COVID-19 and Construction: What it means for your business with Alex Barthet

Tom Houghton:

You’re listening to “The Building Code,” your guide for a better way to run your business. I’m Tom Houghton.

Paul Wurth:

I’m Paul Wurth.

Tom Houghton:

Right now we’re just doing all phone-based recordings. So that way we can keep producing great content during this uncertain time for the entire world. Of course, we’re all talking about COVID-19 or the coronavirus. And joining us on this episode of the podcast is Alex Barthet. We’re having him on. He’s a returned guest from episode nine, owner of the Lien Zone. And he’s got “The Lien Zone” podcast. Alex how’s it going?

Alex Barthet:

So far so good. I’m sitting in my home office here in Miami, so there are worst places I could be. And I’ve kept my kids out of the office, which is a plus for today.

Tom Houghton:

The struggle is real.

Alex Barthet:

Yeah.

Paul Wurth:

It’s getting harder and harder. I was telling you guys before we jumped on the actual podcast that I’m actually just a moving target in my house. I’ve got like four to five different spots I go to my kids can’t find me. So …

Alex Barthet:

You’re going to try to roof soon.

Paul Wurth:

Yeah.

Tom Houghton:

Yeah.

Paul Wurth:

If the WiFi gets up there, I’m in.

Tom Houghton:

That’s great. Alex, thank you so much for coming on the podcast today you do a great job with your lienzone.com and “Lien Zone” podcast. And we know you were putting out a lot of great content for construction professionals. And so we just wanted to chat with you about COVID-19, the coronavirus and just how it’s changing the construction landscape, which seems like hourly it’s changing it. So we just wanted to catch up our audience on kind of where we stand right now and kind of outlook for the future. So maybe let’s first do a quick update so that when people have kind of like a timestamp of when we’re recording this. So right now it’s March 25th and as it stands right now, I think all States have made construction essential except for Pennsylvania. If that sound correct to you?

Alex Barthet:

Yeah. And actually I heard that Boston as well while there is some construction activity. I think it’s very limited. At least here in South Florida, all construction generally is open and available so long as you can comply with all of the CDC guidelines, social distancing, but you do have to have some open air, you know, requirements. So we have seen some folks who have more confined construction, that has been canceled.

Tom Houghton:

Interesting. So where would you say construction professionals can find the latest up-to-date information on how it pertains to their business? I know that you also offer a service on your website with articles and information there too. So where would you like to plug?

Alex Barthet:

So they can subscribe to our podcast as well. I’m trying to do podcasts now, almost daily with various folks in the industry, talking about different things associated with the construction industry locally, across the country. And that is the lienzonepodcast.com. Lien is L-I-E-N, the lienzonepodcast.com. And if you go to the lienzone.com/COVID-19, we have a page dedicated just to the articles that we’re putting out and then on YouTube as well, the Lien Zone, we have the similar content on the YouTube channel. What I will say, and I don’t have it handy, but I will email it to you so you can put it in the show notes. I have run across a seemingly constantly updated chart by another law firm, a national law firm who is tracking business closures across the country, state by state, city by city. It’s a tremendous undertaking that they’ve started, but it’s a great resource. So when we get off this podcast, I will send that to you so you can put it in the show notes. Will be very valuable. We actually use it as a resource as well.

Tom Houghton:

That’s great. Yeah. And so for our listeners, if you’re just joining us, you can find our show notes at buildertrend.com/podcast. And we’ll definitely put that link in there when you send it over. So thanks for sharing that. I think, it’s crazy this situation just continues to seem like it’s changing day by day still. And I think I, for one, trying to be an optimist, I’m hoping that we’ll see the end of it here really soon and just kind of get back to business as usual. But as the time goes on, it seems like more and more. We need to prepare for this having a longer term impact on the industry as a whole, but also just economically outside of that, to a greater extent.

Paul Wurth:

I’m seeing the same thing here, that many of our clients in construction are working more and faster now because everyone is afraid that tomorrow or the day after, it could get shut down. As an example, it was written up in a news article just yesterday afternoon that the city manager in our county here in Miami made a comment offhandedly that he thinks that maybe some construction sites are not complying with the social distancing and other CDC requirements. And he may look into shutting them down. That has started little firestorm on the internet. We have very powerful and well-respected construction trade groups here that are meeting with the politicians to keep construction going. But yes, it’s changing constantly and I’m sure you’re seeing it up there too.

Paul Wurth:

Yeah, that’s a good point. Alex we are now just from my knowledge, as I understand that this is all state by state. The state of deciding what sort of policy of shut down they want. As you’re advised to stay home in place and where people can go. And also more importantly, what essential businesses are. Do we see or that’s going to be more-

Alex Barthet:

I’m going to go one even better. Many governors, not all but many governors are leaving it up to counties and cities. So Florida, for example, the Florida governor has not issued a statewide stay at home position and he has left it to various municipalities to decide what they want to do.

