'There is no substitute for hard work'
The latest in his showcase of awards is the 1998 National Contractor of the Year, bestowed on him by the Plumbing, Heating and Cooling Contractors-National Association (PHCC-NA). This was a fitting follow-up to his award earlier that year as the Kentucky Contractor of the Year, given to him by the Kentucky Chapter of the PHCC.
“I’ve been in the heating and cooling business all of my adult working life,” Rechtin said. “I have people working for me who have never worked anywhere else, such as my installation manager, Steve Halpin, who’s been with me for 34 years, and comptroller John Feldkamp, who’s been with me for 30 years.”
Feldkamp’s younger brother, Dave, has only been with Rechtin for 28 years. All three were members of Rechtin’s Boy Scout troop when they were youngsters.
Except for a two-year hitch in the Army, Rechtin has worked a variety of jobs in the Bellevue-Cincinnati area. He worked as a sheet metal fabricator, installer, foreman, and even served as mayor of Bellevue for 8 years.
He eventually purchased the company he was working for (Proven Products) and incorporated the business to its present name in 1971. He has resided as president ever since.
Along the way, he acquired two additional companies: Current Electric Co. in 1988 and Unique Comfort Services in 1996. Rechtin did a little bit of his own “consolidating” before it became “fashionable.”
Today his company will see revenues of $5.5 million. It has a laundry list of services that include installation and service of all types of heating and cooling systems, variable air volume (vav), pneumatic, electric controls, energy management, and electrical services.
Doing what they do bestRechtin employs 55 people, which is a slight downsize from the previous year. He cites one primary reason for the smaller staff.
“When I started in the business, I cut my teeth with new construction,” he explained. “We don’t do that anymore because we basically priced ourselves out of the business.
“Five years ago we committed to doing commercial bid and spec. It allowed us to establish our reputation in commercial work. But we needed to back down a bit by design, and now we are more into design-build.”
Rechtin is concentrating on building up his service contract business. His son, Tom Jr., is in charge of service contract sales as well as the duct cleaning department.
Rechtin likes the focus to be on add-on, replacement, and service. He said these are the most profitable areas of his business, which comprises 40% of the total revenues.
“We started out in the 1960s doing new houses, apartments, and condominiums,” he said. “As time went on, we found ourselves getting more into the add-on and service field. Now we do very little new construction. We can be more selective of what we do.”
The struggle to find workersRechtin is very active in his local community, having served on several educational and vocational committees. He is firmly entrenched in the efforts to keep local high school students interested in the hvac trade. His efforts have paid off in the number of long-time employees at his company.
But he thinks other contractors can work harder to attract young people.
“People always talk about the shortages but they don’t make a sincere effort to bring young people into their business,” he said. “They will hire people as helpers but they won’t train the people to do anything else. As soon as business slows down, they let the helpers go.
“Education is very important. Apprentices should be encouraged to return to work after their schooling is over.”
Rechtin said he spends a lot of money on training because he wants his people to be knowledgeable and to be good representatives of his company.
“There is a shortage of good workers but if you have a good reputation, you attract more applicants,” he said. “But I won’t hire a guy who is not well groomed. They have to be representative of me.”
Compared to the “old days,” the glut of training materials today is very impressive, said Rechtin.
Rechtin added that the hvac industry needs to come face to face with the idea of raising prices in order to pay higher wages for workers. That may be one of the best and most direct ways to attract and keep young workers in a competitive job environment.
Rechtin feels that given the choice, young people may turn to vocational trades. But they don’t always have that choice. “Colleges are full of people whose parents want them there, instead of them wanting to be there.”
Of consolidators and manufacturersRechtin said that hardly a week goes by when he doesn’t receive some type of literature from consolidators. It doesn’t seem to faze him.
“I think the [consolidation] movement will be short-lived,” he said. “It is tempting to sell because of my age, but I want to carry on as a family business.”
Rechtin cites an affection for the industry and the commitment that independent contractors make to their communities and employees as strong reasons for keeping the consolidation movement in check.
“When you own your own company, you live and breathe it. I don’t think consolidators have the expertise to run a profitable business.
“Consolidation is adding layers of overhead instead of taking them off. Big isn’t necessarily better. Look at the stock market now; a lot of guys aren’t doing too well. They won’t all hit the wall. Some will survive and others will be bought up by larger companies.”
A couple of nearby businesses in Covington, KY have sold to national consolidators, but none of Rechtin’s local competitors have jumped on the bandwagon yet.
Although utility deregulation hasn’t come to Kentucky, Rechtin is already thinking about competing head to head with utility service companies. And he doesn’t like the disadvantages before going into the fray.
“I don’t object to deregulation, even though we have some of the lowest rates in the country, because it gives consumers a choice,” he said. “I do object to cross-subsidization, because it is one of the biggest threats our industry has ever faced.
“If utilities can use ratepayer money to market themselves, it would be almost impossible for smaller [competitive] businesses to survive.”
Rechtin believes the utilities are more interested in selling energy than in making profits, which is a dangerous combination.
“It’s pretty nice if you can go about your business and not worry about making a profit or having to close your doors,” he said. “That puts us [contractors] at a disadvantage. However, utilities don’t have the people or the expertise to run a company. They would be forced to buy a contractor to service their customers.”
Now Rechtin will soon have a third competitor in town — the equipment manufacturers. He’s not looking forward to dealing with this new threat.
“Thank God I’m as old as I am,” he laughed. “Actually, in the greater Cincinnati area, the Williamson Furnace Co. started out in service. They owned and operated their own retail division. [Williamson eventually went out of business.]
“It makes you wonder if that trend will come back.”
Rechtin believes that his company’s personal service will be his greatest edge against any competitor, whether they are born and bred on Wall Street or just across the river in Cincinnati.
“Our advantage is that we are still hometown. A customer can call me at home or get me by the neck.”
Formulas for success“The biggest competition our industry has is ourselves,” Rechtin said. “We are giving the business away and not charging a good enough price for our services. A lack of business education and not being able to recognize overhead are reasons why pricing is not right.”
One of the keys to maintaining a professional reputation is to have solid licensing laws, according to Rechtin. He has worked hard to get new licensing laws passed in Kentucky, and continues to press for unified certification within the hvac industry.
“The unity of the tech certification programs is the best thing that could happen,” he said. “I always wondered why there were so many programs.”
Rechtin believes there are many different keys to success. He cited his own example of being the youngest mayor in Bellevue’s history. It was his way of “giving back to the community.
“You need to establish yourself in the community and have a trusted and respected name,” he said. “There is no substitute for hard work. You have to be willing to continually educate yourself.”