Blaine Heating, which serves the entire Minneapolis/St. Paul market, was recently purchased by the utility’s non-regulated Minnegasco Home Service Plus unit. Utility executives indicate that other acquisitions of hvac and other home service firms will follow, although no timetable was provided.
The utility emphasized that acquisitions may only be a small part of its long-range corporate growth plan, whose basic aim is to broaden the products and services it offers to its customer base.
Surprise, surpriseThe acquisition of Blaine caught other hvac contractors in the Twins Cities area by surprise. Most believe that the transaction will change the competitive balance within the local hvac market, and may force them to revamp their operations to meet the coming changes.
“This is just a continuation of ongoing changes in the hvac marketplace here and nationwide,” said Ted Ferrara of Standard Heating & Air Conditioning, Minneapolis.
He added that while it was too early to determine how the purchase would change local market dynamics, he was not surprised that it occurred.
“Minnegasco is trying to remain a viable operation in this market by offering customers additional reasons to do business with it,” said Ferrara. “Blaine had an excellent reputation for doing quality work, and its services are a good fit for what the utility wants to do in this market. I wish both firms success in this transaction.”
Standard is itself owned by a national consolidator, Sunrise, FL-based Blue Dot.
Bruce Hasselbring, president of Ace Supply Co., Minneapolis, agreed. “This is yet one more change in the hvac marketplace that we are going to have to react to in order to maintain our position in the market. What that reaction will be we probably won’t know for a few months.”
Hasselbring added that he prefers local contractors being acquired by utilities, as they usually continue to do business with local refrigeration supply houses, because contractors acquired by manufacturers switch to obtaining parts and tools from the manufacturer’s in-house operations.
The game planFor Minnegasco Home Service Plus, the purchase of Blaine was an acquisition of expertise, said Andrea Newman, the unit’s vice president.
In the past, Minnegasco provided repairs for central heating and cooling equipment covered by its maintenance service plan through an in-house staff of service professionals, but contracted hvac sales and installation work to outside businesses, according to Newman.
With Blaine, Minnegasco gains the ability to perform hvac sales and install work itself, and to have the same staff support maintenance plan-covered equipment.
The result will be a more efficient hvac sales-service operation, Newman said. She added that Blaine earlier had been one of the unit’s local sales and installation subcontractors.
By acquiring Blaine, the home services unit also gains entry into new construction and commercial hvac markets.