Episode Transcript
[00:00:02] Speaker A: Welcome to the podcast about Lighting Matters. Our unflinching conversations uncover the nuances and complexities which shape the craft of lighting design.
[00:00:11] Speaker B: We explore the pivotal whys behind a lighting designer's choices and find honest answers to your most challenging lighting questions. Because lighting matters.
[00:00:26] Speaker A: Hello everybody and welcome to the Lighting Matters podcast. I am so excited for this company conversation today.
I am Avi Moore with Moore Lights in Chicago and I'm here with my glowing co host.
[00:00:40] Speaker B: I'm Lisa Reed with Reed Burkett lighting design in St. Louis. And we have been in general focusing our podcast kind of outward and trying to talk about things that are interesting to things about lighting that are interested to people outside of lighting. But I would say today's topic is really for people inside of lighting. Maybe not just lighting, but we'll get into that. I'm excited to have our guest, Ron Unterreiner who has done a lot in his career and that's going to be my first question to him. So Ron, tell us about yourself and how you came to be in your current roles.
[00:01:20] Speaker C: I will do that. Well, good morning to you both.
I am a retired executive from the design and construction industry and I I majored in Business Administration from Southeast Missouri State in my hometown of Cape Girardeau. I spent my first 32 years with HBE Corporation. I went to work the day after I graduated from college, stayed there for 32 years. We specialized in building hospitals and medical buildings all over the United States on a design build basis online. I left HPE in 1999. I started a design build a vision for Ross and Berazini which is now known as Entroba and after two years and a in house management shakeup they decided they didn't want anything to do with construction. Probably a very wise decision on their part. I took all the contracts that I had assembled over the last couple years. You were just getting ready to begin and I started my own company.
So I ran my own general contracting company called Design and Build Design and Construction Services and I did that for six years.
Actually the day I started and had payroll on my company was 91101 which was not a great day to start a business.
So I all of the bonding capacity and all the contracts that I had assembled they went away with the World Trade Center. So it was a challenging time but so I managed my own company for six years and I then I shut it down and started with started up with Pam Duffy with Roadie Construction which is a mid sized general contractor in St. Louis area. It does a considerable amount of work with BJC, WashU and a lot of industrial clients. So and in 2013 I started People, which I describe as a non organization just myself meant to and it's meant to introduce the minority and the women owned contracting community to the major players in the marketplace. And People was all about gathering as many people as I could in one room. The goal was to get half fill a room with half minority contractors and half of the majority players and get them to mix it up, get to know each other and ultimately to work together. I'm still doing that. The pandemic kind of put a stop to the in person meetings and I haven't really gotten back into having too many more meetings but I do keep in touch with a lot of the minority firms in town and I'm still introducing them to as best I can to the major players.
And then in 2020 I started a women owned group called WBEDC which Lisa is a proud member of.
And the purpose of that was really to get all the small to mid sized women owned firms, the business owners of those firms together and give them the opportunity to share their successes and failures and get to know each other, help each other through the many, many challenges we have in this industry.
And certainly the ability to get paid is one of those challenges. And we'll talk about that a little bit later. So that's. And that group, because of the pandemic we really have met very few times but I do keep them informed. On every Monday basis was a inspirational email and we've got about 40 business owners on that group and another 56 what I would call consultants or industry professionals that it's. So it's a great contact list for, for different opportunities that come up. So I like the group, I like, I like what it does and I like all the, all the business owners in that group are very passionate about their business and really wanting to succeed. And so I offer my assistance to anybody that needs help.
And one other thing that I do to keep connected with minorities, I work with the Rise cdfi. It's a community development financial institution that provides working capital to minority firms for qualified firms. And it really, it's all project loans but we have money for any minority owned firm that probably in the range of say 20 to 30 grand to maybe 150,000 max. We don't have a lot of money so we can't really go much higher than that. But and we've got about, currently about 12 companies that are, have borrowed from us and that we're Working with and I mentor them and keep in touch with them on a really a weekly, maybe monthly basis depending on and, and help them to grow their business and do their business in the right way. So that's kind of what I'm about. Since retiring about seven years ago, I offer one on one consulting services to any minority or women owned firm that needs help. So I do that on a definitely a nonprofit basis. I do get a little payment from Rise, which is good.
But working with any, I don't charge any minority firm for assistance. So that's kind of, kind of what I am about. I like to write and I've written 10 books since I retired so I'm always kind of, kind of proud of that. Different, different books. Two or three about the industry, some about some health issues that I had and travels that I had. So.
[00:07:12] Speaker B: And a cookbook.
[00:07:13] Speaker C: And a cookbook. Yeah, actually I'm pretty proud of that cookbook which is a collection of old family recipes that I converted to a gluten free and a dairy free combination and I wrote several chapters in the cookbook of the right foods to eat. So it's, it's, it's a, it. I thought it was a very good cookbook. You make anything out of that, Lisa?
[00:07:35] Speaker B: I have, I don't remember what now I, right now I have my, my 23 year old child living at home who loves to cook. So I've got, I've got a personal chef right now. So not making anything. Yeah, but, but Ron, seriously like your heart and the way that you see a problem and then just make a solution.
Across the board from minority contractors need to be connected with the big players to financing of projects for down tier consultants which is going to be the topic of our conversation to eating right and cooking for. I mean I just, I'm so amazed at how you make it look easy and you just like go like go do something about it.
[00:08:24] Speaker A: I'm wondering like how did you, how did you manage all of that and how are you, how are you managing all of these different things at the same time?
[00:08:34] Speaker C: Well, they're all kind of related for sure. And you know I was, I was pretty connected with the, through running my own company and got a really kind of a unique background in construction because I, I'm a business guy but yet when you work for Fred Kummer and HBE Corporation you're expected to know everything so. And I ran my own company so.
