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The Decline in Multifamily
Housing
Housing
By: Carol Brzozowski
A decline in payroll employment for the first time in four years – including a drop of 23,000 jobs in residential construction –
has become a matter of concern not only for the construction industry, but also for affiliated industries such as portable
sanitation.
After the release of August employment figures showing the U.S. economy’s payroll decline, Brian Catalde, president of
the National Association of Home Builders (NAHB), issued a statement from the association’s fall board meeting calling for
action.
“In light of the significant decline in employment reported today, NAHB and its 2,800 board members call on the
administration, Congress and federal regulators – along with stakeholders in the private sector − to work in concert to
prevent further deterioration in the housing market and erosion of growth in the nation’s economy,” says Catalde.
The August report had jolted Wall Street, he notes, “demonstrating the paramount importance of restoring consumer and
investor confidence in the U.S. economy and housing market.”
Indeed, for those in the sanitation industry whose businesses are heavily dependent upon the residential housing
construction sector, the news is not good. Economic forecasts predict that the housing slump will most likely worsen
before there’s light at the end of the tunnel.
Although a slight increase in construction is expected next year, the forecasted numbers for new housing starts for 2008
have been lowered from 1.49 million to 1.46 million.
“Unless the Federal Reserve makes some major changes in their monetary policy, we’re going to continue in this downward
spiral we are in,” Catalde told Sanitation Journal.
Catalde confirms the economic forecast of a residential construction housing slump through 2008, but says a move on the
part of the Fed to make major shifts could shorten up that time frame.
However, there’s a glimmer of hope in the commercial construction market. That sector was expected to grow by seven
percent in 2007, accounting for some of the slack in the residential construction sector.
Those in the sanitation industry whose businesses are heavily dependent upon housing construction are feeling the heat.
Those who offer umbrella services are picking up the slack by strengthening other areas while riding out the slump.
Gretchen Menard has owned Poopy’s Potties in Holly, Michigan for 10 years. Michigan’s unemployment rate is among the
highest nationwide. Menard recently had to put a few more workers on those unemployment lines when she laid off a few
employees.
“I used to have three guys; now I’m down to one full-time guy and myself,” she says. “I’m still doing good because I have
less expenses, less payroll, so I’m not as busy and I’m still able to make money and pay my bills.”
Seventy percent of her company’s clientele is in the construction sector, with the other 30 percent in special events. In the
autumn, Menard usually has about 260 units out – this fall, she had about 80 fewer units out.
Menard, who’s been in business nearly 10 years, has resigned herself to the housing construction slump.
“You just deal with it; there’s not much you can do,” she says. “You try to cut costs. I cut back on my advertising in all the
phone books. I used to put the bigger ads in there. That saves me a couple hundred bucks right there.
“I’ve been trying to cut costs everywhere - toilet paper, chemicals, payroll. If I can do something, I do it myself instead of
hiring somebody to do it.”
In all, Menard says she believes she’s one of the “lucky ones” in the industry.
“I’ve been in business for a long time – but I know there are some other porta-jon companies that opened one or two years
ago. I don’t know how they can stay in business,” she says. “I still have the same customers that have been with me for the
last nine years and they are going to use my company forever. If I had opened this a year ago, I’d have to get another job.”
Menard actually is enjoying the down time.
“Spring, summer, fall, I’m working long hours each week,” she says. “I make a living, so I’m not complaining.”
Some business owners are having to spend money to rent space for portable sanitation units that aren’t making them
money right now.
Eric Anderson knows of such cases, but hasn’t had to resort to that – his company had already been getting rid of older
units. Nonetheless, his company, Anderson Rentals in Mims, Florida, is down 60 percent in its construction sector rentals.
“That’s pretty huge,” points out Anderson, the company’s corporate secretary.
Anderson Rentals has shifted gears to pursuing the commercial construction sector and networking with roll-off container
companies.
“We rent their equipment; they rent ours,” he says.
Also, a change in laws that required permit for holding tanks has enabled his company to rent out holding tanks “like
hotcakes,” Anderson notes. His company had enforced the previous law requiring permits “and I know we lost a lot of
business because the yard showed it,” he says. “We had stacks and stacks of holding tanks.”