Paul Wurth:

And that’s all the way down to what’s an essential business and what’s not

Alex Barthet:

Correct. So some orders with regard to which businesses are essential and which aren’t, they do not track exactly city to city, county to county here in Florida and across the country as well. So it’s kind of a hodgepodge.

Paul Wurth:

Yeah. Do we feel like that’s going to change at some point? Do we feel like the federal government will step in and sort of lay the ground for what’s an essential business?

Alex Barthet:

I’m not sure if you follow our president on Twitter, but he seems to be suggesting that he’s not going to do that. He’s made a proclamation or an innuendo about Easter. So I don’t know that he’s going to do that. I don’t know that he’s going to have a national lockdown, if he’s suggesting the opposite.

Paul Wurth:

Yeah. It doesn’t sound like it from a conversation again, Tom told you that today that could change tonight or tomorrow, but it sounds like he is leaning towards letting each state and to your finality, even down to the city or County, make their own decision. I just wonder [crosstalk 00:07:55] yeah, go ahead.

Alex Barthet:

Does it feel like “Star Trek.” You started the podcast by noting the date and time. When have you ever had to do that on a podcast before

Tom Houghton:

Captain’s log May 25th and we’ve been in quarantine for five days. Send help.

Paul Wurth:

I mean, it’s crazy how information can be out of date by the minute. Between like, I mean last week was insane, but it’s not slowing down by a lot. I’ll tell you that.

Alex Barthet:

I’ll give you some other pieces of information we’re hearing from our clients. Again, this is primarily South Florida, but I understand this is happening in various parts of the country. Most county offices are closed to in-person business transactions. However, they are open for online and phone business. So for example, if you wanted to go to your building department and talk to an inspector or the chief building official, or a plan reviewer, most places, most counties or cities not possible, you cannot go and see them. You can have a phone call. You can submit whatever information you are otherwise able to submit online. And that’s it.

Alex Barthet:

What we’re also seeing is that a lot of offices, municipal offices are not issuing new permits. I don’t know if that’s a Miami thing or a South Florida thing, but if you don’t have an open permit, the municipality is not, that we hear from our clients, are not issuing new permits. And then there are certain municipalities where it is absolutely just closed. So there’s some small cities in Florida where, because of an infected individual in a rather small office, they have closed the entire building department for that office. So no business is being transacted, no inspections in the field, no plan review, no calling the building official. So that has brought those projects that are in those jurisdictions to a complete halt.

Tom Houghton:

That crazy.

Paul Wurth:

That doesn’t seem good.

Tom Houghton:

Yeah.

Paul Wurth:

That’s negative.

Alex Barthet:

Yeah.

Paul Wurth:

And again, hopefully things continue to move at a pace where in the positive way for us.

Alex Barthet:

Well, I,

Paul Wurth:

You know, I … Go ahead.

Alex Barthet:

With that intro, I don’t know if you want more bad news, but I can also tell you that there are some other jobs that we’ve heard from clients that have actually been canceled, just not happening. As you can imagine, down in South Florida, we’ve got the Port of Miami. The Royal Caribbean was building a multi-million dollar headquarters here. That has been placed on hold indefinitely. I suspect because of a cash crunch in light of their financial position because no cruises, but other major projects, at least here in South Florida are getting axed because everyone is just so nervous.

Paul Wurth:

Yeah, I can imagine. And just to be clear, and because this is my question, and I insinuate, a lot of your clientele and who you deal with construction-wise is in the commercial space, correct?

Alex Barthet:

Primarily commercial. We do represent folks that do some residential work and some residential only contractors and trade contractors. They seem to still be working with the one caveat, which is if they have a new project and they don’t have the permit, they are kind of stuck for the time being, because they can’t get a new permit.

Paul Wurth:

Yeah. I guess my question with relation to those two sides of our business, residential and commercial, have you seen the state by state county, by county essential businesses specify one or the other? Because I think I did see that in Massachusetts that they specifically said residential construction is a essential business. Is everybody doing that distinction between the two styles of construction?

Alex Barthet:

So at least here in the counties in South Florida, which are the ones we monitor most closely, those orders are just construction. Construction is considered an essential business. And those businesses that service construction are typically considered essential businesses. But it wouldn’t surprise me because it’s a patchwork approach across this country that there are probably some cities that say residential is essential and others that say that it’s not. And there are other cities that I know of that say only essential construction is essential. So hospitals, repair work, something, not just building an addition to someone’s house, it’s got to be something that’s serving the public good.

