SAN DIEGO, CA — Refrigeration contractors can find steady and profitable work when they land a maintenance agreement with a supermarket or — even better — a supermarket chain.

But they are also aware that store decision-makers are always looking for ways to make sure the work is done well at the best possible price. And that effort goes well beyond a quick chat and a handshake.

During the 21st-annual Food Marketing Institute Energy & Technical Services Conference here, management personnel from several major chains talked about what they look for in a maintenance agreement.

Cliff Timko, energy manager, Giant Eagle, Pittsburgh, PA, asked his audience of peers to consider working through an insurance company when developing and enforcing maintenance contracts.

Basically, he said, the third-party insurance agent “assumes the obligation of the vendor service agreement.” He noted that agents “underwrite the policy to cover maintenance,” and savings can be anywhere from 8% to 25% over more traditional arrangements.

The contractor’s paperwork flows through the insurance company, where an auditor makes sure the invoice is correct before authorizing payment. If there is a problem, the contractor is contacted for clarification.

Timko contended that the procedure provides cost savings over contracts because of consolidated billing and the need for a smaller support staff within the supermarket chain.

Such insurance providers are growing and are starting to get the hang of the refrigeration industry, he said. “We had lots of problems in the first year, but that has been corrected.”

An added requirement is getting contractors “to accept insurance companies as intermediaries. The vendor [contractor] is no longer in contact with us [the supermarket] on a daily basis.”

Service Agreements

Key store personnel who prefer to continue to deal with outside contractors may find things changing when it comes to service contracts, according to Randy McAdam, director of maintenance and utilities for Safeway, Pleasanton, CA.

By definition, he said, a service contract “is an agreement to provide a clearly defined service for a fixed period of time for a set price.” If a supermarket doesn’t already have such a contract, the time to tap into one, he said, is when “prices are increasing, there is limited staff support, you’re trying to achieve budget stability, and trying to ‘fix it when it breaks’ just isn’t working.”

In finding that elusive refrigeration contractor who can do supermarket work, McAdam urged his peers to make sure of a “good service match. Don’t train a dog to be a cat.” He urged signing up for multiyear contracts to avoid low-ball, first-year bids.

Once a good contractor is on board, supermarket officials have to work to keep them on board. McAdam said some contractors might have a big chunk of business tied up with one store chain. Driving them out after a year may drive them out of business and reduce the pool of area contractors to draw from.

Compounding the problem is the overall decline in refrigeration technicians. “I’m worried about who’s going to fix our refrigeration systems in the next 15 years,” he said.

Oftentimes, outside contractors and service contracts arrive on the scene when there is a bad situation. But McAdam noted that contractors are not miracle workers.

“If your stores are a mess, don’t expect a service contract to clean them up for free. And be patient. It takes time to get a contractor up to speed.”

Scott Moore, director of energy management and procurement for Albertson’s, Boise, ID, said outside sources can be used in the installation phase. Such companies, he said, can perform analysis and do most all aspects of the installation.

“The question is, what will this realize in savings? The problem is not surrendering control. Just remember to pick a company that knows your business and has supermarket experience.”

Publication date: 10/16/2000