Coffee Conversations LIVE at IRE 2025 - Day 2 - PODCAST TRANSCRIPT

Editor's note: The following is the transcript of a live interview with Trent Cotney of Adams and Reese, Eric Miller of Westlake Royal Building Products and Piers Dormeyer of EagleView. You can read the interview below, listen to the podcast or watch the recording.

Intro: Here at the IRE in San Antonio, Texas. This coffee conversation is being sponsored by SRS. In fact, they've sponsored our soundstage all week at this great show. We are so excited because today is day two of Coffee Conversations. I'm Heidi Ellsworth, and today we're going to be talking with manufacturers, technology providers and legal, asking the same questions we asked yesterday to the contractors. And so we're going to kind of see different perspectives and how it's all coming together. We're so excited you're here. Let's get started. So first of all, welcome gentlemen and let's start with some introductions. I'm Trent, can we start with you?
 

Trent Cotney: Sure. Trent Cotney. I am partner at Adams and Reese and NRCA General Counsel.

Heidi Ellsworth: Awesome. Eric?

Eric Miller: Eric Miller, Westlake Royal Building Products.

Heidi Ellsworth: Thank you for being here. Piers.

Piers Dormeyer: Hi, I'm Piers Dormeyer, CEO of Eagle View.

Heidi Ellsworth: And we have some repeat. You guys, thank you so much. Piers and Trent have both been on before. Eric, we're so glad to have you here. This is great. So, okay, let's get started with talking about what we've seen so far. What are some of the hot trends that you think are going to be shaping trends, issues, all of those things that are going to be shaping the roofing industry in 2025 and if that's kind of the same as 2024 or if you're seeing some new things developing. Trent, you want to start us off?

Trent Cotney: Yeah, just a few things have changed here recently. Obviously the biggest questions that I get day in and day out are immigration and tariffs. Those are the two biggest ones that we're facing right now. What that means for contractors, what that looks like for manufacturers and distributors and sort of navigating that, figuring out what's noise and what's reality and how to address contracts and then how to work with your labor force to kind of deal with those issues.

Heidi Ellsworth: That's all I've been hearing since I've gotten here.

Trent Cotney: Yeah, [inaudible 00:01:54].

Heidi Ellsworth: I know, it's crazy. Eric, what are you hearing?

Eric Miller: Obviously what Trent mentioned and additionally all the weather events and how it relates to the different insurance criteria, the different changes with insurance. It's a big issue. Labor obviously continues to be a big issue in combination with immigration. Those are big drivers and a big focus certainly now compared to where they were last year.

Heidi Ellsworth: And I think it's interesting how they kind of push each other, right?

Eric Miller: Yeah.

Heidi Ellsworth: All of these big weather events are pushing insurance, are pushing labor shortage, there's just materials and how it's working.

Eric Miller: Absolutely. And it's interesting, right? It's across the country. It's hail, it is wind, it's fire obviously. So it's really hitting everybody where I think when you look at it historically, it would be an isolated region. It's really impacting across the US now.

Heidi Ellsworth: Yeah, it really is everywhere. I mean look at, we're in San Antonio this week and it's freezing every night.

Eric Miller: Yeah, [inaudible 00:02:55].

Heidi Ellsworth: I mean literally below 32, it's been cold. Piers, what are you seeing?

Piers Dormeyer: I would echo everything these gentlemen have said and then some. I think from where we sit, insurance is a huge area of uncertainty and in addition to the perils that Eric just mentioned, you can even add flood to that mix, because...

Heidi Ellsworth: Yes.

Piers Dormeyer: ... flooding is actually, especially as it relates to the FEMA 50/50 rule and where I live and the aftermath of hurricane Helene, you've got thousands of homes particularly on the coast that you can't get permits for, because the flooding is just forcing teardowns. So where you would've had re-roofing, for example, hurricane-driven demand, you're not getting that anymore. And then we're seeing this migration away from replacement cost value policies, to actual cash value policies. So homeowners just don't have to cash to actually engage in those repairs. So I think there's quite a bit of concern out there, just around sustainability. Not just from... We always think eco and green sustainability. I think sustainability of the business model is something that we're really concerned about. You add a shrinking workforce to all of that, we've got some real problems that I think we all need to put our heads against.

Heidi Ellsworth: Yeah, Piers, that really makes me think, I mean when you're talking about what's going on. So let's tune into that just a little bit more on the insurance front, and really how insurance companies are... I mean they have to, with all this extreme weather and what's going on, they're looking at things totally different. And as an industry we need to look at things different too. You do so much with both insurance and roofing. What are some of the trends that you're seeing that way, as in are we getting closer or things happening where we're working together? What are some of the things... You know? A little bit of your crystal ball for 2025 would be cool.

Piers Dormeyer: So I'll just say yeah, we've been in this business and I think that Venn diagram between the roofing industry and insurance and how the two industries kind of interplay, has changed a lot in the couple decades that I've been in this world. And I think it's changed for the better. I really do. I think that there's a lot more collaboration between the insurance companies and roofing contractors, and there's been a lot of fraud that's been removed through technology and other tools, which is really good for everybody, including ultimately the consumer and the homeowner, building owner. But that said, we're also seeing this increase in costs and prices have risen to this relatively... I mean talk about unsustainable. Inflation and price increases, cost increases have outpaced rising incomes or if you even call them rising incomes, to the point where something's going to break. Carriers are generally operating at elevated loss ratios, so there's not a lot of money being made there and then you've got rising deductibles that just are creating a real challenge. So I think really thinking about how we can navigate that's going to be going to be pretty important.