Paul Wurth:

Well, I follow up to what you said earlier, what really took these considered a supporting business for construction, like everything.

Alex Barthet:

This is why people don’t like lawyers because I could probably come up with a good argument on how almost anything serves. I mean, am a business serving construction? So could I have my office open? I guess. I think the intense of the various orders and they’re all written differently is in order for construction to happen, there’s a lot of things that go into it. So for example, rental equipment related to the project, scaffolding, a backhoe, the delivery of plumbing fixtures, maybe it’s not much of a stretch that that’s part of construction, but it’s not defined in many of the orders that I’ve seen.

Alex Barthet:

How about if you have a showroom and that showroom services, your field and service operation, can you keep your showroom open and have someone walk in and buy a faucet? Probably, but it’s unclear depending on some of the orders. Let me interject, one thing. What I haven’t heard is I have not heard either locally or anywhere in the press of police arresting anybody or any type of national guard presence that’s preventing people from doing something that would otherwise fall in the essential category under their respective municipal orders. So even if you do something, I don’t think you’re going to get arrested.

Paul Wurth:

Yeah. I heard in New York that there’s just some sort of fine if you’re not an essential business and you keep your doors open, but yeah, To your point, it’s so gray. I don’t see how they can enforce anything right now about what’s an essential business. When you get into the detail.

Alex Barthet:

What we have prepared for many of our clients at their request, we’re posting an article which may have been posted today on the “Lien Zone.” And I’m interviewing one of the lawyers in my office tomorrow about this concept, but we’ve created what I would call a hall pass for many of our clients where they can give it to their people in the field that are traveling, that are working in the field that come and go to the office in case they get stopped. And it’s a letter that effectively says, I am doing work under an order that requires essential business, and I am one of those essential businesses. We’ve given it out. I know they’ve given it to their people. I haven’t heard that anyone’s been stopped and had to show it, but it makes them feel better. And when this post hits and again, I don’t know if it’s already posted or if it will post tomorrow, we have a sample hall pass letter that people can tailor for their own use in their own jurisdiction based on their own municipal order.

Tom Houghton:

That’s great. I love that. We’ll definitely link that in our show notes as well. We’ll track it down and figure out where it is and put it in there for our listeners.

Alex Barthet:

The other thing I think you guys wanted to talk about, which everyone wants to talk about is the Families First Coronavirus Response Act, right?

Tom Houghton:

Yep. That’s correct. Yeah, that just came out and I’m sure our listeners are probably eager to hear how it impacts their businesses and then their employees of their business.

Alex Barthet:

Yeah. So with the expectation that this was going to be a significant issue, I looked in my Rolodex, can you say Rolodex now? Does that date me?

Tom Houghton:

Sure. No, you’re good.

Alex Barthet:

I looked at my contact cards in my iPhone. How’s that? And a good friend of mine is the former area director for the Southeast, for the department of labor who retired and then started a consulting company. His name is Jorge Rivero. I spent about 45 minutes on the phone with him. You can listen to that podcast on our podcast or see it on the YouTube channel. And we took a deep dive into the Families First Coronavirus Response Act last week. He and I spoke the morning after it was enacted. I intend to talk to him again prior to April 1st to update that information because the department of labor just issued a FAQ and then a white paper for employees and employers that further clarifies it. But if you wanted a brief rundown of the Families First Coronavirus Response Act, I would say, listen to that podcast, but I’m going to give you the short version right now.

Alex Barthet:

It goes into effect on April 1st, 2020. It applies to any business that has 500 employees or fewer. I just saw it today for the first time that there may be certain exemptions to the extent it may negatively impact your business if you have fewer than 50 employees. But it generally applies to those employees that take leave from the business because of a child at home, because they have a doctor’s confirmed case or a suspected case of COVID-19 or giving care to someone, an individual that has COVID-19 occurred the coronavirus. If those apply, then generally speaking, that employee is entitled to two weeks, 80 hours of paid leave and that paid leave has certain caps on it based on a percentage of their salary with a certain amount that it cannot exceed.

Alex Barthet:

Thumbnail sketch. That’s what the act is. Now, what this seems to do is that it seems to force the employer to bear the brunt of what we have in this country, which is an at-will work environment in most States in the country. So, if I wanted to let someone go, even if they had those criteria before the act, I could, and I wouldn’t have to pay them. Now I’m going to have to pay them. And the way I’m going to be reimbursed by the government is via a tax credit later for the people that would fall into this category that I paid their two weeks of paid leave. Lots of exceptions, lots of nuance, further being clarified by the Department of Labor. What I’ll do is I’ll send you as well. So you can put it in the show notes, a link to the interview with Jorge Rivero, but as well, the Q&A, that was posted by the department of labor this morning. Does that answer most of your questions about the Families First Act?