For those like Anderson who’ve been in the industry for a long time, the present housing construction slump is “the worst
we’ve ever seen.”
There are some national influences to blame, such as the crisis of homeowners defaulting on sub prime mortgages. New
housing is a hard sell in a market where people cannot even afford to live in older homes.
Yet there are regional factors as well.
Property taxes in Florida have left residents clamoring for relief while the skyrocketing homeowner insurance rates in the
wake of hurricane damages have created conditions where people are less likely to retire in the Sunshine State, notes
Anderson.
For the past few years, many new portable sanitation operations started up in Florida in response to rebuilding efforts after
several years of hurricane damage.
“The competition has got to be dying left and right here in Florida because they went out and bought trucks and toilets and
they only worked for a year and a half at the best, the guys who got in early. Now, they owe a lot on that equipment that’s
standing in their yard,” says Anderson.
Anderson Rentals also has had to trim its work force. The company is down by one-half in its pool of drivers. The company
has not replaced people who have retired or left.
“Our layoffs have been at a minimum, but our workforce is down,” Anderson says. “A year and a half ago we had 96
employees and now I think we’re down in the low 50s. Last month, we did some really difficult layoffs - three 15-year
employees. Hiring people is when business is fun. But when business is going backwards, and you’ve got to lay off, that’s
when business is not fun. It gets serious when you are affecting peoples’ lives.”
Anderson – a past president of the Florida Onsite Wastewater Association - says he’s always preached pro-active
business planning.
“But it’s really hard to do,” he concedes. “When you are growing really fast, you try to keep up with the demand by
purchasing units and building or buying trucks and hiring employees. When it starts to slide the other way, it’s hard to be
proactive.”
The downside to the slump is that it has intensified the practice of price-cutting just to get any revenues, Anderson says.
“All of these smaller operators make me a much bigger target because I’m easier pickings when they are willing to do it for
less,” he adds. “When you are a big player, you are a big enough target already, but when things start sliding backwards, I
think the target just gets bigger and bigger the more the slide goes downward. It’s not been fun for us. We enjoyed it
during the good times and we’re struggling to keep our necks above water in the bad times.”
Rion Rutledge, Jr. is the owner of Tidy Toilets in Rock Hill, South Carolina. His company has about 200 construction units,
with “way too many” of them sitting in the yard, he notes.
Rutledge is bracing for a longer slump than operators elsewhere in the country.
“We’re behind much of the country by about a year,” he says. “Construction started slowing down about a year ago so we
knew it was coming, but now we’ve really slowed down. It’s getting harder for a lot of people to get loans and therefore we
are building less at the moment. There are loan scandals at the moment, with a lot of institutions failing because of giving
people loans they can’t afford and we have a lot of houses sitting on the market. Most of the big builders have half the
toilets they normally have out.”
Doing special events and pumping septic tanks has helped pick up the slack. But Tidy Toilets is in another bind: the area
has been in a drought, so that means less of a need to pump tanks that typically get messed up in rainy conditions.
Competition has popped up everywhere and everyone’s getting a smaller slice of the pie, Rutledge says. From speaking
with some of his competitors, he knows the challenges run across the board.
One of the ways he’s coping is to pay off all of the debt he possibly can. Plus, he’s not replacing people after they leave.
Rutledge points out that in times like these, giving good service becomes even more paramount as to not lose customers.
Bobby Spurlock handles outside sales for Spivey Rentals in Chesapeake, Virginia. His company’s been in business since
1969 and services a broad region including and outside of Chesapeake.
Ninety percent of the company’s business is in the construction sector.
Is Spurlock worried?
Not much.
“The residential market for this year was off about 42 percent as opposed to what it was last year for the second quarter.
But with that being said, our business as a whole is not down nearly that much - probably less than 10 percent,” says
Spurlock.
“We have refocused our attention the commercial market. The commercial market in this area is phenomenally strong right
now. Right now, I’m juggling 120 bids. We bid everything commercial that comes across our desk. You have to.”
