NATIONAL CMU CHECKOFF PROGRAM NOW AWAITING REFERENDUM VOTE
Who can forget the iconic Got Milk? commercials and those now-famous milk moustaches on celebrities, real and imagined, including Lady Gaga, Batman and Dwayne Johnson, aka The Rock? California’s largest milk processors voted to contribute 3 cents for every gallon of milk the companies processed to the creation of a collective fund, according to the Association of National Advertisers (ANA) Educational Foundation website. Those 3 cents turned into a pool of $23 million annually used to fund the Got Milk? marketing campaign originally through the California Milk Processor Board. The national Milk Processor Education Program added the milk moustache. The rest is marketing and dairy history.
Today, Dairy Management Inc (DMI) manages the national dairy checkoff program, working in partnership with state and regional promotional organizations. Checkoff programs work on the same principle described above: Assessing a token fee per unit, amassing a funding pool, and using the funds to promote an industry. According to DMI’s website, “Dairy farmers pay 15 cents and dairy importers pay 7.5 cents for every 100 lbs of milk they sell or import into a generic dairy product promotion. That money – with US Department of Agriculture (USDA) oversight – is used to fund programs aimed at promoting dairy consumption and protecting the good image of dairy farmers, dairy products and the dairy industry.”
What does milk have to do with concrete masonry? Plenty. The concrete masonry unit (CMU) industry has worked for nine years to pass legislation authorizing the industry’s development of a national concrete masonry checkoff program. At long last for its supporters, the Concrete Masonry Products Research, Education and Promotion Act became law on October 5, 2018. Under the program, “concrete masonry units are defined as any man-made masonry unit having an actual width of three inches or greater manufactured from dry-cast concrete using a block machine,” according to cmucheckoff.com.
CMU manufacturers across the country now have to vote on whether or not to authorize a mandatory self-assessment of 1 cent for every block produced and sold in the US. A simple majority of those manufacturers voting affirmative (provided that they also represent a majority of the production capacity) in a national referendum vote is now required to activate the program. Jim Gendron, architectural sales for Fendt Builder’s Supply based in Farmington Hills MI, hopes the vote will take place before the end of 2019.
Gendron has been working with other industry representatives on the concrete masonry checkoff initiative at key junctures for the past nine years. Currently, this 32-year veteran of the industry is traveling throughout Michigan with the Masonry Institute of Michigan (MIM), meeting with the state’s manufacturers to encourage passage of the referendum in conjunction with support from local associations, including the Mason Contractors Association (MCA), the Michigan Mason Contractors Association (MMCA) and the Bricklayers and Allied Craft workers, Local 2. Others like Gendron are promoting the checkoff opportunity through their own regional associations as well as national organizations such as the National Concrete Masonry Association (NCMA), the Mason Contractors Association of America (MCAA), and the International Union of Bricklayers and Allied Craft workers (IUBAC).
Under the CMU checkoff program, every unit produced and sold becomes an investment in the future.
According to Gendron, the funding gained through the checkoff program would initially generate approximately $10 million based on the one-cent-per-unit assessment and the estimated current production of a billion concrete masonry units nationally. The funding level would rise as the program matures and generates increasingly higher levels of CMU demand and production.
Under the CMU checkoff program, every unit produced and sold becomes an investment in the future. “The participation of all producers ensures a broader funding base, lowering costs for all involved,” according to cmucheckoff.com.
The investment of any given company is pennies on the dollar, but the end result is a thriving business climate for each individual company and for the concrete masonry block industry as a whole. “One cent per block is miniscule,” said Gendron. “A typical job is 10,000 block, so that means a hundred bucks. It means almost nothing to any company, but it means everything to their ultimate survival.”
According to Gendron, the first checkoff programs emerged during the Reagan administration. “Certain industries, such as beef and dairy, were struggling and they needed to figure out how they could get their industry to grow,” said Gendron. “They applied to place an assessment on their particular industry. The money came back to the industry in the form of a national committee that allocates the money for the purpose of advertising, promotion, research, training, education, and similar activities.”
