Reclaiming Residential Market Share

SMACNA and SMART support contractors and Locals reclaiming residential market share.

By / Sheralyn Belyeu

Many contractors across the United States have moved away from the residential HVAC market. “Today, more of our contractors are concentrating on the large commercial or industrial side,” says Mark Saba, executive director of SMACNA Detroit. “A lot of the smaller work has gone nonunion because trying to stay competitive in that market is tough.”

“Before the 2008 crash, 40% of Local 265’s hours were residential new construction,” says Tony Adolfs, executive vice president of SMACNA Greater Chicago. “They lost a lot of work when the crash hit, and most of that work came back non-union.”

John Daniel, president and business manager of Local 265 in Illinois, is hard at work to reclaim those lost residential hours. “When I first started, every construction project had at least six to 10 people on it,” he says. “Now that we need fewer people to do the same work, there’s less opportunity to make work hours in construction. But it takes the same amount of time and energy to change out a home furnace or air conditioner today as it did 32 years ago.”

All three agree that SMART and SMACNA have great opportunities to grow by aggressively going after the residential service sector together. “Right now, the unionized sector might represent 5% of the residential marketplace, so unions have up to 90-95% growth potential,” Daniel says. “If we don’t go there collectively, we’re going to be sorry.”

Metro Air’s experience in Bloomfield, Michigan, proves how profitable the sector can be. “I started in residential, and I’ve never let it go,” says Metro Air President Jay Levin. “We have expanded that market because it’s been very lucrative for us. The cash flow helps me through slow times, and it’s a much higher profit margin than the commercial and industrial markets. When there’s a downturn in construction, we’re still putting in furnaces and air conditioners almost every day.”

Millions of federal dollars are encouraging United States citizens to convert their homes from natural gas to carbonfree products. These policies give SMACNA and SMART new openings to win residential hours. “The legislation doesn’t necessarily say union,” Daniel says, “but the pieces that give preference say you should be part of an apprenticeship program and part of creating pathways to a career.”

Local 265 is a founding member of the IWantSMART.com network, an online marketing tool that teaches customers about SMART’s expertise. This creates a funnel encouraging homeowners to call SMACNA contractors, with rebate offers to help close the deal. The program sends a $200 rebate check directly to the customer if they hire a partner SMACNA contractor to swap out an air conditioning unit, furnace, or heat pump. Several Locals around the country participate in the program—Local 265 alone gives out approximately $1.3 million in rebates per year, or between $100,000 and $130,000 in rebate checks per month.

To provide a fast and efficient experience for the end user, IWantSMART has streamlined its rebate processing and leverages a digital format as often as possible. The smooth process keeps customers happy because they receive their rebates in about a week, and the Locals appreciate compiling detailed data on every job performed. Daniel can display residential activity on a map to see which communities already trust SMART and which communities would benefit from more targeted marketing. “It helps us develop a growth strategy and more potential for our contractors and members alike,” he says.

Illinois’s biggest energy provider, ComEd, also offers incentives for equipment upgrades. “Most of our customers can get $1,400 in rebates from ComEd,” says Tess Salek, residential sales manager for Air-Rite Heating and Cooling in Naperville, Illinois. “That’s instant to the customer, so they get it at the point of sale. Some municipalities offer rebates from $300 up, and customers may qualify for a $2,000 federal tax credit.”

Salek helps customers identify the Local and provider programs they qualify for and encourages them to consult a tax advisor for details on federal programs.

In Detroit, Local 80 helps SMACNA contractors like Metro Air with targeting funds when they are bidding against a nonunion provider. “They fund rebates that that my competitors can’t give,” Levin says.

Metro Air finds new referrals through their large customer base. “We go into hundreds of customer homes for replacement, repair, and maintenance,” Levin says. “By late April, we were booked to do non-stop maintenance into June.” His team leaves a $30 coupon in each home, which customers can redeem any time they refer a new customer to Metro Air.

All residential market recovery efforts are built on the bedrock of SMART’s highly skilled workforce. “We have a service lab, which directly pertains to the residential side of the field,” says Tim Mulligan, business manager for Local 80 in Detroit. “We’ve got furnaces and AC units and offer courses on home equipment at our training center.”

Metro Air invests in advanced education through supply houses. “Manufacturers want you to know how to properly install and service their equipment,” Levin says. “It’s very technical. You would never want a guy working on a furnace who did not go through the program and have some formal training on that piece of equipment.”

When systems are not installed and maintained correctly, energy savings go out the window. “You can pay for a 90% efficient system, but if it’s not put in right, you’re not going to get that efficiency,” Daniel says. “If the people who are doing the work are not qualified, you’re just burning money, and you’ll never even know it.”

As important as cost and technical skills are, they are only part of the calculation homeowners make when they decide who to allow inside their homes. “Communication is the key to understanding and repairing any issues that may occur,” Daniel says. “Understanding the customer’s problems and resolving them together is the key to building relationships and trust.”

Customers also need to know that service technicians will respect their property. Because the residential sector is less regulated, homeowners are wary of being cheated. “Too often it’s in and out, fly-by-night type stuff,” Daniel says. “We are not that way. We’ve been here for a long time, and we’re going to be here in the future. Let’s ask how we get people to trust us and call us, because they’re not only going to get a competitive price, but they will also get a better end product and a team they can trust.” ▪

A Colorado native, Sheralyn Belyeu lives and writes deep in the woods of Alabama. When she’s not writing, she grows organic blueberries and corrects misspellings of her name.