Three Ways to Prepare for the Future of HVAC
Changing landscape reveals business strategies for continued success
The future is not predictable. Information and trends can provide clues as to how business may fare or the economy may turn, but actual future predicting is the stuff of imaginary sorcerers and counterfeit crystal balls. Instead of relying strictly on clues and best guesses, here are three ways to prepare an HVAC company for whatever situation presents itself in the future.
1. RUN A FLEXIBLE BUDGET
There is a lot of talk on the news and in political circles about the state of the economy. The emergence of the coronavirus, known as COVID-19, has had an effect on global business and supply chains as interruptions are being experienced from stoppage of work or reduced production from the hardest hit regions like China and Italy. The stock market often experiences drastic changes, but COVID-19 has caused it to experience historical highs one day and substantial drops another day in reaction to global and domestic events alike.
This economic volatility can put contractors in a place of uncertainty, but there are ways to run a company that isn’t reliant on market performance for success.
Although keeping an ear to the ground on the economy can be advisable, Brad Casebier, president and founder of Radiant Plumbing & Air Conditioning in Austin, Texas, finds that learning to run his company lean makes him ready for practically any financial condition that comes his way.
“There is always going to be work for the best contractors, so you have to learn to get the jobs that are available,” he said. “When you run the company lean, you are mindful of every expenditure, as opposed to when you are in a surplus and are less mindful of your spending.”
Casebier said that it is important to know when to make changes in the company, be it during a thriving economy or in a downturn.
“When the economy starts to take a downturn, that is the time to get lean,” he said. “Don’t hold onto people in hopes that things will get better. Cut people and ensure the survival of the company. Once you have weathered the storm, you can rehire or work your way back to surplus operation.”
2. MASTER CUSTOMER SERVICE
Part of mastering customer service is knowing what the customer wants. In an unofficial man-on-the-street survey conducted by AHRI, 10 out of 10 people said they would give up their phone before they would give up their air conditioner. Customers want to be comfortable, and as HVACR contractors, that is a big part of the job description — comfort master. What customers don’t understand, though, is that comfort doesn’t come simply from running equipment. It also requires proper sizing, insulation, ductwork, humidification, maintenance, and more. And customers will only realize this through education.
“About 99 percent of the time, people don’t think about how much time and skilled labor is invested into being comfortable,” said Dave Schmidt, general manager of Frederick Air Inc. in Frederick, Maryland. “Either your customer is comfortable, or they’re not — and then they call somebody and they fix it. There’s no connection to how difficult comfort is to establish.”
Schmidt went on to explain that this disconnect leaves room for the commoditization of the HVAC market. He said that companies like Amazon and Google began as facilitators that provided access to what customers wanted or needed. As these types of companies have matured over the years, however, they have found that they can make more money not merely as facilitators, but also as actual providers of goods and services. This includes parts, filters, and materials needed to make heating and cooling systems function.
“Obviously, parts have already been commoditized via these marketplaces,” said Schmidt. “A fan motor or disconnect or something that I’m buying, whether it’s from a big box store, online, or through a distributor, is an item that I can get very cheaply because of the economy of scale. We’re moving now to where services are starting to become the same thing — where the experience of the customer can be replicated multiple times over, and this experience will cost less to accomplish than what is being done now.”
This is where contractors can differentiate themselves from rising commodity brokers and show customers the difference between commodity services and the professional, masterful customer service provided through their companies. It is at this point that customer service and comfort can become the true differentiators for an HVAC contractor.
“Don’t build a fort to keep the wave of commoditization out of the industry,” advised Schmidt. “Instead, find a way to build a boat and navigate the waves of customer demands that are headed our way.”
General manager Frederick Air Inc.
3. OUTSMART THE TECHNICIAN SHORTAGE
Baby boomers are retiring, and a lack of interest in the advantage that HVAC provides for the millennials and Generation Z has HVAC contractors facing a technician shortage. It’s not that there aren’t enough candidates to take the positions available; it’s more that the connotation of the trades as hard, dirty, undesirable work is still a prominent perception for a vast group of digital natives (see below).
The growing workforce today is looking to engage the world through digital devices and technology. This might actually be just what the industry needs.
“Those experienced workers [baby boomers] will need to be replaced with those who are more comfortable with new technologies and who are well-trained in computers, electronics, and refrigerant handling, to name a few challenges,” said Francis Dietz, vice president of public affairs at AHRI. “But in some ways, that makes our industry more attractive to today’s young workforce, many of whom have taken courses in computer science and electronics and are not only more familiar with them but also more excited about a job that involves technology.”
The technology being referred to is not only in regard to the equipment being installed and serviced, but also in regard to the advanced tools, diagnostics, and peripherals that contractors can leverage to outsmart the technician shortage.
For example, what if one senior technician sat in a control room with monitors and communication devices while newer technicians used augmented reality glasses, advanced diagnostics, and their basic knowledge to diagnose and fix an HVAC system as they were instructed? That is an idea that Schmidt suggested when discussing solutions for the technician shortage. He also explained that continuing changes in installation techniques will no longer require technicians to have certain skills, such as brazing, in order to get started in the trade in the near future.
“I think the confluence of lowering the skill bar of entry and the emergence of one of the largest generations since the baby boomers will provide a significantly larger labor pool to pull from in the next 10 years as plug-and-play technology advances,” said Schmidt. “If I were a technician right now, I would be identifying this new technology that’s coming out and guaranteeing that I am the expert on it. The combination of the expertise on the current technology, combined with the years of experience, will make you incredibly valuable.”
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