Today, Gendron believes a checkoff program could boost the CMU business. “Block production has fallen from a high of four billion to a current level of one billion annually in the United States,” said Gendron. “We’ve lost three billion block, despite being a product providing modern solutions.”
The softwood lumber industry has a checkoff program through the USDA, and uses the North American Softwood Lumber Board (SLB) to promote its products. According to the Wood Business website, the SLB’s mission is to increase market demand for softwood lumber by supporting pro-wood communications (Think Wood and Wood, Naturally), code and standards expansion (American Wood Council), educating and assisting architects, engineers and construction specifiers (Wood Works), and supporting innovative new applications and markets for softwood lumber products.
“The wood industry’s checkoff program has been extremely successful,” said Gendron. “They started it five years ago, and that is why you are seeing a lot of wood structures today. They pull in $14 million a year. They are spending that money to get more business, and it is working. They have always been big in residential, but they are just going to town right now even in commercial. A case in point is the wood-frame modular apartments being built on Trumbull and Michigan Avenue in downtown Detroit on part of the former Detroit Tiger’s stadium site.”
The SLB’s website lists some key statistics in its 2017 impact report: Since its inception in 2012, the SLB has created more than 3.6 billion board feet of new demand and resulted in an incremental $1.33 billion of revenue. The SLB has delivered a total return on investment of $19.74 in incremental revenue for every $1 spent since 2012.
The checkoff program will bear much-needed fruit in the form of pooled funding applied to promotion, education and research
Got It: Collective Funding = Greater Growth
The existing 20 different checkoff programs through the USDA range from softwood lumber to Christmas trees and from avocados to watermelons. CMU manufacturers, however, are the very first industry authorized to create a checkoff program through the US Department of Commerce.
As Gendron travels across Michigan visiting CMU manufacturers large and small, he describes how the checkoff program will bear much-needed fruit for the industry in the form of pooled funding applied to promotion, education and research.
PROMOTION: The checkoff program would dramatically expand the ability of the CMU industry to promote demand for concrete masonry. According to Gendron, promotion could include webinars, social media campaigns, conventional media advertising campaigns, and direct meetings with potential block users ranging from local architects to large national accounts with facilities scattered across the country.
Gendron offers an example of how he convinces even small manufacturers of the checkoff program’s value: In traveling to a family-owned and operated manufacturer in southwestern Michigan, “I told them, ‘You make the block, your children drive the trucks, and your spouse sends the bill, but who sells the job? Let’s suppose a Holiday Inn comes into town and the new hotel is made out of wood. How do you sell that job?’ And he said, ‘I don’t.’ And I said, ‘You are absolutely right. With a checkoff program, we could meet with national accounts, such as Holiday Inn. Next time, they will be more likely to build out of block – and your penny paid for it.’”
“Block has great qualities that are easy to sell, including greater sound absorption, lower vibration transmission and the fact that block is non-combustible and easy to insulate,” said Gendron. “It sells particularly well in Florida, because block is insect-proof, mold-resistant, and weather-protected from everything from tornadoes to hurricanes.”
RECRUITING, TRAINING AND EDUCATION:
The checkoff program could help ease the labor shortages now rampant throughout the construction industry and in the masonry trade. Gendron and other proponents worked with the MCAA and the International Masonry Institute (IMI) on the initiative. “We can sell like crazy, but we need the installers,” said Gendron. “With the checkoff program, we would have the funding to spend on recruiting installers, as well as expanding the installers’ training and education. The unions are behind this one hundred percent. It will produce more work for them, plus the checkoff program will expand funding for more extensive training programs.”
