by John Crowley | Jan 14, 2026 | Uncategorized
The Majority of SMACNA Members Need a CTO The phrase “what gets measured, gets managed” is everywhere, but it raises a better question: What exactly are we measuring? How do we decide which numbers matter most? How do we know if we are improving?There is no single right answer. Every shop, project, and company has its own priorities. The real goal is consistency. Measure something, measure it the same way every time,and review it regularly. Over time, those consistent measurements become a mirror that reflects both progress and weakness.Many shops track familiar metrics such as pounds per hour, weld inches, lineal feet, machine utilization or ratios of fittings to straights. These provide a snapshot of productivity and can be tracked across time. But they also have limits. Increasing coil line output might look like a win, but if that creates a bottleneck in assembly or shipping, what did you really improve? Metrics can highlight success, but they can also hide inefficiencies elsewhere in the system.The danger lies in using isolated numbers as if they tell the whole story. Real insight comes from connecting each metric to the total workflow. When viewed together, performance patterns emerge. A spike in one area might explain a slowdown in another. That bigger picture is where true improvement happens.Early in my construction technology career, I chased point solutions. Each one solved a narrow problem, such as spooling, tracking or reality capture. Each win felt like progress, but every fix revealed a new issue downstream. The problem was that those tools worked in isolation. Today, software platforms connect estimating, coordination, fabrication, logistics and installation. For the first time, we can see the whole system. That visibility means our measurements must evolve as well.Systems thinking changes the question from “Are we improving this step?” to “Does this change improve the entire process?” Poorly chosen metrics can drive behavior that looks productive but hurts overall flow. When people chase metrics that do not align with company goals, they can optimize for local success rather than overall health.Revenue is a good example. It is easy to compare and feel like growth, but it is not always meaningful. High revenue does not guarantee profit or stability. Chasing top-line growth through low-margin work can drain cash and morale. For fabrication-heavy firms, better indicators might include lower rework, higher field productivity driven by improved shop output, or a growing share of projects that leverage your prefabrication strengths.Once the right metrics are in place, benchmarking gives them value. Tracking your own results over time shows progress and reveals backslides. Comparing to peers adds context. Peer groups are especially valuable because they collectively define metrics and openly share results, making comparisons fair and useful.Benchmarking should not be about competition for its own sake. It should provide perspective. It shows whether your systems can scale, whether your profit margins are in line with peers, and where you can improve.Metrics also drive alignment. What you choose to measure tells your teams what matters most. It connects daily work to company goals and helps people see how their efforts contribute to progress. When the wrong metrics are emphasized, they can confuse or demotivate teams, pulling them in opposite directions.Metrics are a mirror. They reflect your priorities, your values, and your company’s health. Like training at the gym, progress takes time and consistent effort. The results appear slowly, but they build into something powerful.So, ask yourself: Are you measuring what truly matters?Travis Voss is the Director of Innovative Technology and Fabrication at SMACNA. He leverages his background in the tech field to explore, adapt and potentially develop technologies and workflows for the construction industry, particularly as it undergoes its digital transformation.
