Although he's now in his late 80s, the memories are vivid for Paul Hobaica: memories of growing up in hard economic times, of helping his immigrant parents make ends meet; of striking out on his own in business; and, best of all, of building a life as a husband, father, and business owner.

Paul Hobaica founded Hobaica Refrigeration in 1952, working out of a three-car garage in Glendale, AZ. He soon moved to Phoenix, where there were greater opportunities in commercial refrigeration.

Residential air conditioning became the company's main business during the 1960s, thanks to the growth of forced air systems over evaporative coolers. Air conditioning quickly became a "must have" service.

Hobaica sold the business to his sons Paul and Louis in 1989. He's been fortunate to see his legacy — high ethical standards, a fierce commitment to customers, and ongoing community service — live on with his sons, Paul, Louis, and another son, Mike, who bought into the company in the 90s. They, along with their wives, sons, and daughters, are keeping the Hobaica legend alive in the Maricopa Valley of Phoenix.

Hobaica Services is an HVAC industry leader. When you think about it, it always has been a leader, even during its formative years, when profits were hard to come by. Paul Hobaica's quiet tenacity and belief in what he could do to help people live better and feel better set the bar for others to reach. Nowadays, Hobaica's shows a profit in every year, and it continues to serve as a model of excellence in business management, marketing, dedicated customer service, generous employee incentivizing, regular training and certification, and ongoing service to the HVAC industry and the community.

From Very Little to Very Much
Paul Hobaica arrived in the U.S. from Cuba with his Syrian parents in 1924, at the age of three. They made their way to Phoenix, to be with relatives who had immigrated before them.

Hobaica entered the army in 1943, as a radio operator. He served in the Battle of the Bulge and other European conflicts, and earned a Bronze Star for heroism. Back at home after the war, he studied refrigeration and business on the GI Bill at Phoenix Tech School. After four years of training, he worked for a short time for a refrigeration contractor, then in a supermarket, and performed various electrical jobs on the side for friends and family.

As air conditioning’s popularity grew, the company experienced slow but steady growth. The senior Hobaica did his best to provide for his family of seven children, and put them all through college. He was also committed to helping those less fortunate than himself.

"My father founded the business on two basic principles: the more you give, the more the good Lord will provide; and, always treat others as you would want to be treated," Louis explains.

"He provided free service, repair and installations for non-profit organizations, churches and families in need. Nobody went without comfort with Hobaica's Refrigeration around," Paul adds. "In addition, he's always given discounts to the churches. If it were a hard financial burden he'd work out a way to assist with a very low rate. We've continued that tradition of helping the needy, churches and organizations."

New Era Begins
The company gradually worked into a new era of leadership. In 1978, Paul joined the company as an estimator. He had earned a degree in construction management, and was now ready to take up a larger role in managing and growing the business.

"A construction degree gave me insight into scheduling and operations, as well as business law and other business-related courses," he adds.

Louis went on to earn a degree in business management, and joined full time in 1983. He and Paul began to apply modern marketing and business strategies as a way toward greater growth.

The brothers bought the company in 1989, and grew it by about 15% in the following two years. Their brother Mike Hobaica, a mechanical engineer, returned to the company in 1995. He had been working as an engineer for Hughes Missile Systems, but changed his plans with the decline of the defense industry.

Today, Louis is president, Paul is vice president, and Mike is secretary/treasurer.

Despite a recession in 1992, and a drop in business following the attacks of 9/11, Hobaica Services grew at a good pace through 2007.

Then came 2008, a tough year, for Hobaica's, and the industry at-large. Wages at Hobaica were frozen, and some employees were laid off. But, the business has since rebounded. It enjoyed 32% growth in 2010, and is looking at a record year for 2011.

The company's gross sales for 2010 are $5.4 million. Its gross dollar volume breakdown is:

  • Installation retrofit: 65%
  • Service: 30%
  • Wine cellars: 5%.

Winning 'Raving Fans'
Employee incentivizing is a rich fuel that drives the Hobaica engine. Cash incentives, "Raving Fan" awards (inspired by Ken Blanchard’s book, "Raving Fans"), and "Hobaica Bucks" are bestowed on employees for anything that brings in new business, or by contributing ideas or inspiration to weekly meetings. "Hobaica Bucks," which are budgeted as marketing expenses, can be used for tools, uniforms, or for personal items such as gift cards, or gas cards.

"We focus on our employees marketing our products and services, and obtaining referrals from our customers. I'd rather pay my employees for marketing. That's a big part of our 'Raving Fan' approach," Louis says.

