Coffee Conversations - Reid Ribble, NRCA CEO shares updates and answers questions - TRANSCRIPTION

Editor's note: The following is the transcript of an live interview with Reid Ribble of NRCA. You can read the interview below or listen to the podcast here.

Heidi Ellsworth:
Good morning, and welcome to Coffee Conversations, season three. My name is Heidi Ellsworth, and I'm with Roofers Coffee Shop. And we are so proud to bring you Coffee Conversations into season three throughout the fall and into next spring, where we are having conversations about what is happening right now. And in fact, just a little recap, in season one, the very first episode that we ever had, we were so happy to have Reid Ribble as one of our very first conversations. And so, in season three, guess what? Yes, Reid is back. Reid, welcome to Coffee Conversations.

Reid Ribble:
Heidi, it's really good to be with you. It's always good to be with you. Thanks for having me.

Heidi Ellsworth:
That's how I feel. You said some things earlier, but you always make me feel smarter. I always know I learn something when we visit.

Reid Ribble:
Yeah, well, you're pretty smart. That's why you feel that way.

Heidi Ellsworth:
It was like, oh, there's all this great information, and I just don't have those insights. And I think a lot of people who are watching today are also asking a lot of questions. There's so much going on. So, before we start, because we're going to ask for you to give an overview, and then we're going to take all of your questions. And so, I want to make sure that you're aware this is being recorded, so you can watch it, you can share it, give it to people who couldn't be here so they can get all this great information that we're going to cover in the next hour. In your control panel, there is a place for questions, and there's also a chat. And of course, we have Megan Ellsworth in the background, and she's going to be chatting with you, and she'll be getting sure that the questions get to Reid. So, if you have any questions, please do that. Do not wait till the end. This is all about questions and answers as we go through. So, Reid, are you ready?

Reid Ribble:
I'm ready. Let's do it.

Heidi Ellsworth:
Okay, so first question of the day. Can you give us an overview? What's happening out there?

Reid Ribble:
I get asked that question a lot. And I think everybody really knows what's going on. But I started in the roofing business in 1975. That's 45 years already. And I've lived through the high inflation rates in the late '70s, through the Y2K change in 2000, the recession in 2001, 9/11, the great recession of 2007, 2008. But there's been nothing that has compared to the last 18 to 24 months in the roofing industry, and for the country. The last global pandemic was in 1917, and here we are, 100 and some years later with this pandemic that just doesn't seem to go away. And it's having a huge cascade of effects on us, some that we could foresee once we knew what we were in, and others that we didn't have any idea that were going to come. And so, today, we're still struggling with the remnants of the pandemic, and who knows what new variants will come, because we still have about 30% of the population is very resistant to getting a vaccine. And so, variants can find hosts with which to mutate and continue to affect the population.

Reid Ribble:
So, I think we're in for a pandemic that's going to last much longer yet. We're not at the end of it. And until we get a higher population base vaccinate, we're not likely to get through it. And then some of the cascading effects have been the impact on the global supply chain. It was a global pandemic, we have a global supply chain, so the supply chain was impacted. And contractors talk to us all the time about difficulty in getting certain components. And it seems like those components vary from place to place, that they can't do their work. Let's face it, if you can get every component but a fastener, you still can't put the roof down. And if you can get all the fasteners you need, but you don't have the right insulation, or can't get the membrane, or what have you, can't get the sheet metal flashing, it becomes a problem. And often, it's just a single component or two that prevents people from working.

Reid Ribble:
And then we have an ongoing labor shortage that has not abated, and is only going to be exacerbated as customers begin to demand to vaccinate crew. And we're seeing more and more of that. And so, we have this perfect storm of events that are coming on us, and change over in government. All of these things, a clumsy withdrawal from Afghanistan that's consumed the news and the psyche of the country. And so, we find ourselves in a really weird space. However, with all that negative stuff, I'm still really optimistic, because everybody reports that they're busy. So, people are busy. And that's a good thing. I'd rather have a backlog than no backlog, even if it's a long backlog.

Heidi Ellsworth:
Right. Well, I can attest too. I see it every single day with the roofing contractors out there, and with the companies, and manufacturers, distributors, everyone's busy. There's almost just this craze, craze of we've got to get it done, we've got to get out there, we've got to get in front of it. And that is good, but you're right. It's also... I think a lot of this craziness is coming from all those factors that you're talking about that are bringing us together. So, I wanted to start with, and you just brought it up, so I want to start here, is really the challenge that contractors, and not just contractors, distributors, manufacturers, every business is going to have with vaccination requirements, from customers, from travel, from all the different things that are going on. You talked about that a little bit, but can you go a little bit deeper on really how that's going to affect the industry?

Reid Ribble:
We're starting to get reports of from our members, where certain customers, usually larger multinational companies, are saying, "You're not allowed on our property unless your crew is vaccinated. We have to have... We're only allowing vaccinated personnel to come into the company, because if you're going to do work on our company, we can't have any chance of your crew infecting our workforce, because we can't find workers, we can't replace a sick workforce, we can't have COVID run through our plant, our factory, our hospital, whatever it is. And so, you have to have your crew vaccinated." Now, that's a particular challenge. And it's more of a challenge in the south than the north, but it's a challenge in the north as well, because there is this resistance. And in an era where it's particularly difficult to hire roofing workers, to put an additional layer of requirement on a roofing worker to hire them becomes an even more difficult challenge. And so, you can be doing everything right in your company, and then all of a sudden, one of your biggest customers says, "Oh, by the way, I realized they gave you this 3,000 square job, but you can't send a crew here unless they're vaccinated."

