As Shreveport shifts from industry to tourism, there’s room for growth among hvac contractors
While looking for a way to kick-start their economy, visions of slot machines, blackjack tables, and roulette wheels kept appearing in their heads. Tourist dollars were going south to New Orleans, west to Texas, and east to the casinos in Mississippi.
Up until World War I, Shreveport depended on the Red River, its link to the Mississippi and the Gulf of Mexico, as a shipping link to other parts of the country. As other modes of transportation became more widely used, the river lost its importance and began to silt up from disuse.
In July 1994, Harrah’s opened up a casino; others followed. Two riverboat casinos opened soon afterward, and the neighboring cities of Shreveport and Bossier City began to feel the effects of growing tourism.
Today, the community is ranked as the third highest per capita gambling location in the United States, behind Las Vegas and Atlantic City. The population, down in the 1980s, has taken a turn upward in the 1990s. More casinos are on the drawing board, and the future is looking good for the region. The national spotlight turns to Shreveport every year for college football’s Independence Bowl.
The News decided to put a spotlight on the area by paying a visit to see how some of the local hvac contractors are benefiting from the building and population boom.
The recent string of 100ÞF days last summer produced some record sales for area contractors and despite a mild winter, the business “climate” continues to look good.
Richardson's mechanicalBack in June, 1996, The News paid a visit to Richardson’s Mechanical, Process Piping, Plumbing & A/C Service. At the time, president Gene Richardson spoke of the company’s rapid increase in sales volume which culminated in $8 million for fiscal 1996.
A mere two-and-a-half years later, the figures have continued their meteoric rise.
According to Don Richardson, senior vice president, 1998 saw the figure jump to $13.5 million, including $10 million in new commercial construction and $3.5 million in residential and commercial service.
But those figures don’t impress Richardson too much. In fact, he wants to cut back.
“These sales were larger than our five-year business plan, and we would prefer to return to the plan for more controlled growth,” he said. “That would make the company more manageable and profitable.”
Richardson said he wants to put a great deal of emphasis on his service contract program. The company currently has about 1,500 contracts; he wants to increase that number to 2,000 by the end of 1999.
Another one of the company’s immediate goals is to move into niche markets, such as food processing. Richardson’s has developed a following among some local businesses, and the company is looking to expand its borders to include some well-known national accounts.
Tyson Foods, the world’s largest poultry producer, has several manufacturing plants throughout the country. The company, which recorded $8 billion in sales for 1997, was looking for a contractor to install process piping at a retrofit project in their Vicksburg, Ga. location, so they called Richardson’s, which had done some work on a Tyson plant in east Texas. Richardson acted swiftly.
“Vicksburg called us on Friday afternoon at 1 p.m., a week before Christmas,” He recalled. “By 6 p.m. we had 14 guys installing process piping, and they worked all weekend to complete the job.”
After receiving its contractor license in Arkansas, Richardson’s is hoping that a future sales presentation at Tyson company headquarters will result in more work. Richardson said if that happens, he is staffed up to meet the additional workload.
The current staff of 90 often balloons higher, depending on the number of jobs. Richardson said he has plenty of people to meet the demands. In fact, “I would like to increase our service calls so I can balance my overhead.”
He said that finding help in the Shreveport area hasn’t been too difficult. There is a good blend of union and nonunion shops, and contractors all seem to get along with each other when there is a call for extra help on a job.
Richardson said he doesn’t like to dangle any carrots in the face of competitors’ employees. “We don’t want to steal help from other contractors,” he said. “We would rather take young people and take the time to train them.
“There are good relations in this town between contractors and labor, and between contractors and contractors. This is not a cutthroat environment.”
Good indicatorsRichardson sees the continued boom in casino construction as a good indication of Shreveport’s strong economy. General Motors and the local school system are two of the bigger employers in the area but the casinos have been able to draw people from all over the region, including Arkansas and Texas.
Speaking of Texas, Richardson cited an example of the type of work his company does and the importance of meeting a tight deadline.
“The Trane Company has a plant in Tyler, and we were retrofitting to take out their old split systems. The air quality was bad and it was time for a change,” he added. “We converted the system to chilled water and installed four 900-ton centrifugal chillers and 26 rooftop units in three-and-a-half months. The cost of the project was $9 million.”
The contractor’s performance has not landed any phone calls from national consolidators, but “I’d listen to them if they wanted to talk,” he said. “I’d be foolish not to.
“But I want to still be doing what I’m doing in five years. I also want to stick around until the year 2015, when we celebrate our 100th anniversary.”
In the meantime, Richardson’s has enlisted the help of Excellence Alliance Inc. (EAI), the national buying group made up of hvac, plumbing, and mechanical contractors, to come up with an insurance plan for employees. After joining EAI, Richardson sold his company safety plan to them.
Incidentally, Richardson said his uncle installed one of the first air conditioning systems in the area back in the 1930s. The company name has been a fixture in Shreveport ever since, having placed in the top two during a recent name recognition survey of consumers.
Advanced Air Conditioning & HeatingTom Lawson knows what it is like to start out fresh with a small operation and watch it grow. He was a technician when he started Advanced in 1991. He knew little about the business side of running a business, and had one truck at his disposal.
Today, the Bossier City-based company has grown to 11 trucks and 16 employees, with 1998 sales of $1.2 million in residential repair and light commercial work. In 1998, Advanced was named one of the top-10 small businesses by the Greater Shreveport Chamber of Commerce, and has been named a distinguished Trane dealer three out of the last four years.
“I basically started with nothing and built the company,” said Lawson. “I had to learn the financial part and the business management. I’ve learned to sell myself more than the product.”