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Radio and TV advertising are part of the presence. The bouncy Hobaica jingle — "You'll lika… Hobaica" — is recognized throughout the community.

One of the first things a company cuts during hard times is advertising and marketing. Not the Hobaica's.

"We increased it during the downturn, and we ramped incentives up in 2008," Paul recalls. "We put a wage freeze on in May of 2008, and we basically couldn't afford any more overhead. However, if sales allowed for it, we could afford the incentives. In 2010 our employees earned $140,000 in bonus incentives and over $23,000 in vacation incentives."

Good Listeners
Kevin Nutt, president, KGGroup Marketing, works with the Hobaicas on various advertising and marketing initiatives, branding, and corporate identity. He appreciates the Hobaica's willingness to try new ideas, and spend money to make money.

"One of the questions I ask a potential new client is, 'Do you think of marketing and advertising as an expense or as an investment?' If they say it's an expense, I see a red flag.

"Some companies won't listen to advice. The Hobaicas do. I also enjoy working with family businesses that have a heart for their customers and communities. That's an element you don’t get from many companies, of any size."

Strategic Planning Maps the Future
Louis Hobaica would agree that Hobaica Services would be half the company it is without strategic planning. "I'm, a type-A person. Everything has structure, place, and process," he says. "That includes having standard operation procedures complete job descriptions, and planning for the future: next year and the next five years, and how we're going to get there."

This includes one- and five-year financial plans, company and departmental budgets, and more.

Managers participate in monthly budgeting and financial meetings, a monthly business operations meeting, weekly marketing planning meetings, and a monthly owners meeting.

The company's goal is 15% growth per year, with 10% net profit.

Goal Setting & Follow-up
Six key performance indicators are tracked and updated twice each month: new residential maintenance agreements; new commercial maintenance agreements; equipment leads; units sold; Raving Fan testimonials; and total revenue. The service department tracks activity per department and per technician, and provides reports on:

  • service revenue; new residential and commercial maintenance agreements; sold equipment leads/equipment revenue; warranty service percentage; Raving Fan testimonials; comfort enhancement sales; and new customers.

All Work, Some Play
All Hobaica managers participate in financial planning, budgeting, and business operations planning. Plans, goals and key performance indicators are communicated to all employees twice each month during company meetings.

The entire company meets on the first and third Tuesday of each month. These meetings mix business with pleasure, and are fun, energetic, and interactive

"A different employee starts the meeting with our company cheer, followed by our mission statement and motto, then we sing our company jingle. All employees get to draw from the Hobaica Buck Bank, for a chance to win $5 to $50 each time they participate," Louis explains. These meetings are also used to celebrate birthdays or anniversaries, and recognize special accomplishments, certifications, milestones, and sales achievements.

Much Time for Training
Training sessions are held every two weeks, customized for service technicians, installers, and comfort specialists. A company-wide meeting is held every two weeks, followed by the installation meeting and service meeting.

Training topics are determined by current issues.

"Because they're held so often, our training meetings most often include topics that have come up in the last month or so," Mike says. "I also spend time with the installers to talk about issues they're having in the field. The salesmen will be in those meetings, and that's helped us tremendously; the comfort consultants who are selling the equipment are in the meeting with the technicians who are installing them, and they're able to talk through issues that come up in the field."

Rick Hutcherson of RHI Training provides sales training twice each year. He devotes an entire week to review sales and communications for all employees, with a specific focus on field employee sales and communication.

One for All, All for Growth
Hobaica Services grew by 30% in 2010. It expects to see 10% to 15% growth in 2011.

"Every employee of Hobaica Services is a sales person.

Growth is driven by all employees, as they all participate in very generous bonus, spiff, and vacation programs, where they earn monthly bonuses and free vacations by providing our customers with our products and services," Louis says.

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The entirety of Hobaica's product and service sales are offered in the most ethical, honest and professional manner, and must always meet the Hobaica Services "3 Cs" —

  • be in the best interest of the Customer
  • be in the best interest of the Company representative (employee)
  • be in the best interest of the Company.

Peer Group Guidance
In 1998, the brothers joined an Air Conditioning Contractors of America (ACCA) MIX® Group, known as the Excellence MIX Group, which provides opportunities to share ideas and management problems with other contractors who operate in a different geographical area.

"Membership in an ACCA MIX® Group is the single greatest proponent of our growth and success," Louis says. "Our group consists of 12 of the finest HVACR and plumbing companies in the country."

