2006 Commercial Contractor Survey

Contracting Business has again surveyed a select list of commercial HVAC contractors, to solicit an analysis of their businesses, and gain insight into the overall commercial HVAC market across the country.

The majority of contractors who provided Contracting Business with commentaries on business conditions say they're pleased — if not outright ecstatic — over the current business environment, and see it continuing for at least the next three to five years.

Health care is reportedly providing many construction opportunities, as are school renovations, which are needed to repair faulty or non-existent IAQ systems.

Chuck Richter, senior vice president of service for ACCO Engineered Systems, Glendale, CA, reports activity in energy conservation, high-tech clean rooms, and laboratories.

Calvert-Jones Co., Inc., Alexandria, VA, installs plumbing and medical gas piping as an add-on service.

Other services reported by our survey respondents include process piping, sheet metal fabrication and installation, refrigeration, indoor air quality (IAQ), and energy performance contracting.

Roberta Adams, marketing and communications specialist for TDIndustries, Dallas, TX, reports TDI's non-HVAC areas of business now include plumbing, high-purity piping, facilities management, and fire and life safety.

Opportunity Abounds for Those Who Seek
Some of the industry's activity — such as that seen by A.O. Reed & Co., San Diego, CA — is piggy-backed on major infrastructure improvements. For example, the new stadium for the San Diego Padres is two years old, and still generating work around it.

"Downtown San Diego is off the chart with new building," says Adrian "Ed" Blum, general manager for service, who adds that the new construction has made downtown San Diego a more family-friendly environment.

Les Merton, president of Adrian L. Merton, Inc., Capitol Hts., MD, responds that the commercial HVAC market in the Washington, DC metro area is "steady."

It's still a jungle out there, however, when it comes to winning a project, as multiple issues come into play. Comfort Systems USA, Inc., Houston, TX, which is among those companies with a national service area, gets a sampling of competitive bidding and economic conditions in every region of the U.S.

"We believe current pricing competition will continue, and are subject to general economic activity, inflation, and capital discretionary spending," says Julie Shaeff, corporate controller.

Plan & Spec Most Common, Design/Build Preferred
Half of all survey respondents use the Plan-and-Spec delivery method, and 36% use the Design/Build approach, based on client preference. However, Design/Build remains the " preferred" method of delivery among 75% of all respondents.

"Design/Build work allows us to provide value-added service to our customers, thus creating long-term relationships," says Shaeff.

"Design/Build is based more on performance and relationships. It represents lower final costs to our customers, and is less adversarial, with fewer change orders," comments TDIndustries' Adams.

"With Design/Build, we can use systems, procedures and standards we have developed over time. We believe these will provide best value to clients," says Robert Krier, president, Hill Mechanical Group, Franklin Park, IL.

Louis Cantu, director of business development for Comprehensive Energy Services, Inc., Longwood, FL, says CES most often uses a "negotiated and design assist" method.

"It's relationship-based, and performance-driven, and leads to continued negotiated work in the future," says Cantu.

The accompanying table spotlights 40 of the leading entities in the U.S. commercial HVAC market.

Please note that all numbers and percentages were supplied by the responding companies.

If you'd like your company to be considered for participation in next year's survey, please contact Senior Editor Terry McIver at 216/931-9732 or e-mail [email protected].

Insights from Industry Leaders "The current economic environment continues to be favorable compared to recent years, based on nonresidential construction trends, HVAC shipment data, and industry forecasts." — Julie Shaeff, corporate controller, Comfort Systems USA, Inc. "Healthcare and education appear to be healthy markets, lasting throughout the next 3 to 5 years." — Denny Terrell, president, Ivey Mechanical Company "We've found our corner, and have very little in-state competition. The market is good. Contract wording is still the biggest problem." — Michael P. Johnson, president, Johnson & Jordan, Inc. "The San Diego market is booming. There are no people left in the union hall, and many workers (union and non-union) are here from other areas of the country. I see no let-up for at least 2 to 3 years." — — Adrian "Ed" Blum, general manager, service division, A.O. Reed & Co. "Now, more than ever, it's important to focus on strengths, and differentiate yourself in the marketplace to bring real value to your clients. Our people are our greatest asset." — Thomas J. Winstel, president/COO, Engineering Excellence, Inc. "In our area, work moves from hotel/motel to retail, to government, to office buildings, to hospitals. Currently, hospitals are high on the list." — Jan Van Den Top, corporate general manager, The Superior Group, Inc. "Work is picking up, as ventilation installs continue to cost less 'first cost' than chiller/boiler systems. Service remains strong, as capital budgets tighten up. School remodeling work for energy savings/IAQ has been strong. Many schools have never had proper ventilation and/or air conditioning." — Kathy McCauley, president, McCauley Mechanical Construction, Inc.

