Managers interviewed for this article from three major independent hvacr service contractors have developed their own methods of finding qualified technicians and attracting young people to the trade. They also use specialty subcontractors to help fill the gaps, but this can wind up eating into profits.
Using Subcontractors Can Cut Into ProfitsWhen asked how they compensated for the shortage, they all said that they made more use of subcontractors.
“We have been using subs more lately,” said John Bevington, president of ChillCo in New Orleans, LA. “They help us keep on schedule and free our men for more technically demanding work. Primarily we sub out welding, some electrical, and sheet metal. The hourly cost is more, but we feel the expense of benefits and equipment cancel out the increase.”
“We haven’t increased our use of subcontractors in some time, except for out-of-state work,” said Dave Gough, operations manager for MacDonald-Miller in Seattle, WA. “Of course, we use subs when it makes economic sense, but we have been able to keep our projects on schedule without having to farm out the work.”
“The worst thing about the shortage of technicians is overtime,” said Jeff Somers, service operations manager for Monsen Engineering, Fairfield, NJ. “When we get really busy, we end up paying overtime for work that was contracted for straight time. And we can’t get compensated by our clients because we’re committed by contracts.
“So, we end up subbing out a lot of work we would normally do ourselves — insulation, pump repair, sheet metal, and so on. Sometimes we make a small markup, but usually I feel the use of subs hurts our margins.”
The exception so far is subcontracting for high-speed refrigerant recovery/decontamination work. Somers uses Hudson Technolo-gies. “They actually do the work for less than we do and give us additional profit room.”
Gough agreed that using the subcontractor “gets the job done in a fraction of the time. And that frees up our technicians for more technically demanding work that they’d rather be doing anyway. So we get projects done faster and make more money without increasing our charges to the client.
“We also use them for difficult decontamination jobs,” he continued. “One client who runs a chlorine processing plant had a water leak in an old 1,400-lb R-12 centrifugal chiller. Tests showed there were 33 ppm of moisture in the refrigerant with much more trapped as ice.
“To avoid downtime, we proposed using Hudson to decontaminate online and keep the line running until the next scheduled shutdown for maintenance. They were skeptical and gave us two eight-hour windows to prove the technology would work.”
The sub’s technicians used a chemical dehydrant to thaw the ice and suspend it, bringing up the moisture level to 125 ppm. Then they used high-speed decontamination equipment to side stream the refrigerant and remove moisture.
“When the second eight-hour session was done, we had reduced the moisture content of the refrigerant to under 20 ppm without any downtime.” The customer went ahead and made plans for decontamination and repair.
Recruiting TechniciansWhile subcontractors offer a partial solution, the tech shortage problem can only be solved by finding more technicians.
Somers commented, “It’s gotten so competitive. Our technicians constantly receive offers from other companies. Fortunately, we have an excellent record of keeping our guys happy and we lose very few.
“But recruiting from competitors is counterproductive. We don’t do that at Monsen because the real problem can only be solved by bringing in fresh blood. And the way the market is, we’ve had to resort to hiring outside recruiters to find new people. It costs us between $8,000 and $12,000 per hire. That’s a lot of money, but at least we’re bringing in new guys and not raiding competitors.
“We’ve also created a finder’s fee program for our current employees. If they identify someone that we end up hiring, they get a bonus. I won’t say how much, but it is substantial. We give them half on hiring and the second half after the new employee has been with us for six months.
“It doesn’t cost us a cent if it doesn’t work, and when it does, it saves us a large amount of recruiters’ fees. And it keeps our current employees always on the lookout.”
“The pressure for finding new hires got so intense,” said Gough, “that we hired a full-time recruiter. He has been with us for 16 years as a technician and foreman, so he knows what to look for. He’s developed a set of personnel calipers that gauge not only the individual’s physical and technical potential, but also if he has the right personality for the craft.
“So far he’s found us several skilled technicians and some promising future technicians who are doing quite well in training. It looks like a good investment. We also sit on the boards of several tech schools, which gives us early access to promising young people.”
“We take a cautious approach,” said Bevington. “We actually have five distinct businesses at ChillCo: replacement parts, training, rental, installation, and service. They all complement each other, but we can afford to grow our service business slower when technicians are scarce and focus on the other four.
“We are very focused on hiring the best hvacr techs, whether they are experienced or rookies. There are so many costly problems that can be caused by technicians who are not totally up to the job. And we base our success on establishing and maintaining our customers’ confidence in us.”
