Put Aside the Apprehension and Deal With the Utilities

Competition is a Concern

In the past, The News has published many articles about residential contractors and how many feel that utilities compete unfairly for service customers, wielding their massive marketing powers and deep pockets to put the “small guy” in a situation where feels he is unable to compete. We’ve all heard the stories and experienced them, too. “Cross-subsidization” is a term that has crept into our vocabulary.

In early February, the Air Conditioning Contractors of America (ACCA) published results of its biennial legislative survey which showed that the number one concern of its members was “the issue of fair competition with electric and gas utilities who choose to compete in our industry.”

The number two issue was the continuing need for trained technicians.

ACCA also began a “Fair Competition is Cool” campaign, designed to “end unfair competition in the industry and to level the playing field for all contractors.”

In 1998, the Missouri legislature passed a bill separating utilities and their unregulated affiliates, thus eliminating any unfair advantages the affiliates may have had against contractors when marketing services to residential homeowners. The bill was designed to “level the playing field.”

All of this distrust and concern for fairness has spawned the growth of something I call the “looking over one’s shoulder” syndrome. We all do it, whether we are driving down the street or keeping a watchful eye on what our competition is doing.

Some contractors will say that they are still looking over their shoulders at what consolidators, manufacturers, or big box companies are doing. It is only natural that curiosity and a sense of survival drive us into the watchful mode. And that’s good, we should all try and be mindful of industry trends.

But I have met many successful contractors who tell me they don’t care what the other guys are doing — they just stay the course and keep their customers happy. Maybe that’s not such a bad philosophy to adopt when it comes to dealing with the utility companies, too.

Perhaps we should be focusing our energies on seeing what the utilities can do for us rather than what they can do to us.

There are unique situations in many communities that cannot be lumped into any generalizations by this journalist. However, I think I can make a few observations which could be applicable to your business model.

The philosophy of many successful contractors is this: Don’t worry about what your competition is doing. Stay focused on the task at hand and only do things that will add to or enhance your business model.

Key Questions

With regard to utilities, there are key questions to consider. Will being suspicious of the local utility enhance or add to your business? Or will a partnership with the utility achieve the ends you seek?

Again, you may be in a unique situation where you might say yes to the first question. But I tend to think that, in most cases, contractors would say yes to the latter question.

There are hundreds and perhaps thousands of top-drawer hvacr service contractors who are “preferred” contractors for utility companies, which depend on their expertise to install and maintain equipment that has been sold or leased to the homeowner by the utility.

Accentuate The Positive

I have to think that there are more contractors who have benefited from a partnership with utilities, than those who have been hurt by cross-subsidization. My objective in pointing this out is not to minimize the importance of fair competition, but to focus on positive changes.

I remember a few years ago when the consolidation craze hit our trade. There were contractors who lost some sleep over whether they’d be able to compete with a national entity that offered competitive service rates — and also offered higher wages, benefits, and career paths for its workers. Well, a few years later, the consolidators and the independent contractors have managed to carve out their own niches, and all seems to have calmed down.

That’s because business owners have decided to turn their focus inward, strengthening the business within their own four walls.

And just what is their strength? Service. And what do utilities preach to their millions of homeowner customers? Service. Funny how those two words sound alike.

What is the ultimate goal of contractors who tout their service agreement programs? They hope to gain customers for life.

What do utilities, which face new competition for customers due to deregulation, list as their ultimate goal? They hope to gain customers for life.

Let’s take it a step further.

Many contractors lack a well-funded marketing campaign to attract new customers. What do utilities have at their disposal? A well-funded marketing campaign.

Meanwhile, many utilities lack experienced, well-trained technicians to install and service equipment. What do contractors have at their disposal? Experienced, well-trained technicians.

The Case For Cooperation

Let’s recap:

Utilities and contractors offer service.

Utilities and contractors want customers for life.

Utilities and contractors need a well-funded marketing campaign.

Utilities and contractors rely on experienced, well-trained technicians.

The common thread is indoor comfort, be it heating or cooling.

I don’t mean to belabor what I believe is a very simple point. The synergies between utilities and contractors spell more customers for each — and more customers means more work, and hopefully higher profitability.

We should still keep our rearview mirrors in working order, because you never know when someone or something may come up quickly and cause you to alter your driving pattern.

But as long as your gearshift is in drive and you leave your windows down to let in the many business options that come your way, you are likely to find the road to success.

Hall is business management editor. He can be reached at 734-542-6214; 734-542-6215 (fax); halljr@bnp.com (e-mail).

Publication date: 08/06/2001