Reid Ribble:
And so, companies are scrambling to shift bodies around and to find enough people to man a crew that can do work for one of these companies that are demanding it. And I think this is going to get more so, not less so, because businesses are going to continually try to protect their own environment. And so, we're already seeing it in restaurants, and concerts, and things like this, where they're requiring proof of vaccination. And so, I think this gets worse before it gets better.

Heidi Ellsworth:
Yeah, it really feels like this is going to be driven by business, because people want to get back to business. And we see that across the board. And so, that vaccination is, however you believe in it, it's going to be driven by business, because that's the only way to be able to do business and not have people [inaudible 00:08:08].

Reid Ribble:
Yeah, I think you're right, Heidi, because first of all, there is this... And I think this has been this way all the time in the United States, there's this natural mistrust of government. And so, if the government tries to impose a mandate, it's always, whoa, whoa, whoa, that's... And people say that it's not the government's job. However, private enterprise can do what they want in their own companies. And so, it's not surprising to me in a pandemic that continues to go on and on and on, businesses are saying, "I just want to get back to normal. And if I've got to require my employees, or I've got to require my customers, or I've got to require my providers to be vaccinated, I'm going to do it, because I want to get back to life as normal." But it is a challenge for everybody right now.

Heidi Ellsworth:
And really, it's that new normal. It's never going to be normal, normal again, like we've seen probably in the past. But we are getting there. And so, one of the things that I want to just hit right at the top, and this is one of the questions that has come in a lot, is let's talk about material shortages. Let's just go right to that elephant. It is, everyone's talking about it. I know the NRCA, I know you have one of your big initiatives from way backs, beginning of the year, has been to try to get information out to help contractors on how to handle this. But can you talk a little bit more about material shortages and the price increases that are going along with that?

Reid Ribble:
Yeah, well, there's a lot of volatility for sure. And in some cases, manufacturers can't even tell you what the price is going to be. Because they might not be able to deliver something for three months, six months, a year in some cases, and they're basically telling you the price of the material is going to be what the price is when we ship it, not when you order it. And so, here's what the price is today. We've been advising our members to make sure you're putting in clauses in your contracts that allow you to pass on that increase to protect yourself. Some contractors are better at doing it than others. And part of it is that there was a certain amount of skepticism early on. And so, contractors were reluctant to impose that type of language in their contracts, because in the past, they were always able to find a taker, meaning if they couldn't get Firestone, or Manville, or GAF, or whoever to do it, they would go to somebody else, and that that company was likely to take that order.

Reid Ribble:
Today, that's not the case. And so, they feel really stuck. And in fact, they are stuck. And so, one, contractors need to protect themselves by having language in their contracts to cover that volatility in pricing. The volatility and delivery is a bit all over the map, and it is partly regional. And it is partly dependent on individual components. In one case, this component's not available, in that case, it's that component. But the fact of the matter, the chemicals and materials that are... The raw materials that are used to create TPO, or the wire that's needed to create screws, or the MDI and polyols that are needed to create the installations, they all come under different stress points throughout the year. And certainly, the storm a week ago, Ida, didn't help, because it really caused a lot of damage. The damage to the electrical infrastructure, power lines, and things like that is still pretty great. 60% is being restored, but that still means 40% of the people don't have their power yet. And so, that's a big deal. And when you stop and consider the number of power poles that were damaged or blown over, is greater than Katrina, Ike, Delta and Zeta combined.

Heidi Ellsworth:
[inaudible 00:11:50].

Reid Ribble:
And so, there were 36,000 power spans that were destroyed during the course of this storm. Sea ports were closed. But infrastructure is coming back together. Ports are being reopened. Rail is starting to ship again. But it's still going to be a compounding factor. Then that storm went up to New York and up the East Coast. And so, it affected logistics there because of the flooding. And so, things are not going to get better in the short term. And it's not as if manufacturers don't want to sell you things. They want to sell things. And in some cases, production levels are pretty high. They're as high as what they were in 2019. But demand is even higher. And the thing that I think gets missed by a lot of folks is the federal government has stimulated the US economy at a level never seen before in US history. So, they've stimulated between direct stimulus and quantitative easing nearly 50% of the nation's GDP in a single 12 month period of time.

Reid Ribble:
And so, there's this massive influx of money to make the economy work, and it's not overheated it. And tragically, it's overheated it everywhere. It's not just roofing. It's all construction materials, but it's also automobiles. Try to go buy a new washer, or dryer, or refrigerator, some type of appliance today, you can't even get one. And to a certain degree, one of the silver linings is the fact that the auto business is being impacted so heavily by not being able to get computer chips, they're a big purchaser of the same polymers that we use in roofing. And so, if they were at full production, our circumstances would likely be worse than they are today. And so, this is a real challenge. And I totally appreciate the sheer frustration that contractors are feeling, because if they can get polyiso, for example, but they can't get the roofing screws in the right thickness, they're held up. If they can't get the adhesive, or low rise foam, they're held up. if they can't get the membrane, they're held up.

Reid Ribble:
And the real risk here is that they have to layoff a crew because they don't have materials. And they're fearful that they can't bring that crew back on, or that crew's going to disappear. And the Wall Street Journal had an interesting data point. There are 750,000 layoffs in the US construction industry right now, almost all directly related to the material supply chain. Not roofing, but in construction. But there are 350,000 job openings that nobody wants to take because it's not reliable anymore that you'll always have work. So, we've got some real challenges ahead for the industry. And it's going to require all of us working together to solve them.

Heidi Ellsworth:
Yeah, so what are some of the things, along that lines, what are some of the initiatives... With the NRCA, and the board, and what you're doing to... And I know I've heard so many of the webinars and everything on contracts and all that. But along with that, what are some of the other things that you're doing to help the roofing contractors in the industry overall?

