by Bob Axelrod
The controls business has always been exciting and challenging. For my company, it complements our heating, ventilation, air conditioning, and refrigeration (HVACR) work, which is our core competency. The challenge is working with ever-changing technologies and educating customers on the benefits of using them to manage their buildings and their processes. Education is definitely the most difficult aspect of the controls business.
I believe this stems from the early 1980s when the first major energy crisis swept the U.S., and some vendors put together those magical black boxes that were supposed to save building owners and managers significant levels of energy and energy dollars. Of course, that didn’t happen, and it left a fairly bad taste in the collective mouth of the marketplace.
Add in today’s economic and political conditions and the large facility management marketplace seems to be shrinking rather than growing.
However, when it comes to niche markets, having a controls specialty is a great way to add business and profits to your company. My company, Cooling Equipment Service, Inc. (CESI), based in Chicago, IL, is a Design/Build firm that targets the refrigeration markets — primarily refrigerated warehousing, supermarkets, and convenience stores.
We’re a $5.5 million organization that focuses on the service side of the business, with 50% of our revenues derived from commercial work, 50% from refrigeration. It’s on the refrigeration side that our controls expertise really comes into play.
In our local refrigeration marketplace, customers know very little about the current state-of-the-art of building and system controls. Many have never heard of concepts such as direct digital controls, remote monitoring, facility management, etc.
Owners tend to stick with what they know: central plant ammonia systems in the commercial refrigeration markets. However, we’re finding that people are ready for a change. Electronic/DDC controls are still new to them, but their existence provides a welcomed alternative to those old central system plants.
In the refrigeration business, because controls aren’t as widespread, we don’t have to worry as much about getting two different controls packages to talk to each other as you find in the commercial facility management business.
Business Is Local
No matter how you look at any given marketplace, business is won or lost on the local level. We make or break our customers’ environments based on our ability to deliver projects that achieve stated comfort and energy goals on time and on budget.
Our ability to do this can be impeded by local issues. For example, in Illinois, the electrical unions are trying to get legislation passed requiring contractors to have an electrical license for all air conditioning work.
Right now, this is targeted to residential contractors, but if passed, could spill over to affect every aspect of the contracting business.
Electricians really have no expertise when it comes to diagnosing refrigeration problems. I certainly see a need for installation crews to have electrical licenses, but service is an entirely different animal.
I see this type of legislation becoming more prevalent across the country as the various organizations, in an effort to bring everything under one umbrella, begin playing hardball in the state legislatures.
Is this type of activity ruining the facility management controls business?
The controls market overall is growing, but the facilities management aspect of it is a very tough market right now. Many contractors are doing that work, and that tends to convert the business into a price-driven commodity.
On the other side of the coin, there has been a general weeding out of some manufacturers. I see that process continuing for at least the near future.
Although the days of giant facility management control systems growth are waning, niche markets, such as commercial refrigeration, will always be growth areas. n
Bob Axelrod, P.E. is president of Cooling Equipment Service, a union Design/Build company located in Chicago, IL. The 70-year-old company, founded by his father, currently fields 17 service and installation vehicles and employs 25 people. Axelrod can be reached by phone at 773/775-9191 or by e-mail at [email protected].