, and effort to engage your people on a communicative level about why they're there, and not necessarily are you making enough money.
I think a lot of industries do a great job with employee engagement, but I think the construction industry has gotten so head down, just drive, drive, drive, fast, fast, fast that we don’t stop to sometimes think of all of our employees as the most important cogs in the machine. In my industry, it matters more what those guys think than management thinks. You know why? Every check I get from an owner, every bit of revenue I've got, I didn't make any of that. I supported the guy who made that. I think that we forget sometimes that as management our job is only there to support them. I've done a lot in my time here. I don't remember the last time I've run a motor grader or finished some concrete or put a piece of pipe in the ground. But the guys who come in on the check that exist because of them, we don't talk to them enough.
We don’t need to just ask, “are you happy”? That's day to day, right? You can still be engaged and motivated and passionate about what you do and not be happy today. That's life. I think we don't spend enough time engaging them about why we're here and why do you want to do what we do? And tailor the response to that person to engage them based on what that is.
That was a long answer. I'm sorry, but it's something I'm very passionate about because I think I try to do it every day and I fail a lot. I fail at it because it takes some effort. You need some dedicated people to do it. And I think your upper levels and C-levels and executives have to dedicate part of their time to it as well.
What impact do you expect environmental practices to have on the industry?
You know, environmental construction practices have been very good for our industry and the taxpayers and the world at large. I've been doing this for 26 years, which seems like a long time to me some days, but in the relative scheme of things, it's actually very short.
Just in my time, the improvements we've made to make a better world and a better living condition for the communities we built through are dramatically better. And that's a good thing, but I think that there has to be balance. It's like we said earlier, just because I wish the world and the government and regulations would be different, it doesn't matter. It's going to go forward. So our job is to figure out how to balance those.
There is going to be, in my opinion, if we're not careful, a little bit of a tail chasing death spiral of environmental regulations and requirements and supply chain because too often that the right hand of one side of the government and the left hand don't know what the other one's doing. And I understand that the need to be greener, the need for trying to reduce global warming, the need for trying to just better emissions make cities better places to live because whether we like it or not a lot more people are packing into a lot more urban environments. The quality of life in those environments affects hundreds of thousands if not millions of people.
Certain municipalities say that we can’t have a concrete plant in our town. Okay, I get it. I'm not going to put it by the elementary school, but let’s put it five miles out of town where there's nothing. If you don’t have a concrete plant, what you've done in this town now is make it where the cost of concrete's gone up $30 a yard because of freight and trucking. And now you don't get as many dollars per mile in your town. So now you double around and you start this chase if you've implemented the environmental practices to an extreme and now you've cut off the supply chain.
The supply chain drives the schedule. Now you're not getting as many dollars per mile and jobs aren't getting built. Now that goes back around to when funding happens, whether it's through city bonds, whether it's through regular tax dollars and gas taxes, or whether it's through a hotly politically contested infrastructure package, the taxpayers who sign off on all that didn't get their money's worth. So now the next time comes around. When it's time to vote on that, they're like, well, you didn't get it done with the last package. It gets you to a spot where you're not building. I think that while I would love to sit there and say, well, we just need to logically talk to some of these entities and try to keep them not in check, but keep them balanced and looking at it with an open perspective, they're politicians, right? If we could do that, we could do a lot. I think contractors have to do a better job. Contractors have got to do a better job of finding out how to build roads in lieu of what may be restrictive practices.
We've got to find a way to take what we have and still build the work instead of just being so intent that we're going to fight it or stop it and just run our head against the wall. I think you devote some resources to try and deal with that, and you need to spend equal or more resources, but how do we do it anyway? How do we do it better? How do we do it within the constraints? What materials can I use? What can I submit? What processes can I use? Do I tell them that this is going to cost more, but here's a way for something else to cost less? I think you have to work with your owners to be able to ask what the most important thing to them is on the project because you'd be surprised sometimes. Everybody thinks you build a road just because you need a new road or a better road; that's not always the case.
Sometimes you need to ask your owner “what's most important to you on this project?” I've had an entire road that we were building before with street lights. When I asked that question, the whole job was to put the street lights in for children's safety. They just decided to fix the road while they were there. So that made me understand that I need to get the lights in as early on this job as possible. If there's a way for me to go ahead and put the conduit in before I usually do and get the lights up faster, I have achieved the owner's goal quicker, right? I didn't just put my head down and go, “well, I wanna build the road because I'm a concrete guy and the electric guy can handle lights whenever”. What's your owner's goal? As an industry, we need to be asking these questions.
It doesn't matter if we want to change or not. You can either figure out how to change with it, or you can become a very sad chapter in history of how you were not part of the solution, you were just part of the problem.