Reid Ribble:
So, to help navigate it, one is to increase communication. And a year ago, actually when COVID started, we created a special website just for COVID, a special location on our website that covered all things COVID. We now have that same thing going on covering all things on a material shortage. And we have had nearly 30,000 visitors to that location on our website. And so, we know that it's a big issue that's causing a great deal of stress. Here in a couple of weeks, sometime during the week of the 20th of September, I've invited some key leaders from the manufacturing community, senior leaders in their company, folks like Joe Smith at Manville, and John Altmeyer at GAF, Josh Kelly at OMG, Brian Whelan at Sika, to participate in a telephone town hall. And we're going to be calling our entire list. And if you'd like to make sure we call you, pay attention to sign up for that. You'll be seeing some of the promotions coming out here any day.

Reid Ribble:
And we're going to ask them as senior leaders on the manufacturing side to talk to our contractors and to say, "Here's where we're at, and here's what we're seeing. Here's a current state of play. Here's when we think things would get back to normal, and here's what you should be looking out for." And then allowing our contractor members to ask some questions. And they realize there's likely to be some tough questions, but we'll make sure everybody keeps it polite and respectful. But we want to hear from them. And so, by facilitating this coming together and increasing communication, it's really about the number one thing that we can do. We're also sending a letter off to the Department of Commerce and FEMA about things that we feel they could be doing, and ask them to redirect specific energies to this process and to getting materials moving and logistics moving as quickly as possible in the northeast and in the hurricane zone. So, we've been involved in this almost non-stop over the last few months. It consumes the bulk of my day.

Heidi Ellsworth:
Yeah, there's just so much, and I'm just thinking from the materials to... I've never heard so many commercials on Sirius for truck drivers. It's just not construction, but it's the truck drivers, we can't get the materials delivered.

Reid Ribble:
Logistics is a massive, massive problem. And I talked a little bit about roads being closed and things like that. But there's a real shortage of both trucks and truck drivers. And there's been a shift that's been going on very quietly in the trucking industry, where private equity is starting to buy up logistics companies, and in some cases, shutting those companies down because they haven't been able to find an adequate workforce. And so, things are getting worse there then instead of getting better. And so, sometimes consolidation works and is really beneficial. Other times it can really backfire if private equity isn't prepared to deal with the challenges that they're facing. And I think that's part of where we're at right now. So, logistics is a real issue. And then rail gets overloaded, right? And so, there's no real good solutions here. Our economy has been really challenged, in part by this massive influx of money that's been shoved into it.

Heidi Ellsworth:
That's what we're seeing across the board. And in fact, I want to make sure we're asking some questions, we're having... I love this discussion. It's so... This is exactly what's happening right now. But I do want to say thank you to everybody who's on. We have a huge crowd. And please, please ask questions in your question box so that we can get those to read as we keep going along with this. But-

Reid Ribble:
I will say one thing on the logistics. A lot of roofing companies have large trucks themselves. And you're probably not going to be turned down by your distributor or manufacturer if you say, "Hey, can I send dually truck in with a large trailer and ship this myself?" You're probably going to hear a fairly open minded recipient on the other end. And so, the industry is modifying work practices and finding ways to meet the challenge, as they always have done. I'm particularly proud of our members and how they've risen up to meet some of these challenges where other industries have not been able to.

Heidi Ellsworth:
I think that's the communication between the manufacturers, the distributors, and the contractors. Even though it's tense, that communication is so important right now to look for different solutions.

Reid Ribble:
That's correct. And we have to really look at over the last 40 years how the industry has changed. When I was first in business, and even all the way through the 1980s, we were mostly buying direct from most manufacturers. And I was one of these direct buyers who welcomed distribution, because I wanted to hold lower levels of inventory at my own warehouse, and use the benefit of distribution. And distribution has dramatically expanded in the country, making logistics easier in many cases for the roofing contractor. However, all we've done is shove the logistic problem to them. And they've got logistics challenges, but they can move material from location to location. And they've done about as good a job as they can, given the nature of what they're up against. And it is not easy.

Heidi Ellsworth:
No, it's not easy. It's not easy. And I want to go back on to one of the things that you said just a little bit ago about talking about in the trucking industry, with the consolidations and the merger and acquisitions. We are seeing this across the board right now in the roofing industry, manufacturing, distribution and contractors. Roofing companies being consolidated, being bought out, private equity coming in. In fact, it was a key topic at National Women in Roofing Day during IRE, that just from the other side of the picture, how do employees deal with this, right? How do they deal with all these things? What are you seeing with the private equity coming in, and this, the consolidations and also the mergers and acquisitions?

Reid Ribble:
These types of things come in waves. And we're in a wave right now. And I think that wave's going to crash probably within the next 12, 18 months. But here's what's driving it. Returns, people are nervous about returns just in the stock market. There's a lot of... The stock market by some measures is way overpriced. And so, interest rates on fixed investments is low. So, people don't want to put their money there. They don't want to buy an overpriced stock, so they say, "Where can I invest money and get a better return?" And private equity has provided some pretty significant returns. And so, private equity is cash rich right now. They're looking to spend that money. On the positive side, private equity is giving people an opportunity. If you're in your late 50s, early 60s, and you don't have an exit plan, it gives you the possibility of having an exit strategy.

