Blaine contractor takes remodeling business by storm

In just five years, Jeff Hausmann and Frank Mannella have built Cedar Valley Exteriors from scratch into a business that could see $20 million in sales this year.

By Brian Johnson/F&C Staff Writer
June 12, 2003

For Jeff Hausmann and Frank Mannella, opportunity came knocking when a series of merciless hailstorms swept through the Twin Cities in 1998. After the storms, Mannella and Hausmann did some knocking of their own.

Hoping to drum up business for their newly formed company, Cedar Valley Exteriors, Hausmann and Mannella walked through neighborhoods that were particularly hard hit by the rain, wind and hail. Door by door, they offered their remodeling services.

"We started our business by knocking on doors, offering free inspections and estimates after a storm," Hausmann noted.

The canvassing efforts paid off nicely. Today, Hausmann and Mannella oversee one of the largest roofing companies in the upper Midwest, with 20 full-time employees, 50 sales reps and thousands of names in its customer base.

Based in Blaine, Cedar Valley Exteriors specializes in roofing, windows, siding and other exterior work. The company is licensed to work in Minnesota, Wisconsin, Iowa, Ohio and Indiana and expects to be licensed soon in 10 additional states.

Cedar Valley eventually plans to open home remodeling centers in all of those states.

"The Minnesota office will always be our headquarters," Mannella said. "But the satellite offices will be providing services for both homeowners looking to remodel their home and insurance companies that need a reputable contractor to handle high volume catastrophe situations."

Their timing couldn’t be better. The National Association of Home Builders said the $170 billion residential remodeling industry is making a comeback after a lull in the second half of last year. The NAHB's Remodeling Market Index, which gauges market conditions based on reports from 600 professional remodelers, was up 3.2 points to 46.4 in the first quarter of 2003; anything over 50 means more contractors view conditions as favorable. The index for future expectations — which takes into account calls for bids, job backlogs, the amount of work committed for the next three months, and appointments for proposals — was up 11.2 points to 50.3.

The Wall Street Journal said earlier this month that the booming remodeling industry is being driven partly by rapidly rising home values — many people have decided it’s cheaper to remodel their existing homes than to try upgrading to houses that have become out of reach — and by a surging mortgage refinancing market that has enabled people to take out extra money to fix up their houses.

Chris McCambridge, president of the National Association of the Remodeling Industry's Minnesota chapter, said remodeling contractors in Minnesota generally have been staying busy. "I think people want to invest in their homes; it's a secure place to put their money," said McCambridge, whose organization represents 290 remodeling contractors in Minnesota. "People are starting to feel a little better about spending some more money. And we have seemed to be pretty stable here for the past seven years or so."

Mannella agrees that 2003 has been a good year for remodeling. And the company has ambitious goals, including plans to expand its retail operations and become less dependent on storm damage repairs.

"We want to be the top remodeling company in the United States," Mannella said. "... When storms do hit, we'll send our storm team into that area. But when they pull out ... we'll still be there to service all the homeowners, to provide warranty services, to handle anything that would come up in the future.

"That's our model, because we don't feel it's right to go in and then just pull out."

Cedar Valley takes pride in its ability to guide homeowners through the insurance claims process. Hausmann has worked in the industry — he received his insurance license while still in his teens — and both partners have studied insurance companies' practices.

According to Mannella, Cedar Valley has made a special effort to use the same estimating software that insurance companies use.

"We made it easy for them to do business with us," Hausmann said. "That's where we really moved far ahead. And because of that kind of relationship, they started sending us more business."

A long-term goal is to become the vendor of choice for insurance companies whose clients need home exterior repairs. Mannella said the company is in "late-stage discussions" with major insurance companies to be their first "direct vendor" remodeling company.

"That's the way I see the insurance industry going," Mannella said. "It helps them control consistency and costs, and obviously it helps companies like us control the same things."

Controlling costs was especially important in the company's early days, when Mannella and Hausmann operated on a shoestring budget. Mannella said banks "didn't really want to touch us" and that he and Hausmann self-financed the business. Profits were put right back into the company.

"We started the business on credit cards and a couple of thousand bucks I had in the bank. In fact, I was the money guy with a couple of grand," Hausmann said, with a laugh. "We worked 12-, 15-, 18-hour days. We stayed and ate pizza until 2 o'clock in the morning and just worked."

The partners' work paid off quickly. In 1999, the company's second year in business, Cedar Valley did $1 million in sales and just two years later it closed in on $10 million. This year, company officials hope to do $13 million to $20 million in sales.

As the business grew, Mannella and Hausmann developed a good relationship with Blaine-based Village Bank, which financed Cedar Valley's recent move from rented space in Coon Rapids into a new 14,000-square-foot headquarters building in Blaine.

The new facility has a large warehouse that allows the company to purchase its supplies "in bulk" and keep its prices low, according to Mannella. It also gives the business more of professional image in an industry that hasn't always had the best reputation.

Hausmann said, "We don't want to be your normal contractor that works out of his truck and smells like liquor. We want to be professionals."