by John Crowley | Jan 14, 2026 | Uncategorized
Navigating Tariffs, Tax Incentives, and Workforce Priorities TARIFFS AND MATERIAL COSTS: A MAJOR CHALLENGE AMID SUPPLY CHAIN UNCERTAINTYTariffs remain a significant factor destabilizing supply chains and driving up material costs crucial to HVAC and sheet metal work, such as aluminum. Recent tariff hikes, notably driven by the Trump administration’s legacy policies, have increased market uncertainty and largely functioned as hidden taxes, inflating input costs for contractors. Analysts warn of ongoing price instability due to limited domestic capacity for critical metals.To mitigate the impact of tariffs, contractors may rely on several contractual and regulatory tools under the Federal Acquisition Regulation (FAR). For example:FAR 52.229-3 permits contract price increases to reflect newly imposed federal taxes, such as tariffs, provided those taxes were not anticipated in bid pricing.Economic Price Adjustment clauses (FAR 52.216-4) may allow contractors to request price adjustments if material cost indices rise due to tariffs.Those working under flexibly priced contracts can seek cost recoveries consistent with FAR 31.201-2, which defines the allowability and allocability of such costs.Practically, contractors are advised to pre-purchase materials where feasible, identify domestic suppliers, update contract pricing provisions to accommodate cost passes, and scrutinize existing agreements for tariff-related relief or escalation clauses. These steps are vital to protect margins amid ongoing tariff volatility.LEGISLATIVE MOMENTUM ON TAX INCENTIVES BOOSTS ENERGY EFFICIENCY PROJECTSSeveral key tax provisions favorable to HVAC and sheet metal contractors remain on track or have been extended through bipartisan efforts under the House-passed H.R. 1 and related reconciliation packages. These include:Section 179D Energy Efficient Commercial Building Deduction allows up to $5 per square foot deductions for energy upgrade work in new or renovated projects. This incentive supports contractors specializing in energy-efficient systems.Bonus Depreciation and Section 179 Expensing enable faster write-offs for equipment and property investments, which can improve cash flow for contractors upgrading fleets or tooling.Advanced Manufacturing Investment Tax Credits (boosted from 25% to 35%) tied to CHIPS Act-facilitated domestic facility expansions open opportunities on construction projects supporting semiconductor and clean energy manufacturing.45Q Carbon Sequestration and 45U Nuclear Energy Credits provide indirect support to contractors involved in cutting-edge clean energy infrastructure. While a political tug-of-war persists between the House and Senate over the full package, with the Senate pushing back on some health and deficit elements, the energy-related tax incentives critical to HVAC and sheet metal scopes are expected to be preserved and potentially expanded in the upcoming 2026 tax extender bills.WORKFORCE DEVELOPMENT AND LABOR STANDARDS REMAIN A PRIORITYSMACNA advocates continue to press Congress to bolster workforce development by supporting Registered Apprenticeship Programs (RAPs) and enforcing prevailing wage laws, which are critical for union contractors. These efforts align with the demand for a highly skilled workforce capable of meeting technical challenges posed by advanced energy efficiency and federal infrastructure initiatives.Efforts to close employee misclassification loopholes and promote Project Labor Agreements (PLAs) drive policy aims to level the playing field and protect contractor competitiveness and labor standards.ENERGY AND INFRASTRUCTURE INVESTMENTS FEED PROJECT OPPORTUNITIESMassive federal investments under the Inflation Reduction Act (IRA), the expanded 35% tax credit within the CHIPS and Science Act, and the bipartisan Infrastructure Law continue to catalyze large-scale construction projects, from energy-efficient buildings to advanced manufacturing plants. Despite some delays and freezes on approved projects due to budget office constraints and legal challenges, the general outlook for CHIPS and data center projects is positive. These initiatives continue to generate sustained demand for HVAC and sheet metal contractor services, particularly for energy-efficient terminal upgrades in transportation hubs, commercial retrofit,s and new clean energy facilities.POLITICAL ENGAGEMENT AND ADVOCACY MOVING FORWARDSMACNA’s political engagement efforts continue to emphasize growing bipartisan support on Capitol Hill for policies that advance contractors’ economic interests. The outlook stresses building a strong, engaged coalition of legislators to embrace key industry priorities, tax incentives, and favorable regulatory frameworks.SMACNA is expanding efforts at the state and local level, promoting far greater legislative outreach, education, and targeted advocacy to complement federal actions.Contractor members have been encouraged to serve as “legislative ambassadors” and to participate, share updates, and insights to reinforce SMACNA’s industry voice in policymaking venues.Contractors who stay informed and engaged with ongoing political developments, workforce initiatives, and evolving contract rules will continue to be best positioned to safeguard profitability and capitalize on the transformative projects defining the industry’s future.
