Won't You Please, Please Help MeA few key points kept popping off in my head as I read Barb Checket-Hanks May 28 cover story “HVACR Contractors Diversify to Meet Changing Markets.” While there certainly were legitimate points made, the average HVAC company needs to be very careful when switching fields.
First is the issue of focus. I have seen time and time again companies try to go from plumbing to HVAC (or HVAC to plumbing or commercial to replacement/service, etc.) and waste valuable resources only to retreat and go back to what they know, like, and specialize in. Let’s face it, we are creatures of habit and we tend to focus our time and energy in what we know best. To think that a change of this magnitude can and will happen without education, training, assistance, systems, etc. is literally impossible for most companies, and therefore their fate is usually predictable.
Second is the issue of pricing for profit. Being from the service and replacement world, I cringe every time a new construction contractor tries to make the transition to replacement/service, because they price their jobs in the same manner and with the same margins they used in new construction.
It’s a different industry with a different culture and standards. Even the example used in your article referring to a 30 percent gross margin in replacement is flawed. Successful replacement contractors know that even the best companies operate with a 25-30 percent overhead in their replacement department, therefore requiring a minimum gross margin of 40 percent plus to obtain a reasonable profit.
Can the transition be done? Yes, but only with a serious plan that includes resources, systems, training, and lots of what the Beatles sang about in 1964 - Help!
One Hour Heating & Air Conditioning
Get Everyone in on the ActMark Skaer’s editorial from May 21 [“It Takes a Village to Raise HVACR Technicians”] hits it on the head. If we are going to make a difference in the construction workforce needs for tomorrow, it will be everyone recruiting their sons, daughters, nieces, nephews, and neighbors to our industry.
Technical Education Consultant & Standards Manager
Air Conditioning Contractors of America
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Publication date: 06/18/2007