Keeping Contractors’ Fleets on the Streets
Maintenance, GPS, and leasing options are all important factors
Technicians need transportation to get from point A to point B. Thus, an HVAC contractor’s fleet of vehicles is perhaps one of the most critical parts of his or her business. Service and installation trucks take a beating, racking up miles as they haul techs, tools, and equipment from job to job. Therefore, it’s essential they’re kept in good working condition, which requires care and supervision, preventive maintenance, and a budget.
According to Automotive Fleet’s 25th annual operating cost survey, 2016 marked the fourth consecutive year fleet operating costs remained stable, primarily due to lower gas and diesel prices. Other contributing factors include newer, more fuel-efficient vehicles and the increased implementation of telematics systems that result in improved route optimization and allow companies to easily identify drivers who are engaging in behaviors that decrease miles per gallon (mpg).
While some contractors reported fleet management costs in tune with the survey, others reported increased costs due to increasing fleet sizes resulting from company growth and higher maintenance costs as vehicles continue to grow older.
REPAIR OR REPLACE
Plano, Texas-based Samm’s Heating & Air Conditioning has eight vehicles in its fleet, according to owner, Paul Sammataro.
“We have an online form our employees submit weekly, and we schedule repairs or maintenance based on those forms,” Sammataro said.
Total replacement on a vehicle may vary, he noted. “We still have a 2005 Chevy Cargo Van in circulation. As far as I am concerned, until a major repair of several thousand dollars is needed, such as the engine or possibly a transmission replacement, we continue to utilize the vehicles in our fleet.”
Sammataro said replacing a vehicle costs $28,000-$33,000, depending on the make and model. He tends to budget for one replacement vehicle each year.
Jason Stom, CEO of Clear the Air in Alvin, Texas, has 15 fleet vehicles and replaces vehicles based on mileage.
“We use our GPS software to track mileage and establish a maintenance schedule,” said Stom. “Our managers also do weekly fleet inspections to check for safety issues, cleanliness, and organization. When we get around 200,000 miles, we start the process for replacement. Repairs always start to add up at this point, and the vehicles also look worn down.”
Stom said he estimates how many vehicles need to be replaced annually and adds that expense to his budget. “This year, we won’t have any that hit the mileage, but we are adding positions, so we are adding new vehicles to the fleet, just not any replacements.”
Frederick Air Inc., located in Frederick, Maryland, has 24 fleet vehicles.
“We use GPS tracking and do preventive maintenance based on mileage,” said Steve Schmidt, president, Frederick Air Inc. “This really helps us schedule downtime and avoids untimely breakdowns.”
Schmidt said he tries to get a minimum of 10 years or 230,000 miles out of a vehicle before replacing it. “We average about one vehicle replacement a year. It costs us about $35,000, and we are now at the point where we pay cash for it.”
Hamstra Heating & Cooling, Inc. in Tucson, Arizona, boasts 49 vehicles in its fleet. According to Wade Hamstra, vice president, the company conducts weekly inspections on every truck.
“We do a weekly visual inspection of the interior, exterior, and fluids,” said Hamstra. “Preventive maintenance is performed at a designated facility with a company we’ve partnered with for all service with the understanding that we receive priority service to minimize downtime. Proper preventive maintenance procedures play an important role in maximizing the useful lives of our fleet vehicles as well as limiting downtime and associated costs.”
Hamstra Heating & Cooling leases roughly 95 percent of its fleet vehicles through Enterprise Fleet Management.
“With this program, there is scheduled maintenance based on mileage that is built into our monthly lease payment,” Hamstra explained. “Each vehicle is tracked via GPS, and the fleet manager receives automatic emails and text messages when a vehicle is within 500 miles of the upcoming oil change interval.”
Based on the lease schedule, vehicles are replaced every three to four years or once they hit 100,000 miles.
“With the vehicles on a lease program, the upfront costs are minimal,” Hamstra noted. “All costs associated with functional shelving and accessories are incorporated into the lease payments. Having our fleet on a leasing program allows us to easily forecast monthly costs and budget accordingly over the three to four year lifespans of each vehicle. We also avoid the unexpected costs and unexpected downtime that comes with having older, higher-mileage vehicles. Our fleet, and therefore our technicians and installers, experience little to no downtime since none of our field vehicles have more than 100,000 miles.”
THE INSURANCE FACTOR
Insurance is another important consideration when it comes to managing HVAC vehicles.
“Insurance is a must,” Sammataro said. “We want proper coverage in the event of any accident.”
Sammataro also added he has not switched insurance agents in the past two years. “I do not shop [for insurance] yearly. The service they provide is equally as important as the price.”
Stom agreed, saying proper insurance coverage is critical. “You never know when you’ll need it. We try to stay with one insurance vendor because we value that relationship. However, we do shop around to make sure we are getting the best return on the expense.”
Schmidt said he tends to shop the insurance market around every three years.
“Shopping for insurance is quite a task,” he said. “We use one carrier for all business-related insurance. So, the actual automobile is only part of the overall investigation. Since it is so time-consuming, we only take that time every three years or so. And, if you have a good group of people with good driving habits, insurance companies are reluctant to let you go, thus it keeps the price very competitive.”