Heidi Ellsworth: Yeah, and I think part of this is coming down to the durability of products. We had some people talking earlier about this, is that the durability of products is also changing the life cycle for the contractors. So there's these different things. So Eric, I would love to hear about that.

Eric Miller: I think it's not only the roof of contractors. I mean you look at the average consumer and their awareness and taking a much more active role and understanding the different products. That historically they may rely. So I think they're asking more of contractors to be able to articulate the value of the different products, and they're doing a lot of research on their own to try to understand what products, which ones are sustainable, how do they relate to the total cost of ownership. I think that the consumers are much more active. The insurance issue is going to continue to be a significant issue.

Heidi Ellsworth: Yeah.

Eric Miller: It's a big one and it is got a lot of challenges, I think.

Heidi Ellsworth: It's not going away anytime soon.

Eric Miller: No, not anytime soon.

Heidi Ellsworth: No.

Piers Dormeyer: I know just to add on too, I didn't mention, but even the state of Florida just made the news few weeks ago, maybe a couple months ago, where the head of insurance in Florida makes some statement along, "Hey, we don't know if there's a future for shingles in the state." I mean you really think about that, right? In the context of the dominant roof covering available. So you're getting all the way to the top of state government on this, and yeah, it's going to be really interesting to see how this plays out.

Eric Miller: And you think historically that statement would've never been made at that level. It's a unique time I think for the industry without a doubt.

Heidi Ellsworth: It is. In fact, I was thinking of you today, Trent, when we had some folks on the soundstage talking just about that, about what's happening in Florida around shingles. And the coatings are on a different side, but there's also a lot going on with coatings and talk to us about that.

Trent Cotney: Sure. So historically, California has been where all the regulations come and then they slowly move out east. Florida is the epicenter for insurance reform, and all of the money that the insurance lobby has nationally is being dumped into Florida right now, because it is a receptive state. I live in Florida, my homeowners insurance has doubled twice. I haven't gotten it this year, I'm sure it'll be up again.

And what you've seen is at least four rounds of legislation that has looked to curtail a lot of the stuff that is impacting insurance or what they say is impacting insurance. So they specifically targeted the roofing market and done a variety of things. Everything from eliminating assignment of benefits to having very specific warnings and requirements for advertising, to eliminating work authorizations without a good faith estimate. Just stuff that if you're a storm and restoration contractor, you do daily and don't think twice about it. So the statement that was made about eliminating shingles, I don't know if that statement is now regretted, but I anticipate that... Rest assured, I've had a lot of conversations about that.

Heidi Ellsworth: I'm sure.

Trent Cotney: Yeah, obviously shingles are here to stay, they're not going anywhere, it's a dominant form of the market. But part of what we need to do as an industry is help insurance understand that there are other ways that you can provide value to a roof, whether it's through coatings or metal or shingles or whatever it might be. There's a lot of different ways, and to pick a particular product over others, yeah...

Eric Miller: [inaudible 00:09:44].

Trent Cotney: ... I start to get a little worried about that. So one thing that I can also, I'm not a betting man, but if I was, I would say that more than likely we can anticipate some more regulation changes this year that will hopefully help eliminate some of the pressure that insurers are feeling right now in Florida.

Heidi Ellsworth: Yeah, you know what? That's a great segue to talk about government affairs. And you started off with that as a trend with tariffs. And also the regulatory. We had Dwayne and Deb on here earlier from Governmental affairs with NRCA, really talking about what's happening and that they're seeing a lot of regulatory. What are you kind of seeing that's going start really affecting the roofing industry? And please feel free to go into tariffs and everything else from the current political.

Trent Cotney: Yeah, so 75,000 foot view. There are pros and cons to this administration for construction. Nothing political, don't care if you're red or blue, I only see green so it doesn't matter. So-

Heidi Ellsworth: Can I use that?

Trent Cotney: Sure. So the plus side for this administration is deregulation. Regulation generally is an expensive thing for construction to have to deal with. So eliminating regulation is usually a positive. The freeze on existing regulations that were being promulgated are a good thing, because most of those were onerous and most of those would've increased admin costs and overhead and things of that nature. Another plus is that there may be some tax benefits that come. If there's no tax on overtime, that's a good thing. As a business owner myself, I didn't realize how bad payroll sucks until you start doing payroll and then you're like, "Oh wow, I got to pay more on top of what I pay people?".

So eliminating overtime, tax would be a great thing from a federal perspective. The one thing that I want to make sure that all of our listeners understand is that regardless of what the federal government does, states can always be more onerous and more restrictive. So if you're in California, if you're in Oregon, if you're in Washington, it's going to be business as usual on state plans like OSHA and things of that nature. The bad side of stuff, I'm most concerned about immigration. I know we'll touch on it later, but immigration is the thing that worries me the most and can...

Heidi Ellsworth: What are you seeing? Westlake is such a huge prominent company and does so much. When we're looking at tariffs, materials, supply chain, all the kind of things that you're seeing from the administration change. What's your thoughts?

Eric Miller: Yeah, it's a moving target, right? It's certainly gauging what's going to go into effect, when, what the impact is. It's something we're watching very closely. We definitely have seen issues relative to immigration as well where we've had a number of our trade partners already have issues. You think about not only what... describe people going back and forth for certain periods of months. Living in California, we've got people that travel across that daily. And it's an issue and we've already had a number of customers, contractors so that it's already impacting. And you wonder about the ability to scale, the ability to onboard, the cost associated with all that. I think it's a big challenge and I think people are trying to figure out how they can navigate not knowing exactly how it's going to play out.

Heidi Ellsworth: Right.

