contractors

President-elect Donald Trump’s stunning election victory on November 8 is expected to lead to significant shifts in the nation’s financial and regulatory policies that affect the U.S. construction industry. With a Republican-controlled Senate and House of Representatives, changes in other federal policies, such as immigration, may also affect plumbers, heating and HVAC contractors

“We have seen a continuing increase in federal regulation in the past eight years,” said Jim Tobin, chief lobbyist, National Association of Home Builders (NAHB), in a pre-election interview with Perspective Media. “Today, a full 25 percent of the cost of a home is due to the regulatory impact at the local, state and federal levels.”

During his campaign, Trump called for a temporary moratorium on new regulations. “We need to give our American companies the certainty they need to reinvest in our community, start hiring again, and expanding businesses,” he said on his website. “I will cancel immediately all illegal and overreaching executive orders and our most intrusive regulations, like the ‘Waters of the U.S.’ rule.” That would be followed by a thorough review of “burdensome regulations that are not necessary,” he said.

On the other hand, Trump’s call for tighter restrictions on immigration could have an impact on the construction sector, which relies heavily on foreign workers in many regional markets. Tobin said immigrant labor constitutes about 22 to 25 percent of the U.S. construction workforce. “We need to create a cohesive immigration policy that goes beyond the issue of undocumented workers,” Tobin said.

A focus on jobs

One of Trump’s campaign themes was a promise to create millions of new jobs and accelerate the growth of the U.S. economy. In his speeches, Trump said he would fulfill that pledge by reducing non-defense spending, lowering taxes and imposing penalties for companies that move overseas.

“We will reduce taxes across the board, especially for working and middle-income Americans,” Trump said during the campaign. “We will ensure the rich pay their fair share, but no one pays so much that it destroys jobs or undermines our ability to compete.”

Reducing business tax rates would be a boost to the contracting sector, which is dominated by small companies. Many contractors would also applaud a repeal of the Affordable Care Act, known as “Obamacare,” which imposed requirements on employers to provide health insurance to their workers. Repeal of Obamacare – with that employer mandate – is likely to be a top priority in 2017 for the new administration and GOP-controlled Congress.

Another issue facing the new administration is reauthorization of the national flood insurance program, which is set to expire in September 2017. “There were no policy discussions on flood insurance during the campaign,” Tobin said. “But natural disasters, like the summer flooding in Louisiana or Hurricane Matthew in North Carolina, are going to continue. We feel this is an incredibly important program for the country.”

Federal energy policy

President-elect Trump has called for making America energy independent, while protecting clean air and water.   In terms of policies, that may translate into greater production of traditional fossil fuels, and less of an emphasis on alternatives, such as solar power.

“We will unleash America’s $50 trillion in untapped shale, oil and natural gas reserves, plus hundreds of years in clean coal reserves,” Trump said on his website. “We will open onshore and offshore leasing on federal lands, eliminate the moratorium on coal leasing, and open shale energy deposits.”

He also called for encouraging the use of natural gas and other energy resources that will reduce emissions while also lowering the price of energy. “I want to eliminate all barriers to responsible energy production,” he said.

However, what that energy policy change means for manufacturers and installers of water heaters, boilers, air conditioners and other household appliances remains to be seen. There may be fewer incentives for developing energy-saving technology, but cost factors and consumer market demands also come into play in manufacturers’ product decisions. It’s possible we may see a decrease in demand of specific products and technology in certain sectors, and a rise in demand of others.

An increase in housing starts?

Prior to the election, the National Association of Home Builders forecast a 10.1 percent increase in housing starts in 2017, rising to 1.258 million from 1.143 million this year (see chart). Much of the increase would be in the single-family segment, rather than multifamily housing.

The NAHB also projected a small rise in the Federal Reserve rate, along with an increase in the average 30-year fixed-rate mortgage from 3.56 to 3.79 percent.

However, the U.S. and global financial markets, as well as consumer perceptions, could change that forecast. Those financial and market forces will also shape the outlook for the commercial contracting industry in the coming year.

