Butch Welsch

Each one of us contractors realizes the need for training. Certainly with the complexities of the new furnaces and air conditioners, every contractor should be having regularly scheduled training sessions. We have found this to be especially true in the last year as manufacturers have brought equipment on line, with little advance notice, in an attempt to capitalize on the government tax (and other) incentives. We should never forget about the importance of this type of technician and installer training.

However, today I want to address a different type of training. How many of you do any business training for your service technicians and installers? I’m guessing not very many. However, how many of you have ever been asked by one of those service technicians or installers regarding the fact that you charge at least $90–130 per hour and yet he only takes home $25 per hour?

This is a situation we all confront at some time. Whether the technician actually comes forward and asks the question or whether the technicians merely discuss it among themselves, we all know that it is something that is on their minds. But there is a way to address this problem: provide some basic business training for all of your people. I recommend including all of your office and sales people along with the technicians and installers.

I have had the pleasure to present just such a program to groups of apprentices for the last couple of decades. In addition, I have made the presentation to the rest of our employees, including journeypersons and office staff every few years in an attempt to make sure everyone gets exposed to the program.

The format is that each individual is considered to be the boss of his own company. His first task is to bid and attempt to obtain a job. Unfortunately he is bidding against all of the others in the class, which, as in real life, makes it impossible to get the job and also make money on the job. After the bids are received, we begin to analyze in detail all of the items that should have gone into preparing the bid. By the way, to make it easier, we actually give the bidders the equipment and material costs and number of labor hours. Despite these givens, the bids are typically separated by a factor of 2.5 to 3 times.


The most important points we make include a complete labor breakdown, including all fringe benefits, FICA, workers compensation, unemployment, etc. Just that breakdown alone is very shocking to the average worker. They really don’t realize all of the cost items associated with an hour of labor.

The second most important point is a description of overhead and a complete listing of all of the items that go into making up a contractor’s overhead. Again, while they understand that there are some costs out there that the contractor must pay, until you put them down on paper and really itemize them do they really start to understand the many “extras” that are costs for which any contractor is responsible.

With this information assembled, the amount of profit desired on the job is discussed. This is always interesting because the average worker feels his contractor is making a net profit between 10 percent and 20 percent. They find it hard to believe that national averages are less than 5 percent. Finally the actual bid is revealed and compared to their original bids. Usually about 50 percent are considerably lower and the same percentage are higher.

We have additional sections on company operations, such as operating efficiently, teamwork, and similar important operating functions. There is even a portion of the program that briefly explains a financial statement.

When the program is completed, the apprentices have not likely adsorbed all of the material, however the important thing is that they have been exposed to some of the many things we go through as contractors. I strongly urge you to consider such a program within your organization.

NOTE:Contact me for a program outline or the Manual entitled “The Real Costs of a Sheet Metal Business” is available for $195 through the Sheet Metal and Air Conditioning Contractors National Association (SMACNA), at 703-803-2980 or www.smacna.org.

Publication date:05/17/2010