Hamstra Heating & Cooling has a formalized process to regularly shop all of its insurance policies. Hamstra added that the business focuses on forming strong multi-year partnerships with all of its chosen vendors.
“Having appropriate levels of insurance coverage is critical for any business,” he said. “We have a lot of exposure to risk with 49 vehicles on the road, and well-selected coverage helps us mitigate that risk. One coverage many business owners neglect to include in their auto insurance policies is coverage to protect the thousands of dollars in inventory and tools that ride in every service and installation vehicle.”
Many enterprising contractors are taking advantage of the blank spaces on the sides of their vehicles and wrapping them in attractive graphics advertising their companies’ names. There are many advantages to truck wrapping, including reaching a larger audience more often, increasing awareness, and creating positive feelings toward the company brand.
Schmidt said vehicle wraps can be a great marketing tool for contractors.
“Vehicle wraps also make scuffs and scratches less noticeable,” he added. “We have gotten a great response on our trucks. Everybody says they notice them, but figuring out ROI [return on investment] is a tough calculation.”
Stom said it was important for Clear the Air to brand its vehicles in order to increase awareness and be seen as professional.
“Most contractors don’t see the importance and only focus on traditional marketing,” he said. “I feel like everything a company should do must revolve around a brand image and how you want to be viewed by clients. Then, you deliver on that image. The response from our vehicle wraps was immediate. We saw a spike in business and more top-of-mind brand awareness. A lot of our other marketing started to have better ROI due to the layering of the brand in different media.”
According to Hamstra, truck wraps cost the company between $1,800 and $2,500, depending on the vehicle being wrapped.
“In the marketing world, that is a cheap, one-time cost for a marketing piece that will be in play for three to four years,” he noted. “By comparison, a standard billboard in our town will cost you $1,200 to $2,000 per month to advertise on. Our fleet is by far our most important branding campaign, and I attribute a lot of our success in the retail space to our attractive vehicle wraps. Ten years ago, when we had standard white trucks with small door decals, very few people knew who we were. Now, my wife can rarely go anywhere where people don’t recognize her last name and ask if she’s related to the Hamstra Heating & Cooling family.”
Hamstra added the company created 130 new customer accounts in 2016 for people who said they called because they saw the company vehicles. “These 130 customers purchased $201,500 in products and services from us. Those numbers speak for themselves.”
Sammataro said that while truck wraps are certainly assets to contracting companies, their effectiveness really depends on the design.
“I have seen some wraps that are so busy I am not sure where to look when I see the truck,” he said. “We do get calls specifically stating, ‘We saw your truck.’ We also have more traditional-looking vehicles. I would say the return takes an average of three to four years to directly pay for the signage on our trucks.”
Overall, GPS monitoring is a must for fleet management, noted Sammataro.
“We use GPS to monitor speed and schedule and dispatch service calls in order to save money,” he said. “We also maintain tires and rotate as necessary to maximize fuel efficiency.”
That being said, Sammataro estimated he has spent about the same amount of money on fleet management over the past two years.
Stom said Clear the Air is actually spending more money on fleet management than it ever has.
“We are growing and adding additional vehicles,” he said. “If we would have stayed at our current size and operated the same number of vehicles, our spending would not have increased.”
Clear the Air also uses GPS tracking and proper dispatch training to save money while operating its fleet.
“We also make sure maintenance is consistent to limit the big, expensive breakdowns,” Stom added.
Schmidt said he is also spending more than in years past.
“In our case, we’re trying to extend the lives of the trucks,” he said. “With the high cost of vehicles, we tend to spend more repairing older trucks which can delay the cost of replacement. And, as the company grows, we’re increasing the number of trucks in the fleet.”
Hamstra Heating & Cooling has a fully stocked trailer that mirrors service vans, and it’s put into service immediately if a vehicle goes down unexpectedly. Meanwhile, the company’s fleet manager and warehouse assistants handle everything to do with the fleet itself.
“Our technicians and installers never have to worry about doing their own oil changes or even changing flat tires,” Hamstra said. “An example of this philosophy in action just recently occurred. One of our technicians was at a commercial client’s facility and his van’s battery died. He called the fleet manager, who picked up a new battery and arrived at the technician’s location within 20 minutes. While the technician was finishing up on the roof, the fleet manager changed the van’s battery, and the technician experienced zero downtime. Had the issue with the van been bigger than just a dead battery, the fleet manager would have brought the technician either a spare van [that was identically set up to his] or our truck/trailer and swapped it out. Nothing is more important than effectively utilizing our technicians’ and installers’ time, and we carry that philosophy over to our fleet management.”
Additionally, Hamstra noted the company is investing more into its fleet now than ever before; however it’s spending its money more wisely, as well.
“Instead of paying for large unexpected repairs to keep old vehicles on the road and incurring downtime with vehicles in the repair shop, we put that money into our lease agreements and avoid the surprises,” Hamstra said. “Instead of putting our technicians and installers in poorly outfitted and old vehicles, we give them the best vehicles from which to work out of, and we put a support team behind them to ensure their time is effectively used to serve our clients and generate revenue for the business. Our fleet helps us recruit and retain the best talent, and our vehicles save our field teams time on each and every job.”
Publication date: 3/6/2017