How are you covering the losses due to the flood of defective products the last couple years.

The Steam Whisperer

We've seen the situation go from horrible to just an outrage these past 2 years. The manufacturers are churning out defective products in record numbers and continue to expect us contractors to eat most of the cost of corrective measures. On new installs we have seen about 50% of the new boilers that go in have some defective component, if not more than 1. The usual names like Honeywell have gotten completely out of hand with what appears to be no quality control at all. 2 brand new gas valves on power burners bad right out of the box, bad commercial flame controls, electric motors only lasting 12 to 18 months in light duty applications on vacuum pumps and even bad and incorrectly machined castings. We expect to be pulling out our second 5 year old Peerless SC boiler because the burners get so hot that they melt the head, ignition components, etc.( 2 different brands of burners both being overheated).
We've initiated a 5% labor increase to at least partially cover some of these unnecessary costs that the manufacturers really have no financial incentive to address.

Ironman

When I find that a manufacturer has a significantly higher than normal failure rate and that they won’t address it, I take my business elsewhere. I also share that experience with as many as possible.

The only way they’ll change is to make them feel it in their wallet.

I also let their reps and distributors know it.

The Steam Whisperer

I agree, I use the same methods. The problem I see, is that poor quality seems to becoming the norm, and so it seems that there are no longer any alternatives ( most industries have are now dominated by a few monopolies, since these laws stop getting enforced in the early 80's). We can't escape the low grade Honeywell components since everyone is using them ( though I am trying out Johnson controls pressuretrols as an alternative). At least McDonnell and Miller are getting thier due, since almost no one equips thier smaller boilers with thier equipment anymore,....I just hope Hydrolevel doesn't get cocky about the situation ( I had my first Hydrolevel defect recently). Only one boiler manufacturer I have worked with fully backs thier boilers... and that is Slant Fin... they paid the labor bill to address defects in thier equipment along with supplying the new parts( at that time I think they were still privately held). I agree with your general thought that you have to hit them in the pocketbook since the current business model is that the management of the company must have only one responsibility ( I believe this is U. S. Law now), to maximize profit for the shareholders (true capitalism is long gone).

Ironman

"true capitalism is almost gone". Unfortunately, so true!

But doesn't maximizing profit include retaining customers by giving them quality and good service? Or am I that much of a relic to think so? It's worked very well for my business.

The Steam Whisperer

That's too long term thinking and doesn't enter into the short term mentality of the stock market. There are lots of us "relics" in the business community that still work by that fundamental of the capitalist theory.. That a person that provides a good or service desires to be paid appropriately for the good or service. Unfortunately, that mentality is incompatible with the current investment laws and most of us are going to be wiped out ( or have been) because we end up cleaning up the manufacturer's messes on our dime. The problem I see now, is that dime is not longer a dime, but is amounting to several thousand dollars in losses per $100,000.00 of sales. Last year alone, I believe it worked out to about 7% of total sales and there is no impetus for the manufacturers to change thier ways unless suits start being filed based on merchantability laws... that a product should be expected to perform the purpose the manufacturer states it does. That's why I have started adding an additional 5% labor on all installations to help cover some of those out of control costs the manufacturer's have dumped on the contractors. It's reached the point with a number of products that the cost to remediate the defects is more than the product cost of purchase.

neilc

not that I would expect any satisfaction to come from my government, but,
this is something congress should address,
manufacturer warranties ought to cover your labor costs !
why should installers / contractors take the hit when the product is bad?
as my favorite electrician says, "I brought 120v to the fixture, it's still there, someone else specced the fixture, but I have to work for free to fix the warrantee ?
If the manufacturer had to pay the labor to replace their boiler, or lightbulb, maybe they would build the better one, again.

HomerJSmith

Welcome to the third world! Profit above all else is the mantra. Off shore manufacturing is just one of the problems. If you want to understand why this is happening, I suggest you study your money and the its diminishing value.

How many of you guys are working for $50/hr and why is that not the case today? Better understand that.

Supply chains are breaking down, copper is at an 8 yr high. Do you understand what that means for you? Or, do you think tomorrow is going to be like yesterday? If so, you are captured by your conventional thought of what is real and it is not.

I have watch quality disappear in the marketplace for the last 50yrs. A company makes a profit or it goes out of business. That's a fact. Unless it is supported by FED credit.

How many of you remember the Hoyt Copper Heart water heater? That was quality put into a product with the intent to produce the best product for customers. I have seen one operating for the last 50 yrs. The intent today is produce a product that last one day beyond the warranty and if it fails one day before the warranty expires to find some reason to deny the coverage. It is a different philosophy than from the past. It's the avoidance of responsibility and anything goes.

I am sickened by what I see and no good will come of it. Sorry!

Jamie Hall

I agree with much of the above -- especially @Ironman 's approach. A clearly defective item -- once, OK, my problem. Twice? I'm an idiot. The problem, of course, comes when the item is essentially sole source.

