Boston contractors: A breed apart

June 1, 2000
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BOSTON, MA — New England weather — not too hot, not too cool — has long been a catalyst for tourism.

But something has been happening over recent years. The mercury has been inching up and New Englanders have been breaking out in a sweat.

“Air conditioning has changed from being a luxury to a necessity in New England,” said Arthur Pickett, owner of Royal Air Systems, Inc., North Reading. “New England is the last vestige of old-timers who have held out.”

He said typical homes are being readied for the new demand for air conditioning. “The vintage New England home has an empty basement and an empty attic. We work with customers to put mechanical systems in those spaces.”

Pickett is one of several residential and commercial contractors interviewed for this Boston series. In the first of four parts, The News will visit with Pickett, a neighborhood residential contractor, and with Peter Comeau, president of Refrigeration Engineering & Contracting Co. (RECCO), Inc., Medford, a commercial refrigeration contractor whose work includes food processors, commercial refrigeration, and ammonia plants.

Comeau also believes that New Englanders are unique, which may be bad news for people from the outside who want to do business there. “We still think of ourselves as being a region, being different from the rest of the country,” he said. “Contractors from outside our area are having a difficult time.”

Royal Air Systems

Pickett said he didn’t have designs on running an hvac business when he was selling equipment to contractors. He was selling Bryant products, but they went into private distribution in 1981 and he didn’t want to continue as a distributor so he decided to start his own business. The rest is history.

“It was perfect timing,” he said. “I decided to temporarily start a service business and began pounding on the doors of commercial establishments. Within a week, I was generating a week’s pay.”

Pickett depended on his roots in the community for business contacts and he steadily built the residential-retrofit business into a 14-person shop featuring Lennox products. He likes to work directly with customers and forego connections with builders or general contractors.

Being located on a busy highway helps, too. Pickett said the company has quite a few walk-in customers.

North Reading, a bedroom community of 12,000 to 14,000, fits Pickett’s style and he has watched an aggressive growth spurt recently — at least 200 new homes have been built in here in the past two years. “With all of the new homes being built, we are starting to pick up some service work. A lot of the builders around here don’t have service departments, so people come to us.”

A better image for hvac work?

Pickett sees a lot of exciting things happening in the hvac industry. He acknowledges that the labor shortage is the number-one problem, but he is encouraged by the emerging image of hvac.

“I wish I was 10 years younger,” he said. “I believe the industry has finally come into its own. I’ve got Service Experts on one side of me and Boston Gas on the other side doing installation and service. Sears is on another side and I’ll probably soon see a Home Depot nearby giving me competition.”

In other words, he jokes, “Don’t sleep more than six hours because when you wake up, things may be different. “The business has emerged from a guy’s garage on the side of the house to becoming a legitimate business,” he said. “All of this means that customers have a higher level of expectation.”

Pickett thinks the consolidation movement is “fantastic,” because it adds to the industry’s professionalism. He said that Sears will also bring professionalism to the trade, and its presence may generate new leads for Trane dealers. But he’s not ready to fold up his tent and join a national presence.

A new concept: 'selling manhours'

The labor shortage has changed Pickett’s focus from “selling boxes” to “selling manhours.” The results have been interesting. Pickett’s equipment purchases are down 8%, but his gross sales are up 15%.

He contends that lower prices do not always satisfy a customer, especially if the products and service are poor.

“Customers will remember if you stick it to them. It may not be right away, but someday, maybe years later at a cocktail party, they’ll remind you.”

Pickett would like to stay competitive with his pricing, but it’s a struggle going against a utility that has the financial strength to offer good rates.

Boston Gas started a separate company, Service Edge, which competes with Pickett for service contracts. Boston Gas also does some installation work using subcontractors. Pickett noted one interesting thing about this “separate” company. “Boston Gas has its own trucks with certain colors and style of letters; Service Edge came out with the same colored trucks and lettering. They are technically a separate company and they are operating legitimately.” Despite the increased competition and price squeezing, Pickett’s bottom line is a satisfied customer.

“I would hope that I don’t have any unhappy customers,” he said. “I’ve even given an unhappy customer’s money back. I don’t want them saying anything negative about us.”

As for his future, Pickett would like to encourage more of a walk-in trade and add some new products to his current lines, for customers to browse through.

“I think there will be a lot more showrooms in the future,” he said. “In our area, there is a good market for fireplaces and high-end gas barbecue grills. I just wish we had the labor to install them.”

Recco: Working in refrigeration

What do Pillsbury, Coca-Cola, General Foods, and Budweiser have in common? If you said you’ve purchased products bearing their names, you’d be correct.

If you said their manufacturing and distribution plants shared the same mechanical contractor, you’d win first prize.

The companies are part of the client list of RECCO, a commercial refrigeration contractor formed in 1971 by Bill Hoover and Fred Antoon. Current owner Peter Comeau, who came up through the ranks, eventually bought the company in 1995. The company employs 10 to 12 office workers and 20 to 40 field workers. Annual revenues run between $10 million and $12 million.

“I came to work here in 1977 because this company was more involved in refrigeration than any other contractor in the Boston area,” Comeau said.

The union contractor also has worked with Boston College in the construction of its new ice skating rink. “We build rinks, having done several for local schools,” said Comeau. “We also prepackage our own refrigeration [systems] and send it out on skids.”

Juggling techs through the union

The nature of the work often makes it difficult to find qualified service technicians, which is compounded by the nationwide shortage of manpower.

“It takes years to train lead people for our teams, particularly in specialty areas like ammonia service,” Comeau said. “We are bringing in people from Texas and New Jersey, and switching people from one local union to another in order to make up our crews. We have permission from our local [union] but as things change, we may not be able to mix.”

Comeau says the bottom line is that there aren’t that many people out there who want to go into this type of work — and he thinks he knows why.

“This is not a glamorous industry for a kid getting out of high school. This has been a steady industry for over a century, and now it is volatile because of the computer industry.”

The advantage to working in the commercial refrigeration trade is the appeal of working with new technology, particularly in the ammonia and food industries.

“The ammonia industry is being looked at more for use as a refrigerant by people who would have never considered it before,” he said. “Our mechanics like this work, and the hours available are unlimited.”

The many faces of competition

Comeau is keeping an eye on the expansion of consolidation into the area. Although it has not had an immediate impact on his business, he does have some opinions on what may happen in the future.

“It [consolidation] is something I cannot control and there is a possibility that it may hurt my business,” he said. “It’s something I have to adapt to and I may even become part of that movement someday.”

Comeau is also concerned about the consolidation of manufacturers. He sees jobs disappearing and his industry losing smart people because they are being forced to move on.

“We have manufacturers that have been bought up and facilities centralized,” he said. “We now have fewer people we can talk to about equipment.”

Another form of competition is coming from equipment manufacturers, with the recent marriage of Sears and Trane products. Comeau said that this trend may have a bigger effect on hvac contractors than on his company, because “We’ve always had manufacturers compete with us.”

Utilities represent another form of competition for hvac contractors, but they have not had the same impact on RECCO. “Refrigeration has not been a big enough industry yet for utilities to go after and offer services to, but we’ll have to watch out for it.”

Comeau said he would like to increase business by 50% while maintaining a good profit margin. But he would rather look at his clients’ success than his own bottom line.

The company’s goals include doubling the size of the service area and becoming more professional through new training. Comeau said safety issues and energy usage are critically important to his clients.

He would like to grow, but not at the expense of profits. “I don’t want to work harder and make less profit.”

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