So I got very familiar with the technical side of construction and, and everything I did was always design, build So I work with architects, engineers, and the construction guys. So I understand all the, of how to work with each of them. They're all quite different, as Lisa probably knows. Probably a lighting designer is even maybe more different. Right.
[00:09:20] Speaker A: It's just a different language. Everybody has a different vocabulary and language.
[00:09:25] Speaker C: Oh, absolutely. And I felt I was in a good position. That's when I started People.
I felt I was in a good position to connect people. I had the support of all the major general contractors in town. They all have a diversity director or somebody that's responsible for DEI within their organization. So a lot of support from them which, which helped me to introduce people because I, I probably have 45 to 50 general contractors on my list that I'm tied into that would know me and respond to me. And certainly there's, there's a lot more than that in town, but there's a lot of general contractors that I, I just kind of leave alone. They seem to be, seem to be quite happy without me.
[00:10:10] Speaker B: You have a familial connection to the lighting industry.
Ron's brother owned for years a lighting agency here in St. Louis.
[00:10:22] Speaker C: Yeah, my brother Charlie was the owner of St. Louis Lighting Group for many, many, many years and he's been in lighting ever since his college days.
Yeah, so I was always, and I always loved lighting and I stayed close to it by.
I was always talking to Charlie about the way, the way his company does business and, and how it works. And so, yeah, he's.
He just went through a major surgery yesterday. I don't know if you know that, Lisa, but he turned out fine. He's. And he's back home and he's, it's kind of all related to his neck issues. And so he's doing great. And I think he's enjoying retirement as much as he can in between his surgeries, you know.
[00:11:10] Speaker B: Yeah, he's not working in retirement like you. He's playing.
[00:11:15] Speaker C: No, he seems to be quite content to do nothing. You know, I'm working on him, though.
[00:11:21] Speaker A: So I have a slightly veering off topic question, but I'm curious, Ron, to your, your answer to this question. So you had a brother who was in the rep agency business. You've been involved design build for many, many years. Can you explain how light fixtures get on a job site? So the reason I ask is it's a common issue that we're finding that people don't understand it. And I, I'm curious to know and there's no wrong answer, Ron. I'm just curious to know what you what? Like your experience, what you think? Like. Yeah, I'm more interested. I'm interested to hear what you say.
[00:12:06] Speaker C: Well, it probably happens different on different projects. I mean, some, some owners are super involved in their projects and take a bjc. They know exactly what they want. They want a Cooper Fixer or Lithonia, and they're going to tell you exactly what. And that's all you can do. Right. And others, I would assume the, the MEP engineering firm, the electrical firm would make recommendations and would put together a set of specifications, probably allow different fixtures to be specified and you know, they'll reach an agreement. Of course they go out and take bids and the electrical contractor would take it over from there. But what I really respect about Lisa's work and the lighting designer, I, I think it's just so important to have a specialist in a certain, on certain areas of construction. And lighting is one of them to where somebody really has to.
Has to take charge of exactly what this lighting is going to accomplish. You know, you can't just put a bunch of can lights up. I mean, you got to put some spark into a building. And so I love it when a lighting designer is involved and you can see the results of any building.
You can almost walk in a building and say there was a lighting designer involved in this project, you know, so I do think it comes in different ways. And, you know, maybe the electrical contractor on some projects has more input than others, but I would say typically the electrical contractor probably just responds to the specs and the. Whatever the owner and the engineering firm put in the book. You know, in construction, I always say we would build a building and leave the back wall out if it wasn't on the plans, you know, so if it's not in there, we just don't do it. So.
[00:13:54] Speaker A: Oh, Ron, that's awesome.
[00:13:56] Speaker C: I love building with no lights in it. That's the way we would build it. You know, that's the way construction works.
[00:14:01] Speaker A: So back in the day, I worked for a theatrical dealer and we would bid jobs to electricians and we would bid per plans and specs, first line item. And the second line item would be all the things the specifier wanted but wasn't actually in their specifications because it was the same theater consultants. We were bidding their jobs and every single time we won the job, the contractor would only pick the first line item and then we would do submittals and we would submit only on what was per plans and splat. Splats specs. Right. Those are the contract documents.
That's what we are bidding. And they would come back bloody and red and all these things needed to change. This is missing. That is missing.
And then there'd be the big change order and that would have all of our profit in it.
[00:14:55] Speaker C: Yeah.
[00:14:56] Speaker A: And we did really great business. And there's two different theater consultants we work that we would bid on. And I mean, this is 20 years ago, so, you know, I'm sure it's changed. Well, let's say I hope it has changed. But I mean, we just knew every single time that was going to be our. Our profit center.
[00:15:17] Speaker C: Yeah.
[00:15:19] Speaker A: And even though it's not in the
[00:15:20] Speaker B: drawings, you tried to point it out ahead of time.
You're going to need this.
[00:15:25] Speaker A: Yeah. And. And a lot of times, like you send out RFI at bid time. But, you know, at that time. Again at that time, hopefully it's changed. You know, say the positive side.
We would get requests for bids two days before bids were opened.
[00:15:41] Speaker C: Yeah.
[00:15:41] Speaker A: For multimillion dollar theaters.
[00:15:45] Speaker C: It's crazy. I will tell you that we change very slowly in this industry. So probably hasn't changed much in the 20 years. You'd see a lot of the same things happening, you know, unfortunately.
[00:15:58] Speaker A: Yeah, but I love that sentiment. Like, if there wasn't a back wall on the drawings.
Yeah, put it in.
[00:16:04] Speaker C: No, it's the way that's the way we do it. Plans and specs.
[00:16:08] Speaker A: But you know, it's also funny. Like, I also feel like there's the moments where things get overthought and then overworked. Recently had a project in Chicago where it's a restaurant, and the contractor was really worried about where the compressors were going to go for the coolers. The engineer had designed it to go on top of the coolers. They design a whole system. And I was on a OAC meeting and the GC's talking about putting these compressors up on the roof and putting a hole through the roof and all this stuff. And the owner's roof's like, whoa, hold on. What are you guys talking about? The engineer designed it. If it breaks, it's the engineer's responsibility. Like, stop tinging.