Diversification also helps maintain business when one sector is sluggish, he points out.
“We have the special events units, a pavement marking division, a traffic control division, roll-off Dumpsters, a sign shop
and a safety division,” says Spurlock. “We’re very diversified, so if one division is falling off because of the economy,
other divisions are there that can help pick up the slack.”
If a company is going to focus heavily on the construction sector for portable sanitation, it seems to make sense that
offering umbrella services for “one-stop” service attracts greater revenues while meeting customer needs, Spurlock points
out.
“The local contractors know we have it, but we really try to key in on that with the out-of-town contractors who come here,
because they don’t know where to go to find things, so we provide that service to them,” he says.
“If they are looking for something that we might not particularly handle, we can refer them to other people in the area so
they’re not beating their brains out trying to find something,” he adds. “It’s a little extra service, but it really helps to make a
lasting relationship with an out-of-town contractor because if they ever come back, they’re going to know who to call.
They’re going to call you; they’re not shopping for prices.”
Spivey Rentals has been in business long enough to have weathered many economic cycles.
“To a certain degree, you may have to adjust some things as far as your pricing goes to be more competitive,” Rutledge
says. “We’ve got competition in this area, as all markets do. So you deal with it on a case-by-case basis.”
Sometimes the ability to sustain a business and even see it thrive depends on location. As Anderson pointed out, Florida
was “hot” in the rebuilding efforts after hurricane damage, but a freeze has settled throughout the state because of the
housing construction slump.
For Spivey Rentals, being located near military bases can mean a steady stream of work.
“I know from living here 20 years that the rest of the economy in the country can be bad, but it really has to be very bad
before you start seeing a dramatic effect in this area because of the military,” says Rutledge. “There’s a lot of money here.
They’re always building something at these bases and it’s not a small contract – you’re talking projects that run in the
millions.”
Rutledge agrees with economic forecasters that “it’s going to get worse before it gets better.
“I knew it was coming,” he says. “Money was too easy to get, people were building houses hand over fist at over-inflated
prices and the market flooded itself out because too many people are defaulting on mortgages.”
has become a matter of concern not only for the construction industry, but also for affiliated industries such as portable
sanitation.
After the release of August employment figures showing the U.S. economy’s payroll decline, Brian Catalde, president of
the National Association of Home Builders (NAHB), issued a statement from the association’s fall board meeting calling for
action.
“In light of the significant decline in employment reported today, NAHB and its 2,800 board members call on the
administration, Congress and federal regulators – along with stakeholders in the private sector − to work in concert to
prevent further deterioration in the housing market and erosion of growth in the nation’s economy,” says Catalde.
The August report had jolted Wall Street, he notes, “demonstrating the paramount importance of restoring consumer and
investor confidence in the U.S. economy and housing market.”
Indeed, for those in the sanitation industry whose businesses are heavily dependent upon the residential housing
construction sector, the news is not good. Economic forecasts predict that the housing slump will most likely worsen
before there’s light at the end of the tunnel.
Although a slight increase in construction is expected next year, the forecasted numbers for new housing starts for 2008
have been lowered from 1.49 million to 1.46 million.
“Unless the Federal Reserve makes some major changes in their monetary policy, we’re going to continue in this downward
spiral we are in,” Catalde told Sanitation Journal.
Catalde confirms the economic forecast of a residential construction housing slump through 2008, but says a move on the
part of the Fed to make major shifts could shorten up that time frame.
However, there’s a glimmer of hope in the commercial construction market. That sector was expected to grow by seven
percent in 2007, accounting for some of the slack in the residential construction sector.
Those in the sanitation industry whose businesses are heavily dependent upon housing construction are feeling the heat.
Those who offer umbrella services are picking up the slack by strengthening other areas while riding out the slump.
Gretchen Menard has owned Poopy’s Potties in Holly, Michigan for 10 years. Michigan’s unemployment rate is among the
highest nationwide. Menard recently had to put a few more workers on those unemployment lines when she laid off a few
employees.