by John Crowley | Jan 14, 2026 | Uncategorized
Uncertainty is the New Normal Rebecca Patterson talks about the economy, tariffs, and AI with the SMACNA Annual Convention audience. Rebecca Patterson, a globally recognized investor and macroeconomic researcher, took the SMACNA Annual Convention stage at a tipping point in economic history. This year, the challenges facing leaders in construction, procurement, and business are sharper than ever, driven by rising tariffs, shifting policy, and the accelerating march of artificial intelligence (AI).Patterson, known for her tenure at Bridgewater Associates, Bessemer Trust, and JPMorgan, and for her inclusion on American Banker’s list of Most Powerful Women in Finance for six consecutive years, delivered candor and clarity to an audience eager for direction. 2025: A YEAR OF RISK AND RESILIENCE“Tariffs and related policies like export controls and countervailing duties are clearly the big issue this year for supply chains,” Patterson says, underscoring both the uncertainty and inflationary pressures dogging businesses nationwide. “Prices will go higher — the question is not if, but exactly when and by how much.” Her words resonate at a time when procurement and supply chain leaders are grappling with confusion over exemption levels and political winds, with national economic emergency tariffs hanging in the balance.When asked what keeps her up at night in 2025, Patterson is direct. “We have an uncomfortable number of questions that create risk for procurement leaders,” says the current member of the Council on Foreign Relations, the Economic Club of New York, and the Trilateral Commission. “What if America’s national economic emergency tariffs are deemed illegal? What countries are at risk of seeing tariff levels changed or delayed again?”Given these unknowns, she advises leaders to “avoid where possible the ‘known risk areas’ — both specific goods and countries in the White House’s crosshairs — then stick to business as usual, purchasing what’s needed.”THE DOUBLE-EDGEDSWORD OF AICurrent conversations in boardrooms are equally focused on the bottom line and on workforce disruption, Patterson shares.“Given changing cost dynamics, companies are searching for efficiency gains and other ways to manage budgets. This increasingly includes using AI to reduce needed headcount,” she says.She recently told Amazon’s Business Reshape audience that companies faced with rising input and AI-investment costs, along with economic uncertainty, are “planning to scale back headcount going into 2026.” In her words, “The bias is that more job cuts are coming. The offsets are personnel.”LIVE DATA, MARKET MOVES AND UNCHARTED TERRAINAsked what indicators she watches closely, Patterson says, “labor-market data is top of mind. Fewer jobs would mean less spending, and that would flow through not just the U.S., but also the global economy.”She also points to the risk of politicized central banks, warning, “If the Fed becomes politicized, you risk unanchored inflation expectations, which hurts confidence, markets, and consumers.”Still, Patterson tries to balance realism with resourcefulness. “The best approach may be to try to avoid known risk areas, but stick to business as usual otherwise,” she advises. If there’s one message she hopes leaders remember, it’s to pay attention, innovate, and never bet purely on yesterday’s playbook. At a “truly historic moment for the global economy,” as she calls it, that advice is more urgent than ever.
by John Crowley | Jan 12, 2026 | Uncategorized
Appeals Court Upholds Minnesota’s Construction Worker Misclassification Law In Minnesota Chapter of Associated Builders & Contractors v. Blissenbach, the court affirmed a lower court’s refusal to block Minnesota from enforcing its construction worker misclassification law.Minnesota’s 2024 law imposes a 14-factor test that must be satisfied for a worker to be treated as an independent contractor in the construction industry.This is good for union contractors. It reaffirms a state’s authority to regulate labor standards within the construction industry and prevents contractors who misclassify workers from gaining a competitive advantage by avoiding payroll taxes, insurance obligations, wage protections and collective bargaining responsibilities.MINNESOTA’S CONSTRUCTION WORKER MISCLASSIFICATION LAWEffective March 1, Minnesota’s comprehensive 14-factor independent contractor test applies exclusively to workers engaged in commercial or residential construction or improvement services. To be considered an independent contractor, an individual operating as a business entity must meet all 14 criteria, including:Business Independence – The business entity must be established and maintained separately from the contractor hiring it and must provide services to multiple clients or the general public.Operational Capacity – The business entity must own or lease tools, equipment, vehicles or facilities necessary to perform the work.Legal and Tax Compliance – The business entity must hold any required MN or federal tax ID numbers, receive and retain Form 1099s when applicable, file business or self-employment tax returns and provide a W-9 when required.Regulatory Compliance – The business entity must carry workers’ compensation insurance (if required), a Minnesota unemployment insurance account (if required) and any required business licenses and certifications.Contractual Requirements – The business entity must perform work under a signed and dated “written contract” that is “fully executed” within 30 days of starting