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Second, residential/light commercial a/c is one of the few remaining small business opportunities with low financial and legal “barriers to entry.” It is comparable to the auto mechanic/ autobody repair/service station situation of 30 to 40 years ago. A guy can simply hang out a shingle one day and be in business. Generally, this person is an adequate tradesman who is unprepared for the business side of things.

Much of the residential a/c work is done by this type of businessperson. Because their selling skills are weak and they don’t understand overhead, they define the bottom price level in the residential/light commercial business. Generally, they don’t understand that their price levels prohibit them succeeding as a business. So long as the barriers to entry in a/c remain low, the bottom price level will be defined by small companies that undervalue themselves and are vulnerable to failure with any big loss. Somebody who prices his work far too cheaply simply cannot afford to pay a real wage with real benefits to his people. The math is simple, if one knows how to do the math.

Third, there has been a cultural disconnect in career paths in the U.S.A. over the past 25 years. For those who can afford college, the idea of a career in the manual arts has become a second-class choice. In poorer areas of the U.S.A., this is not an insurmount-able problem, but it seems to be a bigger issue in more affluent areas. Fortunately, the next wave of immigrants is breaking into the middle class in our sort of career path.

Unfortunately, our industry has traditionally been a trade passed down through the generations. There has been a bit of a hiccup in incorporating the next wave of immigrants into the trade because they have lacked family or other mentors to bring them in.

Because many of these individuals do not physically resemble the guys running the small a/c companies, or live in the same neighborhoods, they don’t become known through school, church, scouts, little league, baby-sitting, feeding your cat while you are away, or the other traditional ways that a kid who is not related to you gets to talk with you and thereby learns about your job. Our recruiting has therefore suffered by being in a gap between generations and between ethnicities.

The good news is that the same low barriers to entry that make the low price arena of our industry such a tough place to be also make the industry very attractive to the same first- and second-generation immigrants that have fueled every entrepreneurial industry in the U.S. over the last 100 years. While some predict that our nation’s aging demographics portend a more difficult time in getting techs over the next 10 to 20 years, I think this misses the point. Good techs will be available. They may not look like you, or have a last name that matches your ancestral country, but as recent immigrants get into the industry, they tend to bring in more and more of their friends and relatives. The techs recruit from family and friends, if they are happy.

Change is always hard. The focus on the current shortage of technicians, particularly in the residential/light commercial segment of our business, is only part of the picture.

Until the industry does a better job of advertising itself, or the family trade/ mentoring relationship reestablishes itself, or a whole new group of people is successfully brought into our family, there will be a tech shortage.

Hopefully, the low-price element of the industry will take the hint and raise their prices to levels that are sustainable for a real business — even if they only understand the opportunity, and not the business necessity.

Finally, the barriers to entry are slowly increasing. Government paperwork and regulation are part of the trend. This dynamic will probably have the same impact that it has had on the auto repair industry — to force minimum prices up to a level that will sustain the investment necessary to really be in business.

This News series has gone beyond the technical side of business. The issues are as much sociological as technical or financial, and I enjoyed the series. Keep up the good work.

Michael Gallagher, P.E. Western Allied Service Co.

Publication date: 09/11/2000