ACHRNEWS

Integrity of the Game, Fair Competition

March 7, 2011
Mike Murphy

When the New England Patriots violated NFL rules by videotaping in-game hand signals of New York Jets coaches, the proverbial you-know-what hit the fan for league commissioner Roger Goodell. It led to his implementation of a policy called “Integrity of the Game and Fair Competition.” The policy required all owners, executives, and head coaches to certify annually that they have complied with NFL rules and policies and have reported any violations.

I wonder if something like that could prove valuable in the HVAC industry. Maybe the time has come.

Competition in whatever form it takes is usually good for business. Take the advent of HVAC manufacturing firms that were pulled into the service business. Decades ago, the industry required the manufacturers of large chillers to provide startup service. A quick history lesson as told by Pat Rucker of Entech Sales and Service, a friend in Dallas who was already tinkering around when Willis Carrier was in junior high school:

“Contractors began to lean on these startup technicians to diagnose and solve all system problems even if it had nothing to do with the manufacturer’s equipment. Contractors were a little lazy in making sure equipment was piped and wired properly and water flows met design conditions. If the manufacturer did have a problem with their equipment they would hire the contractor to make repairs while the manufacturers supervised. Contractors were often too busy to furnish the labor and began to insist the manufacturer furnish labor.”

It is no big surprise that these relatively new service organizations had to look for more work in order to sustain business. And, so it was that companies like Trane, Carrier, McQuay, York/Johnson Controls, and others became involved in providing service direct to owners. Today, these companies compete for service alongside mechanical contractors. It’s been that way for quite a while, and it will continue.

Another example: Utility companies have from time to time become involved (sometimes successfully, sometimes not) in providing services and materials to the homeowner market - and, even some involvement in light commercial markets.

Yet another example: General contracting (GC) firms such as Turner Construction began providing design services directly to owners within the last 10 years.

Even more recently, a reader of The NEWS brought to our attention that he has noticed an onslaught of activity by “facility management companies.” These providers engage in everything from HVAC to electrical, and lawn mowing to sidewalk washing.

Competition takes many forms, and if a contractor is going to make a living in HVAC, good competition is to be expected - wherever it comes from.

Periodically, good competition gets a wee bit aggressive. Take Coach Bill Belichick’s Patriots for example. Perhaps his team was simply looking for an additional advantage when some enterprising assistant got a little carried away.

Rucker shared with me a conversation he had with a manufacturing company president, as they were discussing competition. “He asked me what contractors want, and I said, ‘We’re just looking for an unfair advantage, like everybody else.’ We both laughed, but seriously, everyone is looking for an advantage in the market. What we have to be careful of are those times when competitive practices begin to limit an owner’s choices. In other words, very few owners want to be sole sourced with regard to service provider selection.”

THE COST OF COMPETITION

I have had the opportunity to be a fly on the wall at some fairly high level discussions between industry leaders. Some of those discussions involved fair competition practices. It became clear that the top guns are not always apprised of what happens in the field. No surprise there; (I never told my boss everything that I was doing when I was selling equipment 15 years ago.) So, just as Belichick may not have had any idea about the videotaping violations, company leaders may not always know about a particular competitive practice that might limit competition.

Competitive practices seem to cycle in the industry about the same as everything else in business. For a few years, competing parties (contractors, general contractors, manufacturers, utilities, facility management companies) will get closer to singing from the same hymnal, and for a few years they won’t. People yell and scream and get some attention for their issues or grievances. Then, the cycle repeats itself.

While everyone may be looking for Rucker’s “unfair advantage,” it’s a good thing none of us work for NFL Commissioner, Roger Goodell - he fined Belichick $500,000 for his role in “Spygate,” and the coach might have just had his headphones on too tight. Goodell could have overreacted with Belichick, but the NFL got a message about a code of ethics from the new sheriff in town.

Publication date: 03/07/2011