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Comprehensive Energy Services, Inc. (CES), is one, with close ties to Universal Studios entertainment projects. The other is Mechanical Services of Orlando, Inc./GroupMAC (MSI), which does a lot of work with the Seaworld entertainment complex.
Both companies have been on the fast track to success and owe a large part of this success to their close ties to the entertainment industry, namely Disney and Universal Studios. Although competitors for some of the area’s many design-build projects, both companies maintain a mutual respect for each other.
“Much of the high-end work goes to us and MSI,” said Todd Morgan, president of CES. “We both serve the same niche markets.”
The whole story of each company’s success goes beyond the entertainment business. Let’s take a look at each one and see how they respond to the changing tourist and commercial business in and around Orlando.
CES, Inc.Headquartered in Orlando, CES is a full-service mechanical contractor. The company handles design-build construction, engineering service and maintenance, environmental-IAQ, energy management, building retrofits, and tenant services.
“We are very strong on the design-build side,” said Morgan. “We also have a strong service operation that complements our relationships with building owners.”
Morgan said that attraction work is an established niche with CES, beginning with a universally popular movie theme.
“The first large attraction we did was Terminator 2, 3-D for Universal Studios Florida,” he said. “After that we started work on the Twister project. Now we are working on a new project called Men in Black.”
These large projects have a two-year lifespan. CES gets involved in the initial design stage and the meetings with Universal’s creative people have produced some interesting results. It’s not every day that a company is asked to incorporate special effects into its design-build plan.
“We provided the hydraulic systems that operate the robots in Terminator 2,” Morgan said. “We were responsible for the design and installation of a lot of the special effects, including the liquid nitrogen and steam which provide the fog-explosion effects.
“We handled all of the wind effects on the Twister project, on a design-build basis, as well.” Creating special effects involves a lot of research and development. There is a lot of mock-up work and testing that goes into a special effect before it is installed and tested again. Many times the effect is changed again and again.
“When we [and Universal] created the wind effect for Twister, we were creating something that had never been done before,” Morgan said. “There was a lot of tweaking going on throughout the whole process.
“This type of design work is well beyond the standard air conditioning work and CES has developed a unique level of expertise.”
Ice is niceThe latest special effects project involved the Titanic exhibit in Orlando. CES was tasked to create a giant ice wall and recreate the setting for the night of the tragic sinking.
“The owners asked us if we could create a 16-foot-wide by 8-foot-high replica of the iceberg and we said yes,” he recalled. “After all, ice is what happens when an a/c unit is not properly working and a coil ices up.
“We also had to create a cold, clammy environment to simulate standing on the deck under the starry night sky.”
Since projects like Titanic are monitored through a series of direct digital controls, it is easy to keep a constant tab on any problems that may develop onsite. Morgan relayed the story about a challenge involving the ice wall. It was melting and one of his techs needed to troubleshoot the refrigeration system.
“He took out his laptop, connected to the project via the telephone lines, and was able to pinpoint the problem,” he said. “One of the a/c units switched into the heat mode as the room temperature dropped from the iceberg, and was blowing hot air on the ice. Our guy changed the settings and effected the repairs without making a service call.”
Growth profileCES maintains an onsite presence at Universal Studios because of their ongoing projects and continued growth in the next few years. By keeping up with its demands, Morgan will be able to continue leading the meteoric rise of the business, averaging 33% each year over the past seven years.
“This year we expect to do $8 million and will grow to $20 million in four years,” he added. “We enjoy the growth because it gives our people the opportunity to grow.
“But it is critical that we have controlled growth. We have turned down work because we couldn’t properly man the project.”
Although the design-build aspect of such attractions is an interesting part of the business and one that brings in new recruits, the majority of CES’s markets are in retrofit and renovation. It also has a tenant finish group among its commercial accounts, and recently added plumbing services to the line-up. The service department is quickly growing, too.
“We are a solutions provider and as such, the service side is a very important component for us,” Morgan said.
He also boasts about the company’s IAQ department, which is run by his son, Todd S. Morgan Jr. The younger Morgan got his degree in environmental studies and EPA policy from Michigan State University, where he became interested in the indoor environment. He now is developing CES’s capabilities in the IAQ area.
Another future growth area for CES is in partnerships with local utilities. The company has been involved in a series of performance contracting projects with the non-regulated energy service side of the utility companies.
“We try and find opportunities where we can work with energy service companies (ESCOs),” added Morgan. “The ESCOs are looking at markets that we are very involved in right now. We see this as a future growth area.”
Since the company is “pushing the right buttons,” it is obvious that a slew of consolidators would take an active interest in adding CES to their nest.
“We have been approached and I believe we are very attractive to them,” Morgan said. “Right now I prefer to stay on the sidelines. We are too wrapped up in our own growth to think about cashing out.”
Mechanical services of OrlandoUp the road in Orlando, Bill Dillard is focusing his attention on starting and maintaining long-term relationships. The ceo of MSI recently ushered in a new era of growth for his company by joining forces with national consolidator GroupMAC.
