My thoughts on Home Depot ....et al.......

Steve Ebels

You know guys........ The times, they are a changin'.

The old standard ways of doing business are going out the window FAST. I personally think that things are going to turn right clean upside down in the next 3 to 5 years. The internet is a big part of this. Look at the information that trades places on this site. Have you ever stopped and wondered how many people were able to effect their own repairs or installations with knowledge they gleaned from here instead of calling a contractor?? So, does that make the Wall a good thing or a bad thing? Is the Wall in competition with contractors?? On the other hand how many homeowners asked a few questions and decided that the job was over their head or they didn't have the tools to do it. Or maybe realized that the contractor they had been talking to about an install didn't have a clue about how to do it right? Maybe they saved themselves a lot of aggrevation
and found the right guy for the job here.

The laws of business constantly drive things toward a lower price point, more economies of scale, dealing with less to get more done. This makes a lot of the contractors here nash their teeth in frustration as we view ourselves as craftsmen, not mere contractors. Our work is virtually all custom type, one of a kind. There are few, if any "economies" that we can generate in our labor. Each job is different than the one before, so it's difficult to prefab or use the same "pattern" so unskilled individuals can do this work. One of the "holy grail" tenents of mass production, cheap production, is to make the product in such a way that unskilled (read lower priced) labor can produce it by using a simple system. People run the system, the system runs the business. IE... McDonalds.

That being said, installing boilers, radiant floor systems etc. will never be simple or easy. Especially if it's done correctly. So we are stuck with high priced, highly skilled labor. That leaves manufacturers of boilers in a tight spot. Remember that they are not only competing with each other for the sale but are also competing with other products in the heating industry. (think scorched air here) We all know you can buy a decent furnace for 1/2 of what a run of the mill boiler costs. (there are a host of reasons to go with the boiler but that's another discussion)

So how can a manufacturer achieve any kind of marketshare improvement? Well, my friends, you're seeing the first of it with Weil McLain and HD. I would not be at all suprised to see other mfgrs. team up with other big boxes. Especially if this program works well.

A lot of us lament long and loud about wholesaler loyalty to contractors. The simple fact of the matter is that most, I said most, wholesalers provide nothing more than a central shipping point for the mfgrs. Few will do a heat loss. They send the floor plan out to someone else to engineer. (Look where that got the poor guy out West) Most will sell to Joe Blow who walks in right off the street. As a matter of fact, there is a "distributor" in these parts who will glady sell anybody a Viessmann. That's right, a Viessmann. "Just back your pickup to the dock there and we'll load it right up for you Mr. Jones".
Why do they do this. Because they can make more money than selling it to a contractor. Also because Mr. Jones hasn't found a contractor that he likes, so he's going to do it himself. Or, Mr. Jones hasn't run into a contractor that has the ability to sell themselves to him. The contractor hasn't figured out that he has to sell his skills, knowledge, ability, and his business. Maybe he doesn't even have a "business" he's just a guy and a helper or two and Mr. Jones wonders who will service it when the guy retires/croaks/hangs it up. He hasn't shown Mr. Jones that buying a boiler is different than buying any other item that he purchases. They haven't shown Mr. Jones that he's not just buying a boiler, he's buying a system and someone who knows how to maintain/service/install it correctly and that they are in it for the long haul.

Face it guys the biggest area we need to improve on as a group is not installation or product knowledge, it's selling. And that's why Weil McLain is in HD. Those boys know how to sell product. They've built a selling machine. The contractors among us that wake up to that fact will survive and the ones that don't make the transition from contractor to businessman won't. It's as simple as that. It used to be that if you operated in a given location you could count on sales from that location. Not any more. The Internet has opened up a whole new ballgame as far as a HO finding someone to do their work for them. Just "being there" doesn't mean you'll get work from "there" anymore.

So where is the market going and what can we do about it??
That's the million dollar question. My crystal ball says this. Manufacturers are going to get the public exposure to their products by one way or another. They all realize that they need their products out in front of J.Q. Public if they are going to stay in it themselves. This is going to take a couple of forms. One of which we see with the HD/WM alliance. The other avenue I think will pop up is manufacturers dealing directly with contractors/dealers who have retail floor space to display their product on. I don't mean someone operating out of a dumpy warehouse looking building, I mean a heating store displaying the full product line with all related accessories . You will see "protected" areas for these dealers who commit to a given product line. You will also see that these dealers have to meet certain criteria to be in this position. It just makes sense that this will happen. Ordering and shipping is getting so streamlined and painless due to the Internet that there is no need for a "middleman" to handle the product. It's the logical place to cut costs out of the final price of the product. The manufacturers will assume the support role that the "distributors" now somewhat provide........somewhat. Look at Viessmanns' 24 hr tech service line. How many distribs have 24 hr help. If they have it what are the chances they actually can help you with a problem. Not any in my area. Nothing within a hundred miles.

Face it guys something's going to give. The pressure is relentless for these mfgrs to get their product to market at the lowest possible cost. We have to learn to sell. We have to learn to turn our places of business into selling machines too. It's just the way it works. This industry is just a little slower and a little more difficult to do it with than most.

Whew! quite a ramble for a Sunday morning.

Tony Conner

Nothing Has Really Changed

A hundred years ago, you could order from Sears, a load of lumber, all pre-cut, to build an entire house without a saw.

The old Audels Plumbers & Steam Fitters Guides talk about how people shouldn't be blaming the boiler manufacturers for crappy effiency units. The manufacturer will only build what folks will buy, and doesn't care about the fuel cost.

There has always been, and will always be, people who are looking for absolute lowest price on everything they buy. To them, everything is a commodity, including labour. My take on this is that I DON'T WANT CUSTOMERS LIKE THIS. The people who shop at HD should not be your target customer base, unless you're somebody like WalMart. Let them go, and don't look back. Aim for the niche markets in your area. If you try to compete with outfits like HD head-on, you're gonna lose.

