Competing With “Chuck In A Truck”
The drop-off in new construction in Florida, combined with rampant unemployment, has created what David Hutchins refers to as “the perfect storm” for unlicensed, standalone handymen attempting to sneak under the radar and supplement their incomes by performing HVAC installations and repairs.
“It’s hard to compete with somebody with little or no overhead who doesn’t pay workman’s compensation,” insists Hutchins, president and owner, Bay Area Air Conditioning, Inc., Crystal River, FL, whose company now employs 53, down from 104 employees in 2006.
To counteract the flood of the “Chuck-in-a-Truck” types, the Florida Department of Business and Professional Regulation has upped its presence at home shows, handing out bumper stickers to educate consumers about the dangers of dealing with the state’s unlicensed contractors, and increased the number of stings it conducts annually. Hutchins recalls a recent service request from a homeowner asking why her new system, which his company didn’t install, wasn’t producing heat. Upon arrival, his technicians discovered that one guy sold and delivered the unit and another installed it, neither of whom had a license.
“The indoor and outdoor equipment was not a matched set,” he laments. “One was four years old and the other three, neither under warranty. We got the call, because they didn’t put in any electric heat. When it got cold, the customer asked us to come out and see why the heat didn’t work. Well, they never put a heater in it.”
He’s guessing the consumers thought they could save a buck by buying the equipment through an online liquidator or distributor. The problem with that, he says, is “the equipment may not be under warranty, the installation may be incorrect, and they may not come back and fix it.” Equipment manufacturers hesitate to get involved in this industry issue, he says, because there are many established and reliable HVAC contractors who operate in states that don’t require licensing.
Hutchins cites another situation experienced by his firm: After a handyman supposedly serviced the air conditioner, the homeowner called Hutchins to check it out because she noticed the service didn’t take long and worried that several steps may have been skipped.
Come to find out, the handyman not only charged the customer for refrigerant he didn’t put in, but he charged her double what Bay Area would have charged for a complete checkup. “In this case, it wasn’t a bargain,” he exclaims.
Know Your Value
Suzanne Debien, president, Central City Air, Houston, TX, believes there is only one way for legitimate HVAC contractors to deal with “Johnny One-Trucks.” “Know your value and worth,” she emphasizes. “Educate the consumer about what is going on. You can’t make up their minds for them, but you can certainly give them the benefit of your knowledge and what you bring to the table. Beyond that, it’s their decision.”
If she encounters a homeowner who is trying to figure out an economical way to upgrade an HVAC system, she might say something like this: “Let me give you the benefit of my expertise. This is a skilled service that takes technical expertise and experience in electrical, plumbing, and air flow.”
If she loses a customer over a low-ball estimate, she shrugs it off. “People are very price conscious,” she says. “I’ve had people curse at me when I was higher than that guy who will do it for cheap. We know we will not get every customer. Welcome to the public who look at the dollar bill and not what they are getting. If cheap is what they want, then performance is not what they’ll get.”
Debien remembers that when her husband David was alive, he was a guest host on a home improvement show, so he got a lot of calls from people who asked him to fix problems created by industry fly-by-nights. Because he felt sorry for these customers—and to keep the industry’s reputation from being sullied—he often didn’t charge the full price of fixing the issues.
Debien admits she takes a different approach. “We have people who call and say, ‘We should have used you. You gave us a proposal. We went with this other person. I’m not happy. You need to come and fix it.’ We are very gracious, and we fix it, but they pay the market price.” And she doesn’t give them priority service over her existing clientele.
“The best advice I could give to a legitimate company is make sure your consumers know what you’re doing and you will take care of them,” she says.“That’s what people want. If they say it’s too high, you reassure them of what will be done for that price and that you will always be there for them. If they go somewhere else, you let them go. You can’t whine over that. You have to believe in your value and your work.”
Playing by the Rules
Roger Costner, who recently retired as the general manager, Brothers Air, Heat, and Plumbing, Inc., Rock Hill, SC, believes the best deterrent to unlicensed HVAC workers is having strong local code inspection departments that make sure permits are required and enforced.
“I’m a big believer in state licenses,” he says. “You don’t want the government inside your business, but you have to have regulations. It’s hard to run a good business if not everybody is playing by the same rules.”
Debien agrees. “As much as we might bellyache about having codes and regulations, I love them,” she says. “They protect the consumer and help keep the standalones out.”
Brothers, which has 175 employees and a 2014 total sales volume of $28 million, services a 50-mile radius of Charlotte, NC. “We’re fortunate North Carolina has a very strong licensing system.” Costner doesn’t believe South Carolina’s enforcement is as stringent.
He explains it’s no fun to be called in to fix a problem caused by an unlicensed worker. “Most of the time, the homeowner is not happy with us. What we often find is that a permit has never been pulled. Then we have to say, ‘Listen, we can’t do this because a permit hasn’t been pulled. This is what is required to bring you up to code and fix it.’”
Although these customers are inevitably distressed about the added financial burden, Costner stays firm in his pricing. “Our thinking is: ‘If I’m going back in behind somebody, I’m going to charge exactly what it takes to get it right.’” In other words, no discounts.
Another advantage of strong local code enforcement, he says, is the ability to examine inspection results. “We sell our business by showing the customer our inspections,” he says. He also tells homeowners about the company’s BBB A+ rating and inclusion on Angie’s List.
“Most people don’t realize if you get someone in your home without worker’s comp and they get hurt, they can probably sue you for damages,” he explains. “We let the homeowner know that we are licensed, bonded, and insured, that we get the job inspected so they know it will be put in right, and that we will give them a guarantee.”
During sales presentation, HVAC contractors should sell their own companies and let consumers draw their own conclusions about competing bids, according to Costner. “Just explain why the customer should choose you,” he suggests. “By doing that, you indirectly point out the other company’s weaknesses. I’ve never found it beneficial to downgrade another company. I like to sell to my strengths.”
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