work, “identifies the specific services to be provided or performed” and “provides for compensation from the person for the services provided under the contract on a commission or per-job or competitive bid basis.”Payment and Invoicing – Payment must be made only upon invoices submitted in the name of the business. Cash payments do not qualify.Control and responsibility – The contract must give the business entity control over the means and methods of performance, and the entity must be responsible for completion of the work and liable if it is not completed.Risk of Profit or Loss – The entity must be able to realize a profit or suffer a loss depending on performance and expenses.Failure to satisfy even one of the 14 factors results in the worker being classified as an “employee” and not an independent contractor under Minnesota law. The Minnesota Department of Labor and Industry (“DLI”) and the Minnesota Attorney General have enforcement authority. There also is a private right of action, through which a misclassified individual may seek compensatory damages.The law also authorizes discretionary civil penalties that may include:Up to $10,000 per misclassified workerUp to $10,000 per violation of the law’s disclosure and classification requirementsA penalty of $1,000 per day for obstructing a Minnesota DLI investigation Individuals who knowingly or repeatedly engage in any of the prohibited activities may also be held liable.BOTTOM LINEExpect more states to look to Minnesota’s law as a way to stamp out fraud in the non-union construction sector, level the competitive playing field and ensure that workers receive legal wages, benefits and protections.Grant Collins is a specialist in labor and employment law at Felhaber Larson. Reach him at gcollins@felhabor.com
by John Crowley | Jan 12, 2026 | Uncategorized
When the Sky Isn’t the Limit As a child in Santa Maria, California, Nicole Malachowski’s fascination with aviation began after she saw an airshow.Retired Colonel Nicole Malachowski speaks to the SMACNA Annual Convention Keynote audience. “Sometimes I wonder if it’s weird that I declared at age 5 I wanted to be a pilot, and it actually happened,” says the USAF Retired Colonel, her tone equal parts humility and steel. That relentless drive shaped her youth: soloing in a Cessna at 16, then earning her Air Force commission. “People looked at me and said there’s no way I’d become a fighter pilot; it was against the law for women then. I found that made the dream more intriguing,” she says.As one of the first women to fly the F-15E in combat and the first woman Thunderbird pilot, Malachowski later led a squadron, flew 2,300-plus hours and 188 in combat, and managed resources exceeding $1 billion.So, when she takes the stage to speak, audiences expect tales of high-speed flight and military discipline. What they don’t expect is how gracefully she links those stories to leadership, vulnerability and gratitude.RISK, FAILURE & LEARNINGMalachowski’s commitment to mastery is legendary, but she doesn’t shy away from discussing setbacks. She recalls herearliest check ride as a pilot, which she failed due to a minor but consequential mechanical oversight. “I went back to mydorm, devastated, and cried. I entertained quitting,” Malachowski says. Her mentor’s response reframed the experience.“She told me, ‘Failure is the price of entry for achieving something great,’” she says. “Success is not born when you get things right; it’s born when you move forward after failing.”For her, vulnerability is a source of power. “People think military culture is about the perfect persona, but the real essence of elite teams is vulnerability — being honest about mistakes and learning from them,” she says. “When you demonstrate vulnerability, you empower your teammates to do the same. That builds trust, as well as loyalty and better performance.”A SEASON FOR CHANGEThe Colonel’s message resonates deeply with SMACNA’s changing industry, emphasizing adaptability, self-awareness and timing as critical leadership traits. She describes autumn as a metaphor. “Like trees that shed leaves in fall,” she says, “we must let go of obsolete practices and embrace change. Healthy organizations make it through seasonal transitions by building psychological safety and supporting diversity, which helps teams become less resistant to change and more engaged in innovation.”Malachowski’s personal journey from fighter pilot to leading national initiatives to surviving a devastating, career-ending illness adds gravity to her words about letting go and starting anew. “I was medically retired for a brain infection,” she says. “I had to reinvent myself. ‘Yield to overcome’ became my mantra. It wasn’t about quitting, but accepting what is and asking, ‘What can I do to move forward from here?’ The runway behind you is always unusable. All you have is the one ahead.”LEADING WITH PURPOSEMalachowski’s time with the Thunderbirds taught her to see a formation of six jets not as six aircrafts, but as “one aircraft and six people perfectly aligned.”“It’s a mindset we all can adopt: the precision, the integrity and the trust in the person beside you,” she says. “That’s what makes great teams, whether in the air or on a construction site.”For an industry navigating its own headwinds — generational shifts, evolving technologies and the need for new talent —Malachowski’s words carry more weight than ever. “Nobody wants to lead a scripted life,” she says. “Leadership is aboutadapting to change, lifting others and never underestimating the power of gratitude and vulnerability.