Reid Ribble:
And for the first time in my career, they're focusing more attention on residential roofing companies. And so, they're looking to enter in new private equity to consolidate and roll up residential companies. So, from a person that's in their late 50s and 60s, they've now created a value metric that didn't exist before. So, there's an exit for that building, that company owner. For the employee, it can be a little bit scary. However, that influx of capital can sometimes create growth that you didn't see before if it's done correctly, and it's handled correctly, and senior leaders of the company are bound to stay for a couple of years. That transition can happen pretty well. Now, there's going to be some disasters for sure, because private equity sometimes will overpay for things. Because, like I said, they've got all this cash, and now multiples have gone up. They end up overpaying, and then a year or two later, they bail. And so, we've seen some of that in the trucking industry.

Reid Ribble:
And so, it's going to require a close eye on things. But I certainly wouldn't say it's all bad. It can be bad, but I think it can mostly be good. Now, here's where the squeeze starts to happen, though. Private equity rolling up a bunch of residential contractors, they then get very large. They then get some economies of scale that doesn't exist for that four or five, 10 million dollar roofing company. And that medium sized company starts to get squeezed. Now, we saw this happen in the commercial low slope wave 20 years ago. But business entrepreneurs are really good at what they do, and they find a value proposition. And they actually can grow, that medium sized company can grow in spite of those threats. Because there is something about being truly local that consumers really like when it comes to the roofing company that is doing their business. So, there's pros and cons to it, but I would anticipate it to continue to happen until there's a reset in the stock market.

Heidi Ellsworth:
I also think too that it is the time. And people in the roofing industry, especially roofing contractors are entrepreneurs. And so, you tend to see as consolidation comes together, and companies are purchased, then you see this whole groundswell of new companies coming in. And whether it's manufacturing or distribution, it's just... Like you, Reid, I've seen it for the last 30 years. You have the consolidations, then you have this groundswell of people coming up. I was driving on Bend yesterday, and I saw a truck go by, Scott's roofing, and I'm like, "I don't know Scott's Roofing. Who is that?" And I'm getting Tim to follow him down the road. But those are the kind of things that I think it is an opportunity in many ways. And it is a great opportunity for local businesses because consumers like local, so...

Reid Ribble:
And I'll not pick on it, but I'll use this as an example. There really was very little, very few options for a roofing company owner to exit their company when they wanted to retire. And all too many had all this goodwill, but they couldn't sell it to anybody, because there was no market for it. If they didn't have a family member, or somebody in the company that wanted to buy it, they just auctioned it off and closed it up. And when Tecta America demonstrated how they could be successful by acquiring businesses and creating a different type of operating model, Tecta America drove the value of virtually every roofing company in America up as a result of it, like Tiger Woods drove everybody playing golf up. And so, private equity can play a really significant role in the improvement there. And so, I just think that that's one of the things that are going to happen. It's caused by a lot of economic circumstances in the country. And we should expect that to continue to be that way.

Heidi Ellsworth:
Yes, I've been hearing this conversation over and over, very true. And I just... We did just have just a comment come in from Wendy Marvin out of Vancouver. Thank you, Wendy. Now more than ever a time to know your customers and reassess our small companies. Also, to plug into our industry associations for assistance with this.

Reid Ribble:
Exactly right. She hit the nail on the head, and it's very, very true. And I'll tell you, it's always good advice to stay close to your customer, and then know them better. And then they're less likely to look for somebody else.

Heidi Ellsworth:
Yeah. And I think it's important to stay involved with your associations too. And I'm not just saying this because you're sitting on here as CEO of NRCA. I'm saying this because that's where you can talk to other roofing professionals in the right ways and have support as you're trying to navigate, not just what's going on with mergers and acquisitions and consolidation, but also, like we talked about earlier, the material pricing, everything else, or shortage, it's important that we be strong together.

Reid Ribble:
That's exactly right. And that's why I'm... Obviously, I want everybody listening to be a member of NRCA, because as we get larger, our voice gets much louder, particularly when we do advocacy work for building codes. And in Washington, DC, that size really matters to help us put wins on the board for everybody. But I'm also a huge supporter of all of our affiliates, whether it's a regional affiliate like MRCA, or Western States, or NRCA, or the state affiliates, because it's this connection and the networking and sharing in best practices that sharpen us to become better at what we do. And so, I encourage people to be members of all of them, and it'll be the best investment you ever make.

Heidi Ellsworth:
[inaudible 00:28:07], and from someone who has with your company, with your roofing company. You're preaching what you did, so that, as always, means a lot. What I would like to do is I'd like to take this conversation to DC. So, infrastructure, new administration, so much going on. No one knows this better than you do, Reid. Can you give us an update? What's happening in DC? And what should the roofing industry be really focusing on?

Reid Ribble:
Well, there's a lot going on right now for good and bad, depending on your political view, maybe. But President Trump was consequential in the ways that he led the country. And now, President Biden is being consequential in what he's doing. And one of the things he's trying to do is get across the finish line a major infrastructure bill. There's a lot of confusion out there on it, because in the earliest days, I think the Democratic Party botched up the communication because they tried to label everything infrastructure. And they've had to back off. And so, now they're calling... They've got two different pieces of legislation they're working out. One is a true infrastructure investment bill, and it's called the Infrastructure and Investment Jobs Act. And that bill is pretty much all infrastructure.

Reid Ribble:
Now, there's some stuff in there that you can maybe say isn't all that much infrastructure, but it's the traditional things like road building, bridge building federal buildings and construction, resiliency, airports, stuff like that. But they've also added things that have to do with energy infrastructure and water infrastructure. We all remember the days where people in Flint, Michigan were having to bring in bottled water to their homes because of the lead pipe issue. They've added funding to rebuild our utility infrastructure. They've added funding to do broadband, though, listen, if COVID taught us one thing, it's how woefully behind rural America is on broadband. And if you're a mom or dad, and you're not working remotely, but you've got a kindergartner or a first grader and a 10 year old trying to go to school, and your broadband is not... Your bandwidth is not wide enough to cover all of this, it was hugely frustrating. And it really began to show up during COVID.