I think a lot of manufacturers have trapped themselves in the "lowest cost producer" rut the same way a many contractors have. Some manufacturers have cut so many corners, for so long trying to get the price down, that they've become unprofitable, or even worse, produced some real junk. Why does ANYBODY want to join the "race to the bottom"? The losers go broke, and/or get bought-out. Even the front runners wind up in an ugly place. The winner? I don't think ANYBODY ever wins this contest. Outfits like WalMart lead the field for a period of time, then typically get caught in things like demographic changes. That's pretty much what happend to McDonalds. I think it'll happen to places like HD too. The aging baby boomers, for the most part, will rather spend their time playing golf or fishing than wrestling a boiler around their basement, or chasing the low-bid contractor to come back and finish/clean up/fix mistakes.

J Zettner

Home Depot et al

That things change is one eternal truth. Do we accept our doctor's opinion as God-given anymore?
I am not a contractor, but a facility manager at a small private school that has followed these messages on the wall with great interest. I am "out there" educating myself and the internet has helped greatly. That you fellows have formed a community that is accessible to people like me outside the trade is phenomenal. (Hats off to Dan!)The result is I learn a little more about your craft and so can ask intelligent questions and will not be shy about getting a second opinion. This, I believe, is a good thing for both consumer and craftspeople alike.
Maybe, as a group, you can sponsor Q & A sessions at Home Depot or wherever to raise awareness of your craft. The danger of the Home Depot approach is that it is based on the belief that the consumer wants first and foremost a cheap product. I can imagine this leading to a franchise type contracting business, "Home Depot installs and services what it sells". The level of professionalism and quality must go down to keep profits up. Either that or the contractors/workers involved work their asses off for little money and even less respect. Witness the workload and working conditions of the chainstore pharmacists.
Where will this all lead? I don't know, but I believe that where good people can come together, good things can result!

johnny2

Depot Threat?

For you guys who can see beyond the threat, it will be business as usual. Home Depot merely generates the lead and passes it to a TCS Dealer.

The next market you will surely see will be the "Do it for me market" with aging baby boomers throughing their green on the table so they can spend time golfing and relaxing.

I never would have considered having anthing installed for me by Home Depot until my wife said fix the garage door or I will have someone do it for you> Of course to me this comment is like leaving her a blank check.

Guess what, she went to THD ordered a door and had it installed. Although this service is totally different than the heating and AC where the TCS dealer designs a comfort system for the indivual consumer.

My point is I paid a fare price, my wife got a door with fancy glass, HD was running 12 months same as cash, so I use their money for 1 year. As far as the installation went- the garage door looks and works great. The contractor was polite, wore a badge and gave me his personal phone number after the installation should we need any adjustments.

I would certainly use HD for other services if this is any example of how the program works.

I'm finding many contractors are to busy to keep their appointments or do not follow-up or write the price on a dirty napkin and say call me.

As I grow alittle older and alittle wiser I will pay more for any service but the contractor have better meet or exceed my expectations.

As for those who are angry with the HD and the services they are now offering, this should not pose any threat if you provide the same service and support.

See you in the trenches!

KevMcG

John B Good

Hey your the guy sending out the Commanche news letter?

Mike T., Swampeast MO

Trade itself partly to blame

As you mentioned Steve, "Our work is virtually all custom type, one of a kind. There are few, if any "economies" that we can generate in our labor. Each job is different than the one before, so it's difficult to prefab or use the same "pattern" so unskilled individuals can do this work."

With radiant in particular, this could not be more true. Seeing radiant as a "hot new thing" both contractors and companies have tried to cash in without learning the skills. I won't mention names, but I see adds all the time in magazines geared both to homeowners AND the trade for "simple radiant systems designed FOR you."

Instead of investing in knowledge (either by learning or hiring) some contractors fall into this trap thinking "it's no big deal--SOMEONE ELSE will do the design for me."

The truth of the matter is that a "simple" radiant system is ANYTHING BUT simple to design and execute properly. May the innocent forgive me, but it seems that many of the problems I see here are the result of letting someone else do the rough stuff. What happens is that ever-more-complex controls and devices are required to compensate for inadequate design.

What "The Wall" does admirably is give a place for everyone to see and learn what works well and what doesn't. Some get really bent out of shape regarding homeowners. Remember though that VERY FEW have the three "T's" (talent, time and tools) to tackle something as complex as a heating system. Those few who do are often willing to invest an incredible amount of time to make up for inexperience. These people are not your enemy as they are generally more-than-willing to share their success AND failure.

Don't confuse simplicity of operation with simplicity of design. Operational simplicity comes ONLY with careful, studied design. While complex controls and devices can be used to compensate for poor design, what you wind up with is a complicated, trouble-prone system no more comfortable than one simply controlled but well-designed.

Complex controls and devices shine when one desires higher versatility than is possible with more simple control. What contractors must stress though is that these are not requirements for a good system--they are enhancements that can be added if budget and taste desire.

I hate to harp on this simplicity, but remember that WE ARE TOMORROW'S DEAD MEN! Like them, our designs should endure long after we have rotted. THAT is really what hydronics is about! That is what is being purchased--PERMANENT COMFORT!

Rich

Home Deep

Years ago I worked for a mechanical contractor who installed , of all things water heaters for THD. The nightmares for the homeowners and contractor and mostly the the poor guys doing the installs are too countless to mention here. I will say that this contractor of some 50+ years had recently sold out. It seems it had lost its soul. It had forgotten its own mission statement,just from to close a relationship with the HD. Very sad!! Alot of good people have been affected. Rich.