"The group took us to a different level," Paul exclaims. "It gave us ideas we never had before. In a MIX Group, you’re not reinventing the wheel. You take proven methods that others have found to be successful, and use them in your company. Otherwise, it’s hit-and-miss, and you’re trying some things that work and others that don't.

"The majority of all we've implemented in the past 10 years have come from our MIX Group, or other peer group sources," Mike says. "It eliminates a painful trial-and-error process."

The Service Roundtable has also been a source of valuable business management information.

"The Service Roundtable has been an awesome resource for information we can't find in other places," Paul says. "We may want help in marketing to a specialty area, or are looking for a document related to drug abuse for the employee handbook. The Service Roundtable has an entire library of documents, and ready-made advertising pieces. Service Roundtable CEO Matt Michel has some awesome ideas." Hobaica Services joined the Air Conditioning Contractors of America in the late 1980s, when Paul was doing sales and estimating for the company.

When Louis and I took over the business in 1989, they became more active in the local ACCA chapter. Louis and Paul are both past presidents. Paul is chairman of the ACCA Public Policy Committee and served on a national subcommittee looking at new technologies.

Mike is a chairman of activities, and Louis just finished a term on the board of directors.

"Hobaica Services has been exemplary in their support of ACCA-AZ. They do more than just show up at meetings; they give of their time and talents, and actively participate in our strategic plan," says Antoine Coffer, executive director of ACCA-AZ.

Call to Customer Service
When asked to comment on the biggest challenge now facing HVAC contractors, Louis Hobaica has a two-word response: "customer service."

"The economy will go up and down, and we have to roll with it. What's more important is touching customers and creating such a relationship that they wouldn't even think about calling someone other than us," he says.

"When you build that relationship and trust, and you provide incentives to employees to market those services, you're helping to create 'raving fan' customers; the kind who will tell others in the grocery store line to call Hobaica."

That customer service mandate is amplified by the realization that today's customers are doing their homework.

"We have an 'aware' consumer base. They've heard about SEER ratings, zoning, indoor air quality, and energy efficiency," Mike says. "They're also active in social media, to see what people are saying about a company, through Angie's List, Google, or other sites that include customer satisfaction surveys," Paul adds. "We take the entire system approach. Do what's in the homeowners best interest, exceed their expectations, be the expert they rely on," Mike says. "Follow through on a promise. Don't just put a 16-SEER system in, and walk away. Make sure it's operating as close to 16 SEER as possible."

Employee Empowerment
Hobaica field and dispatch employees have the green light to make certain decisions on their own, in the interest of the customer.

"We've given field employees and dispatch employees the direction to make decisions at the moment without coming to us. They can refund a certain amount of money and take care of issues without always going to management for guidance," Paul says. "Those are usually decisions that are in the customers' best interest, and reduce the situational impact, and the stress the customer is feeling at the time."

"We've had a significant culture change here," Mike says. "Maintaining the culture is our employee focus. They know the Hobaica reputation and name, and that they're one of the family here. So they view it as a personal quest to maintain the culture."

Hobaica Services, Inc. represents the best of the best in residential HVAC contracting. It's a company whose leaders are in tune with industry changes and improvements. They know they can’t be successful without advice from their peers, and they actively seek out that advice. They know what makes employees tick, and provide what they need to improve. On the customer service front, they’re grateful for all they owe to devoted customers, and strive to be worthy of the trust their customers place in them each and every day.

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For all of the company's contributions to the industry, the community, customers and employees, and for an unwavering commitment to building a successful business, we're pleased name Hobaica Services the 2011 ContractingBusiness.com Residential HVAC Contractor of the Year.

100% NATE-certified
Hobaica's commitment to customer-first quality and excellence is evident in its commitment to technician training and certification. This includes constant updates on technology and equipment, such as the Trane and Lennox systems it installs, and other components such as Arzel or EWI zoning products.

Its field technicians are all certified by North American Technician Excellence (NATE). Hobaica's is among the elite few with 100% NATE certification.

"NATE gives us a step up on our competition, and provides our employees with additional knowledge," Paul says. "We're always training in new techniques, increasing their knowledge. It’s been very positive in terms of getting them onboard. NATE is becoming more and more accepted as the thing to look for in a company when you're looking for a technician. To have 100% of our field employees NATE certified is a big deal for us."

Additionally, Hobaica technicians are EPA universal certified, and hold certifications by Building Performance Institute (BPI) and National Comfort Institute (NCI), as well as many manufacturer and local utility certifications.