“It was an obvious choice for us [to join GroupMAC],” said Dillard. “They have built backroom support for our business to grow in Florida.
“I believe this is another vehicle for bringing in people to the company who can become owners and shareholders.”
It is also a great way to deal with a succession plan. Dillard has three siblings actively involved in the everyday operations and he would like to make it easy for them once he decides to hang up his spikes.
“When a business gets to be our size, it becomes more difficult to pass it on,” he said. “The larger you get, the more you accumulate.”
MSI has two offices, in Tampa and Orlando, and employs more than 300 people. The company’s revenues for 1998 were $30 million.
The full-service mechanical contractor serves the commercial-industrial markets in central Florida, and focuses on IAQ-environmental work, tenant services, health care, new construction, and retrofitting, to name a few markets.
“Our primary focus for new construction is in central Florida,” Dillard said. “Our goal now is to grow the service side of the business throughout the state.
“Our industrial market is about 20% of our business. Central Florida does not have a large industrial base. The majority of our work is in commercial, some which is indirectly related to the tourism industry.”
Seaworld connectionMSI is also going after niche markets. One of the biggest examples is its relationship with Seaworld.
“We do all of the life support systems for the large aquatic animals at Seaworld,” Dillard said. “These are large water-circulation systems with special filtration and special treatments to keep the animals as happy and comfortable that they can be in a manmade environment.”
MSI is currently working on a new theme park for Seaworld, titled “Discovery Cove.” Some of the project includes a 2.5 million-gal dolphin salt-water tank, 2 million-gal shark fresh-water tank, and seven miles of process and hvac piping and multiple pumping systems.
The value of MSI’s portion of the project is $18 million.
Dillard noted that these high-profile jobs are more of the exception than the rule when it comes to projects in the tourism-entertainment business.
“Disney is a customer of ours but primarily in the aftermarket,” he added. “We operate Disney’s worldwide data center. We have a contract to maintain the mechanical services for the building.”
Their limited exposure to Universal Studios’ project includes the Twister, which fellow contractor CES has a large stake in. MSI provides climate special effects, and gas piping and hvac systems for pre-ride areas.
Other new projects in the MSI portfolio include educational projects such as the Campus Crusade for Christ, hospital construction and retrofitting, multiple projects for the University of Central Florida, and a dehumidification retrofit for the Doubletree Hotel.
Comfort, IAQMuch of their work is designed to improve the indoor environment in existing buildings. Environment seems to be the buzzword in MSI’s business philosophy.
Although the average building occupant may not be able to relate to comfort levels inside a giant Seaworld aquarium, they know indoor comfort is important. Dillard said that building owners are concerned about comfort and IAQ.
“The indoor environment doesn’t have the same hysterical impact that it has had in the past,” he said. “We are now getting general contractors involved in IAQ problems during the construction process, so we can avoid problems later on.
“Comfort conditions are the number one concern of building owners. If they don’t feel warm or cold, the system is perfect.”
Keeping his customers happy is a top priority for Dillard. He knows there are more growth areas in south and north Florida. In order to penetrate these markets, he will need to have an expanded staff of qualified individuals.
“We are fortunate to have good training programs, which are great resources for our people,” he added. “We also have a good training program through our affiliation with the union in central Florida.
“We are the largest employer of indentured apprentices in Florida. But like every company in our industry, we could still use good, qualified people. Our industry has ignored this problem too long and now we are paying the price.”
Dillard added that his company keeps a mixture of union and non-union workers who have formed a good working relationship.
One way of forming a good bond with employees is to show its appreciation for them. MSI recently had a barbecue for 70 associates who are working on the Seaworld Discovery Cove project. While it provided a welcome payback to the workers, it also was a slap of reality for Dillard.
“I looked at the demographics of the workers out there and most of the craftspeople were older than me,” he reflected. “It is a scary thought to think that we are not attracting young people to our trades, especially pipefitting, service technicians, and sheet metal craftspeople.”
Another issue facing the hvac trade is utility competition and partnering. Being a large mechanical contractor, MSI is looking to utilities for the opportunities to work with them, rather than to compete with them.
“One of our senior staff focuses solely on energy systems and integration, which really are utility issues,” he said. “We work with local utilities to develop future strategies because we would like to partner with them.
“They [utilities] are having a hard time figuring out how to integrate their core business into our core business so they would rather partner with us.”
Florida will be one of the last states to deregulate the energy market. However, every major utility in the stab is positioning itself for that day by setting up different entities. That includes partnering and acquisition, not an inviting scenario for Dillard.
“I wouldn’t want to be owned by a utility,” he added. “They make decisions in the middle of the night which could be a complete right turn from their strategic plans. It’s a little disconcerting.
“We’ve already seen examples of utilities that headed into the hvac business and then stopped in the middle of the road and headed in another direction.”
It appears that MSI is headed in one, focused direction and Dillard attributes that focus on the people he works with.
“I’ve surrounded myself with good people who have allowed me to deal with the changes in the industry,” he added. “I’ve been able to keep an eye on things through the windshield and they [co-workers] have been looking through the rear view mirror, making sure we have delivered our services.”