Eric Miller: So I think there's a lot of moving parts to it. I think people are trying to gauge what that impact... How do you de-risk what you've got exposure to? The labor part from my perspective, is a real challenging aspect, especially for the trade base. It's really impactful, we're starting to see it already where people aren't showing up. We've had a number of customers, people have been deported. I think to scale that to any size and scale will be... I mean it was a challenge to begin with, it's even more of a challenge going forward.

Heidi Ellsworth: It's going to be even more so now.

Eric Miller: Absolutely.

Heidi Ellsworth: And finding other solutions is going to... Yeah.

Eric Miller: Yeah, a lot of our focus is on product development. How can you reduce the labor aspect? How can you... You know? On the training aspect, we've really tried to focus on training the contractors and getting communications with these contractors and giving them an opportunity to implement best practices and helping them on the training aspect, because a lot of the smaller roofers that we deal with in a lot of cases don't have the infrastructure to onboard and train. So trying to provide a solution to them on different aspects so we can fast-track some of that labor opportunity.

Heidi Ellsworth: Yeah. Yeah, I know it's going to be that combination, isn't it?

Eric Miller: It has to be.

Heidi Ellsworth: [inaudible 00:14:15], the products, and the labor and Piers, you are nodding. I'm sure you see it every day with the amount of contractors you all talk to.

Piers Dormeyer: Yeah, it kind of goes right back to everything that we've already been talking about. I mean, all of these supply chain, the tariffs are going to have knock-on effects, the workforce, all of these things are all coming together. And then you have an incredibly... I mean, very high cost of capital still. People don't realize that. We had a couple rate cuts, but they were dropping the bucket. The cost for capital is very high, the cost of finance is very high. So all of these factors are turning into a just really difficult environment for our consumer. And I think that's the part that we got to be concerned about.

Heidi Ellsworth: And need to be watching. As you're looking at the economy, let's just kind of transfer there for just a little bit. As you're looking forward to the economy, what are you seeing for 2025? I know you guys watched this really close.

Piers Dormeyer: Yeah, we have to. I mean, I think it's more of the same. I 100% percent agree with Trent on deregulation is going to be a net good, but it's going to come with a whole lot of caveats. And again, all those factors that we just talked about, we don't see a massive rollback in interest rates at the SOFR level. I think we're going to see a lot more of the same. I think we're going to get into a plateau period of stability, but I mean, like I said, the high cost of capital is not going away. I mean we might see 50 basis points worth of improvement across the course of '25, but you're not going to get back to levels we had a few years ago. So we're just going to have to settle in and rebalance our businesses and reset our expectations.

Heidi Ellsworth: All right.

Eric Miller: Yeah, I think that the challenging part is the affordability part in certain parts of the country is a big issue. The impact of tariffs and increased labor and the rest of it, I mean that's going to exponentially increase. We see more and more people looking to stay and remodel versus relocate. And I think that's a trend you'll definitely consider... you'll see more and more of going forward. I think a lot of people are really just challenged from the affordability part. And then you get into a house or can't afford a house and then you add the insurance part on top of it. There's just a lot of moving parts and a lot of significant increases for the consumers.

Heidi Ellsworth: And I think a lot of times people either realize or they realize too late that if you do move, all of a sudden everything's a little bit reset, your insurance is reset, everything is

Eric Miller: Your property tax.

Heidi Ellsworth: Your property tax.

Eric Miller: And everything else associated. Right.

Heidi Ellsworth: And so it causes this. So people are looking at that going, "I think we'll just stay here," which is good for the construction industry when it comes to remodeling and to reroofing, and if a roof is leaking, it needs to be fixed. There's just no question.

Piers Dormeyer: And the building.

Eric Miller: But I think it's recalibrating, right? Like he said.

Heidi Ellsworth: Yeah.

Eric Miller: It's...

Piers Dormeyer: Yeah.

Eric Miller: .. the new construction relative to the remodel. How does that play out differently going forward?

Piers Dormeyer: When you think about a construction project, you think about new construction, I mean you really need to be thinking about building to the policy, like [inaudible 00:17:22]...

Heidi Ellsworth: Oh.

Piers Dormeyer: ... build to the policy. I mean, I have some buddies in the insurance business, a few and it's like, Hey, if I designed this house, what would that policy look like? And then you're effectively on the coast of Florida, you're building new house, you build a hurricane proof home and you can design to that environment, but it takes some thought, it takes some planning.

Heidi Ellsworth: And money.

Piers Dormeyer: Yeah. And money, yeah.

Heidi Ellsworth: Yeah.

Piers Dormeyer: Unless you want to self insure and save some more money.

Heidi Ellsworth: Yeah, even more money. Economy wise, I always love to hear what you have to say, Trent.

Trent Cotney: Yeah, so I don't think interest rates are going to go down anytime soon, which is bad because I want to refi. Yeah, I think we will continue to see inflationary pressure. I think tariffs obviously aren't necessarily going to help that, but I do think a lot of the communication about tariff is nothing more than just noise. What's interesting about this administration is that if you look at it, I was political science major, so I can't help but kind of fall back on that a little bit.

Heidi Ellsworth: I love it.

Trent Cotney: From a strategy standpoint, it's shock and awe. Right? Every single day I got to go back, and I'm like, "Oh, I got to write something about this now, here's the next exec," and I'm like, "Oh, God." Yeah, it's [inaudible 00:18:43].

Heidi Ellsworth: Yeah, you're not at a loss for content.

Trent Cotney: Yeah, but I think that's done intentionally. I think the goal is to keep the plate spinning, right?

Heidi Ellsworth: Yeah.

Trent Cotney: So when the tarrifs were announced against Canada and Mexico originally, my phone rang off the hook. And I will tell them the same thing that I'll tell our listeners, is I'm not going to worry about anything until I see it hit my bottom line. And you just need to keep your head down and do business as usual.