For example, a potential downturn in the stock market could make it more difficult for large, publicly traded homebuilders to finance new subdivisions, rental apartments and condominiums. That could create market opportunities for smaller builders and other contractors who finance their projects using their own resources or loans from local banks.

Homeowners who have lost investment funds and feel their financial futures are uncertain are less likely to purchase new homes or invest in renovations, such as kitchens, baths or add-ons. On the commercial side, the same issues will have an impact on the office, industrial and retail markets, perhaps leading to a slowdown in new construction.

If Trump’s policy on jobs and regulations boost the economy as he predicts, we could see a boom in commercial construction and the housing market to follow if we see an increase in jobs.

In any case, the short- and longer-term impact of Trump’s administration on the contracting sector will become clear in 2017 and even more so in 2018. And as Tobin said, “Homebuilding is a huge driver for the nation’s economy, and NAHB will continue have access to the White House and Congress in the coming year.”

Plumbing Perspective spoke with Scott’s daughter and All Clear Plumbing’s Marketing and Business Development Specialist, Anja Smith, to understand what has made their company so special and able to grow so rapidly. “My favorite analogy for the three of us is the three-legged stool.” said Smith. “We each stand as a pillar in our strength as a team member. There is very little overlap in our capabilities, but together, we are unshakeable.”

Between the partners there are very few weaknesses and where there are, they have designed the company to utilize one another’s strengths for the business to run like a well-oiled engine.

Scott acts as their master plumber, field manager, estimator, and training leader. Having a master plumber is the ultimate puzzle master in the field for All Clear Plumbing as they view service plumbing somewhat like a puzzle, with pieces behind walls or underground. “Sometimes you just need that level of expertise in the field.” said Smith.

Scott’s also very involved in shaping the direction of the company as it relates to the mission and the execution of jobs. All Clear Plumbing’s values really come from his vision of how a plumbing company should be run. That being said, he does not have that same experience on the business side. So, when it comes to finances, marketing, and human resources, they rely on the special expertise of Trina and Anja.

Philosophy in action

As amazingly simple their concept is, it’s probably their number one secret of success. “We keep our promises.” Said Smith. “If we say we are going to fix it for X price, we do. If we say we are going to be there, we are. If we say we will call, we do. Any time you enter into a transaction, you are making a promise. The customer promises to pay you in exchange for the promise of solving their problem. That is basic commerce. Yet, it is amazing how often we are someone’s second or third attempt at fixing a problem and we hear, “Yeah, but are you actually going to show up?” Never mind on time, just are we going to show up! It really boggles my mind how people run businesses this way, but it happens.”

It’s something that All Clear Plumbing drills into their employees too. They are making promises to the customer and they take that seriously. Employees understand how sacred the schedule is because the company’s promise is on the line. And All Clear Plumbing keeps them. And they don’t do maintenance contracts or anything similar because it doesn’t fit their culture or philosophy of keeping their plumbers free from becoming salesmen.

From an employee’s perspective, All Clear Plumbing is a bit of an anomaly in their market. They exclusively serve the plumbing market with a mix of both commercial and residential services. They pay their employees hourly wages, have a full benefits package, and most importantly, work as a team. Their highly skilled employees are motivated to practice their craft in plumbing, not sales.

“That honestly doesn’t exist at another company in town. In some markets, that may not be anything special. But around here, the commissioned “technician” model prevails in service.” said Smith. “This often leads to “competition for pay” and outsourcing independent plumbers with 1099 status for many other contractors.”

It’s exactly this difference in employee motivation that creates such a different experience for their customers. “We have a fair hourly rate because we hire good, experienced plumbers who work efficiently and effectively. Customers don’t have to worry that a plumber is going to come in and push a service they don’t need.” Said Anja. Bonuses are structured around productivity rather than sales. In fact, needless upselling is a fireable offense as noted in their handbook.