“I used to have three guys; now I’m down to one full-time guy and myself,” she says. “I’m still doing good because I have
less expenses, less payroll, so I’m not as busy and I’m still able to make money and pay my bills.”
Seventy percent of her company’s clientele is in the construction sector, with the other 30 percent in special events. In the
autumn, Menard usually has about 260 units out – this fall, she had about 80 fewer units out.
Menard, who’s been in business nearly 10 years, has resigned herself to the housing construction slump.
“You just deal with it; there’s not much you can do,” she says. “You try to cut costs. I cut back on my advertising in all the
phone books. I used to put the bigger ads in there. That saves me a couple hundred bucks right there.
“I’ve been trying to cut costs everywhere - toilet paper, chemicals, payroll. If I can do something, I do it myself instead of
hiring somebody to do it.”
In all, Menard says she believes she’s one of the “lucky ones” in the industry.
“I’ve been in business for a long time – but I know there are some other porta-jon companies that opened one or two years
ago. I don’t know how they can stay in business,” she says. “I still have the same customers that have been with me for the
last nine years and they are going to use my company forever. If I had opened this a year ago, I’d have to get another job.”
Menard actually is enjoying the down time.
“Spring, summer, fall, I’m working long hours each week,” she says. “I make a living, so I’m not complaining.”
Some business owners are having to spend money to rent space for portable sanitation units that aren’t making them
money right now.
Eric Anderson knows of such cases, but hasn’t had to resort to that – his company had already been getting rid of older
units. Nonetheless, his company, Anderson Rentals in Mims, Florida, is down 60 percent in its construction sector rentals.
“That’s pretty huge,” points out Anderson, the company’s corporate secretary.
Anderson Rentals has shifted gears to pursuing the commercial construction sector and networking with roll-off container
companies.
“We rent their equipment; they rent ours,” he says.
Also, a change in laws that required permit for holding tanks has enabled his company to rent out holding tanks “like
hotcakes,” Anderson notes. His company had enforced the previous law requiring permits “and I know we lost a lot of
business because the yard showed it,” he says. “We had stacks and stacks of holding tanks.”
For those like Anderson who’ve been in the industry for a long time, the present housing construction slump is “the worst
we’ve ever seen.”
There are some national influences to blame, such as the crisis of homeowners defaulting on sub prime mortgages. New
housing is a hard sell in a market where people cannot even afford to live in older homes.
Yet there are regional factors as well.
Property taxes in Florida have left residents clamoring for relief while the skyrocketing homeowner insurance rates in the
wake of hurricane damages have created conditions where people are less likely to retire in the Sunshine State, notes
Anderson.
For the past few years, many new portable sanitation operations started up in Florida in response to rebuilding efforts after
several years of hurricane damage.
“The competition has got to be dying left and right here in Florida because they went out and bought trucks and toilets and
they only worked for a year and a half at the best, the guys who got in early. Now, they owe a lot on that equipment that’s
standing in their yard,” says Anderson.
Anderson Rentals also has had to trim its work force. The company is down by one-half in its pool of drivers. The company
has not replaced people who have retired or left.
“Our layoffs have been at a minimum, but our workforce is down,” Anderson says. “A year and a half ago we had 96
employees and now I think we’re down in the low 50s. Last month, we did some really difficult layoffs - three 15-year
employees. Hiring people is when business is fun. But when business is going backwards, and you’ve got to lay off, that’s
when business is not fun. It gets serious when you are affecting peoples’ lives.”
Anderson – a past president of the Florida Onsite Wastewater Association - says he’s always preached pro-active
business planning.
“But it’s really hard to do,” he concedes. “When you are growing really fast, you try to keep up with the demand by
purchasing units and building or buying trucks and hiring employees. When it starts to slide the other way, it’s hard to be
proactive.”
The downside to the slump is that it has intensified the practice of price-cutting just to get any revenues, Anderson says.
“All of these smaller operators make me a much bigger target because I’m easier pickings when they are willing to do it for
less,” he adds. “When you are a big player, you are a big enough target already, but when things start sliding backwards, I
think the target just gets bigger and bigger the more the slide goes downward. It’s not been fun for us. We enjoyed it
during the good times and we’re struggling to keep our necks above water in the bad times.”
