Keep your head above ground

 

BY SKIP PFEFFER

PHCC—National

Association President

 

We keep hearing of, seeing and experiencing situations in our trades that make being in business today a real challenge. We all know the stories: not enough work, customers hesitant to spend money, customers not paying their bill, too many bidders bringing rock bottom prices, competition from less-than-stellar contractors…the list goes on. Now this is all magnified with fears of what is around the corner on a national scope, like health care mandates, higher taxes, inflation, higher material and commodity prices…the list goes on.

 

The story I keep hearing is that we just have to hang in there, things will change — they always have. That is probably true — if you are an ostrich. We all need to keep our heads above the ground and look at things realistically. Today, perhaps more than any other time in recent history, you must help yourself. In the past, if you were a good trades person and a good business person, you could get by. That’s not the case today,

 

As we look toward the economic situation and what p-h-c contractors will be facing in 2010, phcc is cautiously optimistic. Based on what our members are telling us, we do think things, overall, will eventually get better business-wise in the coming year. However, the turnaround will be slow and there may not be real signs of recovery until mid- or end-year.

As you can see from the Quality Service Contractors’ article in this issue, phcc’s service and repair contractors definitely have some challenges. However, many are wisely choosing to invest in their companies and employees, particularly in areas like training and education, to come out stronger when things turn around.

 

New construction continues to be the hardest hit, particularly the residential contractors. On the bright side, this situation has given phcc’s new construction contractors, such as those in the Construction Contractors’ Alliance (cca), the opportunity to really fine-tune their business operations and concentrate on differentiating themselves from the competition. In fact, cca’s March 10-12 meeting in West Palm Beach, Fla., will focus on new sales and marking methods that can help their companies get noticed by the right people.

 

The Union-Affiliated Contractors (uac) also is taking steps to stand out from others by offering new residential service agreements that they hope will help them recapture market share. The uac will meet Feb. 3-5 in Palm Harbor, Fla., to learn about topics like solar, leadership and business management strategies.

 

Within phcc, opportunity is a popular 2010 word. It’s what everyone is looking for. I know in my area of New England, the energy conservation market is of interest, as it could be a boon for businesses and benefit customers at the same time. And at the national level, as president I have appointed several industry experts to view the landscape and see what additional training and services the association can offer to help members expand into the “green” arena. Look for more details about this soon.

 

There are additional prospects for new work to consider, such as residential fire sprinklers, geothermal, solar, etc. phcc’s increasingly popular Webinars will continue to focus on topics like these to help members be informed on potential new markets and information that can help their business. In-person seminars on the topics also are planned.

 

As we take steps to make our businesses better, we cannot forget to keep an eye on the legislative process and get involved. If you follow the political scenes at the local, state and national levels, it doesn’t take long to see that if you’re going to “help yourself” we have to develop a strong presence on the legislative front or we’re going to get run over. Some of the decisions made today on tax reform, codes and health care, to name a few, are going to affect our businesses and families for years to come. That is why is it so important to participate events like the April 28-29 phcc Legislative Conference and Day on Capitol Hill.

 

It is trying times like this when our licensing laws can get watered down and others can get into our plumbing and hvacr businesses. phcc is going to help the states monitor their licensing laws in 2010 to make sure that we are strengthening them and not letting them be weakened. Also on the national level, we have to be vigilant to make sure we do not lose the tax benefits we have gained over the last few years. The estate tax, health care penalties and increasing marginal rates are all are going to negatively affect small businesses like phcc members. We are going to fight for fairness as the federal government seeks to increase taxes.

 

A key way to help yourself in these times is by joining trade associations related to your businesses. Information on the Internet is great, but the networking that can be done at local, state and national meetings in invaluable. Help yourself to a dose of the benefits that can be gained by joining associations whose sole purpose is to improve the way you do business. The phcc comes to mind, of course. Consider attending CONNECT 2010 and the qsc Power Meeting Oct. 27-30 in Las Vegas to see that you’re not alone in solving your business challenges. We’d love to have you!

Ex unitate vires (From Unity Strength).    

 

Skip Pfeffer is the PHCC—National Association president, and the owner of Canton Plumbing & Heating Co., Inc., Canton, Mass.

 

Now is perfect time to prepare for growth

 

BY DAVID SINGLETON,

Chair, Quality Service Contractors

 

The economy is turning around — albeit slower than we would like. The good thing about the economy today is that you have done and are doing things right because you are still in business. You have probably made all the employee cuts, cut expenses and overhead, and downsized every way possible.

