When it comes to predicting the future of the HVAC industry, we all wish we had a crystal ball.
Fortunately, the Mechanical-Contractors Association of America (MCAA) has taken a more scientific approach in its study entitled, "Five Key Trends for the Future of the Mechanical Industry."
The study identifies five trends that will impact the mechanical contracting industry between now and the year 2020. It was underwritten and driven by the Mechanical Contracting Education & Research Foundation (MCERF).
"We wanted to take MCERF to the next level," says Bob FitzGerald, CEO of FitzGerald Contractors, Shreveport, LA and current president of MCERF. "We admired the work that our sister association, NECA (National Electrical Contractors Association) was doing, which included an in-depth study on the trends affecting their industry."
Dennis Langley, MCERF's executive director, adds "We thought MCAA's membership could benefit from a mechanical contracting-focused study on future trends. Therefore, MCERF solicited proposals from a variety of academic and research institutions, which we believed had the credentials to undertake such a study."
The proposal they chose came from Atul Dighe, principal and senior futurist with the consulting firm Social Technologies, LLC. Dighe has a solid knowledge of the construction industry and had completed the trends study for NECA.
Dighe attended numerous MCAA meetings around the country and set up several focus groups that included mechanical and service contractors, as well as manufacturers.
Using the information gathered at the focus groups, along with a large trends database, Dighe's research yielded these five principal trends:
- Workforce 2020 — The industry will have to look at new ways to attract talented workers
- Evolving Value Chain — The role of the mechanical contractor will change and new revenue models will be identified
- Era of Rebuilding — There will be opportunities for the industry to help rebuild America's infrastructure
- Sensor Technology — Sensors will change the entire nature of the mechanical contracting business.
- Materials Science — Material technology will revolutionize construction
To find out how these trends might affect their businesses in the years to come, Contracting Business spoke with three top mechanical contractors. What we found is that while no one can truly predict the future of mechanical contracting, in some cases, the future is now.
With baby-boomers poised for retirement, identifying prospective employees has long been a concern of mechanical contractors.
"Hispanics are currently the largest minority group in the U.S., and their population will continue to grow," says Dighe. "In fact, by 2010, Hispanics will be the single largest population group in the prospective labor pool for the construction industry."
The study advises contractors to plan for that available workforce by hiring/training Spanish-speaking supervisors and reaching out into the Hispanic community.
According to Bob FitzGerald, a bilingual workforce can help when coordinating with other trades.
"On some of our jobs, our technicians and foremen have been unable to communicate with subcontracted workers, such as insulators, who were only Spanish-speaking," FitzGerald says. "Having superintendents with a basic knowledge of Spanish would better facilitate the construction process."
Chuck Gaziano, vice president, construction, at McKenney's Inc., Atlanta, GA, adds how the increasing Hispanic population in the Atlanta area has motivated his company to take action.
"We've hired a bilingual safety director, translated our safety manual into Spanish, and are actively seeking project managers who are bilingual. We've also reached out to business groups in the Hispanic community to promote HVAC as a viable career," he says.
The Evolving Value Chain
As the face of labor changes in the decades to come, so will the role of mechanical contractors.
Dighe says, "Successful mechanical contractors must identify their unique features and services. By 2020, profit will be largely based on customer service, reliability, and the ability to coordinate and lead other specialty contractors."
There's also the increasing trend of reverse auctions and direct equipment purchasing by end-users, which takes the mechanical contractor out of the equipment specification process.
According to Wayne Turchetta, vice president, sales, HMC Service Company, Louisville, KY, contractors can't afford to wait to become a single-source provider for their customers.
"Contractors must be aggressive and forward-thinking to be successful, always keeping in mind 'How can I help my customer?'" Turchetta says. "The more you can offer — mechanical, electrical, fire, sheetmetal — the less likely your competition will be knocking on your customers' doors."
Customer satisfaction is also key. "When we gain a new customer, we work extremely hard to provide him or her with a positive experience, because it can lead to subsequent work," FitzGerald says. "In fact, when some of our customers bid their projects out to general contractors, they specify that our company performs the mechanical work."
