A Unique Foundation Serving the Construction Trades Industry
On Monday, May 6, 2013 the Joseph Groh foundation will host its fourth annual golf tournament fundraiser At Prestonwood Country Club in Dallas, Texas.
Confused golfers at the 2010 tournament
Who is this foundation? They are a unique 501(c) 3 public charity because 100% of their grants are directed to individuals related to the construction trades industry who are living with life altering disabilities. If you haven't noticed on their website, Callahan Roach is a supporter of this foundation and has been since their inception in 2009.
The foundation was started by Joseph Groh, a 35 year veteran of the HVAC industry prior to being rendered a quadriplegic from a bicycle accident in 2008. The primary mission of the foundation is to provide financial support for individuals related to the construction trades industry (plumbers, HVAC, electricians, roofers etc.) who are living with life altering disabilities. In the past, the support has ranged from providing handicapped accessible vehicles to specialized rehab equipment for those who are paralyzed to home and bath remodels and more. To date, the foundation has issued grants to 11 different individuals, their stories can be found on the website.
The secondary mission of the foundation is to provide education and information for individuals living with spinal cord and other permanent disabilities. This is primarily accomplished through its website, which hosts well over 100 links to other websites, categorized by subject ranging from US government sites to individual state resources to research sites to rehab facilities to much, much more. You can learn more about Joe and this foundation by visiting Josephgrohfoundation.org.
The best ball golf tournament referenced above is the major yearly fund raiser for this foundation, so if you live in the DFW MetroPlex please consider bringing a foursome and joining in the fun. If you are not in the DFW area, please consider a sponsorship opportunity, many different levels are available. For more information about golf or sponsorship, go to http://www.josephgrohfoundation.org/golf.html
All signs point to a better summer in 2013 then we have seen in a number of years, is your firm position to take advantage?
The U.S. Census Bureau announced that for 2012, overall building permits have increased 30.3% and housing starts have grown 28.1%. The national Association of homebuilders are forecasting that single-family starts will grow 22% in 2013 and that single-family construction will grow another 30% in 2014.
From the consumer's perspective confidence in the economy is growing, albeit slowly. The consumer confidence index now stands at 69.6 up from 58.4 in January. This rebound in consumer confidence stems from a settling of nerves related to the fiscal cliff uncertainty and payroll tax cuts. All this has caused consumers assessment of current business and labor market conditions to be more positive than last month. Looking ahead, consumers are cautiously optimistic about the outlook for both business and labor market conditions. Income expectations have also improved modestly.
According to the climate prediction Center, the Dallas-Fort Worth area will once again experience a hot and dry summer - of course that's not really new! Anyone who has spent more than a few summers here knows that every summer is pretty hot and dry in this part of Texas.
So what do you have when you combine increased construction activity, rising consumer confidence and a hot summer? You have the perfect recipe for an outstanding business summer, so now is the time to prepare. If you plan to add sales or service people, now is the time to hire so when the busy and hot days are here they are up to speed and ready to be productive members of your crew. The thermometer outside may still be in the 50s, but the long, hot summer days will be here before you know it!
Market statistics from March 18, 2013 ACH&R News.
Consumer confidence statistics from the Conference Board consumer confidence survey.
In case you missed it, two major pieces of legislation impacting the HVAC and plumbing industry were recently passed.
A recent article in the ACHR News announced that the recent legislation passed by Congress and signed by the president to avoid the fiscal Cliff also retroactively reinstated the Internal Revenue Service code 25C tax credits for high-efficiency HVAC and water heating equipment that expired at the end of 2011. The air-conditioning heating and refrigeration Institute (AHRI) reported that the legislation extends the tax credits from January 1, 2012 through December 31, 2013 for qualified equipment listed in section 25C of the Internal Revenue Code. The article states that because the credits were made retroactive to January 1, 2012 they can be used for qualified equipment that was installed any time during the past year as well as going forward in 2013.
