Three years ago, few HVAC contractors or manufacturers were looking for new markets-their biggest problem was finding the trained manpower to handle their core business. Most had a huge backlog of work. The economy was booming, and business was good.
But Erik Emblem, executive director of the National Energy Management Institute (NEMI), could see a slowdown coming. The market was showing signs of flattening out. He and NEMI's industry partners-the Sheet Metal Air Conditioning National Association (SMACNA) and the Sheet Metal Workers' International Association (SMWIA)-set out to find new market opportunities for union workers and contractors.
In the spring of 2001, NEMI asked the FMI Corporation to begin research on a contractor growth initiative. Over the years, NEMI had worked on numerous projects and programs with FMI, the premier research firm in the construction industry and a company with roots in the HVAC market.
In its research, FMI zeroed in on three emerging markets that represent a combined $40 billion opportunity: Building Commissioning/Retro-Commissioning, Energy Management and Indoor Air Quality. HVAC contractors and manufacturers will get their first look at the results of nearly two years of FMI research at the Contractor Growth Initiative for Emerging Markets workshop October 19-21 in Phoenix, sponsored by NEMI.
"Our research will give HVAC contractors a competitive advantage in their respective markets," said FMI Vice President John Hughes. "It will help them better understand how to evaluate opportunities within their local marketplace and how to discern whether their company is ready to tackle these new markets."- Jeff Chase, President of Cox Engineering and a member of NEMI's emerging markets task force, said the FMI research "identifies potential customers and users and creates name identification for our industry, for sheet metal workers. The research lets us know whether a new business opportunity is right for us, and if it is, gives us the tools to make it profitable." (Cox Engineering is a century-old mechanical contractor in eastern Massachusetts whose owner, Jack Desmond, is the current SMACNA president.)
Jay Bowman is a senior consultant at FMI. He works with construction firms and manufacturers of building products in the areas of market assessment and analysis and related strategic planning. "My specialty is helping contractors in one of two areas: either in market growth-expanding into a market they've never been in before, advising them how to do that and what to expect-or helping them provide a new service they've never been in before."
Bowman led the research efforts for NEMI "when we were helping them determine how large the opportunity was on a national basis. What they were really trying to do with research studies in building commissioning, energy management and indoor air quality was to first determine if there is a market out there and how big is the opportunity is for our constituency-the sheet metal workers and sheet metal contractors. Then, to really make our research useful, to prepare them to take advantage of those potential markets."
Clark Ellis, another senior consultant for FMI, takes the results of Bowman's market information research and works closely with contractors on marketing strategy. "With the NEMI emerging markets project, we were able to give business owners some tools," said Ellis. "We developed a basic blueprint for how to grow your business-how to assess market opportunities in your area, how to assess the competitive threat, and then how to attack it from a marketing and sales perspective.
"You can use the same principle if you want to expand geographically," said Ellis. "Instead of expanding into energy management, what if I build my base business out into the suburbs? Our primary purpose is to give these firms the skills and tools to do that."
Ellis said there are two essential keys to success: "First, you've got to have a business owner oriented toward growth who is willing to invest time and money in a new market opportunity. At the same time, you need to have a local union that can supply people who are trained and willing to try new areas and who will make a commitment to providing a work force the owner can use effectively in that new market."
Summing up, Ellis said: "when we talk about strategy, we're asking: what and where are our markets, who are our customers, and what products and services do we provide to meet our mutual business goals?"
"Today's construction industry requires new knowledge, skills and capabilities to take advantage of emerging market opportunities," said Emblem. "That's what this research project was designed to do. Without research or preparation, most new businesses fail."
Jeff Chase at Cox Engineering noted that "the leadership of SMWIA and SMACNA is very much committed to expanding the base of sheet metal workers, and that's having a positive impact on the industry." He said the indoor air quality market "is the most exciting to me because it's wide open-the opportunity for a contractor is enormous."
He explained that "up here in Massachusetts indoor air quality is on everybody's mind. There have been a lot of problems with schools after they've been shut up all summer. Mold is a big issue here, as it is around the country. That's a perfect area for sheet metal contractors, but FMI research lets contractors make an informed decision whether it's right for them."
Chase commended NEMI's foresight in developing the emerging markets project. He is confident "it's going to be a winner."
Clark Ellis said the NEMI project could not have come to fruition at a more opportune time. "In many areas, the construction market is suffering. It's been a pretty flat year. But we've identified $40 billion worth of potential new business in these three emerging markets. We've very excited about it, very optimistic. There are all kinds of market opportunities out there for growth-oriented contractors."