OWNER: Peter Hungate
LOCATION: Lakewood, Washington
YEARS IN BUSINESS: 26
BULK OF MARKET: Residential service and replacement
TOTAL SALES FOR 2017: $11 million
TOTAL EMPLOYEES: 88
TOTAL SERVICE TECHNICIANS AND INSTALLERS: 52
AVERAGE HOURS EMPLOYEES SPEND IN TRAINING: 50-plus hours per year
BENEFITS BEYOND MEDICAL/DENTAL INSURANCE: 401(k) with voluntary contribution, profit sharing twice a year, paid time off, paid sick time, flexible scheduling, on-the-job incentive programs, internship/apprenticeship program, monthly employee breakfast, holiday parties, company provided vehicles, and iPads.
INDUSTRY ASSOCIATION & CONTRACTOR GROUP MEMBERS: Nexstar Network and Success Group Intl./Air Time 500. THE NEWS SELECTED THIS CONTRACTOR BECAUSE: Pacific Heating & Cooling was chosen because of its "Win, Win, Win" philosophy of how customers and employees must win before the company can win.

PLANTED SEEDS

Hungate got his start in the industry in 1983 working for a local Carrier distributor in the parts department.

“I was just looking for a job, I wasn’t really pursuing a career,” he said. “I worked for $5 per hour. I was there a few years, and I recognized there were differences between the successful contractors and the unsuccessful ones. In particular was a friend of mine who ran his company and did everything totally different than any of the other contractors in the area, and so I got the inspiration from him. The only way I could really grow was to go to work for a contractor and then start a contracting company. So, the seeds were planted back in the ‘80s.”

HVAC INSPIRATION: Peter Hungate, owner of Pacific Heating & Cooling in Lakewood, Washington, got his start in the HVACR industry in 1983 working for a local distributor. It was there that the seeds were planted to own and operate his own HVAC contracting business.

Hungate started his company in 1991 with a partner. They purchased an existing company that did about $500,000 a year, and they had about five employees to start. In their first year, they increased revenues to $800,000, according to Hungate. And, back then, the company did anything and everything from new construction to service and replacement for both residential and  commercial. Now, the company’s focus is much narrower, operating 100 percent in residential service and replacement.

“The reason for the switch is because we found out that in new construction, it’s really the low bid that gets the work — and there was a downturn in new construction, and sales plummeted,” Hungate explained. “We had to lay off some people. Then, at that point, I decided I wanted something more stable, dealing right with the end user and not a general contractor, so I wanted to get into the service business.

“I bought out my partner in 1996 with the intention of moving into service, and he started another company of his own in residential new construction,” he continued. “We really got a jump start in 1999 when I joined Contractor’s Success Group. For a year, I traveled once a month learning how to operate a successful retail company.”

Since then, the company has experienced year-over-year growth and ended 2016 with $11 million in sales. It finished 2017 with over $14 million in sales. It has also grown from five employees to 88, 52 of which are technicians and installers.

Hungate said his employees spend more than 50 hours a year in training, and the company’s new facility houses two large training rooms along with meeting rooms and a lunch room for employees.

Pacific also belongs to Nexstar Network and Air Time 500. Additionally, it has won several awards, including Business Examiner’s Top Places to Work for Equity and the Best of South Sound Magazine for Best Medium Business.

“We’re really in the people business,” Hungate said. “We provide heating and cooling, but it’s all about people.”

WIN, WIN, WIN

It is indeed about people, as Pacific’s mission statement is, “Win, Win, Win,” meaning customers win, employees win, and finally, the company wins.

“It’s one we adopted several years ago,” Hungate said. “This is the basis of every decision we make. We don’t want to have any losers with the decisions we make. We strive to do our best, so all three entities win. We have very high standards in how we do things and why we do things. There is no room for marginal performance in our company. We take what we do seriously and strive to be the best in what we do.”

In striving to be the best, Pacific offers its employees 100-percent paid health care, dental, and vision insurance. The company also offers a 401(k) with a voluntary contribution along with a profit-sharing program that pays out twice a year.

“If we’re above 10 percent net profit, we divide that with our employees,” Hungate said. “A third stays with the company, a third is divided among managers, and a third is divided amongst remaining employees. In essence, two-thirds of all profit above 10 percent goes to employees. We distribute the final payment in December. This past year, we distributed $190,000 in profit share.”

The twice-a-year disbursement was new in 2017. Hungate said the idea came from an employee’s wife who works at a company that pays profit sharing in June and December.

“We thought this was a phenomenal idea,” he explained. “The first disbursement in June is actually for the prior December through May. And the second half payment is July through November, paid in December.

“We’ve always had profit sharing with our employees, but in the past, we contributed it to a 401(k) program,” Hungate continued. “Now, we’re just giving cash, and the employee can decide whatever they want to do with it. We have a good, robust 401(k) program, and we get a lot of voluntary contributions, so we just decided our people can decide once they get the check if they want to invest it themselves or buy Christmas gifts, or a car — whatever they want to do — we give them the freedom to choose.”

Pacific also has an incentive program for field employees that includes commission if they sell something.