This is what they wanted. That's what we're doing. So there's that other part too where it's like, well, we know better. Well, but there's professionals involved. The professionals have liability as well as the contractors. Right. Like, just do what they said and if it's a problem, then somebody's going to get paid to fix it.
[00:17:11] Speaker C: I think it's always been A problem in construction with it. The, you know, the construction guys always feel they know more than the, than the designers and the engineers because, you know, they've been working for 50 years and this way we've always done it, you know, so you get an awful lot of that. So you have to pay attention. And the good construction companies would definitely pay attention to the, a good set of engineered drawings and the good architect involved and good decisions have been made. But, you know, but you also, you know, you respect the idea of bringing up ideas and saying, hey, maybe we could do it better. But, but you, you got to follow the process.
[00:17:53] Speaker B: If those guys have touched, you know, touched this kind of project over and over again in the field. And yeah, they're not just drawing it, they've done it and they have experience. I, I definitely respect, yeah. The voices of the contractors that, you know, that.
[00:18:07] Speaker C: I think the secret in this industry to a good project is work with good people. Work, work, work with a good architecture firm. Work with people that really have your interest at heart. And we have some really good general contractors in St. Louis and we've got some bad ones, you know, and just leave the bad ones alone, let them play around somewhere else and, and you know, spend a little extra money if you have to and work with people that, that have your interest at heart and get it done. If you do that, you're going to be ahead of the game for sure.
[00:18:41] Speaker B: We'll definitely keep weaving in our threads. Obviously, Avi and I are both coming at this from the perspective of lighting designers and how and why matters. So, you know, we want to hear you say lighting is really important, Ron, but what we wanted to focus on unprovoked.
[00:18:57] Speaker A: Unprovoked statement. I love it.
[00:18:58] Speaker C: Yeah.
[00:18:59] Speaker B: But what we want really to focus on today is the, the payment cycles in aec. I mean, you said you're, you're working with Rise to help with funding and I know that that is a passion of yours, especially for small, small firms and how much we end up putting ourselves out there financially in the lighting design realm. And maybe Avi can speak to this because I know it's a passion of yours too, but we're doing the work, we're doing the design, and then at the end of the month we'll send an invoice to an architect and we may or may not have caught them before they sent their invoices for that month. So if we're lucky, that goes out in a few days on up to the client or it sits on their desk for A month and goes with the next month's batch of invoices to the client who then gets to sit on it for 30 days before they pay and then it comes back down the road. So for us, that work was done at least 90 days before we ever see a check. And I know that happens on the contracting side and it's happening with a lot of design disciplines besides lighting. So yeah, I may just open it up. Avi, I don't know if you have additional sort of probing thoughts on that, but I know that it's something that Ron really cares deeply about and has put action behind it.
[00:20:22] Speaker C: My concern with the generally accepted payment practices of the industry, not the bad practice, but our industry accepts that an owner can take 30 days to pay. And the problem with that, we're really killing our industry. We're keeping any new labor intensive trade contractor from entering our. How can you possibly enter an industry when it's going to take 70 to 80, maybe 90 days before you ever get your first payment and you're expected to continue working, to continue incurring costs? It's a huge problem. I don't understand why the leaders in our industry are not more concerned about it.
You know, the agc, the aia, the Construction Specifications Institute, the American subcontractors.
Why aren't they speaking up? Because what I try to emphasize to everybody I talk to, that 30 days is not good. It's not, you may think it's good, it is not good. It's too long because a guy has to work 30, as you say, Lisa, before you can ever bill.
And yeah, and this whole idea that they have to, somebody should be calling you and if they don't, if they don't get your invoice in time out or call you and say, hey, Lisa, you got any expenses for the month? Right? I mean, there's no reason for something to be missed on either side. And then, you know, an owner takes 30 days to before he pays and you're expected to keep on incurring costs. You know, and I will tell you that my customers, which is the work in a second tier position under a trade contractor, it's typically 80 to 90 days before they ever get paid. And you know what, where does everybody think that money comes from? They don't have that money. And so what do they do?
They go out to these predatory lenders. I worked with a guy the other day that I was looking at his, his percentage interest, percentage rate on the money he borrowed, it was 82.33%.
So they borrow. They go out and find somebody and borrow 20 grand and they have to pay them 40 grand back in the. In two months later, you know, and then if they don't pay them back, then everything goes to hell. So it's a. And the other thing, it keeps them from paying their union benefits timely. Keeps them from paying their IRS federal income taxes timely, their state income taxes, unemployment, all the taxes that go with payroll, because it's easy to delay that. I'm talking in general about my customers, which is the MBE community. But this applies to everybody. But they don't have the credit with their material suppliers that the larger firms do. I mean, they're expected to pay.
Most of them have to pay in advance and are certainly within 30 days.
They don't have a pay one paid provision in their contract.
They have to pay and they get cut off. It's as simple as that. And Lisa, for the professional firms, as you well know, all of your expenses is payroll. It's money. It's time. And I doubt if many of your employees would wait until. Would they accept a pay when paid provision. I mean, you probably pay them with every two weeks, right? Or maybe. Maybe it's.
[00:23:54] Speaker A: It's interesting. Early in my career and owning my business, I carried on a strategy that my previous employer had, which was keep everybody as independent contractors.
And as independent contractors, their contract was pay when paid.
[00:24:10] Speaker C: Yeah.
[00:24:11] Speaker A: And the amount of money I was paying them once I finally got paid was so extreme that there wasn't a profit center to be had. Like, it didn't make sense. But, Ron, you're hitting the nail on the head. And I think there's an important point that I think gets missed. And what you're saying. And Lisa, you kind of said it right. You send the invoice 30 days, and sometimes it takes 90 days. But what we're missing in that discussion is day one of the month, by the time you've invoiced that day one is 30 days.