Reid Ribble:
And so, they put money in there to improve rural broadband, which, by the way, will be a massive economic builder in those areas, and you'll see more businesses going there. Why would you go to a little city and put a company there if you don't have good WiFi or good broadband? You won't do it. But if they do, if that piece is there, businesses will start to invest there. High school kids will likely stay there and work. They won't flee these rural communities. School districts will begin to flourish. And so, I think overall, it's a pretty notable thing that they're trying to do. Here's the challenge they have. It's a trillion dollars, with about 500 billion of it already funded through typical means, gas, taxes, excise fees, and things like that. They've got to come up with the funding for the other 500 billion. And some of that's going to be phony, because that's how Washington DC works. Somebody's going to do things you don't like because there's likely to be some tax increases on Corporate America, and some of your business taxes may go up. But if we want to have these things, they ought to be paid for.

Reid Ribble:
And I was one of these conservatives who felt, listen, if we believe we need to spend a trillion dollars, go make that case to the voters, and then tell them how they're going to pay for it. Because at the end of the day, those taxes have to come from someplace. And so, the other piece that they're working on is this human infrastructure bill, which is three trillion, or three and a half trillion, Joe Manchin wants to get it down to 1.7 trillion. But these numbers are so astronomical, and the government has already flooded money into the economy, that I don't believe there's really any space for it right now without dealing with other things like immigration reform, and things that are really critical to provide the human supply of labor that's unnecessary. And so, I doubt that they're going to get that big 1.7 to 3.5 trillion bill through the Congress. If they do, it'll be like December 31st at midnight when everybody's supposed to be at home with their families.

Heidi Ellsworth:
Yeah, wow. And what is... So, where is ROOFPAC? What is the team in DC? Where are they at in all of these? What are they working on?

Reid Ribble:
So, Teri Dorn in our office has been working really hard on ROOFPAC. And we had a really successful ROOFPAC event, a great tribute to Teri's work there in Las Vegas in a year that was down in attendance at IRE. And we can struggle with ROOFPAC, because our political action funding helps us support candidates who are going to be pro business, and pro small business in particular in Washington. And so, we've been hurt a bit by COVID, because we haven't been able to have the type of events. But on the same hand, Teri has done such a good job that she's keeping us in a place that is pretty solid, to be honest with you. And yet, we need the support of the roofing community. I look at other industries that are about our size, and how big they've grown, how well they've done with their political action. And we wonder how do these people get elected to Congress that keep opposing what we're doing? It's because other organizations have a better PAC than what the construction industry does. And so, anybody who's really interested in having good pro small business members of Congress elected or kept in Congress, it should be writing a check to ROOFPAC today, and we'll make sure that that money goes to candidates that are going to be on our side of the issues when in fact, issues come up.

Reid Ribble:
And so, it's a critical part of our political system works. I don't like it because it's just money in the system, but it is the system that we have, and it's the system that has been built. But also, I want to just hit on Roofing Day in DC, which we do virtually now for a couple cycles. And we're hoping that it can be live, but we're not 100% certain it's going to be. It's April 5th and 6th of 2022. It's where we call the entire industry together across the entire supply chain, and with one voice, we speak to specific issues. And those issues are determined by a committee that spans all of these areas, from the design and the consultant folks that I back, to manufacturing, distribution, construction, raw materials. They're all in the room, and we say, what are the top three issues that we can agree on? Because I know we've been able to put so many wins on the board for the roofing industry because of Roofing Day, and because of the process that we're currently using, has been so effective.

Reid Ribble:
You know what? Members of Congress never want to say no, because they say no, they get a voter that's mad at them, right? But if the industry goes in divided, then they don't know who to pick and choose. So, we specifically set this up to not focus on where we don't agree, but instead to focus on the broad places we do agree. And that's why we've been able to put these wins on the board.

Heidi Ellsworth:
I've been at every Roofing Day. It is the best thing. You get to talk to your representatives, you get to talk to each other, and just the show of the roofing industry in DC brings a mountain of pride. So, for everybody listening out there, anything you can do, it helps the industry, but it also helps your business, and it helps who you are just being a part of this. It's-

Reid Ribble:
Yeah, and you expect to build relationships. I think we have a tendency to think members of Congress are up here and they won't want to talk with us and things like that. Members of Congress are human too. And that touch point back to their congressional district, to a business leader in their congressional district, they're generally interested in hearing what you have to say. Now, you might meet with a staffer, and I'll tell you right now, if I go into a meeting into a congressional office, I'm totally fine meeting with staff. In fact, sometimes I prefer it, because there are staffers that are designated to the roofing industry in every congressional office. They're the subject matter experts that you would need to talk to, because they're the ones behind the scenes talking to the committees of jurisdiction, and putting amendments in, and making sure that our issues are heard. So, we talk to the member of Congress, I'm good with it, but me personally, I'd rather go right to the source.

Heidi Ellsworth:
Yeah, no, that is so good. So, we have some questions coming in here that I want to make sure we don't miss out on. So, first of all, we had one in here from Marty Stout. Marty, thank you so much for being on. He's one of our RCS influencers. But he really wanted to know, do you see any movement to make licensing more portable state to state?

