ACHRNEWS

Albuquerque contractors: A changing breed, indeed

May 1, 2000
ALBUQUERQUE, NM — Not all hvac contractors follow the paths of their founding fathers. There are stories about service contractors who started out as plumbers, residential new construction contractors who graduated to commercial service and replacement, fuel oil distributors who added residential service, and so on.

Many contractors say that their business today is a big deviation from what the original owners intended it to be. Two examples of this model are located at the base of the Rocky Mountains in Albuquerque: Carlson Heating & Air Conditioning and Yearout Mechanical & Engineering.

“Our company started out in 1971 as a commercial new construction contractor,” said Byron Carlson, owner of Carlson Heating & A/C. “I bought the business from dad in 1991 and turned it in a different direction. We went after the service and replacement business and turned away from new construction.”

Kevin Yearout is a fourth-generation owner of Yearout Mechanical. The business was started “in the early 1900s” by his great uncle.

“The business started out as strictly a plumbing company and in 1985, we became a full-service mechanical contractor which included heating and air conditioning. We also started out in process piping in 1979, which led us to our niche market, the high-tech industry.”

As the landscape around them changed, so did their market strategies. Now these two successful contractors are busy servicing an expanding high-tech and service market that has Albuquerque pushing its boundaries to the mountains in the east and the plains in the west.

Carlson heating & air conditioning

Carlson was the typical “young man growing up working in the family business. I started out sweeping floors and worked my way into the inventory side of the business, stocking all of the trucks.”

He also got into service and installation work before heading off to college to get his degree in business administration, which his father recommended if he wanted to stay in the hvac business.

“You have to know the business side of things,” Carlson said. “It’s one thing to know the technical side of the business, but you really need to know the operational side as well.”

One of the operational aspects of the business is hiring and retaining employees. Carlson employs 20 workers. He believes that his company is a good place to work because of what it offers to employees and the types of markets it serves.

“We promote a great working environment with exceptional benefits,” he said. “Morale is real high in the company. Word gets around that we are one of the better companies to work for.”

Carlson likes to hire graduating students from the Technical Vocational Institute (TVI), but he admits that the pickings are often slim because there seems to be more of an interest in computers than the hvac business. But even a technical degree does not ensure success.

“We look for personality, if they are good with customers and can think on their feet,” Carlson said. “We can always teach them the technical side.” Carlson also makes his company attractive to new hires by planning his service contract workload around the weather. That way, he can count on keeping his staff fully employed all year. Although 1999 was a mild year, he said he has planned well and kept busy during the slow months of February and March. (See related article, page 14.)

Deep Base

Keeping busy means maintaining a solid customer base and Carlson thinks his approach to the commercial service business is key to his success. He does not have to gear his marketing to price-conscious homeowners.

“There are a lot of price shoppers in our area,” he said. “New Mexico is a poor state, which is why many homeowners shop for price. We go after the higher-end customers who are more service-driven.”

Carlson also goes after the up-and-coming commercial accounts in town. “A lot of telemarketing companies have relocated here and Intel has become a major employer in the state. We target the support businesses of large companies like Intel.”

Although commercial accounts are important to Carlson, they still only constitute 30% of his business. The remaining 70% is in residential service and replacement and he has a lot of ways of marketing his company to Albuquerque homeowners.

“We ask customers to give us a report card and ask them if they know of anyone else who could use our service,” he said. “We target neighbors of our customers by using direct mail.

“We also do a lot of radio advertising with a jingle, which keeps the company’s name on the listener’s mind.” The company runs the same radio ads while customers are on hold during telephone calls.

Carlson’s success depends on growth. He knows it. He has seen consolidators come into the area, and he has seen the one-man shops grab their share of the market. There’s room for everybody in Albuquerque.

“I believe there will always be a place for contractors of any size who do a good job while catering to their customers,” he said. “Where we have an edge over consolidated competitors is that we are locally owned and know the local market well.

“We are involved in the day-to-day operations and are able to react quicker to our customers.”

Yearout mechanical & engineering

It’s not unusual for The News to pay a return visit to a newsworthy contractor. We visited with Yearout Mechanical in April 1994. Back then they talked about their safety record and how it affected the bottom line.

On this visit, we took a look at the bigger picture.

The contractor has evolved from a “mom-and-pop” shop to a leader in the design-build arena, according to Kevin Yearout.

