HVAC Industry Keeps Truckin’ Along
Buying, selling, and maintaining company vehicles requires vigilance
One thing almost all contractors have in common is the continual need to buy, sell, and maintain their trucks. These workhorses of the industry take a beating, racking up significant mileage as service and installation crews haul themselves, and a significant amount of tools and parts, from one job to the next.
Because trucks are a crucial part of any HVAC contractor’s business, it’s imperative that they be kept in good working condition, which requires constant oversight and, of course, money.
“Fleet acquisition, maintenance, and repairs can cost a lot more than necessary if you don’t monitor the expenses,” said Eric Knaak, vice president and general manager of Isaac Heating and Air Conditioning in Rochester, New York. But, if you keep a close eye on costs, he said, it’s definitely possible to reduce a company’s overall fleet expenses.
The Isaac Heating fleet consists of approximately 165 Chevy cargo vans, a handful of Ford Transits, several Chevy City Expresses, five box trucks, and a couple of stake body trucks. The company buys all its vehicles outright, then amortizes the expense over five years to the appropriate department. “This allows us to maintain our fleet while not carrying any debt on our fleet acquisition,” said Knaak.
All Isaac Heating vehicles are ordered without cargo area windows along with “hockey puck” locks on the side and rear cargo areas, which have drastically reduced problems with theft. Each vehicle is also equipped with a bulkhead, so that if someone were to gain entry to the cab, that person would not be able to access any items in the rear cargo area. “We do ask our drivers to keep electronic devices [and their power cords] and valuables out of sight when vehicles are parked overnight or in any of the more crime-prone areas of the city. For the most part, when these procedures are followed, we seem to do pretty well.”
Grand Rapids, Michigan-based Schaafsma Heating & Cooling purchased all 24 of its vehicles outright because leasing just does not make sense, said company president, Kevin Walsh. “We keep our vehicles a long time, and I’ve looked at leasing before, but, compared to purchasing and breaking down the cost of the van out over seven years plus the residual value, it doesn’t make sense. We also wrap our vehicles and install shelving that may not fit into the next van, and amortizing that cost out over seven years versus a three-year lease can save us $60 to $70 per month.”
The service and install vehicles at Schaafsma are cargo vans that range in age from 2009 to 2015. Preventive maintenance technicians drive smaller vans, such as the Ford Transit Connect, while salesmen drive cars with fold-down rear seating for extra storage. Being in the heart of the automotive industry, all vehicles purchased are American-made and use regular gas, said Walsh. “Our acquisition costs might be higher than most because we want certain items on the vehicles that we view as safety-related or as employee perks.”
For example, Walsh has been ordering all vehicles with backup sensors, and he recently started equipping vehicles with backup cameras, as well. “Many years ago, we had an employee who accidentally backed over his son in his personal vehicle. We would never want anyone in the company to experience that tragedy, nor would we want it to open us up for liability. Our vans also come with drop-down ladder racks, which help prevent back injuries and make employees’ jobs a little easier. We also typically equip vehicles with hands-free communication.”
Flock’s Heating and Air Conditioning in Cashton, Wisconsin, also owns its four service trucks and six install trucks outright, and all are manufactured by Chevrolet, said Mark Flock, president. “We purchase all our vehicles from a dealer who also gives us his HVAC business. We put about 30,000 miles on each service truck and 20,000 on the install trucks every year. We try to keep them until they have 200,000 miles on them, but salt on the roads during winter can be very hard on their bodies. If the vehicle has major mechanical problems after 100,000 miles, we will consider replacing it then.”
MAINTENANCE AND REPAIR
Walsh used to like keeping his vehicles as long as possible — typically until they died — but when he started reviewing their repair histories, he noticed a trend of higher repairs at the 125,000 mile mark. “Whether to repair or replace always boils down to what is the life expectancy after the repair and the future cost of ownership compared to buying a new vehicle — much like a homeowner needs to decide when facing that decision for their furnace or air conditioner. We try to use the same criteria we ask our employees to use when guiding customers through this decision, because how can we ask our employees and customers to do this if we don’t do it ourselves?”
