While “Quality Through Customer Service” is easy for any company to claim, it becomes much more difficult for many companies to honor to the consistent degree achieved by Coastal Mechanical Services, LLC, Melbourne, FL (CMS). Its high standard of excellence has helped Coastal build solid customer relationships and deliver premium HVAC, plumbing, piping, and process systems to the commercial and private market sectors across Central Florida.

From systems design and engineering to installation, CMS's estimators, engineers, project managers, and craftsmen bring superior talent, initiative, and dedication to every project. Additionally, Coastal Mechanical Services places an emphasis on apprentice training, and incorporates a safety culture that resulted in 1.8 million hours without a lost time accident in 2008.

We at ContractingBusiness.com feel we might be a bit overdue in recognizing this excellent company. And now, we wait no longer, as we name Coastal Mechanical Services, LLC, Melbourne, FL, the ContractingBusiness.com 2009 Commercial Contractor of the Year.

Acquisition Leads to New Life

Coastal Mechanical Services, LLC was founded in 1985 by H. W. “Skip” Hauser, through his Venture Management Group (VMG), a start-up and acquisition firm which provides behind-the-scenes business advice, start-up capital, bonding, and other support. VMG had purchased the assets of D&G Air Conditioning, a sheet metal subcontractor that had fallen on hard times. Coastal Mechanical Services was Hauser's first venture into the construction industry. It was a true learning experience, but he made sure he had the right people in place to grow the company.

Six months later, CEO/President Al Osterhout joined CMS as an estimator. Osterhout had earned a degree in construction management at Colorado State University. At the time Hauser recruited him, Osterhout was working for industry giant Natkin Contracting, LLC. He was named an equity partner and general manager of CMS in 1991.

“There was a point when I thought CMS would never be as good as Natkin; eventually, we passed them on a national survey,” Osterhout recalls.

Another leader Hauser brought on board was Kim Brown, an auditor who joined the CMS team in 1994 as chief financial officer. Today, she serves multiple roles, as co-owner of Coastal Mechanical and co-owner/CFO of Venture Management Group.

Coastal Mechanical Services' sales volume for 2008 topped $170 million, consisting of:

  • $80 million from installations
  • $40 million from service
  • $25 million from system fabrication and manufacturing
  • $25 million in electrical contracting.

Coastal Mechanical Services has completed more than 75 healthcare projects throughout Florida, totaling in excess of $180 million. Its more than 80 government, entertainment, and hospitality projects have exceeded $150 million.

In addition, an independent service organization — CMS Mechanical Service Company, led by 25-year industry veteran Bob Bull — posted 2008 sales of $50 million.

Despite concerns over the economy, positive attitudes are evident throughout CMS, from the Melbourne office, to the more than 960 CMS employees who operate out of branches in Orlando, Jacksonville, Tampa, and West Palm Beach.

All Star Team

Osterhout emphasizes the importance of building consensus among his managers, and he's nurtured a solid team of mechanical contracting professionals. Osterhout has high praise for all.

“Miles Sims (chief estimator) is the best estimator I've ever worked with, and P.J. Goodwin (vice president, operations) has implemented production measures to a degree I never thought possible,” Osterhout says. “Coastal CFO Robb Morrison is integrated into everything we do, and Dan Dietel (president, special projects) helped us refocus on how important long term relationships are, especially in tough times.

“This is a people business, a relationship business. Our vice president of marketing and business development, Bob Parsons, is out there turning over every stone, and provides preconstruction services as much as possible.”

Implementation Process: One Week at a Time

On any of Coastal's Design/Build projects, the team works directly with customers from day one, to design a mechanical system best suited to the owner's needs. The result is a project with a realistic budget, little or no change orders, and the most effective design from the start.

To support its Design/Build excellence and maintain high efficiency, Coastal knows where they are at every moment of the construction process.

Once a project's logistics and sequences have been analyzed, and the engineering drawings have been coordinated with all trades, CMS employs a Short Interval Production Planning (SIPP) process for the duration of the project. This process — initiated by P.J. Goodwin — starts with drywall coordination, and provides a weekly “look ahead” for the following three weeks. Precise manpower and supply needs are scheduled accordingly. The process drives the project, and ensures schedules are met on time.