Heidi Ellsworth: Yes, yes.

Trent Cotney: Instead of panicking, the sky's falling, just do your job, figure out what's going to happen. Good business, sound business practices, are sound business practices and everything else may come to fruition, it may not, but until it hits my bottom line, I don't even care about it. It's just noise at this point.

Heidi Ellsworth: Yeah. And one of the things we've been talking to contractors about, or contractors have been talking to us about too is really looking at how to differentiate their business. That if these tariffs or if these things affect their business this way, they may need to be training and getting their crews to be able to sell different products or looking at different ways of doing it. Because you really don't know what's going to affect what. I mean, everything seems to have a lot, there seems to be a lot of snowballing.

Trent Cotney: Yeah, so two things there. The first thing is, and you've heard me say this before, every contractor needs a price acceleration provision in their contract. I said it in 2004, I've said it again and again, I said it during the material price increases, I'll say it again. A price acceleration provision basically says that if any material line item goes out by 5% or more, you're entitled to an equitable adjustment of the contract. You got to provide evidence of the cost. That needs to be in your contract regardless of whether it's residential or commercial. If you need it, email me, I'll just send it to you.

Heidi Ellsworth: Just redo your contract.

Trent Cotney: Yeah. So as far as products themselves, here's what the tariffs are going to hit. They're going to hit the core components, so they're going to hit the chemicals, the chemicals and the stuff that makes up the products that are made here in the US. So it's very difficult to know at this point what is actually going to be impacted and how it's going to be impacted. Do I see the price of shingles being hugely impacted by tariffs? I don't. I don't see that happening. But some of the low-slip roofing systems that are more chemical-based, there could be some impact there. And I have heard some things here and there. Obviously the 25% tariff on steel could impact construction, but I don't know if I'd start switching gears and turning to a completely different system at this point.

Heidi Ellsworth: One of the things that we're seeing, and again, we don't know where it's going one way or the other, but we have had this push on renewables over the last four years that's kind of changing with our infrastructure and different grants and different things coming through. Talk a little bit about sustainability, but also I really want to talk about energy. So our industry has seen a lot of success with the energy savings, insulation and all of those kinds of things. So Eric, what are some of the things... You know? As we're looking at some of these changes in, I guess I'm just saying focus, on either away from sustainability, away from some of those things, but the demand still seems to be out there.

Eric Miller: Yeah, I think on the energy on the front, so as an industry, we've tried to develop a mechanism to quantify what that value is. So for the [inaudible 00:22:22] Institute, we've implemented decks across the 10 climate conditions and benchmark against our products relative to others. So it's really a combination of what really is that impact, and then what's the total consumption of energy. So you look at it overall, you look at relative rising costs and it's what can you do to mitigate that risk? In some cases, it's being able to quantify that value to consumers so they can actually see what that equates to. And in some cases, it's how can you get below a certain interior energy situations? How do you get below a certain tier? So you could more readily do it. But from our perspective, it's quantifying, being able to give consumers a vehicle to go out and be able to put in their area code, their zip code, what that looks like. So it's a credibility thing. We can all say our products do X, Y and Z, but it's being able to quantify exactly what that means.

Heidi Ellsworth: And putting that together. And I know you do a lot in solar.

Piers Dormeyer: Yeah.

Heidi Ellsworth: Yeah. And so one of the things I found interesting in this last year, is we're coming out of Texas, that we don't really care about federal tax incentives. I mean everybody wants them, but they don't care. They're like, "I just don't want my energy to go out in the middle of the winter," or "I don't want my house to freeze." And so there's now this demand for solar that is being driven purely by the consumers. What are you seeing that way, Piers?

Piers Dormeyer: Well, Texas is one of the fastest states for growth in the solar industry. And solar's taken a thrashing mostly due to the, again, high cost of capital and interest rates and financing challenges. I think it's really important and I 100% agree with everything that's been said, but going right back to the cost, whether you're looking at a flat roof, you're a building owner, you're an HOA or you're a homeowner in a single-family home, all these costs are going up.

If you can find an ROI by optimizing the energy profile of that property, and that starts with having the data to understand if there is an ROI of that, which and there's a lot of great technology out there that can give you that information, including ours, plug, but that savings can get plowed back into the total cost of ownership and help bring down some of those costs. And I think that's really important. And it kind of goes back to when you're engaging in those projects, I think the homeowners, the building owners kind of need to be able to see that whole impact of that energy efficiency on the project. And I think if you're not doing that, you're kind of doing a disservice and you're also putting yourself at a competitive disadvantage.

Heidi Ellsworth: Yeah, and when you look at... I don't know if you were able to listen to Reid Ribble's The American Dream keynote, I thought that was really well done. And one of the things he's talking about too is how we are being driven, on some levels, like how often do we want to replace a roof or do we want to have a good roof? How much do we want to stand on our own? And that we have the money in the system on some levels to start becoming more sustainable. I mean as in off-grid, I guess is what I'm saying. And that seems to be... It's interesting to see that switch from just being purely driven by the government to now being driven by, "I don't want to be inconvenienced." And when you're talking about Florida...

Trent Cotney: Yeah. I think more and more homeowners are looking for longer term, longer lasting roof systems and there's some insurance interplay there. In fact, one of the recent changes said that typically an insurance company will put significant pressure on you to replace a roof if it's 15 years or older. Right? Now under the new laws, you have the capability to get a inspector, a consultant out there to verify it's got at least five more years of life and then they have to provide you coverage at that point. But I think sustainability, regardless of politics, is something that we as a roofing industry need to embrace. And the reason for that is everything is interconnected. Our labor shortage, the lack of implementation of technology, the lack of sustainability. We're coming to, and I've said this for... You've heard me.

