Understanding Our Industry

Ed. note: In May of this year, Dominick Guarino participated in an HVAC Energy Efficiency Roundtable in San Francisco, CA. The Roundtable was held to examine better ways of attaining sustainable energy solutions related to HVAC systems. Part 1 of Dominick's observations appeared in our June 2009 issue. Read Part 1

There's an 80/20 rule that applies to virtually any industry, that's more like a 20/60/20 rule. It goes something like this:

  • True Transformation Comes From Within

    The top 20% of our industry strives to improve quality, profits, and growth by investing in new technology, becoming better educated, and doing the hard things to make sure they are always ahead of their competition. These are the companies who focus on marketing and selling service instead of a low priced box. They know that the only way to succeed is by building a service agreement base that becomes their primary source of add-on replacement business.

    These are also the companies most likely to become performance-based, and who will mold the future for delivering and servicing systems that provide the highest efficiency and comfort available. These are the type of companies that creators of advanced energy efficiency programs should focus on, incentivize and promote as the providers through whom consumers can get the best utility incentives and participation in special programs.

  • Of the remaining 80%, the middle 60% of our industry wants to do a good job, but doesn't know where to start. Many are under-capitalized and just can't make the leap. Many think they're delivering a quality product at a fair price because they “don't know what they don't know.”

    This group has great potential, but they need help. They need some baby steps which include the new Quality Installation and Quality Maintenance standards and guidelines. Utilities could encourage this middle group with mid-level incentives and rebates for doing a higher quality job than their low-ball counterparts. Some of the low-ballers can pull themselves up to the higher ground of this group with the right encouragement.

  • The bottom 20% are virtually a lost cause. They like being the bottom feeders because they don't know any better. Most have no intention of changing how they do business. In fact, most of them think they're a lot smarter than everyone else, as they're “stealing” jobs away from legitimate contractors. They too “don't know what they don't know,” but the difference is, they really don't care. This group shouldn't have access to any incentives or ability to offer any rebates to consumers. Every now and then, one will climb out of the low-price swamp and clean himself up to be able to participate in the middle part of our industry. There's nothing wrong with encouraging this, but we must proceed with caution, as most are just looking for low-hanging fruit they can fill their belly, but have no intention of changing who they really are.

So, this caution goes out to my fellow HVAC Roundtable Task Force members and all of those who seek to “change” our industry: before you can effect change, you must first seek to understand. Learn more about our industry, learn about the good in it, not just the bad aspects. Learn more about what the top contractors are doing, and make sure that, as you try to mold new ways to encourage quality and energy efficiency, you do so with these folks in mind. Keep in mind that contractors aren't the only ones that need to change to meet the challenges of the future. The utility commissions, energy commissions, code enforcement bodies, manufacturers, and distributors also need to change some of their thinking to allow contractors to do their work, be successful, and thrive.

California can do some amazing things over the next several years if it keeps some of these precepts in mind. We need to move forward with humility and understanding that none of us have all the answers, and no good will come from pointing fingers and making scapegoats of one segment or another of our industries. If the mission of this group is to truly, “provide the necessary guidance to both California and the western U.S. to help ‘transform the industry,’” then we must keep in mind all of the true stakeholders in this process, especially the homeowners who will ultimately decide whether to invest their hard earned dollars and their trust in us. We must also keep in mind the HVAC contractors who are the face of our industry to these homeowners They must continue to earn the trust that is placed in them day in and day out, as they work and live in the trenches of this fragmented and tough, yet rewarding industry.

Dominick Guarino is chairman and CEO of National Comfort Institute (NCI; nationalcomfortinstitute.com), a national training and membership organization focused on helping contractors grow and become more profitable. Email him at domg@ncihvac.com or call NCI at 800/633-7058.