One of the ways All Clear Plumbing conveyed their value to customers from the beginning was to let them know that they have plumbers, not technicians. “Since South Carolina doesn’t have any licensing for technicians in the state, that dialogue We hire plumbers, not technicians has hit home with our community.” Smith said. “We also like to say that the title “technician” is pronounced with a silent “sales” at the beginning.”

A focused vision to keep their promises

Most services they perform are via commercial work through residential property managers and specialized plumbing services for restaurants and banks. Commercial customers have a higher volume of need and are interested in forming a vendor relationship with All Clear Plumbing. Anja does a great job pursuing these relationships through various networking strategies and knows the payoff over several years will be multiple jobs. “It just makes sense for us and our available resources. The best way to ensure we can keep our trucks busy full time is a focus on recruiting commercial customers.” said Smith. Most of their residential customers come from word of mouth and online review sites like Yelp and Angie’s List, where they have a fantastic reputation that speaks for itself.

In addition, their focus is on service and they stay clear of performing remodel or new construction work. “If it involves the phrase “rough in” we aren’t interested.” Smith said. That can be hard to describe to customers, but in order to keep their “promises” they have to manage their schedules effectively. For instance, with five trucks on the road, if half of their crew is tied up on a remodel job for four to eight hours a day, three days a week, this offers very limited flexibility in the trucks they can run calls with which makes their response time to emergencies longer. “My schedule is too tight for my call volume. In order to serve our customers well, we need to have the scheduling flexibility that service plumbing demands.” added Smith.

A growing fleet with experience and technology

Including the three owners, they currently have 11 employees and growing. In fact, they are growing faster than they ever imagined. They have 5 service trucks, three apprentices, a manager’s truck, two full time office workers, and one part time office worker and looking for someone to join their office team because the call volumes are becoming unmanageable for one person to handle. They may add a sixth service truck soon as well. But the last time it took them six months to find a skilled plumber to fit their philosophy on serving customers.

They are also working with an organization in town to put together an internship program for summer. Perhaps taking upper class high schoolers coming in for three to four weeks and working about 40 total hours, mostly in the field but also in the office and in community relations.

For a company of their size, they have a lot of fun toys as well. “Early on, we knew who we wanted to be able to go up against and what their capabilities were. We had to be able to go toe-to-toe, and that has created a culture around technology application. So, that includes everything from back of house operations to locating equipment, leak detection, hydrojet, camera inspection machines … the works.” said Smith.

There’s a few technologies they have considered but have passed on because their market volume doesn’t make sense. They don’t buy new technology just for the sake of it. “We visit the trade shows and go to local seminars to keep up with the curve, and then spend our budgets well.” she said.

Training and education is also highly important to All Clear Plumbing. However, continuing education is not a requirement in the state, so the opportunities aren’t as good as they are in other states. “We have a US Department of Labor approved apprenticeship program, so there are internal clinics that we do for that. But for our more experienced plumbers, we rely on demonstrations at our local supply houses and keeping up with trade publications.” said Smith. This lack of opportunity though is one of the reasons they became a founding member of their state Plumbing, Heating, and Cooling Contractors Association chapter. Smith sits on the PHCC board and helped shape the strategic mission of the organization. Education is the chapter’s number one priority.

Adding value to the community

All Clear Plumbing has a rather unorthodox approach to marketing. Their goals boil down simply to this: adding value in the community. To them it’s not about writing sponsorship checks, but by being present and a leader in the community. So, not only do they join community groups including the local chambers, they are active in them, participating in luncheons and volunteer at events.

Probably their most out-of-the-box idea to date is their podcast. Smith noted, “As I was trying to figure out how to be a better referral partner to our commercial customers as well as provide value for the community, this weird idea struck me to start a local podcast.”

“I created a locally focused podcast, not about plumbing, but about our area. It’s about uncovering the best kept secrets, things to do, resources, non-profits, and the topics vary. I interview local professionals who I trust to provide excellent advice and insight and every single episode is sponsored by our company, complete with a plumbing tip of the week.” added Smith.

