Employee-owned HVAC Company Growing by Leaps and Bounds
In less than seven years, HB McClure has acquired 13 companies
Pennsylvania is a state rich in history. It was one of the original 13 colonies and is the home of the famous Independence Hall, the Liberty Bell, and the 103-year-old HVAC contracting company, HB McClure. Founded in Harrisburg in 1914 and incorporated in 1931, the company has grown gradually over the years, transitioning from a privately-owned business into an employee stock ownership plan (ESOP) in 2010. In less than seven years, HB McClure has acquired 13 companies and grown from 202 employees to 541.
“When I got here in 2008, we were a 94-year-old company that was in its third generation of family ownership, and Bob McClure — the third generation owner — along with his board of directors, was looking for a succession plan, and I happened to be the lucky winner,” said Bob Whalen, president and CEO, HB McClure. “I had an agreement to buy 100 percent of the company, coming in as a minority owner to start. The important thing about that time is we were in a recession and didn’t know it. The business was going quite well when I came in and continued to do so for the next year, then it really started to feel the effects of the economic slowdown. It was at that point we started exploring alternatives to make the transition from Bob McClure to the new team more cost effective.”
According to Whalen, one of the first things you do when you’re looking to be more cost effective is look at tax. That’s what sparked the discussion about transitioning to an ESOP.
“In the end, the ESOP aligned with what we were trying to accomplish culturally,” he said. “So it ended up being a great solution for where we were going.”
The ESOP transaction took place Oct. 1, 2010, almost exactly 30 months after Whalen came on board.
“The transition was not hard,” he said. “One of the biggest things we wanted to accomplish with the ESOP was have all 200 or so employees we had at the time act like owners. You don’t just become an ESOP, announce to your employees that they now own the company, and all of a sudden, the behavior changes. It’s something that takes time, a lot of communication, and effort. If you continue to do things that reinforce the behaviors you want, and don’t do things that reinforce the behaviors you do not want, then you start to make progress over time. There’s always a few early adopters in the beginning — you’ve seen it with iPods, smartphones, and electric cars. There’s a slow implementation; then, all of a sudden, it catches on and takes off like wildfire. That’s kind of what happened here.”
Today, HB McClure is both a commercial and residential HVAC contracting company, operating about 60 percent in the commercial market and 40 percent in the residential market. But, it wasn’t always that way, Whalen noted.
“In 1983, the company included both McClure Co. and HB McClure,” he explained. “McClure Co. was a union contractor. The union didn’t like that Bill McClure had both a union piece and non-union piece, so they pressured him to get out of the non-union piece, which he did by selling to his brother. When HB McClure was sold to Bob McClure in 1983, it was a predominately residential contractor that did a few small commercial jobs.
“It evolved over the next 25 years to basically being around two-thirds commercial and a third residential,” Whalen continued. “Bob [McClure] saw an opportunity in the marketplace to focus on the commercial side. Today, our emphasis is not really on commercial or residential, we operate the two businesses relatively independently under one roof.”
HB McClure has grown tremendously since becoming an ESOP, operating three locations in Harrisburg, York, and Harley, Pennsylvania. The company has hired over 40 new employees in 2017 alone and operates 280 fleet vehicles. Its 2016 revenue consisted of more than $80 million and is on track to make over $90 million in 2017.
The company has also earned numerous awards, including 2016 Great Game of Business Rookie Team, 2016 ESOP Company of the Year, 2017 Great Game of Business All-Star Finalist, 2017 Forbes Small Giant, and Angie’s List Super Service Award from 2011-2015.
It also belongs to Associated Builders and Contractors Inc. (ABC) and The ESOP Association.
“We certainly use both for education support,” Whalen said. “We use ABC for our technical support as well as for developing our leaders. It’s a place for us to collaborate with other sub and general contractors in the marketplace. Then we use The ESOP Association to educate our employees on the value of employee ownership. Both of those organizations are also our vehicle to have a voice in Washington.”
