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NORTH LITTLE ROCK, AR — Charlie Detherage said that Service Experts of Arkansas, Inc., is a typical early consolidator. The president and general manager of this $17 million residential-light commercial service company said the business reflects the strengths and weaknesses of the parent company.
“We’ve experienced the good and the bad associated with fast growth,” he said. “After the acquisition by Service Experts [the original company name was Hardwick Airmasters], we rolled up 14 other companies in the Arkansas area. We were on a pace of a new roll-up every two to three months in 1997 and 1998.
“We grew a lot mentally and physically.”
Detherage himself is not a former owner. His background in sales and marketing led to a position with Airmasters, a member of the Contractors Success Group (CSG). CSG was formed by John Young and Jim Abrams, who were eventually responsible for the creation of Service Experts.
“I’m not a former owner, but I have several former owners working with me,” he said.
Service Experts of Arkansas has four centers of operation within the state. The North Little Rock center employs 141 workers and divides its markets into two-thirds service and one-third new residential and commercial construction. The original company, Airmasters, was entirely residential service.
Coping with ChangeThe sale of Airmasters to Service Experts went fairly smoothly, according to Detherage. “There was an initial fear that came with changing the way of doing things,” he said. “It was also physically challenging to bring multiple operations together into one building.
“We have worked hard to develop good relationships with key employees from our acquired companies and are pleased with the high retention rate we have achieved.”
The Little Rock area has been stable economically for years. As the capital city of Arkansas, the city’s largest employers are federal, state, and local governments. After these, there is no dominant employer in the area, according to Detherage.
“There’s no heavy industry here, but there are some high-tech companies,” he explained. “No one major industry has a chokehold on Little Rock. That’s good because it means that we aren’t too dependent on any single type of company if the economy takes a downturn.”
No discussion of Service Experts would be complete without including its recent acquisition by Lennox. The giant manufacturer made industry news when it purchased Service Experts in 1999. Detherage said the deal was good for everyone.
“The Lennox purchase was the best thing for the employees,” he said. “It gave us stability and put us on the right track. Lennox is in this for the long term. They have gone way beyond the norm with their patience and understanding. They have a shot at the gold ring — to be the first nationally recognized heating and air conditioning company.”
Two questions lingered after such a radical change: how employees would react, and how contractors would react to being owned by a manufacturer.
“Several people had the fear of being eased out, but discovered that we want them to stay,” Detherage said. “With our many assets, we’ve been able to give people the opportunity to grow in ways that they might not have been able to in a smaller company. Even non-owners who have put in 25 to 30 years in the business feel they can grow with our company.”
And what about Service Experts contractors who traditionally sell products from Lennox’s competitors, such as Carrier and Trane?
“Lennox has not twisted their arms to sell its products,” Deth-erage said. “The North Little Rock location has been a traditional Trane and Carrier dealer. If you can convince me that selling Lennox products in our market would be the best thing for everyone, then I would consider it.
“Lennox International is very concerned that the independent dealers maintain their importance and presence in the marketplace. It is not to my advantage to offend existing Lennox dealers. They are my competitors, but there is plenty of room for everyone here.”
Process SolidLast year’s acquisition by Lennox has changed the philosophy and growth pattern of the North Little Rock location.
“Lennox said, ‘Let’s stop and get the process in order,’” Deth-erage stated. “We have operational challenges and we need to become process solid.
“Lennox bought the bargain of the century as long as they can put the process in place. They are doing the right thing.
“Due to the speed of our growth, there was very little time to examine our daily processes. We are taking a breath, getting better. We want our planning process to be more detailed. We also recognize that managing the cost of labor and materials is always going to be a great challenge.”
Labor management is something Detherage takes very seriously. He said that the Little Rock area is not immune to the labor shortages facing other contractors. That’s why he is taking a more compassionate attitude toward attracting field technicians.
“We believe in treating everybody with respect and making them feel important,” he said. “We also know that a job is not all about money — family time is very important. Our industry has been tough on our techs over the years. Our industry has been a revolving door for some workers.”
It’s been a period of adjustment for customers, too. With ownership changing twice in less than three years, it had to be a bit confusing. Detherage said it took a while for customers to get used to the “new” Service Experts name, but things are looking up now.
“We bit the bullet and changed our name at the beginning of the Service Experts acquisition. Now the customers are used to the changes, and we can focus on delivering service beyond belief with good profitability.”
Publication date: 09/18/2000