It’s a long-term strategy for All Clear Plumbing. Building an audience takes a long time but it meets the goal of adding value to the community while being a good corporate partner to their commercial customers. “It’s a win-win-win for everyone, and a ton of fun to pull off.” she said.

They started their company with a passion and a drive to be “the plumbers who keep their promises”. This philosophy has grown their business so rapidly they are reaching a threshold where processes and procedures matter to sustain this high volume effectively and efficiently. It’s about fine-tuning to make sure they are running like well-oiled engine. Their focus thus far has been on external consistency and building a nearly flawless reputation. Now they are working to make sure internal processes are in order so they will always maintain their now famous reputation of keeping their promises.

SOUTHERN CALIFORNIA REGION OF ARS WINS MOST IMPROVED REGION AT ARS MANAGER’S MEETING MEMPHIS

The Southern California Region of American Residential Services, provider of air conditioning, heating and plumbing services has earned the prestigious Most Improved Region Award at the Annual Manager’s Meeting. The meeting was held earlier this month in Las Vegas. “We are an industry leader in HVAC and plumbing services because of our hard-working employees and local management team,” said Dave Slott, President and Chief Operating Officer of ARS. “It’s an honor for us to recognize and reward the Southern California region.” “I have worked with some ambitious and dedicated people over the past 12 years. We are constantly working to develop branch management teams with solid processes and expectations. We have a very strong sales culture and a great relationship with the Home Depot division and their store managers. I am honored to receive this award and I can’t wait to see the Southern California region continue to improve.” said Roxanne Flores, West Zone Controller. The region saw revenue grow 8% to $36 million.

RESCUE ROOTER IN SALT LAKE CITY WINS CUSTOMER SERVICE BRANCH OF THE YEAR AT ARS MANAGER’S MEETING SALT LAKE CITY

Rescue Rooter Salt Lake City, provider of plumbing services, has earned the prestigious Customer Service/Quality Branch of the Year award in the plumbing division at the Annual Manager’s Meeting for parent company, American Residential Services. The meeting was held earlier this month in Las Vegas. “We are an industry leader in HVAC and plumbing services because of our hard-working employees and local management team,” said Dave Slott, President and Chief Operating Officer of ARS. “It’s an honor for us to recognize and reward Rescue Rooter Salt Lake City as one of the top-performers.” “I have worked for ARS for over 11 years and have stayed because the people I work with are committed to the company. I would like to thank all of the employees at the branch for their hard work and dedication. Without them, none of this would be possible”, said Tracy Nevin, Rescue Rooter Salt Lake City General Manager. The branch has a BBB rating of “A+”.

RESCUE ROOTER RIVERSIDE WINS HOME DEPOT BRANCH OF THE YEAR AT ARS MANAGER’S MEETING RIVERSIDE

Rescue Rooter of Riverside, provider of plumbing services has earned the prestigious Home Depot Branch of the Year award in the plumbing division at the Annual Manager’s Meeting for parent company, American Residential Services. The meeting was held earlier this month in Las Vegas. “We are an industry leader in HVAC and plumbing services because of our hard-working employees and local management team,” said Dave Slott, President and Chief Operating Officer of ARS. “It’s an honor for us to recognize and reward Rescue Rooter Riverside as one of the top-performers.” “I’ve spent a committed 26 years with ARS. It’s been an honor to be partnered with Home Depot and serving their customer base as well as ours. I would like to thank the dedicated and hardworking employees at the branch. Without them, nothing we do would be possible. ” said Jon Swartz, Rescue Rooter Riverside General Manager. The branch services 19 Home Depot stores, averages $76K in sales per store, and has a 32% close rate.