However, I'm not entirely sure that I agree that it all comes down to corporate greed -- or more accurately, large stockholder (activist funds, pension funds, and the like) greed, although at least some of it does. Some of it, however, comes from a consumerist society, which is always looking for the cheapest solution and doesn't factor in quality. This is not just individual consumers, of course -- anyone who has been involved in a lowest bid contract situation (particularly with a government agency) is very aware that to get the contract you have to go as low as you dare and still at least appear to meet the specification. But all too often we see situations where corners have indeed been cut in manufacturing, so that the widget can be sold at a price less than that of the competition.

The Steam Whisperer

I agree about the issue of a consumer society looking for the cheapest ( maybe solution?) however, the problem is that most of our clients that don't have that mentality and be still have poor product to work with despite buying more expensive products. As I said, I believe it is Law in US that a company's managers only have one group to which they are responsible, the stockholders, so you get only short term views. It's not like this is anything new, we were here just before the Great Depression, and the huge volume of laws that came out in response to that financial disaster have long been on the books to balance out the problems with Pure Capitalism gone awry, but have not been enforced since the 1970's. We are likely on the edge of a precipice and may not be able to go back. Now that we are not the world's only economic superpower, there will not be nearly as much as we can do as we did the first time, at least by ourselves.

Jamie Hall

In one major sense I agree with you, @The Steam Whisperer : pressure from stockholders on many of these companies. This is not, however, a clearcut case of rampant capitalism being a problem. Rather, for many of the larger companies -- including most of the ones in consumer facing lines -- the stockholders this time around are neither the capitalists of the 20s (or earlier) nor those of the 50s and 60s. Rather, if you actually look at who is holding the stock, it turns out that in many cases a lot of it -- in some cases the majority -- is held, as I noted earlier, by aggressively managed funds and you are quite right in your assessment. These funds, and the people who manage them, don't give a hoot about anyone but themselves. One or two of them like to say they do, but they don't. I agree that there is much bad that could be said about the Carnegies and the Mellons and the Astors and the Rockefellers and the Vanderbilts of a century plus ago, and there were a few -- Fisk, for instance, or perhaps the Ames family -- who were genuinely bad actors in the sense that we see in the fund managers of today, and as a moneyed class set apart from us poor peons they were indeed irritating -- but at the same time they had a sense that if they did well, they should also do good -- and they did. For them, it wasn't all about me.

There has been a real cultural change which began somewhere in the late '60s from one where if you did well financially you assumed that you would use your wealth beneficially and not just accumulate more for yourself. Now... I see it, of course, in relation to charitable giving; while the US is still one of the top countries in terms of charitable giving, the amount given to charity from the rich folks has been declining substantially over the years. We live now in an exceedingly selfish society, and that is the tragedy -- and a change in economic system will not change that problem.

The Steam Whisperer

of course I imagine that the massive change in top tax brackets had a big impact on the charitable giving. Why pay 70% to 90% tax rates of the 40's 50's and 60's,instead, just give the money away and you can still control what it does. The funds are the official holders, but it is the uber wealthy that still hold almost all of that wealth.

Jamie Hall

Quite so. What charitable organisations have seen is that as the tax goes up, charitable giving goes down. This is not compensated by government support; some organisations aren't eligible for government support, but a great many more simply don't want it -- as he who controls the purse controls the activity.

And as I noted, the uber wealthy of today are a very different breed from those of a century ago.

There is one curious thing about charitable giving -- we find that -- as a very broad over simplification -- a relatively low paid tradesman or craftsman or farmer etc. is likely to give a much higher percentage of their after tax income than an office worker or service employee, despite having similar income after tax. And a much higher percentage than the very well paid executive, doctor, lawyer, etc. Don't know why that is so, but it certainly seems so.

The Steam Whisperer

Hmm, that the reverse of what I would think. When the top tax rates were 70 to 90% I would think the uber wealthy were giving more away, since they were only going to keep a little bit of it.
Is your data mainly for the 1980 plus...greed is good, era.
I've seen similar statistics in church giving... the moderate income members are usually giving not only the greatest percentage of income, but often the greatest dollar amount. I'm Presbyterian, and as the PCUSA has lost the "conservative" big income members, giving as a percentage of income has jumped significantly. It's probably just a simple reason, like the average janes and joes actually see people struggling where the wealthy are largely isolated from the working poor.

Jamie Hall

"It's probably just a simple reason, like the average janes and joes actually see people struggling where the wealthy are largely isolated from the working poor."