They've added duct leakage testing, and blower door and infrared testing. The benefits have been astounding.

"We see many repeat customers. For some of our customers, we're replacing their third or fourth system," Mike says. "We've always taken a whole house approach but relied only on a visual inspection. But you can only see so much. And you make some assumptions. It's amazing to see, when we replace systems we had replaced in the past, what we were missing by not using the technology. We'll see systems leaking 20-30% system airflow in areas we couldn't see previously; maybe it's a return chase going up a wall, and you assume there's no leakage there, but then you pressurize it, and find plenty of leakage."

Customer, Vendor, Employee Testimonials
Homeowner Dave Barry is a brand new Hobaica customer. He called the company when he needed two units replaced in his desert ranch home.

"These guys are fabulous. When people come into your home, you're always a little bit leery about things. But after I spent the morning with these guys, I was considering going to pick up my son and leave these guys here with the house open. I have no concern whatsoever."

Louis' son Andy Hobaica, began working part time at Hobaicas at age 12. Today, he's a NATE-certified service technician. He cherishes the company tradition of honesty. My dad, uncles, grandfather share that. If they say they're going to do something, they do it. We make sure the customers' are happy."

Hector Gonzales, comfort specialist, has been with the company for more than three years. "We take a whole-house approach. We inspect attic ductwork, to make sure it's intact and sized correctly. We also want to make sure we have the customer's best interests in mind. Making the customer the focal point has always made us more successful."

His colleague, comfort specialist Raud Hampton, says customers appreciate the fact that he and Hector ask many questions before providing solutions.

When they find out that we're asking the questions to get down to what they really need, the walls drop down because they see we care.

"This is the best place I've ever worked. They care about the people who work for them, they care about their customers," says technician Scott Gregory, who is also NATE-certified.

"There's good networking between the technicians, not a competition," says technician Jeff Frye.

"Hobaica's attention to detail is second to none," says Sal Farina, president, Empire Metal Products, the Hobaica's sheet metal provider.

"They're about the most prepared bunch of individuals I've ever met. They know how to dot the I’s and cross the T’s. They have the balance between getting the job done, making a profit, and taking care of customers."

"I feel like this is one of the best jobs I've ever had," says Paul's son, Jimmy Hobaica, an installation specialist. "I've learned a lot about respecting my coworkers, and the team approach."

Victor Reichstein, a member of the contractor support team for Emerson White-Rodgers, provides training assistance to the Hobaica technicians. He also serves as a NATE proctor for their certification exams.

"They have a smart group here. They're always willing and eager to learn," Reichstein says. He's also active with the Hobaica's in the BEGIN program (Business Entities Getting Involved in Neighborhoods), which provides heating or cooling assistance to needy residents.

"We put out the word at Christmas time for nominations for homeowners who are in financial need, and can't afford to get their HVAC running, or who have a system that’s beyond repair," Reichstein explains. "The contractors then install air conditioning free of charge, with the help of suppliers such as Emerson White-Rodgers."

"There are ups and downs within the industry, but the Hobaicas have always maintained a level of professionalism," says Tony Nolan, vice president, sales and operations for the Phoenix branch of Johnstone Supply. "As a distributor, it makes it a lot easier to deal with guys who understand the benefits of maintaining professionalism, and who don't have to engage in pricing wars to survive. They maintain good business ethics."

WHAT IS THE CONTRACTOR OF THE YEAR?

The ContractingBusiness.com Contractor of the Year represents an elite group: a forward-thinking class of HVAC contractors who are dynamic and professional in every aspect of their business. They constantly seek new ways to improve their businesses through quality contracting, and they strive to maintain the highest levels of customer service. These contractors maintain superior treatment of their employees, customers, and suppliers. They establish a reputation as providers of superior products and services. They have an eye on the future, and are aware of changing market conditions as they respond quickly to opportunities in their niche. The high-quality management of their companies parallels that of many top corporations in the U.S. today. These contractors follow strategic plans and maximize their returns on investment, and are always exploring new ways to improve their operations. They maintain high levels of communication within their organizations, are aware of changing market conditions, and respond quickly to opportunities. They're the leaders of our industry. They're committed to their businesses and the industry, and aren't afraid to take calculated risks, and explore new market areas.

We welcome nominations for 2012. Visit: http://bit.ly/CBHVACCOY for the entire list of our nomination criteria. Then, nominate your company or a colleague. Send nominations to Terry McIver, executive editor, at terence.mciver@penton.com.