RIGHTIME SERVICES ORANGE COUNTY WINS SAFETY BRANCH OF THE YEAR AT ARS MANAGER’S MEETING TUSTIN

Rightime Home Services in Orange County, provider of air conditioning, heating and plumbing services has earned the prestigious Safety Branch of the Year award in the Southern California Division at the Annual Manager’s Meeting for parent company, American Residential Services. The meeting was held earlier this month in Las Vegas. “We are an industry leader in HVAC and plumbing services because of our hard-working employees and local management team,” said Dave Slott, President and Chief Operating Officer of ARS. “It’s an honor for us to recognize and reward Rightime Home Services in Orange County as one of the top-performers.” “Safety is very important in a service industry like this one, and I am very proud of my branch and employees for earning this award.” said Brian Remington, Rightime Orange County General Manager. The branch ranks among the top ten for claims expense % of revenue and the frequency of distracted driving is consistently better than the company average.

ABOUT AMERICAN RESIDENTIAL SERVICES

Based in Memphis, Tenn., privately-owned ARS operates a network of more than 70 locally-managed service centers in 22 states, with approximately 5,500 employees. The ARS network features industry-leading brands including, A.J. Perrin, Aksarben ARS, Allgood, Andy’s Statewide, ARS, Aspen Air Conditioning, Atlas Trillo, Beutler, Blue Dot, Brothers, Columbus Worthington Air, Conway Services, Efficient Attic Systems (EAS), Florida Home Air Conditioning, Green Star Home Services, McCarthy Services, Rescue Rooter/ Proserv, Rescue Rooter, RighTime Home Services, RS Andrews, The Irish Plumber, Unique Services, “Will” Fix It, Yes! Air Conditioning and Plumbing, and Yes! Efficient Attic Systems. United by Exceptional Service®, the ARS / Rescue Rooter Network serves both residential and light commercial customers by providing heating, cooling, indoor air quality, plumbing, drain cleaning, sewer line, radiant barrier, insulation and ventilation services. Each location has a knowledgeable team of trained specialists, who have undergone rigorous drug testing and criminal background checks. Providing exceptional service and ensuring the highest standards of quality, ARS has the experience to do any job right – the first time, with all work fully guaranteed.

Aksarben, provider of air conditioning, heating and plumbing services has earned the prestigious Overall Safety Branch of the Year at the Annual Manager’s Meeting for parent company, American Residential Services. The meeting was held earlier this month in Las Vegas.

“We are an industry leader in HVAC and plumbing services because of our hard-working employees and local management team,” said Dave Slott, President and Chief Operating Officer of ARS. “It’s an honor for us to recognize and reward Aksarben/ARS of Omaha as one of the top-performers in safety.”

“I would like to thank everyone at the branch for making safety a top priority. I always want my employees to come into work and make the right choices when they are out on the job so they feel safe and knowledgeable. Thank you to the branch for working hard and earning this award.” said John Aliano, General Manager of Aksarben/ARS. Aksarben earned an audit score of 95%, the DriveCam coaching effectiveness is consistently at or above 95%, and the distracted driving frequency is .03%.

ABOUT AMERICAN RESIDENTIAL SERVICES: Based in Memphis, Tenn., privately-owned ARS operates a network of more than 70 locally-managed service centers in 22 states, with approximately 5,500 employees. The ARS network features industry-leading brands including, A.J. Perrin, Aksarben ARS, Allgood, Andy’s Statewide, ARS, Aspen Air Conditioning, Atlas Trillo, Beutler, Blue Dot, Brothers, Columbus Worthington Air, Conway Services, Efficient Attic Systems (EAS), Florida Home Air Conditioning, Green Star Home Services, McCarthy Services, Rescue Rooter/ Proserv, Rescue Rooter, RighTime Home Services, RS Andrews, The Irish Plumber, Unique Services, “Will” Fix It, Yes! Air Conditioning and Plumbing, and Yes! Efficient Attic Systems. United by Exceptional Service®, the ARS / Rescue Rooter Network serves both residential and light commercial customers by providing heating, cooling, indoor air quality, plumbing, drain cleaning, sewer line, radiant barrier, insulation and ventilation services. Each location has a knowledgeable team of trained specialists, who have undergone rigorous drug testing and criminal background checks. Providing exceptional service and ensuring the highest standards of quality, ARS has the experience to do any job right – the first time, with all work fully guaranteed.