“We ‘SIPP’ the job away one week at a time. There are no excuses for not having a procedure completed by the following week,” Goodwin explains. “We get together when we craft the next three week plan and see how we did. It prevents us from getting lost on large projects.”

Sheet metal and piping crews at Coastal's four-acre Melbourne facility fabricate large sections of pipe and ductwork for all projects. This provides the crews with a controlled work environment, and spares them the hectic and time-consuming atmosphere often found on jobsites.

‘Sleeping Giant’ Awakes

Bob Parsons and Al Osterhout met in 2005, when CMS was working on the $30 million Rosen Shingle Creek luxury hotel and convention center project. Six months later, Parsons “took a leap of faith,” and joined Coastal. Parsons says he used to think of Coastal as a sleeping giant with tremendous growth potential, but one not very well known in the contracting industry at large.

“That changed over the last three or four years, as Coastal's exposure grew. The quality of our work, and the way we work has become more widely known,” Parsons says.

Parsons, working closely with Trevor Lewis, the senior preconstruction and business development associate, oversees existing customer contacts, establishes new ones, and ensures that good faith relationships remain intact. A man who chooses his words carefully, Parsons believes in the importance of quality in communication, not just the finished product.

“Quality in communication is about sharing our professionalism and attitude, and the things Coastal does best. It's about establishing a high degree of trust, and keeping your word, which is the most valuable thing you can offer,” Parsons insists.

Dedicated to Energy Efficiency

Coastal Mechanical adheres to energy conservation practices through its participation in Leadership in Energy Efficient Design (LEED®). Osterhout himself has been LEED accredited for five years.

“LEED is a wonderful opportunity for the construction industry,” Osterhout says. “It's a big sales tool, and also the right thing to do. LEED and building efficiency are here to stay, and our customers are demanding it. We attended a presentation for a large hospital being built in central Florida, and the hospital officials insisted that our on-site people be LEED accredited. So, I've requested that we have at least two LEED accredited people at each branch office.

“LEED requires very little additional work for us, because we follow most of the LEED requirements anyway. There are some additional paperwork, recycling, and commissioning requirements, but generally, we don't put any extra money in our bids because it's a LEED program.”

Hospital Construction a Healthy Sector

CMS has accumulated a vast amount of experience in health care construction. This segment remains vibrant in Florida. But until recently, CMS handled only the largest of projects. That changed about two years ago, when Dan Dietel was recruited to start and manage a special projects division, focusing on HVAC, plumbing, and medical gas piping projects with associated costs of $2 million and below.

“Knowing, understanding, and being committed to the unique needs of hospital HVAC is the biggest reason why Coastal Mechanical has been so successful with its healthcare customers,” Dietel says.

Looking Ahead, Moving Forward

Al Osterhout is very pleased with Coastal's past, but views the future with caution.

“We've had a phenomenal five years, but, like everyone else, we're concerned about 2010,” Osterhout admits. “We're involved in some peer groups across the country, and from what I hear, Florida has been hit harder than some of the other commercial markets, primarily because of the residential housing bust. We've seen some school building projects cancelled. People up North who want to move to Florida are unable to sell their homes. It's tough out there. Sunny Florida is nice, but it's not immune to a slowdown.”

CMS recently adjusted its cost structure to meet the new economic realities, and shortly thereafter, it began to pick up additional projects. “We've had to hire pipe fitters, plumbers, and sheet metal fabricators in Central Florida,” Osterhout says.

Communication Improves Planning, Attitudes

A democratic management style is successful for many companies, and Coastal Mechanical is no exception. Al Osterhout values everyone's opinion. For 10 straight years, he would meet with every employee of the company, and ask them how they thought the company could improve. Then, management works to better those areas.

“I'm not able to do that any longer due to my other responsibilities; however, now, one of the owners meets every year with every employee. It's the foundation of our business plan,” he says.

Osterhout believes in people; in their potential, their talents, and their need to contribute and make a difference. For that reason, he's always interested in listening, and in training his “replacement.”

“If you're not training your replacement, you won't advance and grow. I try to get everyone to believe in that,” he says. “I started in this industry as an estimator. I trained my successor, and went on to be a project manager. Then, I trained the next project manager, and I moved on to be a branch developer. It's the most satisfying way to grow, by knowing someone else will be able to contribute as you did. And, you should hire people who are smarter than you are. Some people are intimidated by that; but, the smarter they are, the happier I am.”