Reid Ribble:
No, I don't think it's ever going to happen, to be honest with you. Because, the 10th amendment to the US Constitution basically says, if some particular policy has not been written into the Constitution, it is left to the states as the enumerated power to make the decision. And states love to have control, and particularly in the issue of licensing. And they take a great deal of pride. There's zero chance, in my opinion, that the state of Florida, for example, is ever going to accept a license from Michigan, or Georgia, or wherever. Because they're saying our procedure, our policy is more stringent than any. And not every state even has licensing. And licensing, to get licensing in an individual state is a real challenge, because there's a lot of other constituencies that oppose it. Let me give an example. The Home Builders typically oppose the roofing industry to be licensed. So, the roofing industry can all lock on together, march into a state capitol and say, "We want licensing for roofers." And as soon as the roofers will leave, the Home Builders will come in and say, "No, no, no, that's a really bad idea." And the reason that they'd say it's a bad idea is because they know that pricing is likely to go up if they have to hire a licensed contractor.

Heidi Ellsworth:
Oh, my gosh.

Reid Ribble:
See, this is the thing that people don't understand. For every constituency, no matter what it is, there is a counter constituency fighting against it. And that's true in every single case.

Heidi Ellsworth:
Wow, wow.

Reid Ribble:
And licensing is not exempt from that.

Heidi Ellsworth:
Who wouldn't want licensing? It protects consumers. It protects everyone. So, I know, wow. Okay, and this... We had another question come in from Andy. Thank you, Andy. This is... We didn't really cover this earlier when we were talking about materials, but there has been... And contractors, we're hearing it. We're hearing it from a lot of contractors. There have been increases in warranty costs. And he's, Andy is asking, how can we work with manufacturers to work together for our clients? Is it a broken system?

Reid Ribble:
Well, personally, I think it's been a broken system for a very long time. The interesting thing is nobody likes it, but competition forces these things into place. I personally think warranties ought to be attached, or the depreciation schedules ought to be attached to the length of warranty, and then you see warranty links go down. Long term warranties, I think, are bad for the industry, to be honest with you. I don't really think they're good for contractors. I don't think they're good for manufacturers. However, with that said, there is movement going on. And these are caused by market pressures to change warranty policies and pricing, just like everything else that's going on. And so, here's a case where it's really important for contractors to be in open communication with their individual sales reps, and talking with them about why did your company change their warranty policies? Are there work arounds that are available to my company? What can we do, because I want to make sure I continue to sell your particular product because I believe in it. And that's something that needs to happen on an individual basis. NRCA can't really get involved in it as an organization because of antitrust problems. But you can, as a contractor and as a customer, work directly with the companies that you're working with. And so, my personal opinions on it really shouldn't matter. But you need to be communicating with your suppliers.

Heidi Ellsworth:
Of course. Andy did say he came in a little bit late. So, Andy and anybody else who's come in a little bit late, I just want you to know that NRCA is going to be having a town hall on this in the next couple of weeks, with the leading CEOs of manufacturing facilities, companies. And so, we will have that on Roofers Coffee Shop so you know where it's at, and NRCA will be sending that out. So, that'd be a great time for you to ask that question again.

Reid Ribble:
Exactly. You can ask it directly to the powers that be.

Heidi Ellsworth:
Yes. So, we had another one, and this is really interesting. It says, how are you working with code development to find the balance between affordability and roofing resiliency in the face of more extreme weather events?

Reid Ribble:
Yeah, it's obviously a challenge, right? As we look at the impacts of climate change, and these storms that are coming, there's two schools of thought. If we go back and look historically, the number of hurricanes is really not increasing in the US. But yet it does seem like intensity is, particularly the amount of rainfall that's coming. And so, we've seen more and more flooding. So, resiliency is an important factor. However, there's great debate on what is the sweet spot to have the most resilient roof, while still making it affordable for consumers to have? And you've got, again, competing interest. You've got the insurance industry that would like to see really, really specked up roofs, super roof, we might say. IBHS would call them FORTIFIED roofs in residential in those zones. And then you've got the interests of consumers, who are saying, "Yeah, it's fine for me to do this, but what happens when I have to re-roof it, and I can't tear it off, or I've got to replace the whole deck now, because everything's screwed on." There's these other competing interests that you have when you get in code.

Reid Ribble:
And so, NRCA works closely with our manufacturer members to get a sense. But remember, the building code is very clear that you have to put the roof on in accordance with the manufacturer's written specification. That's part of the code. But NRCA is at virtually every code hearing. We've got committees of roofing contractors that oversee staff work there, and then we advocate based on what our members tell us. And so, if there's a concern that you want us to be more involved in resiliency and advocating for more and more resiliency, then we need more and more of those contractors speaking to that point, because we're extremely responsive to what our members tell us. But we're at every code hearing.

Heidi Ellsworth:
Yeah, every. Well, and along that line then, I want to make sure that we get in talking about really looking to what the members and the industry as a whole is saying. You've been very involved with the quarterly market index surveys. The NRCA and several PIMA, National Roofing, there's a number of associations-

Reid Ribble:
It's everybody, every national association participates.

Heidi Ellsworth:
Every national association. What are you hearing from those, and what's happening there?

Reid Ribble:
Well, we're seeing the length of backlog actually starting to pull out, and it's partly driven by the material challenges that are going on. But it is totally different than what manufacturers are experiencing in the real world. So, the reason these quarterly surveys are so critically important is because it'll give manufacturers real data. But the roofing industry is likely to grow five to 7% this year, maybe four to 7%. But yet, many manufacturers are reporting 50%, 100%, 200% growth based on orders. Well, we know that there's a run on materials, right? So, there are ghost orders going on throughout the country. If you can't get materials from supplier A, or supplier A says it's going to be six weeks, 12 weeks, a year to get materials, you're going to order from B, C and D, and whoever gets you those materials first, then you'll just cancel the orders from everywhere else. The problem is, is that nobody really knows what's real anymore.