As a labor-intensive industry, masonry can help generate strong economic growth. “Masonry doesn’t employ robots,” said Gendron. “Masonry employs people, and people get paid. They can then spend money on new cars, housing and vacations, helping to stimulate and boost the economy.” This increased level of spending accelerates the velocity of money, a term referring to the rate at which money is exchanged in an economy.
The concrete masonry checkoff program would expose design professionals and others to the value of CMU. According to cmucheckoff.com, A concrete masonry checkoff program can provide resources to support the continuing education of engineers, architects, contractors, inspectors, building officials and more regarding best practices for use of concrete masonry products. For future designers and industry professionals who are now making their way through school and college, increasing their educational exposure to concrete masonry construction will make them more comfortable with using it once they become practicing professionals.
RESEARCH: Checkoff funds will offer research opportunities into new block applications. “The wood industry is looking into wood high rises,” said Gendron. “We will be able to research the panelization of prefabricated block.”
According to cmucheckoff.com, “Building codes and standards have a significant impact on how concrete masonry products are used. Research is needed to document the performance of concrete masonry to support code changes that will open additional markets, reduce unnecessary conservatism, and make concrete masonry more market competitive. Additionally, research needs for concrete masonry abound in areas related to sustainability, fire-resistance, structural performance in seismic and wind events, recycled materials, manufacturing improvements, energy, and more.”
New Kid on the Block
Given the checkoff program’s benefits, “I would be surprised if it doesn’t get voted in,” said Gendron. “I think that there is a very good chance for passage of the referendum. We know the checkoff program will be successful.”
At publication time in February, Gendron and other proponents were preparing for the referendum and establishing details on creating a vehicle for funding distribution and program administration. Distribution-wise, the government does not collect nor hold at any time the checkoff funds, according to cmucheckoff.com. Collections and management of funds is the responsibility of the checkoff board, composed of industry representatives.
Administration-wise, legislation calls for five Regional Advisory Committees (RAC) made up of groups of states,according to cmucheckoff.com. These RAC will each have a representative on the board, and they will recommend programs and initiatives for funding that will have the greatest impact for their region. The Board will also consider programs that have industry-wide impact and/or programs recommended by RACs. The Board has the fiduciary responsibility of reviewing and approving the programs.
Michigan is in Region 3, along with North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, Illinois, Indiana, Ohio and Kentucky. The regions are broken down into districts, Michigan being in District 8 headed by Gendron and composed of Michigan, Illinois and Wisconsin. “The block manufacturers essentially make up the committee that approves or disapproves programs, based on cost, type of program, and the proposed program’s projected increase in block demand,” said Gendron. “They are examining the other successful checkoff programs to see how it could apply to block.”
After a decade of work, the referendum should be voted on late this year. The website cmucheckoff.com explains the beginnings of the referendum process: Based on industry recommendations, the Department of Commerce will develop an order that provides guidelines for running a compliant program and the process for a referendum. The industry will have an opportunity to provide public comment to the order prior to the referendum.
Once the referendum is passed, the checkoff program takes about five years to fully mature and produce the envisioned results. “Once you start collecting funds and establishing programs, the industry will really take off,” said Gendron.
After five years, Gendron predicts a growth in production to at least two-and-a-half billion annually. “That’s bigger than the current one billion annually, but hopefully we can get block production back to four billion and increase from that point,” said Gendron.
Once the referendum is passes, checkoff takes about five years to fully mature and produce the envisioned results
Those who fought for almost a decade to secure authorization of this program are as tough and durable as CMU itself. After the program’s passage in October 2018, Major Ogilvie of Ready Mix USA, a CEMEX company, and national chair of the concrete masonry checkoff initiative since 2010, said in a NCMA press release, “This is a great day for our industry. We demonstrated a level of perseverance on this initiative that is only matched by the resilience of the products that we manufacture. By standing together, we will not only strengthen our industry, but our communities. We applaud the members of Congress for recognizing that the small businesses in our industry can accomplish even greater things together if we can more effectively pool our resources to promote ourselves.”