Bingo

Paul Pollets

This topic comes up every few years. The responses are angry about the losses in business due to defective products. Since I'm semi-retired, I don't buy as many boilers as I used to, but the advice holds true...
28 years ago I decided to focus on building a business using the best equipment I could get my hands on. I lived in Seattle and saw the explosive growth of the city with highly paid techies. I decided that offering a selection of various boilers based on price was not very effective as a sales tool. Not to mention the need to have access to all the different parts, few which were interchangeable. Since the demographics of the city I lived and worked in could afford it, I decided to feature one brand of equipment. That brand was Viessmann and I was convinced that having one product line would simplify my world and assure the customer that high quality equipment was being used. Inevitably, there were products found to be defective within the warranty period, some right out of the box. I decided that the financial hit for warranty repairs was dangerous and needed to be dealt with forcefully. I would get the defective part for free but was usually stuck with labor and travel costs of 4-12 hrs that went unpaid. I made a decision to start billing for the labor costs and sent the bill directly to the manufacturer or the wholesaler. Or both. The amazing thing was that I got paid. Always. Several times I was paid in product, rather than a check, but that was fine with me. I kept careful records of the times involved, and of course returned the defective part. Maintaining a real working relationship with your prime supplier becomes key. If you don't have the time, or can't do the paperwork, you'll be left with loss. If you're spending $250k plus on boiler products a year, why should you absorb losses due to the manufacturer? Once I was told that I should charge more to cover the warranty costs. I told them I already did. We shouldn't forget that this is a business and business losses need to be accounted for. This may be the only trade where the heating guy takes a big hit for repairing or replacing defective product and does nothing.

The Steam Whisperer

Hey Paul,

Done that ( billed the manufacturer) was promised it would be paid, multiple calls made, nothing, was told they were looking into it, nothing. This seems to be the norm. I was also once told that I should charge more to cover the warranty costs by a manufacturer....I stopped using thier products for nearly 12 years and only have used a few recently.
Our market is similiar to yours, people who are just looking for cheap can look elsewhere... in fact we rarely get any calls anymore for that type of work. I guess word has spread. But the problem still remains, even the manufacturers that make higher end product refuse to pay labor for cleaning up thier messes. I am guessing the next step is to become completely hard nosed about it.... either you back your product fully or we will go elsewhere. The problem seems to be there is no elsewhere.

Paul Pollets

The next step is to deduct the costs from your monthly statement from the wholesaler if you can't get proper resolution. Having a relationship with your sales manager at the wholesaler and hopefully, the manufacturer and sales rep, is essential to claim resolution. Selling 4 or 5 different boilers also makes it somewhat harder to collect on warranty claims, unless your volume is large.

The Steam Whisperer

We, at one time only sold a single manufacturers boilers, but that didn't seem to have any impact so now we sell 2 main lines, and occasional 3rd line. Your suggestion is something I've considered for some time and maybe its time.

Kickstand55

I had a PA404A N/G right out of the box. Had to wait 2 days for another. Re-installed the original until the other new one arrived. System ran at 6+psi while we waited.
Lost money on that job. Sad.

hot_rod

Proven defect is another part of the issue. Being in the brass business and doing lot of factory testing, we do not see a lot of returns. What we do see is a very high % of installer error related returns, crossed threads, valves packed with dirt or teflon, product damaged after it left the warehouse, valves installed backwards, improperly sized, overheated when installed,etc. So first off the returns department needs to look at returned products and pass along pics of the failure mode.

Thinking of a modern mod con and all the components involved and what % are actually manufactured by the brand listed on the product? I'll bet some models are 100% manufactured by someone other than the name on the front cover. Not that that is an excuse, but the failure needs to be the responsibility of the actual component builder also.
So just sending out a check for every failure is not so easy, and easily abused.
I have been on both sides of this issue, and will say if you approach it in a polite and fair way, there is usually a resolution.

Paul Pollets

Installer error is very common. A major complaint from a major boiler manufacturer's tech service is that some techs refuse to read or consult the manuals and immediately call the 800 number for installation assistance.

hot_rod

Paul Pollets said:

Installer error is very common. A major complaint from a major boiler manufacturer's tech service is that some techs refuse to read or consult the manuals and immediately call the 800 number for installation assistance.

What % of mod cons do you think have been checked with an accurate combustion analyzer when commissioned? 10, 20%? Yet when they fail it's always the manufacturers fault, same with fluid quality:)

Paul Pollets

I'd be surprised if 15% were checked. It's like putting up chrome diamond plate to mount the boiler but not insulate the pipes...or use 7 pumps instead of 1 variable speed pump...Oh well.

Jamie Hall

hot_rod said:

Paul Pollets said:

Installer error is very common. A major complaint from a major boiler manufacturer's tech service is that some techs refuse to read or consult the manuals and immediately call the 800 number for installation assistance.

What % of mod cons do you think have been checked with an accurate combustion analyzer when commissioned? 10, 20%? Yet when they fail it's always the manufacturers fault, same with fluid quality:)

So true. And it seems to me that a good bit of that comes from two things -- first, a somewhat general attitude that whatever goes wrong, it's always someone else's problem and second, so many consumer things today either work -- plug and play -- or simply have to junked. The notion that it might actually take some skill and training to get something set up right seems to have vanished.