Era of Rebuilding
In addition to internal issues such as labor and the evolving role of the mechanical contractor, Dighe's research revealed how the renovation and rebuilding of structures in cities across the country will provide contactors a significant opportunity. "During the next 10 years, the renovation of 1960s-era public buildings and infrastructures will comprise a large portion of the commercial construction market," says Dighe. "There's also been a renewed demand for downtown housing in cities such as Washington, DC, Houston, TX, and Cleveland, OH."
According to Turchetta, whose firm has performed work in numerous historic Louisville buildings such as Churchill Downs, restoration and renovation projects can be a great stream of revenue. They also require technical expertise and creativity.
"Integrating the old and the new requires being a 'visionary.' You have to know what to leave in, what to tear out, and be able to design high-tech systems, while preserving the structural integrity of the building, " he says.
This is why a great Design/Build team is such an asset. "Having the in-house engineering expertise streamlines the process, which saves customers money and allows them to invest in a more advanced system," Turchetta says.
Versatility is also key, adds FitzGerald. "Too many mechanical contractors focus on one type of work and refuse to consider different types of projects," he says.
Instead, they should be flexible as the market changes. "For example, a large commercial building in Chicago might be gutted and turned into luxury condos. While this is a residential project, it's exactly the type of work that should interest a mechanical," FitzGerald says.
Whether it's test instruments or outside package chillers with self-diagnostic features, most contractors already work daily with some form of sensor technology.
However, MCAA's study predicts that by 2015, all mechanical systems will be able to self-diagnose system problems, forewarn of potential failures, and, in some cases, fix the problem. As a result, there will be fewer system problems and emergencies.
So what will this mean for the future of mechanical service? According to Gaziano, we're likely headed in the same direction as the automotive industry in terms of streamlining system diagnostics, which could completely transform how HVAC service is performed.
"As the equipment changes, so must our training. Our service technicians have to keep up with the technology to ensure that we still provide our customers with great service and preventive maintenance."
In addition to self-diagnostic equipment, another aspect of sensor technology is the use of radio frequency identification tags (RFIDs). Just as Wal-Mart is striving to have all of its products\ equipped with RFIDs, it's predicted that all mechanical equipment eventually have them, as well.
"RFIDs would certainly help with inventory control, as well as parts ordering and tracking. The key would be uniformity," says Turchetta. "We need to work with manufacturers to produce readers that can identify all makes of chillers, and not need separate readers for each brand."
For the fifth and final trend, Dighe's research predicts that "Smart materials that combine nanotechnology (the ability to manipulate individual atoms to create new materials) and sensing nanorobots could create self-healing materials and systems by 2015. The service technician of the future could be a microscopic, versatile robot that can continuously repair systems."
Although nanorobotic techs may not be immediately on the horizon, there have been significant breakthroughs in materials sciences with the development of lighter, stronger building materials.
"While nanotechnology has strong commercial potential in industries such as pharmaceuticals and health, no industry could be more affected than construction," says Dighe.
Gaziano agrees. "Improving building materials could simplify and speed up the construction process, reducing risk and installation labor requirements," he says. FitzGerald also sees this trend as an opportunity for mechanical contractors. "Articles lately in papers such as the Wall Street Journal indicate how the U.S. government is spending quite a bit of money building research labs," he says. "If more labs are needed, mechanical contractors will be needed to help build them."
Some Final Thoughts
This research was presented at the 2004 MCAA Convention this past March. According to Langley, the response from members has been overwhelming, with requests for reprints in the thousands. However, now that this useful information is in the hands of thousands of mechanical contractors, what will they do with it?
Dighe adds, "Smart mechanical contractors realize that as the industry changes, they are left with two options: complain and see profits and market share continue to decline, or change by seeking new and perhaps more lucrative ways of doing business."
FitzGerald hopes that one of the outcomes of the study is to raise the awareness level of mechanical contractors. "When they're reading the newspaper or a magazine, and see an article on nanotechnology, RFIDs, or rebuilding, we hope they'll continue reading and think about how they can improve their businesses. If we can raise that awareness level, I believe we've accomplished our goal of creating proactive versus reactive contractors," he says.