The list of rebates includes:
- Air Conditioners and Heat Pumps ($300 Tax Credit)
- Advanced Main Circulating Fan ($50 Tax Credit)
- Boilers ($150 Tax Credit)
- Furnaces ($150 Tax Credit)
- Water Heaters ($300 tax credit)
To read this article, click here .
In another article by Charles McCrudden of ACCA (Air Conditioning Contractors of America), the Department of Energy has agreed to withdraw the pending minimum energy conservation standard that includes regional standards for residential non-weatherized and mobile home gas furnaces. According to the article written by McCrudden, portions of the June 27, 2011 Direct Final Rule setting the minimum AFUE standards for residential non-weatherized and mobile home gas furnaces and 90% in the northern region and 80% in the Southeast and Southwest regions is vacated, along with the pending May 1, 2013 compliance date. Pending the court's acceptance of this settlement, non-condensing furnaces remain legal to install in all states until further notice.
To read this article, click here.
According to an article recently published in ACHR News, the prospects for next year look better than they have in a long time. They cite a recent survey sent to more than 1000 HVAC or manufacturers worldwide, where seventy percent of the respondents said they expected the economy to be better in 2013 than in 2012. Fifteen percent of the manufacturers said they expected a much better year while twenty-eight percent of respondents expected the economy to remain the same. Only three percent expected it to be worse than in 2012.
Commensurate with this outlook, eighty-six percent of HVACR manufacturers believe sales will increase next year, with thirty-five percent of respondents expecting sales increases of more than ten percent. Thirty-two percent forecasted sales increases between five to ten percent, and nineteen percent expected increases of less than five percent. Eleven percent of respondents believed sales would remain the same, while only three percent expected sales to decrease.
Forty-one percent of respondents said the residential sector would account for the strongest demand for new products, and demand was expected to be greatest in domestic (us) markets.
In line with this forecast, seventy-five percent of AHR Expo exhibitors said they will be introducing new products or services at the upcoming 2013 show which will be held in Dallas January 28-30. Forty-five thousand industry professionals are expected to attend, looking at products showcased by more than 1,800 manufacturers and suppliers from around the world. For more information on this exposition, please visit http://www.ahrexpo.com/.
Chances are, unless your area is dealing with a major onslaught of winter storms (and some are) this is an ideal time to complete a little planning for 2013 in your business. Yes, there are the holidays and all the year-end stuff, but if you don't do some planning now you may not get to it at all. So, where do you start?
HVAC contractor Butch Welsch suggests starting with this year's results. Compare your 2012 budget numbers with the real numbers he says, making note of the areas that you know need improving in the upcoming year as well as strategies that were successful for you in 2012. Then he reviews his monthly sales leads and sales from 2012 and compares them with previous years, while reviewing monthly temperatures for those years to the current year to see what impact they may have had on sales. For this information, he notes you can go to www.weatherunderground.com, enter your ZIP code, go to history, and then monthly to find information to help your planning process. From there you can begin to make estimates of monthly sales for the upcoming year.
There are 3 areas where a contractor can improve their profit margins: by increasing sales, by achieving higher gross margins or by reducing overhead expenses. You must determine how your business can do this for the upcoming year, laying out specific strategies and tactics for each. For example, one way to increase gross margins if you are currently utilizing time and material pricing is to implement flat rate pricing. Since this strategy can begin to make an immediate difference, you would want to plan for its implementation as early in the New Year as possible. You can start with a call to Callahan Roach for additional consultation to see if this is right for your business.
You can then begin the New Year with the confidence of knowing your business is operating by plan and not by whim.
The holidays are a heck of a way to end the year. After 12 months of juggling schedules, rushing to meet deadlines and trying to put 26 hours of day into one suited for only 24, we end the year trying to do all of these things on steroids! If you're like most of us, you come into the holidays looking for some peace and quiet, seeking respite and perspective on the year that was. That perspective can be just what we need to balance our world and help us make sense of it all. It is perspective that allows us to be thankful for all that we have and all that we have accomplished. It is also perspective that allows us to recommit to the fray with a new sense of purpose and a strong vision for the New Year.