Heidi Ellsworth: I know, I know.

Trent Cotney: We're coming to a point where the only way that we're going to be able to meet demand is that if we evolve. And I had the opportunity... My booth is right in next to all the European associations and everything, and I talked to all those guys and they view roofing completely different. They're looking to build roofs that last a hundred years. And they put that on there and that's how they do things. And we have this mindset that our roof is going to be changed every 10 to 15 years. And I think we need to kind of move away from that mindset a little bit, and figure out a way to keep that lasting longer. Yeah.

Piers Dormeyer: I 100% agree. When you travel the world and you look at roofing systems in other developed countries, nobody does it like we do.

Heidi Ellsworth: Yeah.

Piers Dormeyer: And in terms of just the amount of replacements, I agree that we've got to evolve. We might be a [inaudible 00:27:50]. You can use that one. That's good. No, I think that evolution really could be very, very positive. Reaching massive opportunities for contractors.

Heidi Ellsworth: Yes.

Piers Dormeyer: If you start thinking about being able to offer proactive roof asset management at a residential level like we do at a commercial level, you can start unlocking even subscription models which provide recurring revenue, is much more consistent, it takes some of that volatility out and that enables you to bring your overhead down  and potentially creates a really profitable and frankly, higher quality business model.

Heidi Ellsworth: And sustainable.

Piers Dormeyer: Yeah.

Heidi Ellsworth: I mean, that's the thing. And I think about all the services we have just on our house that we know they're coming out every year, they're going to inspect, they're going to look at it, we know we're safe for the... I'm thinking of our chimneys. But roofing has missed out on that on a residential site. And there's a-

Eric Miller: Yeah, I mean...

Heidi Ellsworth: Yeah.

Eric Miller: ... it's interesting, right? Historically, we part of a company that did a lot of work in Europe and Australia and just the way that they view the roof, it is a trade, it's a craft and they build roofs to last for a long time. And I think the thing that they've done really well is to be able have a workforce that understands that quality, but they've also educated the consumers, right?

Heidi Ellsworth: Right.

Eric Miller: And they're not looking for the lowest cost solution, they're looking for the best roof, right?

Heidi Ellsworth: Yeah.

Eric Miller: And I think the opportunity lies in, how do you help educate the rovers and the consumers on what the value is? And looking at it outside of the disposable mindset, I think we've looked at it industry-wide for quite a long time.

Heidi Ellsworth: Yeah. And getting away from the disposable, I love that. Now yesterday we did talk about sustainability as in... And it really was interesting in talking to the contractors, I'll give a little bit away from yesterday, but they really immediately went to recyclability and recycling off the job sites and landfills. What are you seeing? I mean, it seems like recycling is one of those things that you hear a lot and then you hear nothing. You hear a lot and you hear nothing. Eric, what are you seeing on that front?

Eric Miller: So you do hear, it kind of comes in peaks and valleys, right?

Heidi Ellsworth: Yeah.

Eric Miller: I think you hear probably less on the recycle part from a long-term perspective and more on what else is part of the sustainability model, right?

Heidi Ellsworth: Mm-hmm.

Eric Miller: Like,. what does it mean relative to freight, what does it mean as far as other factors besides just the recycle part? I look at it very similar to green building versus energy efficiency, right?

Heidi Ellsworth: Yes.

Eric Miller: It's taken a whole different perspective, and I think people are looking at different things relative to sustainability than they did historically.

Heidi Ellsworth: Yeah. One of the things we are hearing is in California there are large deposits, I think I'm saying that word wrong, but with the landfills where they're actually having to pay upfront and then long as they recycle off the roof. What are you seeing on that, Trent?

Trent Cotney: Yeah, yeah. California has some very specific restrictions, permitting requirements that are enhanced as far as eliminating construction debris. And that's going to continue.

Heidi Ellsworth: It's not going anywhere. Anything.

Trent Cotney: Right.

Heidi Ellsworth: I want to shift over a little bit to technology. So I'm going to start with you, Piers. And AI, everybody's talking about it, right? As a trend. You didn't bring it up at the beginning, but this is something that I think everybody's trying to grapple with. So along with AI and just overall the technology process in the building, we're also seeing the influx of robotics, right? And because we have to have some solutions for that labor thing. What are you seeing?

Piers Dormeyer: So AI is a little bit of a good news, bad news story. The good news is this AI thing isn't a flash in the pan. I think it's going to be here for a while. When I was at this event, we were talking last year, I think I was talking a little bit about what's giving rise to all of this innovation, which has a lot to do with GPU technology and what Nvidia's doing. And really the cost of compute storage has dropped to a level that these models are available and you can do so much more.

Piers Dormeyer: And it's moved so fast and so far in just the last 12 months that it's incredible. So the good news is that there's entire processes that are going to be completely eliminated or radically redesigned and optimized. There's a lot of back office stuff that you can get done. I mean, there's estimation, there's building material lists, there's research. Anybody who... Perplexity.ai just announced their own deep research tool that's freely available.

Heidi Ellsworth: Wow.

Piers Dormeyer: So I would challenge anybody, including everybody sitting around this table, to go into the LLM, write them to do an analysis of your business and read that 30 page report and what comes out it will blow you away. It will absolutely blow you away.

Heidi Ellsworth: Really?

