"The competition does not do this," he responded. "Just trying to stay ahead. Raise the bar."

Raising the bar? Welsch has definitely been trying to do so ever since he took over his father's business more than a few years ago. One could argue that he is succeeding, as Welsch Heating and Cooling - celebrating its 110th anniversary this year - earned nearly $16 million in 2004. What is so remarkable is that this equates to over $9 million in residential new construction and nearly $4.5 million in residential replacement/add-on.

Yes, you could say Welsch is raising the bar. He's the only contractor earning the distinction of being on both of The News' 2005 Residential All-Stars teams, in both residential new construction and residential replacement/add-on.

And, when he talks about how strong this past June was for his company, don't be surprised if the company may make the elite status again for 2006. It has been a hot one in St. Louis this summer and that spells b-u-s-i-n-e-s-s.

"Our builders happened to do more," said Welsch, providing one reason for his company's new construction success last year. "Some of it, I hate to say, is luck."

OK. Let's clarify that. In 1998, Welsch expected a downturn in the residential new construction market in the St. Louis area. According to his research, there was a seven-year cycle for growth - and 1998 was supposed to start the decline. He warned his crew accordingly.

He did the same in 1999.

He did the same in 2000.

"Now I don't say anything about it," he said, smiling. "You would think that construction would slow down, but it has not. I'm not complaining. There's no indication otherwise. We don't see anything changing."

For the record, the company installed nearly 2,000 new systems in new homes last year, coupled with nearly 1,000 residential replacement units. Add the 5,000 service agreements the company has collected, and life is good at 2175 Welsch Industrial Court.

"I am proud of our people," he said. "They are the ones that keep this company rolling."

Leaning Towards Replacement

Welsch does not do just any new construction. He has separated himself from the apartment builders and track home folks. Instead, he has partnered with approximately 20 major local builders, people who he trusts and believes in. He looked for those who provide the quality and service that he expects, and tries to deliver. He meets regularly with each of them. "My theory is that when we offer to do something, we're going to do it right," said Welsch.

It's why Welsch has already mandated that when a 13-SEER unit is installed, a new coil comes with the package and price. That is his policy for all systems.

"We may lose some business," he agrees, knowing that when it comes time for replacement, some - possibly, many - contractors may just change out a condensing unit without replacing the coil. "But we believe both have to happen."

Because he knew residential new construction would not always flourish, Welsch did turn his company's focus on customer service and the replacement/add-on market in 1990. It's now approximately 40 percent of the company's income. He believes growth will continue in that market, as long as his team supplies the service that is expected.

"Service is key," he said. "It's doing the little things - like wearing booties inside a home. Quite frankly, when you are doing replacement, you are out there selling yourself. We do not do high-pressure sales. I am 100 percent against that. In the end, we listen to what they [homeowners] want, and then we do what we say we are going to do. We receive one compliment after another."

Challenges Ahead

Looking ahead, Welsch believes next year might be the most challenging. He said there are already some contractors in his area that are "giving away" 13-SEER systems, which is totally perplexing to him.

"Here is a time where contractors can finally make a profit, yet some are giving them away," he said. "Instead of taking the time to make a profit, some are hurting the cause by low-balling. It just doesn't make sense and I hope this is not the norm."

It's why his company is taking the time with homeowners, to make sure they know the ramifications involved. It's why, as mentioned before, a new coil will come with a 13 SEER purchase from Welsch. "We're committed 100 percent," he said. "If we tell people it's going to be 13 SEER, it's going to be 13 SEER. And we're going to be able to prove it and show it, not just only by the manufacturers' literature, but by ARI [Air-Conditioning and Refrigeration Institute] printed data."

When it comes to replacing a system, his company's strategy will be to change out the condensing unit in a day, just so the homeowner has air conditioning. The company may have to schedule a later date to replace the coil, but there will be a replacement.

"Yes, we think it is necessary," he said. "Besides, I have a 110-year-old reputation to uphold."

Did we say that Butch Welsch has class?

Sidebar: Celebrating 110 Years In Business

In the near future, cable in the local St. Louis area will be carrying some advertisements from Welsch Heating and Cooling, which is observing its 110th anniversary this year. Owner Butch Welsch wants to get the word out, and this television commercial may include his grandchildren - similar to what Lee Iacocca did in some recent Chrysler car commercials. "You do what you have to do," said Welsch, with a smile, noting that the company may be 110, but, "I'm not that old."

The Welsch Furnace Co. (now Welsch Heating and Cooling Co.) was founded in 1895 by Butch Welsch's great-grandfather. The company - located for more than 75 years at 5601 Manchester Rd. in the historic Forest Park South East neighborhood of St. Louis - resembled more of a general store than a heating and cooling company in its early days.

Then, in the late 1920s and early 1930s, the company began to specialize in sheet metal items, such as furnaces and the parts needed to install them, as well as architectural sheet metal items, such as gutters and downspouts. In the boom building times after World War II, and well into the 1950s, the company became one of St. Louis' leaders in the installation of residential heating systems. From 1929 through late 1979, the company was headed by Welsch's father, Vincent Welsch.

In the late 1950s and the early 1960s, with the advent of air conditioning, the company became heavily involved in the custom design, construction, and installation of air conditioning systems on many of the thousands of St. Louis-area homes already relying on Welsch heating. By the end of the 1960s, nearly all of the homes that could be air conditioned, were air conditioned, said Welsch.

As a result of that tremendous success, during the early 1970s to the mid-1980s, the company focused its efforts on the new residential market. But then, in the late 1980s, the housing market took a dive. Therefore, the company took another shift in focus in 1990 by turning to the service and replacement of residential and commercial heating and cooling systems.

Since then, the service end of Welsch has grown from $400,000 with four service technicians and no service contracts, to 20 techs, 60 installers, 25 office personnel, 5,000 service agreements, and over $4 million in the replacement/add-on market alone.

Looking over the years, Welsch sometimes cannot believe the growth. "I am proud of our people," he said.

- Mark Skaer

Publication date: 09/12/2005