[00:24:45] Speaker B: It's already. Yeah, it's already 30 days.
[00:24:48] Speaker A: That invoice just went out and it's 30 days old for that day one of three staff members. And now you're waiting 90 days to get paid. Ron, I think you bring up a really good point, and I have a theory on. On why AIA and the GCs and everybody aren't really making too much noise. That's because it protects the big firms.
You take the really big architecture firms, they are the ones that are bidding the big airports, the big mega projects, because they're the Only ones who can underwrite it.
[00:25:27] Speaker C: Yeah.
[00:25:28] Speaker A: Now to meet the requirements of those jobs, they bring on minority lighting designers, they bring on all these other people because they have to meet the requirements, but they're doing just fine because they have the other 35 jobs and multimillion dollar things coming in. And when you look at their P and l. Right. The 90 days to we were talking earlier, six, I had a project in January that was six months behind.
[00:25:57] Speaker C: Yeah.
[00:25:58] Speaker A: They can float that six months because they have 30 other jobs across 60 other offices.
[00:26:06] Speaker C: Yeah.
[00:26:07] Speaker A: Whatever it is, 60 other jobs over 30 over offices that they can align all those pay periods. Plus they're a big enough lender so they can go to the big bank and the big bank can say, oh yeah, you're, you know, got this line of credit to make payroll. We can give you prime plus two instead of what I can get. Prime plus five.
[00:26:32] Speaker C: Yeah.
[00:26:33] Speaker A: At a minimum.
And then they think if, yeah, if
[00:26:37] Speaker B: you can even get it.
[00:26:38] Speaker A: And the size isn't big enough either. Right.
[00:26:40] Speaker C: So.
[00:26:40] Speaker A: And I think the delay in paying this, my other theory is the delay in paying is a lot of times the money's coming through a bank. Right. Except the federal and state work, but it's coming through a bank.
So you got the money coming, the invoice coming from us to the architect, to the owner, to the lender. And the lender's a bank. The bank's like, you know what this is? Design people and construction people, they all have lines of credit. They may bank with me, they may bank with somebody else, but If I wait 30 days to pay this million dollar invoice that pays out 20 different firms, one month of interest is well worth me holding onto this because that interest is higher than the interest I'm going to get from this lender for this million dollars.
[00:27:36] Speaker C: Yeah.
[00:27:37] Speaker A: And I don't think that's a like calculation that's thought. I think it's built into the computer systems to then work everything back down and eventually pay.
Those are my two theories, you know,
[00:27:49] Speaker C: and I think, and a part of that, I think you're right. And, and you know, the.
I, I sat in a meeting with a bunch of leaders of different corporations around St. Louis, some of the major owners as part of that SLC3 group. And I was trying to get out the true reason of why they didn't pay. Of course they all thought they paid. Fantastic.
Reminded them that I don't know anybody that's ever worked for them. They got paid on time. But, and you know what? It came down to cost of capital. So you're absolutely right. As short sighted as that is because what they don't realize when an inbev comes to town and puts on this 120 day payment policy, they don't realize the amount of money that a general contractor, and unfortunately the subcontractors probably aren't smart enough to put that interest money in there, but the general contractors are. If they were to simply say, you know what, what kind of discount would you give me if I paid you in 10 days? It could be 5%. It would so outweigh their stupid cost of capital. And, but here, here's the, and the other thing that, that I see with the general contractors, it really does not hurt them all that much because they, they don't, they've given up on providing their own carpentry services and labor service. They, they sub all that out. They said, hey, we're not going to get paid. We're going to shove it out to somebody else that can't afford it. And plus they, they do have a huge line of credit. So they can, they can borrow. You know, when, you know all these firms have work off their line lines of credit and multiple projects like you say, they've got, they've got plenty of money coming in from somewhere and they're mixing it all up, you know.
[00:29:32] Speaker A: But yeah, and I heard recently my, my son's hockey coach last year worked for a big bank and he was just in the division of underwriting JVs in Chicago doing big state work. And so each JV ended up with a new line of credit because the day they got the contract, they had to go buy the Mechanical Systems for $3 million or else they weren't going to meet the liquidated damages clause on the contract to finish the job by a certain day.
So the bank underwrites it. But that joint venture and that GC Group knows that, you know, the, the bank is ultimately the partner in that construction bid. Right. But I think the challenge as you come down the channels to the subcontractors, again, I'm not a subcontractor, but as a lighting consultant is if I start to include those things, am I just going to lose the job? I will say that I've added into my contracts and my proposals for the world out there. Feel free to steal it, happy to send it to anybody, consult with us if payment terms better than pay when paid can be guaranteed for upwards of 50% reduction in hourly rate expenses.
[00:30:56] Speaker C: Yeah.
[00:30:56] Speaker B: Has anybody not, has anybody taken you up on it? No.
[00:31:00] Speaker A: In three years has and I have it bolded. It's one of three things bolded in my proposals.
[00:31:07] Speaker C: Yeah.
[00:31:08] Speaker A: Another one not one person has ever asked.
[00:31:12] Speaker C: Isn't that amazing? Yeah. And the other thing we were talking earlier about, the, the one irritant to me on an owner payments is they really pay whenever they want to, whatever the contract says. And if now devised in the contract, they have a pay not only pay when paid, but if paid. So if a GC is never gets paid by the owner, they never have to pay you. You have to have to agree with that, which is downright silly. Right. But the thing that really always bothers me about owners, they'll say within 30 days. They don't say within 30 days of what. And there's never any dates involved. So if you're expecting payment within 30 days, it, it may be 35, it may be 40, it may be 45, somebody may go on vacation, it may be 60, you know, and you know what, how can you live with that when you have to keep making payroll
[00:32:05] Speaker A: every Friday or pay the Amex? You got to pay the Amex every 30 days.
