Competition for Installation Contracts

      A cabinetmaker complains that his installation sub started working directly for the builder. The story sets off a discussion on fair competition in the new-construction market. November 11, 2005

Question
I hired a subcontractor recently to install cabinets. He is very experienced and reliable. I recently sent him out on a service call to finish installing some doors at a job. He met my builder at the job site and convinced him to hire him to install all the cabinets I am supplying the customer. Do you think it was improper that he took on a job from my customer to install my cabinets when I also offer this service to my customers?

Forum Responses
(Cabinetmaking Forum)
From contributor A:
Some of my installers are subcontractors who came from the contractor and work for me part-time. They are independent and are free to work for whomever they want. The real issue with me is whether or not they top notch workers. Whatever else they do is their business.



From contributor B:
It depends on your relationship with the builder. If you are supplying the installation in your bid, it is your call who installs. If the builder is buying cabinets from you and installation is not a part of the job, then he is free to use whoever he wants. It sounds like the builder may be trying to keep you from making a profit on the installs. This may not be a bad thing. If the installer is hired by the builder, and the installer messes up, then he and the builder are responsible. Otherwise you are responsible for the installer's mistakes.


From contributor C:
My biggest concern would be that someday he might try to steal the cabinet work as well. How badly do you need this contractor? How much more money do you want to lose out of your pocket? More importantly, how did the sub find out how much you got for the install so that he could cut your rate, and make more for himself, and save the contractor money? If word got out that I ever did something like that I would be out of work real fast. Maybe you should have your subs sign a no competition contract. Thatís what I do, and the ones that will not sign don't work for me.


From contributor D:
Are you sure the sub convinced the builder to use him? Here's a scenario that happened to me:

I am a subcontractor (trim, stairs, and cabinets) and install cabinets for most of my builders as part of the trim package. On the first job for one of my newer builders, I was told not to figure cabinet installation since that was already taken care of. I did my thing and went on.

The next job, he asked me to price cabinet installation also, so I priced the job and was told to go ahead. The owner of the cabinet supply company delivered the cabinets and promptly accused me of low balling the builder just to get the cabinet install. Of course I didn't low ball the price. I charged the builder the same price I charge all my builders. Even if I was working for the supplier, I would have charged him the same thing.

The supplier assumed I had convinced the builder to use me instead of him. This was not the case. It turns out the builder was not happy with quality of the previous install and decided to use me. I just happened to be cheaper. Should the builder have confronted the supplier about the quality of the install? Yes, and he did. The supplier was given the opportunity redeem himself and to re-bid the install. He lowered his price by $1 per box. It was apparently not enough since I got the job, and I didn't even know I was bidding against anybody else.

Should I have told the builder I wouldn't bid the cabinet install since the supplier also offers this service? Heck no! I simply price installing cabinets, no matter who supplies them. The supplier had the same opportunity to price the install as I did.



From contributor E:
To contributor D: Your situation significantly differs from what the original questioner described. You were not on site representing the cabinet shop. The General Contractor was wrong to ask, and the installer was wrong to accept a contract against the shop that had sent the installer out for that job. What happens if the General Contractor asks the installer to bid directly on the next contract?


From contributor F:
There are things to be said about building builder loyalty, but if the builder is going on price alone, there is nothing you can do about it and you will eventually lose his cabinet business as well. It has nothing to do with you. There will always be another company or person that offers a better perceived value or just plain lower price. If your builder is one that wants to put up with the hassle of using new subs on every job to save a buck, move on. Just like there are hundreds of subs, there are hundreds of builders.


From contributor G:
I don't see a real problem here. Ownership/slavery went out back in the sixties. Everybody is freelancing, including you. If he does the installs when you need him, for what you both agree is fair wage, then use him - or don't. I assure you that you will not hold the market captive by controlling the subs. I never signed a non-compete contract. If they want to put me on a set wage, with benefits, and vehicle, and more cash than I think I can make on my own, then we have something to talk about. If you're still catching the cabinet supply end, take care of that, and everything else will work itself out. If you feel that strongly about it, cut the builder and the installer loose. My suggestion is to use both when it suits your purpose, and don't when it doesn't. I think they're already on that program, so you might as well join up.


From contributor H:
I don't understand why you didn't have prior arrangements for the installation portion of the job. Iíd have to assume the builder wasn't going to use your service. But if I was the installer I would have come to you first and let you know that the builder approached me about installing your cabinets.

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