CB TOP 40 Industry Leaders

Company Name

Annual HVAC $ Volume (In Milllions)

No. of HVAC Employees

Percentage of HVAC Work

Service Area

New Construction

Retrofit/
Rennovation

Service

1 EMCOR Group, Inc.*
Norwalk, CT $1,726 7,272 65% 25% 10% Nationwide 2 Comfort Systems USA*
Houston, TX $900 5,955 56% 29% 15% Nationwide 3 ACCO Engineered Systems
Glendale, CA $400 1,800 65% 15% 20% NR

4 Southland Industries
Ivrine, CA

$281 1,400 58% 28% 7% Nationwide

5 TDIndustries
Dallas, TX

$180 900 40% 30% 30% TX, AZ

6 Hill Mechanical Group
Franklin Park, IL

$145 980 59% 32% 9% Northeastern IL 7 Brandt Engineering
TX Dallas $140 900 50% 30% 20% TX 8 Ivey Mechanical Company
Kosciusko, MS $135 1,000 75% 15% 10% Southeastern US

9 Coastal Mechanical Svc., LLC
Melbourne, FL

$133 956 52.5% 14.5% 33% Southeastern US 10 MacDonald-Miller Facility Solutions
Seattle, WA $106 510 50% 32% 18% WA, OR 11 John W. Danforth Company
Tonawanda, NY $100 300 60% 30% 10% Western NY

12 A.O. Reed & Company
San Diego, CA

$95 525 63% 24% 13% Southern CA 13 Frank E. Irish, Inc.
Indianapolis, IN $80 300 70% 20% 10% Central IN 14 Way Holding, Ltd.
Houston, TX $58 285 74% 12% 14% TX T15 Egan Mechanical Contractors
Brooklyn Park, MN $50 125 65% 35% 15% MN

T15 Entech Sales & Service
Dallas, TX

$50 230 5% 35% 60% Nationwide 17 Hill York Corporation
Ft. Lauderdale, FL $44 450 95% 5% 0% Southern FL T18 Calvert-Jones Co., Inc.
Alexandria, VA $40 240 46% 39% 15% Metro Washington, DC T18 Mechanical Services, Inc. of Central Florida
Orlando, FL $40 300 30% 30% 40% North/Central FL 20 Johnson & Jordan, Inc.
Scarborough, ME $37 240 81% 15% 4% ME/200 mile radius 21 Delcard Associates, Inc.
New Castle, DE $36 200 60% 33% 7% DE, MD, PA, NJ

22 Yale Mechanical
Minneapolis, MN

$35 135 25% 50% 25% MN 23 Engineering Excellence
Cincinnati, OH $31 185 0% 25% 75% Midwestern U.S. T24 Lochridge-Priest, Inc.
Waco, TX $30 250 60% 24% 16% Central TX T24 Wiegmann Associates
St. Charles, MO $30 100 30% 60% 10% Nationwide 26 L.H. Cranston & Sons, Inc.
Timonium, MD $27 75 60% 24% 15% Baltimore, Washington, DC 27 Adrian L. Merton, Inc.
Capitol Hts., MD $26 130 40% 50% 10% Metro Washington, DC T28 Comprehensive Energy Svcs.
Longwood, FL $23 160 25% 50% 25% FL T28 Waldrop Heating/AC, Inc.
Spartanburg, SC $23 140 80% 10% 10% SC, NC, GA,TN 30 Comfort Engineers, Inc.
Durham, NC $22.7 150 30% 40% 30% Durham, Chapel Hill, NC 31 Alaka'I Mechanical Corporation
Honolulu, HI $22.5 83 50% 40% 10% HI 32 Streimer Sheet Metal Works, Inc.
Portland, OR $22.3 NR 85% 10% 5% OR, WA, ID, CA 33 The Superior Group, Inc.
Anchorage, AK $22.2 65 60% 25% 15% AK 34 United Team Mechanical
Kaysville, UT $22 145 80% 15% 5%

NR

35 McCauley Mechanical Construction, Inc.
Bridgeview, IL $20 80 35% 60% 5% Chicago, IL 36 Gillette Air Conditioning Co.,Inc.
San Antonio, TX $17 140 95% 5% 0% Southern Texas T37 Champion Industrial Contractors
Modesto, CA $16 100 40% 40% 20% Central Valley, CA T37 Cottage Sheet Metal, LLC
Chicago Ridge, IL $16 50 90% NR NR Chicago, IL

39 Harold G. Butzer Co.
Jefferson City, MO

$15 90 NR NR NR NR 40 Carwile Mechanical Contractors
Cookeville, TN $13.5 114 65% 20% 15% Central TN * Represents numerous locations nationwide NR = Not Reported