Acknowledging the labor shortage facing the skilled trades, HB McClure started its own training program last year. HB University features in-class instruction; an online learning management system (LMS); and a technical training program, which will launch early next year.
“Our purpose as an organization is to be a great place to work,” Whalen said. “The first premise around establishing our university was really about making our employees as great as we possibly can in what we do. Secondly, we also believe it significantly helps us attract employees. I think as much as any generation, this generation is interested in developing their careers. It’s a really important part of our message to the young tradesmen that we’re going to put energy and effort into their career and development.”
Additionally, the company’s culture makes it a great place to work, noted Roy Thoman, project manager. This is Thoman’s second time working for HB McClure — the first time was about 20 years ago.
“I ended up leaving for various reasons,” he said. “But I’ve currently been working here since March 2014. When I worked here before, I loved it — it was a great company. It was a fun, cohesive group for the most part. Now, it’s a completely different company with different leadership. The primary reason I came back is because I was laid off, and I needed a job. But once I got here and saw how the company had changed and saw the leadership’s vision for moving forward, it was a bonus for me. Bob’s vision for the ESOP and how he wants that to continue to grow and how he has a vision of all of us being able to retire with the same status of living we’re currently accustomed to — all of that speaks volumes to how their core values are their people. I think they live that every day.
“The culture is changing,” Thoman continued. “People are definitely onboard with the ESOP — there’s a lot of buzz and excitement. Most people really like working here. It’s more than just a paycheck every week.”
Melissa Ural, vice president of human resources, started with HB McClure just this past August.
“The people and the leadership team drew me [to the company],” she said. “I finally found a company that shared my passion for employee engagement and development. HB McClure realizes doing what is right for our employee-owners creates an engaged environment that leads to our success as a company. This is my first tour in this type of industry. I’m looking forward to addressing the multiple opportunities we face on a daily basis.”
Ural said her favorite thing about working in the HVACR industry is being able to help people.
“In the end, we help people find comfort,” she said. “I love that we make a difference every day in the services we provide.”
HB McClure has seen plenty of change in its long history, but the ESOP has etched itself in the milestones of the company.
“The ESOP transition has certainly had the biggest impact on the evolution of our culture,” Whalen said. “The ESOP didn’t make our culture, but it certainly helped facilitate the most important facets. When I got here, people were very prideful about working for HB McClure. Our colors are blue and gold, and they took a lot of pride in wearing them. I think the ESOP only helped to enhance and reinforce that mindset. The biggest thing it did was build trust that we were all in this together. Everything we do is for the benefit of the team as whole. The ESOP put our money where our mouth was in terms of this being about team success. The ESOP, along with our game sharing bonus program, really had a hand in making that happen. Every single employee in the company participates in our bonus program. There’s not very many companies in our space that are making sure that every single employee participates in the financial success of the organization.”
Like most other contractors, Whalen said the company’s greatest challenge is finding and developing employees.
“The biggest challenge for us is just to continue to develop the talent we need at all levels of our organization to continue to grow and thrive,” he said. “We are having a lot of success right now, but just like any organization that is in the midst of having a lot of success, it’s an even bigger challenge to keep that going. The key to remain successful is for us to continue developing talent at the technical, supervisory, and executive levels to be able to scale what we’ve started.”
The company is also using strategic acquisitions as a way to gain new talent, Whalen noted.
“We have a strategy that includes geographic expansion, and we also make acquisitions to acquire expertise and customers that we might not have had previously,” he said.
Ural said she hopes to continue building upon the company’s employee-owner culture in the future.
“Our employee-owners need to understand everyone plays an important part in our success no matter their level in the organization,” she said. “I am challenging myself to think outside the normal compliance realm of HR to create programs that enhance the employee-owner mentality and experience.”
As for Whalen, he hopes HB McClure continues to provide a great place to work as well as retirement security.
“We’re more focused on continuing to make a little bit of progress each day than we are necessarily on where the ending point is, how much revenue we do, or how much profit we make,” he said. “We’re more focused on being better tomorrow than we were today.”
Publication date: 11/20/2017