[00:32:10] Speaker C: Absolutely.
[00:32:10] Speaker A: Or you're paying 32 and a half percent interest.
[00:32:13] Speaker C: Yeah.
[00:32:14] Speaker A: And Ron, you also brought up a really good point to bring a little bit back to lighting, is that the electrical contractors with their distributors are on most likely 30 day terms. A lot of them I think offer 10%, like net 10 or 2%. Net 10. Right. If they, they pay in 10 days, they get 2%.
So you know, when they're buying a million dollar light fixture package and they receive that, they owe that million dollars within 30 days and then that distributor has to pay that Lithonia, Cooper, Usai Lumen, you name it, within 30 days. And they might have some special terms too, but you know, there's this big gap. I mean drywall, two by fours, Home Depot, you gotta go over there and pay them before you walk out the door.
[00:33:07] Speaker C: I don't understand why we accept this in the industry, number one. But why do we want to work this way? Why do we want to put everybody to the brink of disaster leading to the edge of a cliff ready to jump before, before we pay them? I mean, when I was at hb, I was CFO over there. So I was in charge of all the cash and the money. And you know, I always would convince an owner that prompt payment is really one of the best ingredients to success in a construction project.
Everybody's happy, you know, you, if you pay with it, we, we would get paid by the 10th of the month. And we. That was something that's very important to us. We never could have grown that company if we wouldn't have been paid by the 10th. And it allows us to pay all of our subs by the 15th or the 20th. And in no way would we have ever not paid a guy by the time he was making up his next payment requisition. And that hardly ever happens right now. Right, Lisa? I mean.
[00:34:07] Speaker A: Oh, you're sending waivers of lean for three payments you still haven't received, and you sign away.
[00:34:15] Speaker C: Yeah.
[00:34:16] Speaker A: Your waiver, your lien rights for the last two checks that you still haven't received.
[00:34:22] Speaker C: Yeah, it's, you know, prompt payment just keeps everybody in a good mood. Everybody's happy. You know, the subcontractors will do miscellaneous change orders without charging you because they said, hey, what the hell? You know, and, you know, we'll help you out. But now people fight every step of the way. They want to fight because. Because why? They don't have any money. They can't get paid, you know, and. And yet the expectations for them to keep on working and to keep on doing a fantastic job and go above and beyond are the. They don't go away. Right. They're there.
[00:34:58] Speaker B: You know what.
Yes, that expectation is still there. But I'm going to put this out there for the world. I have told my team we are now prioritizing the people who pay promptly. And a lot of times that looks like residential clients who maybe you wouldn't normally think of in our field as being the ones that we prioritize. You know, they're little projects, but they come first because they pay before my next invoice goes out.
Small churches. There are a couple of. Well, I think Washu, anyway, there are a couple of organizations that pay quickly. And so we are going to put their projects first. And that means these other important, classy, cool projects that think they're important that haven't paid me. I mean, we're talking about 90 days. And sadly, that's good.
I. It's embarrassing to talk to anybody in any sort of finance industry about how long it takes us to get paid. I always get these lectures. So anyway, that's. I mean, you know, it's out there. Hey, my architect friends, your. Your project isn't our priority right now. And if you're not paying us quickly, sorry.
[00:36:10] Speaker A: We have a museum client that we usually work directly for that, you know, 30 days, 35 days, no big deal.
We're buried three layers down.
We're at six months.
And Ron, we're talking about $2,000.
[00:36:28] Speaker C: Well, and I think that's the other.
[00:36:29] Speaker A: I mean, that's the crazy part of some of this stuff too, right? We're lighting designers. We're not multi million dollar expenses.
We specify more expensive things, total packages than our entire fee on a job.
[00:36:48] Speaker C: Yeah.
[00:36:49] Speaker A: $2,000 for six months.
[00:36:53] Speaker C: Yeah.
[00:36:53] Speaker A: Come on.
[00:36:54] Speaker C: Yeah. And that's it. That's the other part of that I think a lot of owners don't really totally understand is how much money is involved. It's, there's in construction. It's a lot of money. I mean, sometimes a GC billing on a major project could be 5 to 10 million, you know, and so maybe, you know, 3 to 7 or 8 million of that is owed to people that have no money. So it's big money, you know, it's causing huge problems. I have watched so many people go out of business and go broke and lose their house, lose their family, get divorced, whatever, you know, and, and you know, I'm, I'm just tired of it, you know, and, and it's really for. The reason is simply because of. There is no such thing as cash flow anymore. That's an outdated concept. It does not flow.
[00:37:49] Speaker A: You know, how do we fix this? How do we scream it louder? How do we force.
So Lisa and I, one thing, there's many things that we've learned we agree on and believe together, and we're both action people.
How do we change it? How do we start screaming this loud? How do we.
[00:38:10] Speaker B: And who has the power to change it?
[00:38:13] Speaker C: I think the leaders in the industry have to be the one to step up, and that's probably the agc.
I, I'm always surprised that the American Subcontracting association, which is pretty strong here in St. Louis, has a good group and it's a national organization. They haven't. But these are the guys that are really hurting. It's the subcontractors.
A lot of the gcs can make it work, you know, and I would put Lisa's company in that subcontracting type, you know, from the way the money flows. And I, I don't know why they don't do more, but I think it's going to take an organization like that speaking up, because a little voice like me is just not going to make it work. You know, I've met with the city. We had, I organized a meeting that had about 30 people involved in the city several years ago saying, why don't we. When you bring all these out of town developers in and you give them all these tax breaks. Why don't we make it a requirement that they pay? They have to pay within 15 days. I mean, it's in your power to do that. It's not a big deal. And I get nowhere with that. You know, it just.
And so I, I think it's going to take, it's going to take the subcontractor, the trade contractors, speaking of, they're the ones that are putting the money on and I don't know why they accept it.