The Effectiveness of AdvertisingThe old standby, of course, is running classified ads to fill technician slots. Bevington wasn’t very high on it.
“Advertising hasn’t done us much good,” he said. “Word of mouth is our best source because we run a premium service business and most people in the industry know it. And everyone wants to work for a top firm.”
MacDonald-Miller, on the other hand, has had more success with advertising. “We are aggressive advertisers,” said Gough. “We advertise across the country when looking for experienced technicians. For instance, if we need someone who specializes in centrifugal chillers, we advertise heavily in the South because more centrifugal chillers are used in hotter climates.
“As a part of [parent company] Encompass, we also take advantage of their resources. And we maintain a website with an area specifically designed to answer potential employees’ questions about our company.”
Somers says that Monsen has also had success with advertising. “We put the word out any way we can — local and statewide papers, industry journals, presentations at high schools and trade schools, our website, ads in union publications, and so on. We even tried cable TV for a year, but got only one response. Aside from that, a carefully planned and focused advertising campaign has borne fruit.”
The Training AspectBevington said that at ChillCo, “We train our new guys in house, of course, and on the job. We also send them to independent specialty schools and manufacturers’ schools.”
However, the contractor runs its own general training — for customers. “The school we run is open to everyone, but it’s mainly targeted at our customers. It’s a five-day, high-intensity course that focuses on chiller maintenance and repair from the end-user’s perspective.
“We draw about half our students from comfort cooling and half from process. It’s good for both us and them. They gain knowledge that can save them problems by learning to properly maintain and troubleshoot their systems, and it’s good for ChillCo because it enhances our image for our clients. The added knowledge also makes it easier for them to understand when we recommend services.”
As for training new recruits, Gough said, “We work closely with the Construction Industries and Training Council programs. They offer educational programs and after-hours training for our apprentices. It’s a four-year program supplemented by on-the-job training.
“We also have a training coordinator who runs special after-hours training programs in house. The program open to all of our 1,100 employees in our Seattle, Portland (OR), and Spokane (WA) locations and covers a spectrum of skills.”
Monsen also offers a creative training program for new hires. “We’re a union shop, so we work very closely with the union’s program,” said Somers. “We sponsor our new recruits and send them to apprentice school.
“But there’s more to it than that. We want to be very sure we don’t waste our investment. Each new guy works for us for a year as a delivery man, picking up parts and taking them to jobsites. After a while we get him involved in assisting the technicians. This gives us a chance to see if he’s really interested in this as a career, and if he fits into the organization.
“After that, he attends school one day every two weeks at the union apprentice school and earns apprentice wages.”
This much is clear: While industry organizations seek long-term strategies that will draw potential hvacr technicians to our industry, it is critical that contractors use their own creative tactical approaches to help themselves find new employees — and use subcontractors wisely to solve short-term labor problems.
Sine is a freelance writer from Beacon, NY, who specializes in the hvacr industry.
Sidebar: It’s Bad Out ThereIn June of 1999, Thomas E. Bettcher, chairman of the Education and Training Committee for ARI, produced some chilling numbers: “Vocational-technical school enrollment in hvacr courses declined by 71% over a 10-year period,” he said. “At the same time, enrollment was dropping for masons (down 63%), auto mechanics (down 35%), and other skilled workers.
“Competition for skilled workers is fierce, and we need to examine successful recruitment techniques used by other industries.”
By 2006, the number of skilled technicians needed in the hvacr industry will rise by over 100,000.
At the same time, the existing labor force between the ages of 45 and 64 will grow faster than any other age group. As those technicians retire, the new workers will be deprived of the guidance of senior technicians.
Jeff Somers of Monsen Engineering, said, “It’s bad and I don’t see it getting better. The prediction is for 140,000 jobs to go unfilled this year. Vocational schools aren’t promoting hvac training. The union and ACCA are producing videotapes, ads, and working with vocational schools, but students find they can make the same starting money at computer-related jobs without doing any heavy lifting.”
Bevington of ChillCo agrees. “Qualified techs are very scarce. High school kids are going into computer science and I don’t clearly understand why. Pay may be similar in the beginning, but after going through the training process, the rate of increase for hvac technicians is phenomenal.”
“Our needs are great,” said Dave Gough of MacDonald-Miller. “We employ over 120 hvac technicians in the Northwest and are constantly in need of fresh blood.”
Publication date: 01/29/2001