Lawson said that he markets his company through direct mailing, coupons for tune-ups, and maintenance agreement programs, but he believes good service and follow-up is what sells.
Using that philosophy has come in handy, especially since the faces of his competition have begun to change. Consolidation has moved into the area, and Lawson feels that if he maintains his good service record, he’ll have nothing to worry about.
“I think consolidation is good for our industry,” he said. “It brings a higher level of service and a higher level of competition. I’m friendly with everybody in town, so I don’t mind friendly competition. If you work together as an industry, it will be better for everybody.”
Lawson added that he wasn’t interested in joining a consolidator because he likes running his own business. It doesn’t matter to him who’s running the other businesses in town, whether they are locally owned or run by a national consolidator.
“Running a heating and cooling business is like running a McDonald’s restaurant,” he added. “You know that each hamburger gets two pickles, cheese, and ketchup — it’s pretty simple.”
In order to run an efficient company like Advanced, it takes a lot of dedicated people. Lawson knows this, and the topic of locating and training people in northern Louisiana is always on the mind of the local chapter of the ACCA, of which Lawson is currently president.
“A person has to want to do this type of work in the first place,” Lawson said. “We need to get people when they are young and able to do the work physically, and who don’t mind starting at the bottom.”
Lawson believes that young people starting out should learn the installation business first. Installation work will give them the knowledge of how the systems work, and if they want to go into service later, Lawson said that the training would be available.
“Contractors often worry about training people only to see them leave, so they might keep the people but not train them.” However, “You have to show faith in these people and train them well. Right now I’m paying men to go to heat pump school.”
Finding good people is hard enough right now — Lawson wonders where utilities will find qualified people once they inch their way into service and repair work.
“I can’t stop utilities from coming into our industry,” he said. “But I want them to start off on the same level playing field with us. I’m all for fair competition as long as the utilities don’t cross-subsidize with ratepayer’s money.
“I view our competition against utilities as the same as a mom and pop retail store competing against Wal-Mart. You can’t beat ‘em on price but you can beat with service — and our niche is service.”
Lawson plays up his service record through prominent Yellow Pages advertising. He said he has the largest ad and it helps to promote his name recognition.
“I’ve had people say that since I have the biggest ad, I must be doing okay,” he added. “And they’re right, I’ve been very successful.”
Lawson learned some marketing tips from Gorilla Marketing (which provides tools for promoting yourself or your business: www.gorilla marketing.com). Gorilla advised him to use the name “Advanced” (beginning of phone book with the name), and suggested his company phone number: 222-KOOL.
With all of the drive to succeed and the tools to help, Lawson has picked a good environment to grow his business. “Growth in our area is very substantial. Bossier City is the fastest growing city in Louisiana.”
Lawson’s plans are for a slow, controlled growth. He would like a 25% increase in his sales to $1.5 million. He would also like to grow his fleet of trucks to 25 at a rate of three more per year.
Crosby & Co.Crosby & Co. A/C & Heating, based in Bossier City, has been expanding its service area by acquisition.
In the past four years, the company has purchased an hvac business in the Fort Worth/ Austin, Texas area, to complement its existing base of operations. The commercial-industrial contractor is positioning itself to compete with national consolidators while finding some interesting niche markets.
“In these areas, we are doing a lot of renovation work on health care facilities,” said service manager Mike Cannon. “Our specialty is bringing these buildings up to current codes.”
Cannon thinks that other companies might want to follow Crosby’s lead, but are held back by a lack of trained personnel.
“A lot of people tend to shy away from out-of-town work, but we can funnel people to all of these areas to work on projects,” he added. “It takes a special person who is willing to travel.
“Since we are a family-oriented business, we won’t send someone away from home for more than two weeks, and we always put them up in a nice hotel.”
Cannon, who has 22 years of experience in the business, has also taken to the road more lately with this new wave of acquisitions. He said it was a challenge to work in different communities, where there are many different building codes.
“We have mechanical licenses in several states and recently got a building license for Louisiana,” Cannon said. “We have just opened up a construction division and one of our first jobs was to build some interior sections in a large local furniture store.”
If this multilocation contractor is appealing to national consolidators, Cannon knows nothing about it.
Owner Cary Crosby “hasn’t discussed consolidation with me, but I know he wants to keep the business in the family,” Cannon said. “We are proud to be independent. I think we provide more ‘emotional benefits’ for our employees than a consolidator would.”
Cannon said that the one consolidator in the area, Service Experts, provided Crosby & Co. with an unexpected advantage.
“I don’t know how to explain it, but customers seem more comfortable with a locally owned business,” he said. “I’m glad they’re here, because it makes our personal service look even better.”
Service by the bayouThe northern Louisiana landscape has provided some interesting stories for some of Crosby’s service techs, due to the proximity to bayous and the creatures that reside in them.
“You never know what might pop out of a control panel,” said Cannon. “We found a snake across a large contactor which had shorted the breaker out. You might even see an alligator if a bayou is nearby.”
Cannon added that the abundance of cottonwood trees in the area plays havoc with condenser coils. The trees shed a white material that adheres to the coils and clogs them up.
None of these environmental and animal problems seem to throw a monkey wrench in the fast-growing economy. Cannon thinks the opening of riverboat casinos has had a positive domino effect on tourism, which has increased the need for more restaurants and hotels.
Cannon said the plan for the 30-person company is to grow into new areas. He hopes to add to the company’s current $2 million annual revenue.
“Renovation is very big here and we are a part of that,” he said. “But we will look into anything we feel confident doing, not just hvac or mechanical work.”