[00:39:34] Speaker A: You know, I know the, in the iald, the International association of Lighting Designers, one of the conversations that happens just about every meeting is this fear of collusion and antitrust, that if the. All the lighting designers came together and said we will no longer do this, this is the way it shall be, that there could be some antitrust lawsuit brought upon the organization and all of its members. But I, I think where you're going, Ron, and I guess maybe what I would suggest is like if you took the subcontractors, organizations and organizations like the iald, the AIA and you got everybody together like, and then like class action this and demanded modification or demanded this change. Right? Like, the problem is you can't just have RBLD and more lights do it, right? Then the, those architects would just go to somebody else. You really need everybody to do it and you need it to come from the organizations, from the trade organizations.
[00:40:45] Speaker C: Yeah, no, I think you're right. It's, it's.
And, and all of the people involved in a construction project are affected. I mean it affects everybody. And it. Just to watch it happen. The irritating thing to me is that we in the industry have decided that 30 days within 30 days is prompt payment and that that is not when somebody owes you $2 million and you have to spend, you have to keep spending money every single day.
Thirty days is not, it's not acceptable, you know, you. That that money should pay. And, and I would say in my entire career, up until, up until maybe I got to roadie, that I would receive payment within and at HB would receive payment by the 10th of the month and I would always receive payment by the 10th or the 15th of the month. So it was never that big an issue in my career until I got to roadie and we started working for BJC and Ameren. You know, I mean, they, they take 30 to 45 days and longer, but
[00:41:47] Speaker A: they get paid every 30 days.
[00:41:50] Speaker C: Yeah.
[00:41:50] Speaker A: By all the utility users, you know, up here in Chicago. Comed you pay comed every 30 days or you start getting threats that they're going to shut off your electricity. Yeah, but yeah, I've heard the same thing. Like getting paid from ComEd. Sorry to use ComEd. I apologize that, you know, I don't work for that.
Any utility. I mean, like, they're getting paid every 30 days, but they can't pay the rest. And I guarantee everybody we're talking about pays their credit cards on time.
[00:42:24] Speaker C: Yeah. Or you pay a huge interest rate. Right.
[00:42:27] Speaker B: Yeah. It's business practice. Right. To stretch it to pay slowly and collect quickly.
It's hurting us. I think you've made some good points, Ron, about how really the trickle down impact of that is hurting them more than they realize.
[00:42:43] Speaker C: I don't know how to change it.
I've tried to meet with all the right people over the years and I haven't given up. But also, I don't seem to be making any headway. And the older I get and the more I get separated from my years of active employment, the less people pay attention to me.
[00:43:05] Speaker A: But Ron, you make amazing points. And there's so much that the clients, the owners could win. They could literally get their building for so much less.
[00:43:18] Speaker C: Yeah, they could.
[00:43:20] Speaker A: If they just moved it. And it's sending out the money sooner does mean they pay interest sooner on that money. Right. The way a construction loan works. But based on current interest rates, I'd be willing, and I would welcome any super mathematician out there, feel free to do this math, but I would think on a, on a certain scale job that the interest rate on that construction loan cost is going to be substantially less than what all of your design subs and all of your construction subs are charging to manage the unknown.
[00:43:58] Speaker C: Yeah, it would be so much less that it would be an incredible number. And you know, when I met with these owners, when I was having this conversation, the interest rates were, I don't know, 2 or 3, 4%.
Back when they were nothing. You know, I said, you guys, I can't understand this because the dollars you're talking, if you're talking about cost of capital being the primary reason I was trying to get, I was trying to get out of them, what is the true reason. I gave them 10 choices. They didn't like any of them. But the bottom line was cost of capital, was it 2 to 3%? I mean it, it's peanuts. I will guarantee you that any GC in the marketplace would give you 2% off in a heartbeat. It would give you probably five times the amount you're making on cost of capital.
[00:44:47] Speaker A: I see a presentation that could be put together.
I just recently came back from the Building Museums conference. It's done by the Middle Atlantic association of Museums.
Next year it'll be in la. So this is Atlantic association that's going to go put a show on in la. Very excited. But it's all people building museums wanting to build a museum.
It's very cool. It's very niche. Architects, contractors, museum professionals. I see a session just at that conference saying, want to build your museum for less?
And you literally. It's gonna be a. It's a math presentation, but you could literally show the cost of doing a project covering all those costs and not. And really, like, I. I think it could be really interesting to just really get at that root.
[00:45:47] Speaker C: Yeah.
[00:45:47] Speaker A: And then figure out, like, what's beyond that. Are you afraid of paying them for the work they already did?
[00:45:54] Speaker B: Afraid of making them happy? Like you said earlier, Ron, you have happy people on the project. You don't want that.
[00:46:02] Speaker C: No, I don't think they do. I think they want everybody to be totally pissed off and fighting at each other. You know, they seem to enjoy that.
Yeah. I'll tell you, whatever. You set that up, I'll come make that presentation.
[00:46:14] Speaker B: Yes.
[00:46:14] Speaker A: Yeah, I'm really interested in.
In having that because I think. And I, you know, there's a big project that I'm not even involved in right now here in Chicago at a museum. And actually there's two museums that are going on in Chicago right now. The Shedd Aquarium is doing a big renovation. Valerie dewalt train available. Lights, the lighting designer. Massive undertaking over there. And then there's also the Obama library that's going on.
Lighting designers from all over the world, architects all over the country, lots of minority partners involved in that same kind of issues. I've heard down the channels on both. If they would be willing to have that conversation and break it apart. It's not to say that what has been done on those jobs is bad. It's just a different perspective on how you could do this going forward.
[00:47:11] Speaker C: Yeah.
[00:47:12] Speaker A: And how it could be less expensive, like, you know, happiness. Lisa and I talk a lot about lighting design as something that is not something you can touch. Right. Like, you can't render it. You have to see it. You have to feel it.