To make the Schaafsma fleet last as long as possible, cargo vans start out as service vehicles until they reach about 2 years old or 45,000 miles. Then, they become installation trucks, which usually average about 12,000 miles a year. “We sell them around 120,000 miles, because they still have a decent resale value at that point,” said Walsh. “Michigan roads are in bad shape, and, with the loads we carry, the front suspension usually needs to be replaced around that time.”
Normal maintenance also helps cut down on major repairs. Walsh uses two preferred vendors to do this, and tracks the repair histories of the vehicles. “We do not do on-site maintenance, because we feel these vendors can do a better and more thorough job, as they have all the necessary tools.”
Knaak tries to keep vehicles until they reach the 150,000-mile mark, but, if a significant repair is needed sooner than that, the vehicle may be retired early. “Service vehicles typically get to 150,000 miles in a seven- to eight-year period. Installation trucks are usually only around 80,000 to 100,000 miles at the eight-year mark, so they may get retired based on age. Commercial service vehicles can achieve 100,000 miles in the first three to four years because of the area that we cover, so they may only last six or seven years — it just depends.”
Most repairs are handled at one of two locations, said Knaak, which allows the company to work with a vendor that has an understanding of fleet services. “There are required services, and there are suggested services. As a vehicle ages, it’s important to have an understanding with your repair shop as to what’s needed and what’s suggested. Any item related to safety should never be compromised.”
Technicians at Flock’s Heating and Air Conditioning live and work in a rural area, so they take their trucks home at night and are responsible for keeping their vehicles clean and maintained on time. “They lose the benefit of taking the vehicles home if they don’t take care of them,” said Flock.
This has not been a problem, said Flock, as vehicles under warranty are taken to the dealer they were purchased from. After that, technicians normally have service performed by a repair shop near their homes so it’s convenient for them to drop off the vehicle on a Saturday. “We also try to use repair shops that have us do their HVAC repair and installation work.”
To keep track of his fleet and make sure it’s safe and secure, Knaak relies on a GPS system, which is used in about 70 percent of company vehicles for dispatching and sending assistance as well as ongoing monitoring. “The dashboards are accessible by management through a smartphone or PC, so vehicle details are always readily available.”
Walsh also uses GPS to track maintenance and monitor driving habits. “Items like GPS, backup sensors, backup cameras, and other items add to the upfront costs of our vehicles, but we think they pay for themselves in the long run.”
SIDEBAR: Keeping Vehicles Safe and Sound
The value of stolen vehicles and inventory does not take into account the significant costs associated with theft, especially if you are a contractor. Along with the painstaking process of filing reports with police and insurance agencies, there’s also a significant loss in job productivity, a void in transportation methods, and added business expenses to replace. Thus, securing vehicles and tools at all times needs to be a priority for contractors.
It’s imperative that contractors protect their assets by locking all equipment when not in use, and, if possible, keeping inventory in a location that is off the street, such as a locked shed. The job site itself should also be secured, either leveraging secure fencing, posting no-trespassing signs, or employing a security guard to patrol the area on holidays and/or weekends. Contractors also need to keep in close contact with local police so they are aware of the area and can be monitoring it during off hours. Trucks should remain locked when not in use, and employees should never leave the keys inside or nearby the vehicle. It sounds obvious, but more than 40,000 vehicles were stolen last year with their keys in them, according to the National Insurance Crime Bureau.
Contractors also need to be aware of the surrounding areas to understand the risks regarding theft and must be vigilant where the risk is higher. States like California and Texas have the highest rates of equipment theft. In addition, booming housing markets can also impact theft as a lot of equipment is available for thieves to target. Newer equipment has an increased risk of being stolen because of its resale value. According to LoJack’s “Annual Construction Equipment Theft & Recovery Report,” 54 percent of equipment stolen and recovered in 2014 was less than 5 years old.
Contractors may also want to invest in a telematics device, like LoJack Fleet Management, which can help alert owners to unauthorized use during off-hours and give them a jump on reporting the situation to law enforcement. To complement telematics, contractors may also consider adding a vehicle recovery device, like LoJack Stolen Vehicle Recovery System, which can help law enforcement find and recover stolen vehicles and equipment.
Above all else, contractors must remain constantly vigilant when it comes to making sure their vehicles are kept safe and sound.
Publication date: 11/9/2015