Business Is Sweet for Mechanical Contractor
The friendship turned into a business relationship and Spon-augle began working out of his basement in Hershey in 1956. His company later evolved into sheet metal and electrical installation work. In the 1970s, the company added service to its offerings and eventually became a $50 million mechanical contractor located between Hershey and Harrisburg.
The current owners are quick to acknowledge the main reason for the company’s continued success. “We were predominantly built with the Hershey interest,” said Chris Haynes, vice president. “We were heavily involved in the growth of the Milton Hershey home, too.” The home was established as a facility for orphaned boys.
“In 1981, we got involved with Linc Corporation and they brought a lot professionalism to our service business, which was started by my father,” Haynes added. “Until my dad added service, we were known predominantly as a mechanical company.
“We evolved from plumber to full-service contractor, to electrical to full-service electrical, and now we have added voice data sales, Avaya [formerly Lucent Technologies], to our product line.”
Market Exploration: Voice Data, Design-BuildHowever, being a successful contractor with the backing of the chocolatier wasn’t enough to keep up with changing technologies. There were other markets to explore.
“We saw the growth potential of voice data and saw a lot of parallel and overlap in our electrical field,” said John Wimer, director of sales. “We were doing the cabling for voice data systems and now we are taking full responsibility for the systems.”
Haynes likes the challenges of the move away from traditional mech-anical services. “It has put a little extra spark in all of our business.”
“We tend to be lethargic in our business practices and often hold on too long to old trends. Now we are proactively selling rather than reactively bidding. Our commitment to selling is huge — we are approaching 20 salespeople.” Sponaugle employs almost 400.
Besides the move to service and selling, Sponaugle made a commitment to the design-build field more than 10 years ago. It has since reaped the rewards of the decision.
“We just finished EDC3, the eastern distribution center for Hershey Foods,” Haynes said. “This has been our largest design-build project. Thirty percent of our business this year will be in design-build.”
Sponaugle’s customers include colleges, hospitals, the state government, pharmaceuticals, and light manufacturing facilities. Haynes said that the company’s average jobsite doesn’t “crack” $100,000, adding that “We do jobs between $1,000 and $10 million, but we’re not building 100-story skyscrapers.”
Haynes stated that moving into new niches requires innovation and commitment to specific goals. “You have to increase margins to grow into these value-added services. People [competitors] see our pricing structures and find it hard to relate to them.”
Sizing Up CompetitorsHaynes looks at what other contractors have accomplished in Harrisburg. One of his biggest competitors is McClure, owned by PP&L. He said it isn’t clear that utility ownership of mechanical contractors works as well as it appears.
“The extremely conservative nature of utilities is 180 degrees different from the independent contractor,” he said. “The low margins and high-risk nature of the construction business do not warrant a utility or consolidator presence.
“I’m not sure we could have chosen to work with Avaya if we were owned by a utility. But we were romanced by a utility company, too.”
Wimer added that he gets no satisfaction in seeing the failure of utility-owned or consolidated companies. “I wish it would work, because it means better margins and more professionalism for the industry.”
Haynes isn’t too worried about the company’s future in Harrisburg, noting that the community is neither going “hog wild” in growth nor sinking “too deep” in construction slowdowns. Finally, he cites his company’s old-fashioned approach to doing business.
“We are committed to doing what we tell the customers we are going to do. It is easy to say but harder to do. It is so much easier to work with customers if you are honest with them.
“We really do care. We are the good guys. And the good guys make money.”
Publication date:> 09/18/2000