“Five years ago we started getting into design-build work,” said Yearout. “Now 80% of our work is negotiated, and 70% of that amount is design-build.”

Today, the 170-employee company is heavily involved in the commercial-industrial markets in New Mexico and also maintains commercial and residential accounts. Despite its size, it still has a family atmosphere.

Yearout’s father, Kim, is still involved as an estimator. His wife, Lian is the controller, and brother Bryan is in project management. His uncle, Frank Moser, is a project manager and Moser’s daughter Amy is a project assistant.

If Yearout could employ more family members, he might have the market cornered on how to find good, qualified help. But like so many other contractors, his biggest concern is the shortage of qualified manpower.

Growing workforce

Although Yearout describes the business atmosphere in Albuquerque as being fairly steady with few ups and downs, he knows that in order to compete for projects with other commercial contractors, he has to keep expanding his workforce.

There is plenty of competition for sharp employees with corporations such as Citicorp, Intel, and Emcor in town.

“Manpower is tough to come by,” Yearout said. “It’s even hard to find unqualified manpower sometimes. We can run a want ad for two weeks and get one applicant.”

Yearout sees the shortage of workers as an industry problem. “Somehow we have to get the kids coming out of high school and get them to come back to our industry.”

From an individual standpoint, Yearout believes one key to overcoming a shrinking workforce is to make the work less “labor intensive.”

“We do a lot of prefabrication now where everything is designed up front,” he said. “Prefabrication, preplanning, and automation are important.”

Yearout believes if the work is interesting and rewarding, workers will stay. Showing them the value of their work is very important.

“We do interesting work, not the everyday strip mall or office building,” he added. “What our people do is important, such as a semi-conductor plant making chips, or a hospital that needs its systems to function.

“Interesting work is what is going to bring people back to the construction industry. We aren’t just plumbers and tinners — we are craftspeople.”

That type of thinking is important because of the changing face of hvac customers, especially in the Albuquerque area, where high-tech companies are becoming more commonplace.

“As sophisticated customers move into our area, contractors have to learn how to deal with them,” Yearout said. “We have to be more sophisticated. One way to show that is through our ability to communicate with each other. We recently did a design-build job and 90% of the documentation was done through electronic mail.

“We have been known as a blue collar industry but now we have to be more technology-driven.”

Sidebar: A member of EAI

Yearout Mechanical has the advantage of membership in a national organization, Excellence Alliance, Inc. (EAI), where owner Kevin Yearout is able to use the combined expertise of more than 200 contractors.

Although he has been with EAI less than a year, his company has already earned the Western Region Contractor of the Year Award.

“Roll-ups and consolidated companies have the advantage of gaining knowledge from other member contractors,” Yearout said. “And I think that is an advantage that EAI offers, too. We have the opportunities to learn from each other.

“National organizations are a good way to pool the knowledge of all contractors.” 

Sidebar: Swamp coolers make for tricky, yet lucrative service agreement schedules

Byron Carlson said one of the big reasons he can retain good workers at Carlson Heating & Air Conditioning is to keep them fully employed year-round. It takes planning — and an abundance of evaporative cooling systems.

Part of the careful planning involves scheduling of changeover service and maintenance of this popular form of cooling for this Southwest region, also known as swamp coolers.

Evaporative cooling, the process of filtering intake air into cool, humid air, is very popular with new construction in the Albuquerque area, despite the fact that maintaining an evaporative cooling system is more costly than conventional cooling systems.

Knowing when to convert to and from evaporative cooling in the fall and spring is a critical decision for homeowners.

“Timing is critical in shutting down an evaporative cooler,” Carlson said. “A lot of these systems are tied together with a home’s heating system using the same ductwork. When you convert to heat, you have to disconnect the evaporative cooler. If you wait too far into the fall, we encounter freezing problems.

“It creates extreme spikes in our service schedule. The phone rings off the hook. It seems that we never have enough people to gear up for that demand.”

Carlson said there are many cases when a swamp cooler has been started up and a cold wave hits the area accompanied by a sudden snowfall. In that case, his company has to go back out and shut down the cooler again — a costly service call for the customer.

“Because of that, we let customers decide when to schedule the changeover,” he said. “We give them an average date for changeover and they make the decision, which takes the responsibility off of our backs.”