Heidi Ellsworth:
Exactly.

Reid Ribble:
And so, it's a real challenge. And so, the quarterly surveys gives the manufacturing community a look at what's real, because individually, companies are saying, "Here's what my backlog is. Here's what our new contracts are. Here's what incoming inquiries look like. They're going up or down based on last quarter or last year." And manufacturer can take that information and get a true measurement of where the market is headed based on real numbers, not based on the ghost ordering. If there ever was a time that this market survey is essential to you having better supply chain, and I'm talking to roofing contractors here, if you want to have more confidence in the supply chain, please fill out that quarterly market survey. Because that information does not have your name on it, so it's not specific to you. But we bunk them by region, and then manufacturers can adjust what they're doing based on what real demand is. And they're going to be more likely able to tell you what is coming up and when product can be delivered based on real numbers. It takes you 15 minutes to fill it out. I wish every roofing contractor in the country would fill this out, because it would provide so much powerful, accurate information that the industry could use that would help you.

Reid Ribble:
And if you submit the information, you get to see how you compare with your peers in your region of the country, because we provide the data to you as well. And so, it's a really important piece of work that the whole industry is doing. We just need better participation from roofing contractors.

Heidi Ellsworth:
Right. And I can tell you right now, if you have not... If you for some reason have not received an email on this, which I'd be shocked on, but if you haven't received an email on these quarterly surveys, you can find them on Roofers Coffee Shop. We help host them and get them out there on all of the major national roofing associations, NRCA, National Roofing, PIMA, you name it, and you can find them in there. And if you go to nrca.net, you will find it, and you'll be able to take it, because it is so important.

Reid Ribble:
The interesting thing is last year, we had over 500,000 visitors to our website. This is astounding number, [crosstalk 00:48:34] 550,000. And at the end of the day, there's a lot of information. But sometimes, we can provide information overload. And so, things can get missed just because contractors are so busy in the day to day. And if you're having a hard time getting your next track of whatever it is you're trying to order, I can understand this, the resistance to taking 15 minutes. But this would actually help you. This is one of those things that probably worth the time to invest in.

Heidi Ellsworth:
To do it. Well, and I want to just read this real quick, because it goes to exactly what we're saying about the surveys. But we had a great comment from Dave Lawlor, who is the president of the Roofing Alliance, and with ROCKWOOL. Dave said, "Another great session, Heidi, and always interesting to hear Reid's important perspective. Regarding the association connection, everyone being and coming together with Roofing Association membership simply makes us stronger." And that's what it goes back to that, those surveys. It goes back to bringing the information together. So, Dave, thank you. Thank you for that.

Reid Ribble:
Yes, great having you, Lawlor, listening in. He's a dear friend of mine, and I appreciate his work at the Alliance. For those of you that don't know what the alliances is, it's NRCA's foundation, and they do some great work. And certainly would invite everybody to contribute to the Alliance.

Heidi Ellsworth:
Yeah, I love. I'm so blessed to be able to work with the Alliance and that group, and they are just amazing. And that's a whole nother Coffee Conversation, just on the Roofing Alliance. We did have one question. It came from Henry Stakes, and it really went back to that licensing. But he said, "Do you see if there will be minimal level requirements to work in roofing? Is any state looking at something like that? In Arizona, they are."

Reid Ribble:
It's all over the map, Henry. Some states do a registration. If they can't get licensing, contractors will actually ask for registration. I caution people about the registration idea, because there's no... Other than you got to sign up and pay 1,500 bucks or whatever, it's really just a tax, and anybody can... It's a pretty low hurdle, that path, and it's just a revenue grab. And so, I would just really encourage, if your state wants to have a license, contractors, roofing contractors in your state, reach out to me, and I can maybe give you some pointers on things you can do to maybe increase the odds of that happening, and how you can beat these contrary constituencies if you're willing to put a strategy in place, and then execute on it.

Reid Ribble:
But I will tell you that roofing contractors are pretty liberty minded folks. And there's not even full agreement in the roofing industry and among the construction community about whether licensing is something that they want. Do they want another government agency that they have to now be responsible to or respond to? And some people say, "Yes, I want that." And other roofing companies say, "No, this seems to work well." And it's a relatively low bar for entry. It's one of the great appealing things for workers to find a way to advance in their career. They go and learn a trade by working for a company for 15, 20 years, and then they go start their own. And so, there's a lot of disagreement on licensing. NRCA doesn't take a position on it. But we're happy to help if you would like to see licensing in your state, you want to know how to do it, reach out to me, and I'll tell you the best shot you have and how get it done.

Heidi Ellsworth:
Very... That, again, goes to get involved with NRCA. And those are the kind of things that bring it together and help. That is great. And I did have one question on the survey, and that was, if you are a multi-region roofing contractor, is there any... Let me see if I can make sure [inaudible 00:52:43]. If you're a multi-region, how do you fill survey? Can you fill it out a couple different times?

Reid Ribble:
Yeah, [inaudible 00:52:51], I get it. I totally understand the question. If you've got operations in different regions, how do you get the information accurately? A lot of multi-regional companies are providing information. Most of them are having that data provided by the region itself. So, your operations manager in Illinois fills it out there. Your operations manager in Arizona fills it out there. Others, more sophisticated companies who have their data broken down in their own IT system fill it out just once but for every region, and you can do that.

