Focus

Lee R. Raymond, ExxonMobil Corp.'s chief executive officer and chairman from 1999 to 2005, once said: "Competition can be viewed in two ways. It can be viewed in a negative light and be seen as destructive, but one can also have the view that it is competition that drives people and institutions to higher and higher levels of excellence and, therefore, to more and more opportunity."

For years, roofing contractors have been telling NRCA that competition is fierce and markets are getting tighter. But as Raymond implies, that isn't always a bad thing.

According to research conducted by Lawrence Plummer, a visiting economist at the U.S. Small Business Association, any harm suffered as a result of competition usually is short-lived. In fact, Plummer found that if a business can survive in a competitive atmosphere, all competitors end up better in the end.

Plummer studied the return on assets of 377 public companies between 1990 and 2004 and tracked competitors within 75 miles of an established company.

He found that during a competitor's initial year in a market, return on assets generally decreased. But in subsequent years, both companies' performances had improved.

Plummer explains that an existing company and its competitors form "an industry cluster" that can lead to knowledge sharing and complementary businesses. Plummer says both of these side benefits can end up improving worker productivity and company performance.

In addition, increased competition inevitably will help a local economy, assuming companies survive through the crucial first year.

Although no one is suggesting you begin sharing trade secrets with your competitors, it is worth reminding yourself that being part of a tight marketplace might benefit you more than you think.

Ambika Puniani Bailey is editor of Professional Roofing magazine and NRCA's senior director of communications.