Paul Wurth:

Yeah, that was a great summary. Now, just to be clear, this is separate from the plan to vote today on the stimulus plan, or is this wrapped into that?

Alex Barthet:

No. Very different. So this was a bill that was passed, signed into law last week. What you heard about today, and I have not watched the news, so I don’t know how fast it’s gone through the Senate or whether the president has signed it. I can’t imagine because it was only 1:30 in the morning, last night that Congress passed it. Now that bill is a $2 trillion aid package that seems like it’s going to give most Americans $1,200 and their children $500 each. And it creates a series of loan programs, I think $500 billion for companies, $367 billion to assist small businesses to overcome payroll hurdles, as well as some funding for the unemployment system and hospitals. The next question is, assuming it goes into law, how do I apply for it? It’s just way too early to tell about any of this stuff.

Paul Wurth:

It looks like the Senate, as of right now, hasn’t voted on it, but everybody feels like it will be going through. But one thing to note is that it seems to have made the same distinction as it relates to small businesses. So it picked that same 500 and under number employees, I believe.

Alex Barthet:

That’s good to see.

Paul Wurth:

So, yeah. I guess we could probably do a whole episode on that whenever that gets passed.

Tom Houghton:

Yeah.

Alex Barthet:

Yeah, for sure.

Tom Houghton:

I think-

Alex Barthet:

And I think you probably could do another episode on the Families First Act, once it goes into effect and the implementing regulations are clarified. So kind of all of the nuances and the questions people have may get answered.

Tom Houghton:

Yeah. I think to maybe kind of wrap it up and hopefully, maybe put a little bit of optimism and hope for the future here. Where do you think we go from here? I mean, with these legislation trying to get into a place that will hopefully obviously help, me being an optimist, I was hoping that, we were going to be down for a month and then we’ll be back up and at it. And then if people can just hang tight for that month, we should be okay instead of having this mass panic and all this fallout. So where, in your opinion, do you see the industry headed, in the next three to six months kind of short term?

Alex Barthet:

So I’m not a doctor. I’m not a financial analyst or economist. So it’s hard for me to say, but if you wanted my gut opinion, I think it’s going to be a tough slog for the next little while. And I would say months. One of the things that I will tell you in speaking to various folks for our podcast, one thing that is troubling to me, and I’m ruining the fact that you wanted to end this on a high note is that a lot of our clients are bidding less because people are so nervous about the economy going forward. I really hope that this aid package causes the folks to be more optimistic about the future. I saw that the stock market rallied a bit today because of the passage of the $2 trillion bill. But like everything else, this too shall pass and we will be stronger for it.

Alex Barthet:

And I think that those companies that understand that they are going to have to make difficult decisions and they make them soon and they hunker down are going to be the ones that are here for the resurgence, which will likely occur. Again, I hope it’s sooner too. And those folks that are set up to be mobile, to be paperless that have a solid project management system, like Buildertrend that are adapting to the market, are the ones that are going to not only survive, but thrive in the new economy.

Alex Barthet:

Because people are now, because they had to are more comfortable working from everywhere. So, you know you have to get ready for that. And if you weren’t ready, then this hit you like a freight train. And if you were, it was just a matter of picking up your laptop and working from your home office instead of your office, office. So I think things will get better. I think it’s going to take a while. But I think if we all pitch in and be a little nicer to one another and recognize that everyone’s got their own set of struggles that they have to deal with, I think we’ll get through this.

Tom Houghton:

I love it. Love that positivity.

Paul Wurth:

Yeah. I think that was a great note to end on. And I think, it’s hopefully not going to be as bad by any means of the great recession in ’08, in ’09. But you did see after that, that slow build back up that some of the best companies were still around and they were better for it. So hopefully we have a small bit of that in our industry.

Alex Barthet:

Fingers crossed.

Tom Houghton:

Awesome. Well, thank you Alex so much for coming on the podcast today and sharing all of your resources. Again, we’ll put those in the show notes and we look forward to the next time we’re talking and hopefully it’s on much better terms.

Alex Barthet:

Take care. Thank you for the opportunity guys. I’m honored.

Paul Wurth:

All right. Thanks Alex, appreciate it.

Alex Barthet:

Anytime.

Tom Houghton:

Love what you heard. Don’t forget to rate and subscribe to our podcast. So you can hear from more guests that will benefit your business. Also, please check out our show notes page for more information on what we discussed on this episode. You can find it at buildertrend.com/podcast. Thanks for listening and we’ll see you next time on “The Building Code.”