Happy contractors, happy designers. That. That doesn't matter.
[00:47:32] Speaker B: Same. Well, it's the same problem.
[00:47:34] Speaker A: Costing less all day long. There isn't an owner's rep and owner or anyone involved in construction that would say they Wouldn't be about costing less.
[00:47:47] Speaker C: Yeah, it seems to be what it's all about. And, you know, you guys do happy work. That's what you do. You're trying to bring happiness and light and joy to a project, and you're trying to create an atmosphere where everybody's in a fantastic mood when the building is finished, and yet they want you to work in an unhappy environment and they don't want to pay you. They don't want to pay you for that happiness for. And it's not. It's not just lighting designers, right? It's everybody on their project. You know, it just.
[00:48:17] Speaker A: Yeah, this is a. This isn't just lighting designers. It's the MEP consultants. We're working on a project right now within troba. It's all the sub consultants and it's the architects, too. And it is the gcs. Yeah, they have the line of credit. They still have to make that payment every month. And yeah, the. What happens when all 10 of your big jobs are all delayed? Right? And I'm pretty sure there's sleepless nights that have existed throughout the entire construction industry from top to bottom. And I don't think the owners truly understand the stress that they're putting.
[00:48:53] Speaker C: You know, we. We talk about. If you read the Construction Forum news every.
They put it out twice a week now. That's all we talk about is all the suicides and all the mental health issues in construction. So why do we want that? Why do we want sleepless nights for contractors and designers? I mean, shouldn't we want them to be up at night thinking about what with their next creative step in their.
[00:49:23] Speaker B: Make the project better.
Right? That's what you want. People inspired. Not.
[00:49:29] Speaker C: Yeah, you got Lisa tossing and turning, trying to figure out how in the hell to make the next payroll, you know, without getting paid. I mean, it really. It doesn't make any sense what we're doing to each other.
You want to solve the problem of suicides in construction? You know what? Pay her by owners pay Everybody by the 10th of the month. People always ask me, what is the.
The best way to solve this problem? What would solve the problem? You know what? Pay by the 10th of the month. And you know what? I can work with the GCs to get them to pay the subs. The subs can pay her by just pay by the 10th. Problem solved.
And yeah, there'll be some bad GCs, but we can work with that. What we can't work with is not starting the flow of funds until 60 or 90 days later, because you've already totally disrupted the whole chain, you know, it's over with.
[00:50:25] Speaker B: Yeah, exactly. We're trying to change the accepted practice and make it better. Just. Just a small task.
[00:50:33] Speaker A: And then I said this before we got on the recording today. But also, just because everybody jumped off the Brooklyn Bridge doesn't mean you should, too. Right?
There is change. Change does.
You know, that incandescent lamp is still really amazing, everybody. We should still use it.
[00:50:52] Speaker C: It's a shame, and I feel bad about this, but I cannot recommend any minority firm I work with to work on any of the major projects in St. Louis. And all the. All the African American leaders in this town, they want them to all work on these projects. But, you know, work on the projects that will pay you. Do exactly what Lisa's doing and prioritize your clients and stay within your financial ability, but negotiate prompt payments, and if you can't, don't work for them. And Lisa, you're right on the residential side. Typically, you could even get payments up front. I mean, they'll start with.
[00:51:31] Speaker B: Exactly. They'll pay before you start. Yep, yep.
[00:51:34] Speaker C: And those are the type of projects that you need to work on if you're going to make some money. I just watch so many people go on these major projects and lose money and.
And go through all those sleepless nights, you know.
[00:51:46] Speaker B: Okay, so one of our company values and what we look for in team members are people who are delighted by life. And that's what we're talking about. And light. So I'm going to sort of shift gears and close this out and ask you if there are any spaces where the light in the space delights you.
[00:52:07] Speaker C: We talked a little bit about this, Lisa. When I.
Before graduating from college, I.
I spent six months hitchhiking through Europe and the Middle east, and so. And which really opened my eyes up to so much architecture and especially lighting design because of all the cathedrals and places like Notre Dame and the Eiffel Tyre and. And all the cathedrals all. All through Europe. One of the things I remember the most that involved lighting. Kind of a little bit offbeat story.
We ended up in Rome on Easter weekend, and I was able to sneak in the Saturday services at St. Peter's and it was an incredible setting for one. I mean, totally packed. So I was 10ft away from watching Pope John XXIII walk down the aisle, and they had. They had the. The. All of St. Peter's the lights were dimmed to almost darkness. And as he walked down the aisle, the lights came on. Behind him, right? So he was like walking in the darkness, and every couple steps he took, the lights came on behind him. And, you know, it was such an incredible feeling that this presented. And I think that's when I fell in love with what lighting can do. Do to a project. It was just, you know, I will never. I'll never forget that scene. It was just.
It's something that you remember always. And. And maybe, you know, I don't even. Maybe the lights weren't working and they turned up. I have no idea. But. But I thought, wow, what. What a. What a feeling they created for all the people in that room, because that's. That it just.
And by the time Pope John reached the altar, you know, the light slowly came to full life, and he just felt. And look at what that does to. To a person. And, you know, you carry that simple concept over to. To buildings and. Yeah, I don't know that I can point out a particular, but any building that I. I can tell you that I can walk in a building and tell you whether they. They paid any attention to lighting and acoustics. Right? I'm. I work with Patty Gauss on acoustics, so I'm always thinking about that as well. And, you know, there's a reason.
There's a reason that we hang a chandelier over a dining room table or we put pendant lights over the kitchen counter, right? Because we want it to look different than just can lights. And we want to create a different atmosphere for eating and for dining and for working or playing or whatever it is. So I have a great admiration for what you do as a company, Lisa. As a designer, I think it's a very important part of our industry. And I feel the same way about acoustics because I think that if you walk in a building and you can't hear and the sound is reverberating all over the place, and artists just driving you nuts. And, you know, we all see that in most of the restaurants we go to. But when you walk into a building that should be.