Piers Dormeyer: Yeah. So the technology and the ability to just get much better and much, much faster with GenAI is amazing. And then Gen AI, it's really just the starting point to what we call a agentic AI, which is being able to effectively ask that virtual agent to do complex tasks. "Give Mrs. Jones a good, better, best estimate for this [inaudible 00:33:23]. Pull that data from various sources," and it's just going to do the job for you. So the bad news is if you're not doing these things, you are going to find yourself left in the dust by your competitors.
The good news is that there's such a massive opportunity to improve our businesses, and the roofing industry itself is naturally anti-fragile. It's a resilient industry. You're going to need to have people that are going to climb up on ladders and hammer on those shingles or install that tile or whatever that operation is. We're not going to have robot roofers anytime soon. So we have this opportunity to not be completely blown out of the water by AI, which is what a lot of industries are really concerned about right now, but actually harness that and improve our industry with it.

Heidi Ellsworth: Right. But technology will, don't you feel, start filling in on the labor shortage? I mean, when there's a need, it seems like we start finding things to fit that.

Piers Dormeyer: Yeah, I think that there's no getting around the workforce challenges and those rising costs of the same, but I think what you're going to be able to do is offset some of those costs by removing some of the costs of your general administration line on your P&L and maybe even some of your sales and marketing and some of that expense can collapse in order to help offset some of those rising labor costs.

Heidi Ellsworth: It's interesting. What do you see on the technology side?

Eric Miller: Same thing, obviously he mentioned. Additionally, you look at the limited labor force and you look at a lot of technology around e-commerce and the platform and what can you do to eliminate or create situations where you can have that online where people can control, have access to it. You're not having to staff up historically like you did where you're onboarding a bunch of administrative staff. You could do it online and I think there's a lot of opportunity to continue that development, where you can give people access, real-time information, whether it's inventory orders, deliveries, whatever aspect it is. I think it improves the efficiency, helps with the labor model and it's just something I think going forward helps solve part of the equation relative to labor.

Heidi Ellsworth: Yeah, we have seen, I mean, just leaps and bounds in technology around distribution. I mean, when you look at what distribution is finally... I don't think we're there yet, but we're getting closer to online ordering. You've been a big part of that, being able to provide the data that needs to make that happen. And also then the tracking and everything. You just look at our distributors, they're totally different than they were five years ago, When it comes to technology.

Eric Miller: Well, we have. We've implemented a e-commerce platform, and in parts of our business we have over 80% of people doing online ordering. Which...

Heidi Ellsworth: Really?

Eric Miller: ... a few years ago was not nearly that percentage. So the roofing industry is very adaptable. If you give them a solution and you can make it simple and show the value proposition of it, they'll adopt it.

Heidi Ellsworth: Yeah. Okay. I know this is one of your favorite topics.

Trent Cotney: Yeah, yeah, absolutely. I actually just did a presentation on AI and construction for the Inspire 25 event. And one of the things that was interesting in the comments and questions is how few people have actually used it in our industry. And I will tell anybody that's listening out there, the free stuff doesn't give you an idea of what is truly cable. So if you're using free Copilot, free ChatGPT, whatever, that's a great search engine. But once you start paying, and I've got several pro versions plus, plus, plus, plus, it, I Calculated, it's added about an hour to an hour and a half on my day. And it's like-

Heidi Ellsworth: It's added.

Trent Cotney: Added. So you can't pay me enough to get an hour of... Having that amount of time, and it's like having an executive assistant that instantaneously responds and learns.

Heidi Ellsworth: And learns, yeah.

Trent Cotney: And once you start playing with it and you learn how to use it, it's very easy to see its capability and what it can do for you. Now, it never replaces... You know? I'm not using it for legal work, I can't do that. But as far as understanding things, doing things, how can you use it in construction, you can use it, obviously marketing, customer service, predictive analysis. As Piers said, analyzing your business. It is absolutely amazing. And I encourage anybody that's like, "Ah, AI it's Bitcoin. I don't really know what it is," go out, start playing with it and you'll start to see exactly what I saw. If you are not using it, here's the difference, is that your competitors will be much more efficient and have much more time to run laps around you, because they are automating... They're using AI to do a lot of the stuff that you're doing manually.

Heidi Ellsworth: I use it, but I have not analyzed my business yet. So guess what I'm doing this weekend?

Piers Dormeyer: It's going to be scar. Because you're going to find-

Heidi Ellsworth: Am I going to be crying?

Piers Dormeyer: You're going to find stuff out that...

Trent Cotney: It's stunning.

Piers Dormeyer: ... you should have known, but you didn't know. But yeah, you're going to see... We're just at the beginning. I mean scratching the surface. But you start getting to this complex agentic AI, and you just start thinking about your business and being able to tell the AI that, "I need you to go and email photos and status updates to all of my customers, and all the jobs that are going. And oh, by the way, I need you to do that every single day." And it's just done. It's just done.

Trent Cotney: It just does it.

Piers Dormeyer: You just hit enter and it's done. It's going to do it. And then like Trent said, it's going to learn and then you're going to get to the point where the customer's going to interact and it's going to ask for more photos and more feedback and "I don't want this many, I want less." And it's going to be able to modify and adapt to that request. And these are things that would take a lot of staff, a lot of time and a lot of errors and all of that's just going to be completely eliminated.

Heidi Ellsworth: And it's all happening. Happening now.

Piers Dormeyer: I know. The customer, the experience, we talked about 80% of online orders. This isn't how people prefer to engage.

Trent Cotney: Yes.

Piers Dormeyer: So the homeowners are expecting this experience. I was writing around with a friend of mine in their Tesla yesterday, and was kind of commenting and she said, "The best part is I bought this car on my phone." Let that sink in, right?

Heidi Ellsworth: Yeah.

