Recession changes at Empire Home Remodeling brought unexpected benefits

Greg Lamm
Staff Writer – Puget Sound Business Journal

After spending two decades at his family-owned lumber company, Burke Barker launched a construction and remodeling business in Woodinville 18 years ago.

Now, after surviving the Great Recession, Empire Home Remodeling is adjusting to an unprecedented reset in the industry that has taken a bite out of Barker’s revenue and forced him to rethink just what it means to run a successful small business.

That has meant a lot of changes, including landing smaller jobs, reducing his work force and offering staff fewer hours, while also embracing social media tools to help attract new customers.

“The big one was cutting costs, getting every ounce of fluff and excess out of this business,” said Barker.

The state’s construction industry was waylaid by a recession that was centered on a housing bubble — and has yet to recover.

Housing remains weak, although the worst may be behind the region. Washington housing permits are improving. Single family permits climbed to their highest level in 12 months, according to the state Economic and Revenue Forecast Council, and a clear upward trend is discernable for multi-family permits.

With depressed home prices and excess inventory, 2012 would be the first year since 2006 that the state will see a rise in new housing construction.

At Empire Home Remodeling, Barker has eight employees. His wife, Jeanne Barker, has her own established interior design business called Focus on Design. But Jeanne Barker also is intricately involved with helping her husband’s remodeling clients, working closely with them to develop floor plans and select cabinet and tile designs, as well as providing other interior design functions.

In 2011, Barker said the combined revenue of the two businesses was about $2.2 million, with about two-thirds of the revenue coming into Empire Home Remodeling. Revenue was down about 20 percent to 25 percent from levels of 2008, before the effects of the recession were felt.

Between 2004 and 2007, Barker said, revenue averaged about $2.75 million a year.

Even though the overall economy is recovering and there are some signs of improvement in the construction sector, Barker said his revenue has flattened out.

Barker remembers the days back in the 1970s at the family-run mill — Summit Timber Co., in Darrington. Those were the days of sky-high interest rates that put the brakes on the lumber business.

“Needless to say there was a lot of actions thrust upon us to pull out of that financial morass we were in,” Barker said, comparing those hard times 30 years ago to what he has been forced to do at Empire Remodeling in recent years.

“On a smaller scale, we had to do some of the same things.”

Barker said he has reduced his work force and cut wages and hours for his workers. He has gone from 12 workers to eight. Empire Home Remodeling no longer has a production manager and has fewer project managers.

Barker said his office manager is working part-time; his sales manager now works on commission. And his three project managers sometimes find themselves with a little time off if the company does not have at least three jobs going at the same time.

Barker said he also has sought to lower costs for customers by negotiating lower costs from outside vendors and subcontractors.

In the past three years, Barker said his projects for clients have become decidedly smaller. That means more kitchen and bathroom remodels, more interior aesthetics work and fewer whole-house remodels and additions.

People tend to stay in their homes and fix them up to make them more comfortable, as opposed to moving and doing larger projects at their new homes, Barker said.

There are some advantages of focusing on smaller projects, he said. The jobs are less complicated, headaches are fewer and the turnaround is quicker. The problems that crop up as they inevitably do in any construction job (old hidden damage, for example, that is exposed by renovation work) are easier to fix.

There’s still demand from customers across the greater Seattle area. Barker said he is looking at a new job in Burien; he has contracts for work in Edmonds and Renton, and just completed a job on Mercer Island.

He said that a friend recently called him about a 2,000-square-foot addition to a house in Seattle’s Windermere neighborhood — a job he would be interested in doing.

But overall, Barker said he is focused on the Eastside in general — where 80 percent of his work comes from — and the Woodinville area in particular.

Keeping work close to home allows Barker to save time and travel costs, which allows him to pass on savings to his clients.

Woodinville has 40,000 homes that were built in the 1980s and is a prime area for remodeling work.

“Boy, you can’t argue with that,” Barker said.

Barker has resisted making some changes. He has not gone into retail sales. And he said he considered putting in a small-projects “handyman” division, but decided to stay away from it in the end.

“I have decided to do better with less,” Barker said. “Rather than diversify, I wanted to focus on what we do best.”

Barker also said maintaining good relations with his clients is as important as ever. About 75 percent of Barker’s business comes from past customers, including referrals and recommendations.

Right now, the work board at Empire Remodeling lists 26 names of clients or prospective clients with remodeling needs. Barker said 18 of the 26 are friends, neighbors or former customers.

About a year ago, Barker started working with a marketing group. That led to a Facebook page, a spot on his website for customer testimonials, and a presence on Angie’s List, the online referral site for plumbers, contractors and other service providers.

While people who find his company online “are not typically the meat of our clientele,” Barker said marketing has helped fill the void from jobs lost because of the recession.

Barker, a Vietnam War veteran with a Purple Heart, will be 67 in a few weeks. He comes across as the kind of guy who can roll with what life dishes out.

Fewer jobs has meant less work for him. But that has left more time for local civic work, more time for golf and traveling. And more time for family, including his daughter Gena Baldridge, who shares his passion for fly fishing in Montana.

“I have my feet up on the desk,” said Barker, who said he always has excelled in the role of a delegator. “This is a lot more comfortable way to conduct business.”