I have the perfect book for you to read over the holidays, one that will help you find that perspective. It is the inspirational story of tragedy, courage and triumph. As we read of one man's journey through experiences most of us will never know, we are left with a renewed admiration for the boundless capabilities of the human spirit.
The book is entitled "Eleven Seconds", and it chronicles the life of Travis Roy who suffered a devastating injury 11 seconds into his 1st collegiate hockey game. The book reveals how he managed to cope after the accident, and with the help of family and friends overcome tremendous barriers to begin a new life. In his new life, Roy has been able to look beyond his own personal situation and positively touch the lives of countless others. It is available on Amazon in both hardcover and Kindle additions.
The staff at Callahan Roach wishes you and yours a safe, joyous and peaceful holiday season.
We have all heard the expression "the whole is greater than the sum of its parts." For HVAC contractors, that means approaching a building as a coordinated system rather than a structure that contains mechanical equipment. In October, the Air Conditioning Contractors of America (ACCA) explored this topic in detail when they held their inaugural building performance forum in Austin, Texas. Taking this approach offers your customers big opportunities for saving energy and increasing comfort while providing enhanced profit opportunities for your company. One of the speakers at the forum, Michelle Knaszak said "It's very important that you do your research before jumping in with both feet. You have to learn to crawl before you run a marathon." Michele is director of training and operations for Green Homes America. What are some of the elements of performance contracting?
According to Knaszak, the logical first step is to examine attic insulation and air sealing. "It's unbelievable how much more comfortable and energy-efficient a structure can be when you combine shell work with mechanical work" she said. Once you have addressed attic insulation and leakages in the air distribution system, you are ready to move on to doors and windows. Temperature controls, lighting and zoning also present potential, particularly in older structures.
Performance contracting represents a completely different thought process from selling heating and air-conditioning units, so it's critically important that you educate your organization and do your research before jumping in to this growing area. Once you have done your homework however and are ready to take the plunge, performance contracting offers virtually unlimited opportunities to significantly increase your labor efficiency and average ticket along with your profit margin. It is also a way to differentiate your firm from those companies who are simply looking to change out a condensing unit or furnace. Ellis Diels, chairman of ACCA's building performance Council perhaps said it best. "The time is now for the HVAC industry to realize its full potential. Only we have the expertise, skills, customer relationships, and marketing savvy to term building performance into a true market driven business and not some government funded boondoggle."
Something to ponder as you turn the page to 2013 in your business.
Flat rate pricing has been around for a long time. About 19 years in the HVAC industry to be exact. That’s when Jim Kimmons, founder of Callahan Roach Flat Rate Pricing mimicked the automobile industry and re-formulated his service department to charge a flat rate, or as some put it, upfront pricing for service repairs.
Actually all HVAC companies have always charged flat rate prices on their replacements. Virtually no one charges for a furnace or air conditioning installation by the hour plus parts. Flat rate pricing does that for repairs. The reason the customer wants flat rate for service is the same reason they want it for their equipment, which is to have the assurance as to how much the check they will be writing BEFORE the job is started.
The service company likes it as well because they can attain better margins. The customer is judging the company by the level of service provided rather than by how much time the tech is spending in the house. When that happens, stellar customer service can be delivered a higher service rate.
So why is this beneficial for the service tech? “What’s in it for me?”
Actually the service tech becomes the biggest advocate of flat rate pricing. When the customer knows upfront what the price will be, they no longer stand over the techs shoulder with a stopwatch to scrutinize every move he or she makes. When you give the customer the price upfront, the tech can now take the time to do a thorough system evaluation (or diagnostic), perform the repair carefully, take the time to check out system operation, and explain the repairs to the customer. He can also complete his paperwork completely and neatly, collect for the call, clean up and be prepared for dispatch to send the next call. That’s why techs love flat rate pricing. By the way there is another tech benefit. If the company they work for is more profitable because of flat rate pricing, they tend to drive better trucks, get better wages, get better benefits, and overall better working conditions. Sounds like a win for the customer, a win for the tech and a win for the service company!