Rion Rutledge, Jr. is the owner of Tidy Toilets in Rock Hill, South Carolina. His company has about 200 construction units,
with “way too many” of them sitting in the yard, he notes.
Rutledge is bracing for a longer slump than operators elsewhere in the country.
“We’re behind much of the country by about a year,” he says. “Construction started slowing down about a year ago so we
knew it was coming, but now we’ve really slowed down. It’s getting harder for a lot of people to get loans and therefore we
are building less at the moment. There are loan scandals at the moment, with a lot of institutions failing because of giving
people loans they can’t afford and we have a lot of houses sitting on the market. Most of the big builders have half the
toilets they normally have out.”
Doing special events and pumping septic tanks has helped pick up the slack. But Tidy Toilets is in another bind: the area
has been in a drought, so that means less of a need to pump tanks that typically get messed up in rainy conditions.
Competition has popped up everywhere and everyone’s getting a smaller slice of the pie, Rutledge says. From speaking
with some of his competitors, he knows the challenges run across the board.
One of the ways he’s coping is to pay off all of the debt he possibly can. Plus, he’s not replacing people after they leave.
Rutledge points out that in times like these, giving good service becomes even more paramount as to not lose customers.
Bobby Spurlock handles outside sales for Spivey Rentals in Chesapeake, Virginia. His company’s been in business since
1969 and services a broad region including and outside of Chesapeake.
Ninety percent of the company’s business is in the construction sector.
Is Spurlock worried?
Not much.
“The residential market for this year was off about 42 percent as opposed to what it was last year for the second quarter.
But with that being said, our business as a whole is not down nearly that much - probably less than 10 percent,” says
Spurlock.
“We have refocused our attention the commercial market. The commercial market in this area is phenomenally strong right
now. Right now, I’m juggling 120 bids. We bid everything commercial that comes across our desk. You have to.”
Diversification also helps maintain business when one sector is sluggish, he points out.
“We have the special events units, a pavement marking division, a traffic control division, roll-off Dumpsters, a sign shop
and a safety division,” says Spurlock. “We’re very diversified, so if one division is falling off because of the economy,
other divisions are there that can help pick up the slack.”
If a company is going to focus heavily on the construction sector for portable sanitation, it seems to make sense that
offering umbrella services for “one-stop” service attracts greater revenues while meeting customer needs, Spurlock points
out.
“The local contractors know we have it, but we really try to key in on that with the out-of-town contractors who come here,
because they don’t know where to go to find things, so we provide that service to them,” he says.
“If they are looking for something that we might not particularly handle, we can refer them to other people in the area so
they’re not beating their brains out trying to find something,” he adds. “It’s a little extra service, but it really helps to make a
lasting relationship with an out-of-town contractor because if they ever come back, they’re going to know who to call.
They’re going to call you; they’re not shopping for prices.”
Spivey Rentals has been in business long enough to have weathered many economic cycles.
“To a certain degree, you may have to adjust some things as far as your pricing goes to be more competitive,” Rutledge
says. “We’ve got competition in this area, as all markets do. So you deal with it on a case-by-case basis.”
Sometimes the ability to sustain a business and even see it thrive depends on location. As Anderson pointed out, Florida
was “hot” in the rebuilding efforts after hurricane damage, but a freeze has settled throughout the state because of the
housing construction slump.
For Spivey Rentals, being located near military bases can mean a steady stream of work.
“I know from living here 20 years that the rest of the economy in the country can be bad, but it really has to be very bad
before you start seeing a dramatic effect in this area because of the military,” says Rutledge. “There’s a lot of money here.
They’re always building something at these bases and it’s not a small contract – you’re talking projects that run in the
millions.”
Rutledge agrees with economic forecasters that “it’s going to get worse before it gets better.
“I knew it was coming,” he says. “Money was too easy to get, people were building houses hand over fist at over-inflated
prices and the market flooded itself out because too many people are defaulting on mortgages.”
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Serving the American Liquid Waste Industry Since 2002