“Employee benefits correlate with a good place to work,” Hungate said. “We want to be a great place to work — it’s one of our goals. We want to have the best compensation, benefits, training, and customer service. We want to be the best at everything we can possibly be. Having great benefits, such as ours, also helps retain employees. It’s important. We want to separate ourselves from the competition, so they come to work for us, and, once we have them, we don’t want to lose them, especially due to pay or training.”

In addition, Pacific has an internship and apprenticeship program.

“We bring in most all of our techs, and we train them ourselves,” Hungate added. “We do things a specific way, and a lot of times, if someone has experience, they’re set in their ways and not apt to change. We’ve found this method works really well. As a matter of fact, most of our managers started in entry-level positions and have worked their way up in the company.”

WIN, WIN, WIN: Pacific Heating & Cooling's mission statement is, "Win, Win, Win," meaning customers win, employees win, and, finally, the company wins. That philosophy has improved the overall company culture for the employees who work there.

Dan Quails is one such employee. He has held eight different positions at Pacific in his 19 years there, from duct cleaning helper to maintenance tech to service management to sales manager to, finally, his current role as operations manager.

“I hired on two days after I turned 20,” Quails said.

After graduating, Quails went to community college until he realized he didn’t know what he wanted to do.

“I had interest in the HVAC industry, and so I ended up getting hired here, and I’ve been here ever since,” he said.

He’s stayed with the company so long because of the way he and his fellow employees are treated, and because his personal values are in alignment with the company’s values.

“The teamwork here is amazing,” he said. “We’re all working for a common goal — to serve our customers. We all have our strengths and weaknesses, but everyone works well together. It’s just a great place to work, especially in recent years because of how the company has grown. We’ve realized, especially those of us in leadership, that we need to increase our capabilities and our skill sets, so we’ve spent a lot of time, energy, and money to get the training we need to grow into an organization that we want it to be. We’ve gotten involved with organizations like Nexstar Network and Air Time 500. And we adopted the ‘Win, Win, Win’ philosophy.”

Steve McCall, senior service technician for Pacific, is another employee who came to the HVAC contracting company completely green 13 years ago.

“I was actually a butcher,” he said. “When I was a meat cutter, I managed some meat shops, and we had to deal with a lot of refrigeration. I would call those guys and see them come in with their tool bag and tinker around with the equipment, stay for an hour or two and leave, and I thought, ‘That looks like a pretty good job.’ So, when it came time to change careers, I started looking around for heating, air conditioning, and refrigeration. My first job in the industry was with Pacific. I went in green, and the company completely trained me on everything. I started out the same as Dan, as a duct cleaning helper.”

McCall said his favorite thing about the company is its culture.

“All of our decisions are made with the philosophy in mind that everything we do should be a win for the customer first, a win for the employee, and a win for the company. That philosophy is what makes it such a great place to work.”

One of the ways the company ensures employees stay happy is by scheduling fun events that bring the entire staff together.

“I like working here more now than I did when I started, which is unusual because most places, the longer you’re there, the more it’s a drag. It actually is even better now. I love it here, and that’s all because of the company culture.”

McCall said the company’s incentives are great because they give employees, including new techs, the opportunity to make more than their base salaries.

“But our goal is not to earn incentives,” he said. “We have to do what is right for the customer, so we don’t sell them anything they don’t need. Additionally, if somebody has a repair they need to make in order to keep their equipment running, we don’t make any commission off of that. We only can make commission on things the customers have decided on their own that they wanted. It ends up being a really good system for the customers and for the employees.”

McCall said he is proud to work at Pacific.

“It makes me feel good to come to work every day, especially when we win awards like this,” he said. “The other day, I had to go back to pick up some stuff from the office, and our marketing coordinator, Danielle, was outside taking pictures of Peter in front of the building for the award, and he looked so happy. It’s just great, it makes you feel good to work at a place like this, where everyone is doing really well — from the owner down to the employees. It’s a culture of lifting people up.”

FORGING A FUTURE

Pacific Heating & Cooling has plans in the works to create its own university housed in its new facility, Hungate noted.

“We’re currently working out the details of a partnership to build a school in our building with HBTI [HVAC Business and Technical Institute] and Dave Norman, a well-respected HVAC instructor locally,” Hungate said. “He’s got an accredited school, and we want to partner with him to run our program here to train our new techs.

“Then, we’ll also sell seats to other contractors locally, so they can train their techs as well,” he continued. “It’s not finalized yet, but it’s what we’re working toward.”

Coincidentally, Norman was named The NEWS’ 2017 Best Instructor Runner-up.

“Dave has been doing this for years, and we’re reaching out to our other training partners to strengthen his already incredible curriculum,” Hungate added.

While Pacific currently holds its own training at its facility, it falls short in technical training due to lack of space in its previous building, according to Hungate.

“We’ve been contracting with HBTI and Dave for years,” he said. “We pay a flat fee to be able to send our techs to unlimited technical training. We also spend quite a bit of money with Nexstar. We send our people to their headquarters for sales training, sales management training, leadership training, dispatch training, and more. We’ve easily spent over $100,000 on training each of the last few years.”

Another goal of Hungate’s is to keep his company growing.

“We’ve had a 25 percent growth rate for each of the last three years,” he said. “I decided three years ago to grow and really set a goal, and we haven’t looked back. We want to continue to get better in everything we do. It’s all about constant improvement.”   

Publication date: 1/22/2018

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