Should be a safe place for. Or noise, you know, that I think that's an issue. But I kind of put acoustics and lighting together in my world for having a successful building. And it's another thing that I think there's two things that I think owners need to understand on things like lighting design is that it is a specialty item. It's not something that you're going to get just by hiring a. An electrical engineer. And no matter how big and good the electrical contractor is, it's a specialty item, and it should be treated like that. It should be. I think there's a huge need for lighting designers. And it's also, it is not an extra cost. It always drives me nuts when owners, they want to value engineer all this stuff out, you know, and, and to me, lighting design or acoustic design is not extra. It is a specification item. You either want it or you don't want it. You either get vinyl tile in your lobby or you put marble down. You decide which one you want. And it's the same with lighting design and acoustics. And I see those two items as being the biggest challenge. How do you get owners to understand that? And how do you get an architectural firm down and say, hey, you know, you need me on your team? You know, just let me, Let me show you. Let me show you the way to. To really make its building give it some pizzazz and make it. Give it some life. You just, like you say it's what you really want to do.
[00:56:48] Speaker B: Yeah.
[00:56:49] Speaker C: Yeah. How do you do that? And how do you convince them that it's not extra? And which I think to me, it should be an extra. An easy pitch to do that. But. But it's not, because they look at it as extra, you know, whatever.
However many dimmer switches St. Peter's had on that night. And that obviously cost more than having none. Right. But, you know, that's what they wanted. Isn't that what you're trying to do in a. In a church or a building is trying to. Trying to give it life, you know?
[00:57:21] Speaker B: Well, and it created. I mean, that's, That's a very theatrical treatment, which makes me think of, you know, that's obvious background, but it created a memory that lasted a lifetime. How can you put a dollar. How can you put a price tag on that?
[00:57:36] Speaker C: Yeah, you can't. You can't. Right.
[00:57:39] Speaker A: Well, and, you know, the way we're trying to. The way Lisa and I are trying to change it is we. We created this podcast. We're slowly changing the world as best we can, and we're bringing it to the architects and to the interior designers. Right. We're trying to bring these conversations out there and explain to people that it's not an extra.
Somebody's picking the lights.
Wouldn't it be more cost effective? Because I believe, unfortunately, or fortunately, it all comes back to cost.
I believe that there is no more cost effective solution to specify lighting on any project than to have a lighting designer involved in the job.
[00:58:25] Speaker C: Yeah. And you know what? I would agree with that wholeheartedly because
[00:58:30] Speaker B: it's not finished when there's nothing left to add. It's finished when there's nothing else you can take away.
[00:58:38] Speaker A: Take away?
[00:58:38] Speaker C: Yeah. You know, we at HVE Corporation, we designed buildings for people that had no money, that they were challenged for budget. So we would probably have can lights throughout. Right.
Wouldn't have any. But we were also creating a building for a client that we were trying to meet their needs and trying to give them a hospital.
We always said you'd be better off with a couple with an emergency room and a couple operating rooms than you would with Marvel in your lobby. And. But I think in today's world, now, later on, when we got into the hotel business, we did the Adams Mark hotels. Then we totally switched. We were all. And you know, lighting was super important to us in a hotel environment. You walk in the Adams Mark downtown, I mean, you're going to see all kinds of fancy lighting fixtures. And we spared no expense to doing that because we recognize that that's what the public needs. You know, we could. You couldn't get by with just having nothing walking in a lobby without. Right. You just can't do that. And you're not going to get that from a, an architectural firm.
You have to have. It's a specialty item. You know, you don't go to the dentist if you have cancer. Right. I mean, you all. Health care is. Everything's special anymore. And yeah, I don't know, I always feel that it's a, it's a tough sell at times, but I don't understand why it should be. You know, I've never understood that.
Keep up a good work, Lisa.
[01:00:12] Speaker B: Thank you. Thank you.
Some people get it, you know. Thanks for getting it, Ron.
[01:00:17] Speaker C: And I think the owners that get it are. I think it pays off for them, you know, no question about it.
[01:00:23] Speaker A: Well, I'm so glad that we had this conversation today, Ron. Thank you so much for sharing your wisdom and your perspective. You know, hopefully there's a lot more conversation that can lead from this and I really appreciate it. It's been so amazing.
[01:00:43] Speaker C: Well, thanks for having me. I enjoyed it. And I do think it's a very important subject for our industry. And, you know, it's a national subject. I mean, you could read, read stuff from any city. And, and the problem is nationwide, it's not just St. Louis.
[01:01:01] Speaker B: Yep. I'm hoping to go to that museum conference session in la. I want to hear you guys talk about it.
[01:01:07] Speaker C: Yeah.
[01:01:08] Speaker A: Yeah, I, I think it'd be fun. I, I'll I will.
I'll be in touch.
[01:01:13] Speaker C: All right, you heard it here first, folks. All right, let's do it. Let's do it. Let's change this very slow change in industry.
[01:01:21] Speaker B: Awesome. Thank you.
[01:01:22] Speaker C: I appreciate what you guys do with this podcast. I think it's great to get words like this. It's a nice way for people to listen to a message and maybe do a little more thinking about how they can possibly change within their organization.
Do a great job with it. Thanks for doing it.
[01:01:41] Speaker B: Thanks, Ron.
[01:01:42] Speaker A: Thanks, Ron.
[01:01:42] Speaker B: Thanks, Avi.
Lighting Matters as we wrap up, we want to reiterate how much we value your time, and we hope you found it as much fun to listen to as we had creating it. Remember to like it and share this content with your friends and colleagues.
[01:02:00] Speaker A: The opinions expressed are those of the participants and do not necessarily reflect the official positions of the sponsors. Our content has general application, but we recommend obtaining personalized guidelines guidance from a professional IALD lighting designer such as RBLD or More Lights for your next endeavor.
