Sheet Metal Leaders Offer Look Ahead

For this edition of Sheet Metal Today, Contracting spoke with Randy Novak, president, Novak Heating and Air Conditioning, Inc., Cedar Rapids, IA, and 2011 vice president of Sheet Metal Air Conditioning Contractors National Association (SMACNA); and Rob Felton, president, M&M Manufacturing, Ft. Worth, TX, for their thoughts on business opportunities and challenges in 2011.

Q: What are your thoughts on construction activity projections in 2011? Are there any sectors that show promise, that would provide increased employment for sheet metal fabricators/HVAC contractors?

A: Novak: In our area of Cedar Rapids, hospitals, clinics and medical malls are investing in facilities, upgrades and remodeling. Other projects have energy efficiency at the forefront with a lot of geothermal being designed and engineered not only for new projects but also retrofits.

Felton: If you asked me this question in late November or early December, I would have told you to be prepared for a flat year in 2011 – at best. While I'm still very cautious about the outlook for 2011, the mood across all of our business segments has become much more positive. Our backlogs are up nicely for both commercial and residential HVAC products and we've seen a significant increase in business activity in our Precision Division; which is primarily a close tolerance job shop servicing a diverse group of industries like telecom, food service, energy, and transportation. From a construction/HVAC fabrication standpoint, educational work (schools) is where we’re seeing the most "activity."

Q: What do you believe to be the most exciting development in the fabrication and/or HVAC industry? Do you find HVAC contractors are venturing into areas that will help supplement decreased construction activity?

A: Novak: Building Information Modeling (BIM) is definitely a buzzword around this industry. The neat thing is that BIM means different things to different people. Some contractors are taking the lead with this and being very involved, while others are putting their toes in the water and seeing what part of this process makes sense for their company. I have no doubt that BIM will continue to be defined, and grow as part of future construction. I’m of the opinion that contractors will focus on service departments and opportunities with energy audits.

Felton: When you say "supplement decreased construction activity," I assume you're asking, "Are contractors finding other ways to make money during this downturn," the answer is yes, the good ones are.

I think the quality groups are out there trying to up sell, or sell more on jobs they already have versus just completing the original scope and moving on to the next job. Although it's difficult to get consumers to spend more right now, if a contractor can preach things like the benefits upgrading an old duct system to a quality metal duct system, when the original scope of the job was simply a change out, the consumer/customer may be willing to spring for more than they originally planned. Your best customer is the one you already have, why not do more while you're already set up on the job. Of course, metal duct is our business, so we think it’s the best solution for the consumer — and it is.

Q: Which methods of business management have you recently adopted — or that have been ongoing for many years at your company — that are most successful?

A: Novak: Communication, communication, communication! I think we're guilty of not always realizing how one department impacts another, and that by providing a forum for constructive feedback, we can improve. As important as email and text messaging have become, we lost sight of the impact and importance of face-to-face meetings. We're also making an increased effort to see more of our customers face-to-face.

Felton: We've been in business since 1958. We certainly watch our costs, do our best to eliminate wasted effort and materials, build a quality product, and invest money back into the business, always. But overall, from an operational standpoint, our success lies in the people who work here. I know everyone says that, but it's true here at M&M.

Our employee tenure is amazing because we treat people fair, and we're genuine about it. We truly care about the people who've made the decision to "hang their hat here," and they know it. That doesn't mean that every employee agrees with every decision we make, but they know that every decision we make is thought through and labored over, sometimes to a fault. It all goes back to people.

Q: How can the industry attract more young people to this profession?

A: Novak: Young people want to learn, they want to be at the forefront of technology and they want a career, not just a job. Owners have to make an improved effort to provide and encourage the younger employees to get more education and to get them more involved. We have to define what success is for us and share what the company goals are. This is an ongoing process that we have to focus on. Young people have an energy that’s contagious, and fresh ideas, and if we keep them engaged, they very well could be an important part of growth.

Felton: Education, period. I think we've lost our way a bit in this area. The U.S. was built on manufacturing and innovation, that's been the foundation for the success of this country. We all know, and have seen, manufactured products move away from the U.S., so I won't go into that. When you say "sheet metal," I think "steel," and when I think about steel, it leads me to manufacturing. Young people need to be aware of this, they need to be educated. You asked about the sheet metal industry, and my answer went to manufacturing, because I think the two go hand-in-hand.

Q: What must sheet metal fabricators do to remain successful in 2011?

A: Felton: like most manufacturing businesses, sheet metal manufacturers have absorbed a lot of cost/input increases over the last 24 months, which has significantly impacted margins. In 2011, we have to continue to watch our internal costs closely, manufacture a quality product, and take care of our customers. It sounds basic, but we simply have to block and tackle well until revenues fully recover.

At M&M, we’re positioned well for a full recovery. We've already addressed most of the "fluff" that occurs, and is concealed, during vibrant economic conditions, so 2011 is "back to basics."

Ed. Note: Novak Heating and Air Conditioning has specialized in residential and light commercial HVAC and custom sheet metal for 70 years. M&M Manufacturing, now in its 53rd year, is a leading manufacturer and supplier of steel duct pipe and fittings in the Southwest, with manufacturing facilities in Fort Worth, Dallas, and Houston, TX.

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