Al Osterhout and Coastal Mechanical Services, LLC have much to be happy about. The methods, beliefs, and high quality standards of this company will keep them busy in Central Florida for a long, long time.

Congratulations to Coastal Mechanical Services, LLC, the 2009 ContractingBusiness.com Commercial Contractor of the Year!

Coastal Mechanical Services, LLC

  • Founded in 1985 (became a limited liability corporation in 1995)
  • H. W. ‘Skip’ Hauser, chairman
  • Alfred B. Osterhout, CEO/president
  • Kimberly Brown, CFO, Venture Management Group
  • Mitch Smith, vice president; manager, Jacksonville branch
  • P.J. Goodwin, vice president/operations manager
  • Bob Parsons, vice president, marketing and business development
  • Robb Morrison, CFO, Coastal Mechanical Services, LLC
  • Miles Sims, vice president/chief estimator
  • Dan Dietel, president, Coastal Mechanical Special Projects, LLC
  • Bob Bull, president, CMS Mechanical Service Co.
  • Reggie Parker, safety manager
  • Mike Cole, superintendent
  • Karin Ayres, warranty service coordinator
  • Ana Olivo, accounts payable

2008 sales volume: $180 million

Project types: healthcare, educational facilities, hospitality/entertainment, government. Ranked by Contractor Magazine in 2008 as the 26th largest mechanical contractor in the U.S.

Safety Culture a Way of Work Life

Coastal Mechanical Services employees recently worked 1.8 million hours without a lost time accident, and an employee won a pickup truck because of it. Two trucks are up for grabs in 2009.

Safety Manager Reggie Parker, an authorized Occupational Safety and Health Administration (OSHA) instructor, makes the safety of CMS workers his top priority. When he joined CMS two years ago, he brought a long-term safety vision, to stay ahead of what's coming related to safety in the construction industry. “In a year or two, we'll have to implement things that are being talked about today. If we pay the price up front and get ready, we can be the safety leaders,” Parker says, and he personally brings up the company's commitment to safety with general contractors. “When reviewing a contract, I meet with the GC right off the bat. I tell them we will be the safest company working for them. And if, at any time, they think we're not safe, I want to know about it.”

“A phenomenal safety mindset has taken hold, and it's the right thing to do,” CEO/President Al Osterhout says. “You don't want people getting hurt. But now, with the economy in the state that it's in, improved safety is allowing us to be more competitive, in a time when competition is extremely keen.”

Apprenticeship Training Program a Great Success; Includes Green Topics

In December 2008, after in-depth participation in cooperative state apprenticeship programs, Coastal Mechanical Services LLC realized one of CEO/President Al Osterhout's lifelong career goals. Coastal graduated the first 33 apprentices from its new, in-house, All Florida Apprenticeship (AFA), program. Apprentices completed their core curriculum requirements, which included more than 140 hours of classroom and lab training in soft and technical skills.

To date, AFA has certified 26 apprentices in the Occupational Safety and Health Administration's 10-hour course, and 35 apprentices in the Green Advantage Course developed by the United States Green Building Council (USGBC).

The four-year/8,000 hour program will elevate apprentices to Journeyman status in sheet metal, pipefitting, plumbing, electrical, or HVAC. Sue Holland, human resources manager, says the first graduation ceremony after students completed the core curriculum was exciting and inspirational.

“We were so impressed by the change we saw in the students with the positive learning environment,” Holland says. “Al introduced them as our future leaders, and the importance of education to a career hit home.”

Joanne Stewart, a training contractor brought in to help coordinate the program, found Coastal's commitment to training to be something special.

“As a training professional, I can't say enough about the attitude the owners have towards training,” Stewart says. “I've never seen anything like it: it's rare to increase training in a down economy. And, because it's in-house, you can have a great impact on the career goals of the students.”

What Makes a Contractor of the Year?

The Commercial Contractor of the Year represents an elite group: a forward thinking class of commercial HVAC contractors who are dynamic and professional in every aspect of their business. 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.

To nominate a company for the 2013 Commercial Contractor of the Year Award, contact Terry McIver, at tmciver@penton.com.