Piers Dormeyer: "I bought this car on my phone." That's just what the expectation of the consumer is getting to. So the old way is just not going to be good enough.

Heidi Ellsworth: So I was talking to a lady, a contractor and they bought a company out of Arizona that does all their sales, virtually. 100%. They have nobody in the field, so everything is done virtually. She's like, "We are now analyzing them," I bet they're putting their business into AI to analyze it. But they're analyzing that now and trying to figure out how they're going to take that to all of their businesses, for exactly what you're saying. And we're seeing it also in the new software, the technology that's coming out. We have many that are offering instant quotes, that have people who talk to... I mean, there's one on the show floor that I just saw. I'll put it out, Roof Scout. Scout actually talks to your customers for you. And I just want us all to remember this moment, and next year where we're at on this, because it's going to be totally different.

Piers Dormeyer: Well, and I think the most important takeaway here is, it's maybe not all, but it's nearly all upside for the roofing industry. Because it's a complex that... The core operation of what we do is so complex ,and we're so far away from being able to have a robot climb up a ladder and do the mechanical operational work of roofing. So all of this tech strategy is just going to be additive, and you can't say the same for the legal profession, right?

Heidi Ellsworth: Yeah.

Piers Dormeyer: That's going to get completely turned on its head. So that's the good news.

Heidi Ellsworth: Yeah, it's going to take... And you know what? I think that kind of leads us into another topic that I'd just like to hit on here, and that is recruitment. Recruitment into our industry and what NRCA is doing with Skills USA, what they're doing with getting more people in here. Because to your point, Piers, skilled labor is what's going to be valued as AI takes a lot of these other jobs and makes them a return back. What are you seeing? And I mean we're all involved in the CTE, but what are you seeing on that level?

Piers Dormeyer: Yeah, I mean, actually this is another great news story too, because I think you're starting to see people figure out that there's nothing wrong with going into the trades. It's an honor, you're seeing Mike Rose leading a lot of that. There's a lot of really, really good work that's being done, that's showing that it's not a bad idea. It's a great idea. And it is one of those areas that is pretty resilient and isn't as fragile as some of these other kind of thought worker type of professions. And you can make a lot of money, you can have a really great life and you're actually doing something where you're building something, something tangible.

And I think that's really important. And so I think there's a lot of really good work that's going into this. And Clemson and Skills USA and some of these partnerships are enabling contractors to get some education from top-tier education sources that just didn't exist before. So you don't have to trade that off like we used to in the past. So I'm excited about that, and I think that's really important for trying to solve and head off the workforce challenges.

Heidi Ellsworth: So I want your pitch for Clemson. Every-

Piers Dormeyer: Everybody, okay. So that Clemson curriculum is by far the best and the most cost-effective way to bring new people into the industry up to speed. And I'll keep going on that a little bit because we send all of our new hires through that program. I think everybody should. The way that you're currently trying to train people is so much more expensive than going to Dr. Gajjar. And 100% of my product, my salespeople, my marketers, they're all going through that to get that baseline education. And it's great. It is something you can put on your resume. You got that orange paw, and it's a great program and we're really pumped to be part of it.

Heidi Ellsworth: For anybody out there who might be wondering, this is a Roofing Alliance initiative where you can get training through Clemson University. It's continuing education, it is phenomenal. All online, three courses, with certification and Piers has been the leader of it. So it's been pretty exciting.

Piers Dormeyer: I have passed, which is pretty cool.

Heidi Ellsworth: Yeah, that's good.

Piers Dormeyer: Yeah.

Heidi Ellsworth: I still have to take mine and pass. So Eric, what are you seeing around CTE, this next generation of vocational schools? What is Westlake in your involvement?

Eric Miller: It's an interesting thing. I think with the college tuition being so visible now to so many people, I think it's forcing people to go back and look at things. And I think the trades are figuring out different ways to recruit differently than they have in the past.

Heidi Ellsworth: Yes.

Eric Miller: Right. There's a lot of money to be made, people can have a good, stable, long-standing career, not have the risk, I think historically they've had with college in some cases. I think that it's starting to kind of all the way down to the high schools, where they're not so actively pushing that as the only option. Which is a big step with what we've historically done, where the benchmark on how they're judged is, "How many kids did I send to college? What percentage?" So I think it's an evolution. I think people are looking at things differently, I think the cost of college has been a big part of that.

And I just think when you look at increasing wages and labor and the rest of it, it'll become more and more attractive. The more visible we can make that, and then develop training programs that can really help people get onboarded and really, I think create a career map for them, right? Whether it's the initial trade part, but there's other parts of that. Like, you've got a certain shelf life if you're a roofer or whatever it is, right?>.

Heidi Ellsworth: Right.

Eric Miller: But there's next step opportunities, and it's like how do you kind of create a clear career ladder for some of these people that are looking to get into it, but maybe there's a concern of, "What happens when I've been in the career or the industry for 20 years?" There's other options.

Heidi Ellsworth: Yeah, there is. And even coming from other careers and other trades, we're seeing that there is this shift into roofing. And I think that's been a lot to do with how much everyone has worked in the industry, including the NRCA, to really lift that, our reputation and to be attraction. You have been very involved, Trent. What are you seeing as a future for us on that?

Trent Cotney: Yeah, I think the associations have led the way. As Piers said, I think the Roofing Alliance has done a tremendous job with SkillsUSA and Clemson and everything else that they've done to promote not only vocational training, but having that path through college if you want to do that. But other associations have done well too. So you look at Western States who I think just this past year had a scholarship for SkillsUSA.

Heidi Ellsworth: Yeah. Yeah, [inaudible 00:46:49].