Hardly a week goes by that we don't see an article about the current shortage of technicians in the technical trades industry. There is no question that the industry has, and will continue to have a shortage of technical talent. About 1 year ago Jim and Jeff Stanch, owners of Runnemede Heating Co. Runnymede, New Jersey addressed this topic in a major industry trade publication.
"The pool of good, sharp technicians seems to shrink every year," Jeff said. "In 2003, Arizona State University surveyed high school students, asking them to rank 500 occupations in order of preference. The trades came in 498th." Another poll of American parents found that they knew the trades offered good-paying careers.....for someone else’s child.
"Jim and I have become convinced that technology is the only way we can overcome the technician shortage without sacrificing the level of service customers have come to expect. How? By embracing an open communications standard like ClimateTalk." ClimateTalk is an Internet-based, common information communication protocol developed for the exchange of information between disparate systems and devices. "Contractors who choose to install ClimateTalk-enabled equipment now are laying a foundation for the future of their business by establishing a network of equipment in the home."
According to Emerson, the contractor will be able to perform virtual maintenance checks on a daily basis and will be able to respond to minor or major faults long before their customer even realizes there’s a problem. Furthermore, customers will appreciate their newfound ability to access their comfort systems remotely, monitor their usage habits, even chat with Technicians, schedule service calls, order consumable items specific to their systems, and compare their energy usage to that of their peers.
"For the contractor, this means the ability to provide a higher level of service while lowering direct costs and overhead" Jim said. "Contractors can expand their service expertise to include all manner of energy use, health, comfort, safety and convenience."
This blog is not intended to be an advertisement for Emerson, but might it provide a glimpse into one of the solutions for technician shortages? What do you think?
Presenting the Diagnosis to the Consumer Using Flat Rate Pricing.
"Okay, Mrs. Smith," you start out. "I have done my evaluation of your system and let me point out what I did, what I found and how we’re going to get you fixed up". "I found that in fact your bearings were the reason you heard the noise coming from your furnace. During my evaluation I also found that the blower itself is dirty, which needs to be cleaned when I’m changing the motor. Your blower is a "squirrel cage type", here's a picture of what it looks like. I also found that the burner in the furnace needs to be cleaned and while it’s still summer, I can give you a discount on the repair if I do it while I’m here. Finally, your humidifier pad also needs changing and I am recommending a system check out of your humidifier."
You should point to the line item on the work order, and using the exploded views of the equipment in the Technician’s Flat Rate Manual, point out the Customer narratives for them to read. Don't forget to have the Tear offs ready to use and leave behind with the work order. For each recommended repair, you will insert a price taken from the Flat Rate Manual. Let the customer see the manual and that the prices are published, based upon a national standard. This will alleviate price concerns.
Show the customer that the additional repairs are discounted and that they would receive the discounted price had they owned a service plan from your company. Be prepared to offer them a completed service plan at this time and be prepared to offer them the repair prices from the service agreement column.
Ask the customer to approve the suggestions. If they tell you that they really didn’t plan on spending that kind of money today, the first thing you let them know is the discounts they would receive if they had a service plan. If they don’t want that, inform them that they could perhaps wait a month or so to do the burner cleaning or the humidifier service, but that you MUST replace the motor and clean the blower. Have them initial (not check mark) the boxes for the repairs that they approve and the boxes for the repairs that they decline.. They might just tell you to do everything, especially when you tell them that your company accepts MasterCard, Visa and American Express.
Because you presented options, consequences and a way to pay, chances are the customer will tell you to do all of the recommended tasks. But even if they don’t, you now have a paper trail of the things that will eventually have to be done anyway. Guess who gets to do those? Your company, of course and if the humidifier malfunctions or the burner won’t light, you can now say that it was recommended during the service call. You look better in the homeowner’s eyes because you have made your professional evaluation and recommendations.
You are now being judged by the quality of the service you provide, NOT on your hourly rate.