For some clues, we asked Scott Berger — president of Arista Air Conditioning Corporation, Long Island City, N.Y., and board chair of the Mechanical Service Contractors of America (MSCA) — to share his thoughts on services, employment, and the economic outlook in commercial HVAC. Thank you, Scott and MSCA.
Contracting Business: Scott, from your perspective as an officer in the MSCA, which areas related to HVAC service or installation brought your members the most success in 2014?
Scott Berger: Recruiting and retention of talent and continuous improvement of service management technologies were at the top of the list for many leaders in 2014. Last summer, many metro areas experienced a technician shortage for the first time in years. But, companies that retained their talent and recruited well during the tough times were in a good position to capitalize on opportunities.
Companies that retained their talent and recruited well during the tough times were in a good position to capitalize on opportunities. —Scott Berger
Many companies have also been investing in technology to reduce or streamline back-of-house activities. So now we’re hearing less about companies searching for technology to automate their data exchange between office and field, and more about optimizing the technology systems already in place. Contractors using more sophisticated systems have been able to make better business decisions by overlaying their experience and instinct with verifiable data.
CB: Are MSCA members generally optimistic about their 2015 prospects for revenue increases over and above 2014?
SB: There’s a general sense of optimism. The economic performance on the coasts tends to be a leading indicator for the middle of the country. So, between the positive feedback from the East and West Coasts and the positive results many companies experienced in 2014 across the board, there seems to be a lot of optimism for a stronger 2015.
However, there tends to be less dramatic crests and valleys in our industry, so my sense is that only a modest increase will be seen this year.
CB: In which sectors are members seeing the most growth in the service or installation business?
SB: Slightly more growth is seen in data and technology spaces because of current industry trends. There has also been an increase in commercial real estate transactions in the last six months, which is creating additional service opportunities as buildings are prepared for sale or new owners correct deferred maintenance issues. Even with these modest changes, however, growth is relatively stable across sectors. How and where members experience it really depends on the types of vertical markets they specialize in and their markets’ locations. The areas of success we see in New York, for example, will differ from what is seen in St. Louis.
There has been an increase in commercial real estate transactions in the last six months, which is creating additional service opportunities as buildings are prepared for sale or new owners correct deferred maintenance issues.
— Scott Berger
CB: Would you say customers’ need for improvements in energy efficiency are prompting them to seek out more advice from “greener” mechanical service/installation contractors, such as MSCA GreenSTARS?
SB: We do find that customers seek advice from energy solutions providers like MSCA GreenSTARs either in areas where there is a greater demand for “green” products or in more expensive energy markets. But, in markets where energy is still relatively affordable, energy improvements are not a leading driver in many customer decisions, unless the customer has a corporate initiative or utility rebates to significantly offset funding of the project. I expect this will change as utility companies continue to increase their rates or increase the amount and scope of the incentives they offer.
CB: In the construction arena, is HVAC Design/Build more in demand than in recent years?
SB: From the service perspective, this is an area that has had no significant change in demand nationally in the last few years due to a couple of market-specific variables. Generally, markets tend to gravitate toward historical preferences. So, those that developed a strong design-build preference early on continue to support more of these types of projects in the future and vice versa. If there’s an abundance of design work but a lack of design capacity, the engineering community will sometimes rely on service contractors for support in a Design/Assist approach. But, markets that have had growth in the engineering community in the past year generally are not seeing significantly more or less Design/Build activity.