 

This is all okay, but now you need to begin looking at ways you can begin to grow because the economy is definitely coming back and you need to be a part of it. Growth includes additional marketing, employee training, setting up systems and processes, and reviewing and understanding your financials. Here are some positive steps you can take to build your business to help you to be positioned for the turnaround that is coming:

 

Quality Service Contractors (qsc) members have found that now is the perfect time to invest in your company and your employees. Your employees are the most valuable asset within your company. Keeping them up to date on all the latest in great customer service techniques, sales training, technical training and software makes more sense than doing nothing or cutting everything out. By providing ongoing training, this will send the message to your employees that you are not going to give up, but rather build for the future. There are many inexpensive ways to provide to your employees. This can be done online through Webinars, in-house seminars, vendor technical sessions or teleconferences.

 

Employees want to be part of the solution, if given the opportunity. You need to make sure people are still setting goals and working toward them. Employees will want to know how they're doing and what's expected of them going forward.

Have you given some thought to reviewing your business operations to search for ways to improve your systems and processes with the ultimate goal of improving your bottom line? The time has never been better to look for ways to tweak the systems and processes that will help improve productivity and profitability. Involve your employees. Ask them if they can think of ways to help the company improve the bottom line.

 

Reviewing your financials to see how you compare with industry averages is a good way to determine how solid your company is. Many qsc members utilize the qsc business coaches to help them with this. They can find out if their income and expenses are within averages for company’s their size. If not, then they have good ideas of what areas to look at to improve their bottom line.

 

The qsc Power Meeting in Houston, Texas, March 11 – 13, 2010, will focus on building a world-class business with Making Your Business Work For You! The E-Myth Solution. If you are looking for ways to improve your business, you will want to mark this on your calendar.

 

If you’d like more information about qsc, an enhanced service group of the Plumbing-Heating-Cooling Contractors—National Association, call (800)533-7694, or visit http://www.qsc-phcc.org/.                

 

2010 Hydronics: Going the energy efficient route

 

BY DAN FOLEY

 

For many hydronics contractors, 2009 was not a great year for business. Due to the economic downturn, low consumer confidence, and the housing slump, maintaining growth was a challenge for contractors, rep agencies, suppliers and even manufacturers. My company, based in the Washington, D.C. metro area was lucky enough to break even with 2008 revenues (approximately $3.5M) due to some existing projects booked that carried us through the year.

‘

We are fortunate to be based in an area that weathers economic downturns well, as our local economy is diverse. We are not dependent on one segment of the economy. High-tech firms, telecomm firms, defense contractors, bio med, military, government contractors, and of course, the federal government all stoke the local economy. When one sector is down, another seems to be flying. It has the net effect of flattening out the dips and downturns, which are inevitable. Other parts of the country which rely on one segment suffer when there is a downturn that affects that market. Auto manufacturing in Michigan and the real estate market in California are two examples that come to mind.

 

Within the past two years, my company has ventured in the solar thermal business. I used to turn this work away. After getting certified training from my primary vendor, Viessmann, I installed a simple dhw pre-heat system in my own home. I took on the work that I was turning away and now have over a dozen systems installed including dhw systems, pool heat and even a combined solar/dhw/radiant system.

 

I see this as a growth area for hydronic contractors. We already have the skill set to install these systems. With the proper training, no industry is better equipped to install solar thermal systems. With the 30% uncapped federal tax credit available through the stimulus package as well as local and state incentives, the systems are more affordable than ever.

 

We recently finished a project in Maryland where my client ended up with $9,500.00 in combined tax credits and grants — 50% of the cost of the project. We anticipate a substantial increase in this part of our business in 2010, which is good news for my company and my suppliers.

The stimulus package has significantly increased our sales of 90+ condensing boilers and I see this trend continuing on an upward path. Clients are choosing the high efficiency boilers in replacement situations due to the lower energy bills, as well as the $1,500.00 tax credit. Some states offer additional incentives as well. I expect to see this trend increase in the coming year.

 

Our vendors are seeing this trend as well. My primary hydronics vendor, Thos. Somerville Co. has benefited from this dynamic. Jeff Riley, Somerville’s sales manager, had this to say about the 2010 hydronics market:

 

“Even with the challenging economy we have seen significant increases in our sales of hydronic products from radiant floor components through condensing boilers. Our customers are really ‘warming up’ to selling comfortable hydronic systems with the focus on maximum efficiency. As a result our mod-con boiler business is thriving. One genuine indicator of future sales is the number of requests we are receiving for trainings on hydronic products. It is an exciting time for wet heat.”