Trent Cotney: Yeah. And I know, FRSA a lot of the other associations that I work with have committees that are dedicated to bringing people from high school into the workforce. So I think that's important. Even my son, I'd love him to get into roofing somehow. I mean, he's been on the road with me since he's two, going to different expos. So I don't care what he does as long as he's in the industry.

Heidi Ellsworth: Right. I didn't think both my kids would be in, but they are. So there you go.

Trent Cotney: Right.

Piers Dormeyer: Well, and you mentioned 20 years in the roofing industry and what are you going to do afterwards? The answer is you do 20 years in the roofing industry, the vast majority, the answer might be, don't really need to worry about it, right?

Eric Miller: [inaudible 00:47:33].

Piers Dormeyer: Maybe you're hanging out on a sailboat somewhere because you do really, really well in two decades in the roofing industry and that can't be said for everything.

Heidi Ellsworth: No, I can't. So I would like to... I have a couple more things, but first of all, I just get the wisdom that is sitting at this table, I'd like to ask you to think about what do you see... And I'm going to start with you, Piers, what do you see as some of the biggest opportunities that contractors should be looking at and really working on their business for 2025? What do you see?

Piers Dormeyer: Yeah, we've touched on so much of this, but I think it's... Just a little bit of a story here, and kind of an adjacent industry, solar. And for solar was booming a couple of years ago, driven by a lot of tax subsidies, a lot of really low interest rates and there's just a lot of sloppy work being done. I mean, you're putting estimates out that have just a ton of waste in there because you figure there's enough margin in there that'll take care of it, it'll be fine. And speed, let's just go and sell everything we can sell and go, go, go.

And we've seen a massive contraction in solar. There are a shocking number of customers that we had, large ones. My top 10 list is completely decimated of our solar customers, they just went out of business or shrunk to the point where they're just not operating the same way. So now's an opportunity and it's absolutely imperative that we get efficient and we take advantage of all of these tools. And you look at your processes and you try and... You know? Like Trent said, you absolutely have to use the tools around and get that extra hour and a half and put that to the bottom line. If you don't do that, I think you're going to have a really hard time.

Heidi Ellsworth: Yeah. Great. Great. Eric, what's...

Eric Miller: A lot of the same things we've discussed. I think for the contractors, it's knowing all the different implications relative to insurance, being able to understand what the consumers are looking for. He mentioned about the Tesla, right? Being able to tailor your sales message, your value proposition, to a different buyer. It's how do you create that Amazon experience for customers. And it's a different group. When you look at the people coming into the new home opportunity, it's a different buying mentality. So I think for reverting contractors is how do you continue to develop that? How do you continue to be able to upsell the value that you provide versus maybe just the low-cost alternative?

Heidi Ellsworth: Yeah.

Eric Miller: So I think that's-

Heidi Ellsworth: Staying relevant.

Eric Miller: Yeah.

Heidi Ellsworth: Really. And what's doing. Trent.

Trent Cotney: Yeah, I think my advice to contractors looking forward through 2025, is business is business and be purposeful and in everything you do. Showing up is 99% of everything that you need to do. And watch the news closely.

Heidi Ellsworth: Yeah.

Trent Cotney: Tune into Roofers Coffee Shop, because that's where I go to figure out what's going on.

Heidi Ellsworth: Thank you. Thank you, Trent. We try. We try to keep it all out there. Speaking of, and I'm going to end on this, speaking of relevant and staying tuned in, one of the things that has happened this week is we've had a number of contractors actually approach us on wanting help on what to do if ICE shows up on the job site. And so we have asked Trent to have a Special Coffee Conversations next Friday, the 28th and it'll be at our regular time, 7:00 Pacific, 10:00 Eastern, but it's going to be Trent and we may have some other folks on there, we're not sure, but right now, we just know it's Trent for sure. And we're going to be talking about that. Can you kind of talk, just take us out a little bit on some of the things that you're going to touch on next week and how important this is, that no matter who you are in roofing, that you know your rights and you know what to do when this may happen on your job sites?

Trent Cotney: Yeah, absolutely. So a lot of what we're going to discuss is what an employer needs to understand if ICE shows up at your warehouse, at a job site, at a location, what are things that you can do and what you can't do? And we're also going to talk about what can you do from an employee standpoint? What assistance can you offer, what should you not do?

Heidi Ellsworth: Yeah.

Trent Cotney: That's kind of where I come in is, "Hey, watch out here." And we may get into a little bit of I-9 compliance as well, talking a little bit about best practices, things to watch out for, what do I see coming out of the administration. I've spent a lot of time here talking to Dwayne, talking to Craig Bryder, talking to lobbyists, getting a better understanding of, obviously I hear a lot, but I want to hear what's going on from them as well. So it's going to be full circle, soup to nuts, anything that they'd want to know. And then we'll, I assume ask questions. They can ask questions as well.

Heidi Ellsworth: Oh, they're going to be asking, there's going to be a lot of questions. And this is really what coffee conversations is all about, is how it started during COVID, that we get out there ahead of it and help people. And because of you gentlemen, we're helping people right now and I can't tell you how much I appreciate you. Thank you for being here today.

Trent Cotney: Thank you.

Eric Miller: No, thank you.

Heidi Ellsworth: Thank you. And...

Piers Dormeyer: Yeah, you're welcome. Thank you.

Heidi Ellsworth: ... Trent, next Friday, we'll do this again.

Trent Cotney: I'll be there.

Outro: We'll be virtual. If you are, stay tuned. We're going to be bringing you more interviews from the soundstage. This is our live Coffee Conversations, day two and we're on the Coffee Conversations soundstage sponsored by SRS. We'll be back soon. Thank you for being with us, and we'll talk...