While the customers may never see this side of the business, HVAC companies spend a large part of their working hours traveling between jobs out in the field. Every mile logged in a company van or truck goes against the company’s bottom line in the form of fuel expenses and eventual maintenance costs.
Therefore, it is vitally important HVAC companies have a sound business strategy regarding the size and maintenance of their respective fleets of vehicles. Larger companies can easily have vehicle counts in the hundreds, while small outfits may only need one or two service vehicles. Regardless of size, each fleet must make attempts at increased efficiency and proper maintenance in order to have sustained profitability.
Of course, some trucks get better gas mileage than others. The same fact holds true for vans. Similarly, maintenance costs may ring up faster on one brand of truck than another. It is up to respective fleet managers to determine the best options for his or her fleet and how to balance the different challenges they face.
“Our fleet consists of more than 100 vehicles, mostly vans,” said Scott Berger, president, Arista Air Conditioning Corp., Queens, New York.
“The [vans] have been Chevys up to and through now, but we do have two new Fords — one with a medium roof and one with a low roof — being built in another month. The challenge with fleet size is that we essentially need 15 new vehicles every year. To jump in and get 15 Fords that we have never used before was a bit too scary. These two are a little more expensive than the Chevy vans — the 2014 Ford E150 has an MSRP of $28,600 compared to the 2014 Chevy Express 1500 MSRP of $27,710 — but we are hoping for better fuel efficiency.”
Those short-term and long-term monetary gains are crucial aspects of the decision-making process when it comes to a fleet of vans or trucks. Is it worth it to get a cheaper van with lower fuel efficiency, or is a higher-priced vehicle with better fuel efficiency the way to go?
“The fleet here at Atlas Butler Heating and Cooling is 106 vehicles, six trailers, and 11 Ford Transit Connects,” said Lee Driscoll, equipment and parts manager, Atlas Butler Heating & Cooling, Columbus, Ohio. “We have Ford E150s or E250s from 2003-2014 for the majority of the fleet. We went that direction because it has a smaller carbon footprint, and the Fords get good gas mileage. Our commercial division prefers three-quarter-ton vans while the residential division uses half-ton vans. That may not seem like a big difference, but we drove more than 1.7 million miles last year, so 2-3 miles per gallon is huge.”
Indeed, gas prices are an overwhelming factor in fleet management, and the national trend is favorable in that regard. Nationally, regular grade unleaded gasoline is averaging $3.28 a gallon, per USA Today, as abundant global crude oil inventories and swelling supplies are providing relief at the pump heading into the last quarter of 2014.
Leasing Versus Purchasing
While leasing as a direct expense can be advantageous for contractors, purchasing offers numerous benefits as well.
“We purchase,” said Rich Morgan, president, Magic Touch Mechanical Inc., Mesa, Arizona. “We’ve found transportation is a seller’s market. We replace the vans in our fleet somewhere between 80,000-100,000 miles. We get top dollar for service vehicles, and this allows us to maintain a fresh, pretty fleet. Most contractors drive their trucks into the ground, so it’s very rare to find service trucks for sale with less than 150,000-200,000 miles on them. When we are selling them with 80,000-100,000 miles, they are sold in a matter of days, and we get more than Kelly Blue Book value for them most of the time — especially for the vans.”
Atlas Butler Heating & Cooling prefers to beat the horses until they can’t run anymore.
“We purchase and drive the vehicles in our fleet until they die,” said Driscoll. “In 2008, when the economy really went down, we didn’t want to lease anymore, as it didn’t make financial sense. Most of our vans to 180,000-200,000 miles before we need to replace them.”
Concerns regarding vehicle usage and efficiency can often be negated by utilizing some form of fleet management software. The actual process of managing a fleet of vehicles can be a tedious one, and, when cost-effective, fleet managers opt to use an assortment of different software options and the latest technological developments to aid their efforts.
“We have 11 trucks in our fleet and utilize Sage Quest [now known as Fleetmatics] for real-time fleet management,” said Christopher Roth, president and CEO of Climate Control Experts, Las Vegas. “This has been one of our best investments, as it is integrated into our dispatching software. This also allows us to synchronize our fuel card purchases.”
Programs like Fleetmatics track vehicle location, fuel usage, speed, mileage, and other chartable data in an attempt to reduce operating and capital costs while boosting revenue. The information is logged and then presented to the user in a manageable document format.
“We recently teamed back up with Enterprise for our fleet management,” said Berger. “We hadn’t been working with fleet management prior to that. Enterprise handles all our fleet management data for us. They keep track of our vehicles, the miles we’ve put on them, gasoline prices and usage, etc. That’s good from a management standpoint. Enterprise has helped us to be more disciplined with our fleet.”
However, not all companies rely on outside sources to keep track of their transportation costs.
“All of our fleet management is done by one guy,” said Driscoll. “Accounting sits in on the process, and someone else does maintenance. Our main focus is that we have to keep guys on the road. After the life cycle of vehicles, we salvage what we can, such as refrigeration racks and such, then resell or junk them.”
Trimble recently released its Field Service Management (FSM) Connect, which enhances field service business processes by allowing access, use, and sharing of data across a variety of different systems.
“The amount of information a field service organization needs to operate successfully can be daunting, and one of the biggest challenges it faces is the lack of integrated data to provide a consolidated view of their processes. With FSM Connect, we can enable them to solve this challenge,” said John Cameron, general manager of Trimble’s field service management division.
“FSM Connect enables organizations by providing a single point of access for their field service information. In addition, it allows users to feed the integrated data into business analytics and reporting systems to make more-informed decisions about their field work that can drive productivity and enhance knowledge management.”
Publication date: 11/10/2014