Heidi Ellsworth:
Perfect, perfect. Great. Okay, we are getting close to the end of our hour, so if there's any questions I didn't get to, I will just let everybody know, and I think we've got most of them. And thank you for the awesome, some just awesome comments here. So, Reid will be getting all these comments. I'm sending the whole nine yards over to him and the team at NRCA. So, he'll have all these comments and be able to, if there's anything we missed, or if there's a reach out that needs to take on, that can be handled. But I really want to, before we finish this up, Reid, like we talked about at the very beginning, at the beginning of 2021, NRCA was talking about contracts. They were talking about price increases, material shortages, COVID vaccines, you were talking about all of it. So, I would love it if you would give us maybe a glimpse into what you're seeing and what you think contractors and the roofing industry overall should be focused on for the next 12 months, or 12 to 18 months. What are some top things that people should really be focusing?

Reid Ribble:
Yeah, so I'm going to answer differently for the residential guys, then the commercial guys.

Heidi Ellsworth:
Yeah, perfect.

Reid Ribble:
For the residential guys, I think you're going to start to see some softening of supply concern. Focus on selling projects that are in common colors. Don't get too crazy with the stuff. Go to the sources that you know are going to be available. And most importantly here is have confidence that that next job is going to be there. Because the one thing about that residential sector is 25 years ago, there were X number of houses built in this country, and all those houses are still going to need a roof next year. The great thing about the residential roofing business is there's this massive marketplace out there of re-roofing that has to happen. And it's going to happen. And then if you live in Oklahoma, Colorado, or Texas, in the hail zone, you're going to be busy forever. And so, again, I would try to pull your old skews back in what you're selling, stay with popular colors, because you're more likely to get it, and then really watch what you're doing on cash flow.

Reid Ribble:
On the commercial side, you're going to be up against some challenges here for the next year, I believe. It's going to get... It's going to continue to be difficult. And it's going to be different products that are going to be stretching you. I think we're going to see... During the winter, you should be praying for a real harsh winter, so that manufacturing can catch up with their inventory, and start to build inventory during the winter months, so that by the second quarter of 2022, we start to see a softening of supply, supply starts to backfill, and pricing becomes less volatile. And then for you likewise, watch cash flow. This is a... Really understand your balance sheets going through this, because it can be challenging. If you cannot complete your work because you cannot get all the parts, you could see a drop off of revenue, and many of you are reporting that you are seeing drop off to revenue of completed work by up to 20%. That requires a very deft hand on that balance sheet and managing your relationship with your banks and insurance companies. And so, really, really hyper manage that aspect of your company.

Heidi Ellsworth:
And you and I talked about this yesterday just a little bit. But also, really being open to innovations. Maybe even old products that become new, then you have to be very creative.

Reid Ribble:
Yeah, we're seeing a lot of people who still had kettles and stuff like that firing some of those up because they could get hot asphalt to melt down and use as an adhesive that still would comply with FM. And I just have to put this caution out there, because I do hear people saying, "Well, I was able to get isocyanurate wallboard." That is not the same material as roof insulation, and they're not substitutable. You can't just grab some one inch layer of polyurethane or polyiso wall sheathing, and put it down on a roof, and think it's going to perform the same way. It is not. It's not to be done. And so, don't substitute those products. Substitutions can kill you in this business if you're not careful on what you're doing, and not fully understanding the the technical aspects of substituting products.

Heidi Ellsworth:
And that's one of the things too. Just to go back to it, but as a member of NRCA or any of the regionals, contractors can reach out and talk to the technical departments about these substitutions, or about... So, if you have creative ideas, reach out to the experts to just say, "Hey, will this work? What do you think?"

Reid Ribble:
Yeah, our technical department handles two to 3,000 of these calls a year. So, feel free to reach out.

Heidi Ellsworth:
That is excellent. Well, I have to tell you, we're at the end of our hour, and I can't believe how fast it's gone. Thank you, Reid, so much. There's a couple of little hits that I do want to make. And one of them is that the NRCA Legal Conference is coming up. And I believe that's on the first part of October. I should have my dates in my notes.

Reid Ribble:
I should have [inaudible 00:58:53], but I don't.

Heidi Ellsworth:
Yeah, so-

Reid Ribble:
Go to nrca.net and get it.

Heidi Ellsworth:
Yep, nrca.net. Roofers Coffee Shop, it's on their directory. The legal conference is going to be all about contracts and material shortages and everything that's going on, on how to navigate that. It's another thing the NRCA brings to you. It is virtual, so it's great for you to be able to get into your company. And I do want to also share that we will be having... We will be at Western Roofing Expo, another great event that is coming up starting the 21st. NRCA will be there. We'll be there. We're going to be doing some live interviews from that show, so be sure to stay tuned on our YouTube, and also with NRCA to see what's happening.

Reid Ribble:
And I hope to see everybody at Western States. We're looking forward to heading out to Las Vegas. I'll be speaking at the legislative luncheon. And looking forward to seeing you there.

Heidi Ellsworth:
Yeah, it's a great event. If you aren't signed up already, still plenty of time, get signed up. Finally, I want to thank everybody. Reid, thank you again for being here today. You are just a treasure to the roofing industry and everything you do for us. Thank you.

Reid Ribble:
Wow, that's kind. Thank you very much, Heidi. It's always good to be with you.

Heidi Ellsworth:
Good to be with you. Thank you. And join us two weeks from today at our new time, seven o'clock AM, and we are going to be talking about family business. And we are going to have Sherri Miles, Brittany Wimbish, and Kendall Eckerson here talking about how they deal with their family business. And we might even have a few Roofers Coffee Shop folks here talking about how they deal with this family business. So, be sure to join us. It's going to be great. I'm looking forward to seeing all of you. Remember, this is going to be videotaped and on demand, so please share it out so everybody can hear Reid's wise words. Have a great day, and we'll see on the next Coffee Conversations.

Reid Ribble:
Thanks, everyone.