 

One successful contractor who has chosen not to participate in the recession is Alan Givens, president of Parrish Services, Manassas, Virginia. Alan’s company is closing out a record year and has predicted a monster year for 2010 — 40% anticipated growth from $10M to $14M. Alan attributes this anticipated growth to three things:

 

1. The federal stimulus package and associated tax credits;

2. The phase out of R-22 refrigerant; and

3. Pent up consumer demand.

 

Ninety-eight percent of the equipment his company installs qualifies for the incentive.

 

“My technicians and sales force will only quote systems that are eligible for the tax incentives” said Givens. “I predict 2010 will be the best year for our industry in the last 20 years.”

 

I like Alan’s optimism. This is the attitude of a successful contractor and industry leader.

 

My good friend Paul Pollets owns Advanced Radiant Technology based in Seattle. His company specializes in high-end residential and commercial radiant projects. Paul has seen his market tighten up as the free-spending Microsoft millionaires and the high-tech economy has scaled back. Paul is a bit more cautious about the coming year.

 

“2009 hasn’t been kind to the radiant industry in the Seattle market. The downturn in the economy has been slow to recover, even in the land of Microsoft. We’ve seen a trend toward lower costing, an abundance of competitive bids that are often priced slightly higher than the cost of materials, and a ‘shopping’ tendency of homeowners and GCs. Value is seen on getting the lowest price, rather than a quality system installation. While these trends always have been present in the industry, they multiply with a bad economy where money is tight and prospects have seen a significant loss in their personal investments. The boiler replacement market also has been characterized by low pricing and the abundance of contractors willing to charge as little as possible to get the work. The reduction in fuel prices hasn’t helped the consumer to jump in and spend more for efficiencies, with little incentive for tax rebates. We can’t afford to be complacent, just because fuel costs are lower today. They will rise again. The thermal solar dhw market seems active, but seems to have turned into a commodity with contractors offering and installing systems using Chinese panels at what seems like minimal profit.

 

“I’m hoping 2010 will bring more business. I am slightly pessimistic about the outlook, considering the mindsets of the customers I speak with daily, and the cutbacks from major manufacturers on staff and inventory. The industry needs more state and federal tax incentives and more local marketing and support from the manufacturers. Jumpstarting the economy is not easy. ‘Trickle down’ monies from mass transportation or road projects don’t necessarily translate to any increased business for radiant contractors,” said Pollets.

 

Pollets also has ventured into the solar thermal market and sees an increase in this type of work in the future. He recently completed a large solar project for a local college that was written up in several industry publications.

 

Clearly the growth areas will be in renewable energy sources such as solar and high efficiency boilers that qualify for incentives. John Vastyan, noted hydronics researcher and writer, has monitored the market’s pulse for decades.

“Here in the United States, overall, it looks like the hydronics industry, say, compared with the way things were in ’06, is down about 30 to 40 percent. That’s a huge loss of business and revenue,” Vastyan said.

 

“But, the influence of green — federally-pumped dollars on a massive scale, and the push for renewable energy and energy conservation — have helped to move things back in a better direction,” said Vastyan. “From what I’ve seen, things are improving, but it’ll take some time — several months — before contractors, reps, wholesalers and manufacturers will see the 20, 30 and 40 percent improvements. When that begins to happen, radiant tubing and boiler sales will begin to move up at a pace greater than the incremental improvements we’re seeing now,” said Vastyan.

 

I hope John is right on in his prediction, and I think he is. This is an exciting time to be part of this growing and changing industry. The resources are available to improve and increase our sales and profitability. I intend to put them to work in my company and I hope you do, too. May we all have a prosperous year in 2010!         

 

Dan Foley is owner and president of Foley Mechanical, Inc. — an HVAC company based in Alexandria, Va. specializing in radiant/snowmelt systems. Dan began his career in the HVAC industry after earning his degree in Business Management from Virginia Tech in 1988. After spending 15 years at Arlington Heating and A/C, Inc., rising to the position of vice president, Dan Foley left the company in April, 2002 to start his own company. Dan has years of field experience installing and servicing radiant and hydronic systems to complement his managerial capabilities. He is an RPA certified designer and installer. Dan serves on the boards of his local ACCA, PHCC and RPA chapters. He is also a past president of the Radiant Panel Association. He holds Master HVAC and Master plumbing/gas fitting licenses in Virginia, Washing, D.C. and Maryland.