In April 2014, SE Holdco, LLC — parent company of Service Experts Heating and Air Conditioning, one of North America’s largest heating and air conditioning brands — acquired Engineering Excellence National Accounts, LLC (EENA), a leader in commercial HVAC maintenance, service, and retrofits in the U.S. and Canada.
Both entities have long HVAC genealogies. Service Experts was founded in 1996. It became a division of Lennox from 2000 until 2013, when Service Experts was spun off as an independent company.
Since 2000, EENA has operated as a North American business of Engineering Excellence, Cincinnati, OH — a leading, 35-year-old commercial service and planned retrofit organization with 100 employees serving five midwestern states. Engineering Excellence Regional Services will continue to operate as a separate entity.
Scott J. Boxer, president/CEO of Service Experts, had previously served as its chief operating officer, from 2003 to 2010. Thomas J. Winstel leads Engineering Excellence and EENA. Engineering Excellence was founded by his father, the late Thomas A. Winstel, an admired and respected pioneer and leader in the HVAC industry until his passing this past April. Thomas A. Winstel's leadership was instrumental in the firm being named the 2005 ContractingBusiness.com Commercial HVAC Contractor of the Year.
ContractingBusiness.com recently spoke with Scott J. Boxer and Thomas J. Winstel, to hear why the time was right for the acquisition, and about their plans to grow EENA.
Sights Set on Commercial HVAC
Boxer said strengthening Service Experts' presence in the commercial HVAC arena has been part of Service Experts' plan, since it reacquired the business from Lennox more than one year ago.
“Bob Major, our vice president of business development, and I had an objective to get into the commercial national accounts service arena,” Boxer said. “As we looked around the industry for a company that could help propel us into that sector, the name ‘Engineering Excellence’ kept coming up. We ultimately decided we’d make contact with what we felt was the number one company in that sector. It turned out that one of the objectives we had coincided with one of Tom Winstel’s objectives, that of taking the next big step forward in his national accounts business.”
Winstel listened to what they had to say, and soon realized the possibilities a merger of resources would provide.
“When we were contacted by Scott and Bob, we weren’t necessarily looking to merge or divest of our business,” Winstel said. “But the more we began to talk about our shared vision, it became apparent that with the resources and synergies we had between both companies, we could do something unique in the marketplace.”
Capital, Manpower, Greater Tech Capabilities
For Service Experts, Engineering Excellence National Accounts provides a platform for a quick and ready-made entry into the commercial national accounts service sector.
“They have a business management software program, tested processes, and quality standards for service providers. They probably have the most extensive service provider network of any HVAC company in the industry,” Boxer said, and added that Service Experts could provide the resources to empower EENA to conduct a greater number of "self-perform" projects, in addition to subcontracting to a network of approximately 600 service provider HVAC contractors.
“One of the great synergies we could see, was the ability to grow that self-perform model in many other states fairly quickly,” Boxer said.
Winstel pointed to the growing sophistication and insight of commercial HVAC customers as a sign that the commercial HVAC market needs service providers prepared to meet their growing facility needs.
“Customers want to run more effective businesses, and they enjoy the opportunity to outsource their facilities’ HVAC maintenance, service, and replacement needs to a firm like EENA, Winstel said. “As our customers’ demands increased, we could see we needed additional resources, to be able to expand quickly, to reach our vision of becoming the service provider of choice to our multi-location building owners across the U.S. and Canada.
“We realized we would need to upscale and grow at a much faster pace,” Winstel continued, “to integrate new technologies into the processes that we’ve already developed in the service management center, and be able to provide self-perform services for our customers, as well as the subcontracted services they need. Combining with Service Experts gives us a tremendous amount of leverage with which to do that.”
Winstel said commercial customers are seeking added support in analytics — obtaining as much information as they can about facility energy use and efficiency — along with the benefits of a single-source provider.
“Customers are looking for more information, and the ability to aggregate more information from a single work order,” he said. “Also, there’s a need for mass customization of services. We still live in a paper-driven world, but the HVAC industry is changing very rapidly thanks to smart technology, and it challenges us to in some ways ‘reinvent’ the HVAC processes we’ve known for the last 30 to 50 years. This is accomplished by applying new technology, and integrating it with the routines and processes we provide daily, to deliver and guarantee the quality we want to provide to retail shopping environments.”
Many Customers in Concentrated Regions
Initially, Boxer said, Service Experts will seek to expand EENA’s reach into highly concentrated regions of Florida, Texas, New Jersey, and Western Pennsylvania.
“As I’ve had the opportunity to talk with more national account customers, including large retailers, restaurants, pharmacies, and drug stores, they’ve told me how difficult it is for them to deal with numerous contractors, so there is a tremendous amount of opportunity,” Boxer said. “Every time you talk to one of these owners, facility managers, or building management companies, they’re all having service issues, in different parts of the U.S. or Canada.
“We will have the ability, as EENA has had, to service the entirety of Canada and the U.S. The opportunity for some of these retailers, big box stores, and restaurants, to deal with much fewer contractors is a tremendous opportunity. It makes their lives much easier.”
Industry Breakout Anticipated
The easing of recessionary pressure in the U.S. economy has increased Boxer’s optimism for increased service and replacement, as long-neglected equipment finally gets the attention it deserves.
“Engineering Excellence has had a tremendous reputation in the planned replacement and service of older HVAC units,” Boxer said. “As customers put together new capital budgets, we have the data to help them establish planned replacement programs. The demand for energy efficiency, and the desire to deal with fewer contractors makes us attractive at just the right time.”
He added that an increase of new construction starts nationally provides another ray of hope for increased prosperity in the commercial HVAC service/replacement industry.
“Many of these owners are starting to build, and they’re paying more attention to the facilities they have through remodeling, efficiency upgrades, better controls, and lower cost controls. With EENA partnering with Service Experts, we’ll be in a position to do this as well as any other company,” Boxer said.
Winstel added that he’s excited about the opportunity to incorporate some of the vast array of new HVAC-related technology on display at the last AHR Expo in New York City.
“As we see the new technology being rolled out in the HVAC service industry — new building automation controls, light commercial automation, higher equipment efficiencies — the facilities groups and senior-level financial executives within our companies are seeing huge opportunities with a built-out platform,” he said.
“The big-box store was invented in the 1980s. If you look at the vast amount of operating HVAC equipment that can be updated and improved and better serviced and maintained, you see it’s a huge market that’s still very fragmented,” Winstel said.
“By embracing some of the new technology and with the scale and the resources we can bring to the marketplace, we’ll be rewarded by clients who are looking at reducing their total operating costs, as well as the indoor environment they want for their store patrons.”
Neither Boxer nor Winstel have forgotten the contributions of the many people that will make this venture a reality: their employees. At a time when the HVAC industry is clamoring for new employees to enter the trade, both men realize the value of qualified, time-tested and loyal employees mean to their success, and what they can offer in return for dedicated service.
“Tom and I have shared a very similar vision, one his late father also had: of developing a culture inside the company that allows people to continue to develop, and to find and promote the highest integrity in the workforce,” Boxer stressed. “Tom’s father believed very strongly in that, Tom believes very strongly in that, and I believe strongly in that. That common thread runs through both companies."