SMACNA convention update
World class manufacturing can mean many things. Here it was defined as the systematic elimination of waste.
In tough economic times, it is more important than ever to scrutinize your way of doing business. Competition, while always there, can become even more brutal in a recession. Every job you lose, every dollar you waste, impacts your bottom line.
Consultant Kim Dixon, Technical Change Associates Inc., offered SMACNA conventioneers a thoughtful peek inside lean manufacturing in an hvac environment.
To control costs in a tough economic climate, ask yourself: Is this something that the customer would be willing to pay for? Better yet, ask: Does this activity change the form, fit, or function of the product?
Any activity that does not add value is a waste that only adds cost.
Waste comes in many forms, according to Dixon: too much complexity in a simple operation, for one. Producing too many parts or products. Too-high energy bills. Unused space within the shop. Defects that lead to scrappage.
Too many shop owners find themselves in the first stage of “waste awareness” — in fact, they’re unaware. It’s easy to say, “All our operations are necessary; they can’t be improved upon.” While easy, this kind of an attitude can make people blind to their surroundings.
The beginner knows enough to believe improvements can/should be made; an intermediate stage considers other activities that are wasteful. But an expert recognizes that waste occurs in many areas, and questions the entire processing method.
Lean manufacturing uses time as a competitive weapon. Lean manufacturing is based on continuous improvement. Lean manufacturing:
- Is the only production system known that is designed to continually change. Lean manufacturing exposes paperwork (especially job orders) as an intolerable waste of time.
- As lot sizes are reduced, paperwork increases. Orders, change orders, scheduling, and expediting makes impacts on purchasing and accounts payable.
Are you ready to be a custom fabricator?Profit Management Consulting Inc. addressed sheet metal contractors who are considering operating custom metal fabrication shops, as opposed to hvac ductwork fabricate-and-install.
Alex Cunningham of PMC, said many contractors have made a successful transition, but many more are doomed to failure if they’re not careful.
“The first and foremost thing to remember is to not try and accomplish work that you and your equipment are ill suited for,” he said. He urged identifying the market segments that you want to work for, your competition in those areas, and any obstructions to entering this market.
Ask yourself: do you want to serve other hvac contractors? What other industries use formed light metals and lightweight structural members? Who have you done work for in the past? Who has asked you to quote work in the past? Who in your organization, if anyone, has the skills to solicit metal fabrication work? Who is currently serving these selected markets? Who in your organization is capable of pricing your services competitively and profitably? What must you do to advertise and promote your services? Should you separate your shop from any remaining hvac contracting business you intend to keep?
Once you have defined your role, Cunningham suggested the following:
- Make a realistic assessment in terms of personnel to transition from a duct and plenum builder to a reasonably full service fabricator.
- Do not go out and purchase technology to get you into new markets until you are certain that the market is available and you can gain entry.
- Be certain you have the communications necessary in your operation to engineer your quotes towards profitability (that is: be certain your estimator and shop foreman or production manager can sit together and figure out the operations sequences and machine routings necessary to accomplish the work in your shop, with your personnel, in a competitive manner.)
- Be willing to look for low tech, more labor intensive solutions to fabrication challenges when you are first bidding repetitive, high volume parts.
- Know what your labor, machine and burden rates are before you begin bidding work. Failure to have these numbers right will either lead you to get too much work at no profit or be non-competitive in the marketplace.
- Be certain that you have a simple, repeatable method for quoting work that ensures you always know the truth about how much it actually costs you to perform the work.
- Have a plan for acquisition of new and replacement equipment that allows you to remain competitive in the market as you grow.
Cunningham also advised performing a complete inventory of your equipment to assess it condition. Then be realistic about what repairs, maintenance and replacements you will need. Don’t panic! he concluded. “Establish some realistic goals, figure out in detail how to achieve those short term goals and then go forth and work that detailed plan to get that work. Do not take work just to fill the pipeline if it is not moving your plan forward.”
Customer service issuesThe Service Contractors Forum featured Tom Mikulina, vice president of industry relations for the Trane Co.’s Worldwide Applied Systems Group. His presentation, “The Challenge of the Future: Service Contracting in the First Decade of the 21st Century,” focused on the changing hvac market. Mikulina said the growth sector for the near future will be in replacing hvac systems in existing buildings. With the slowing economy, he said new construction would continue to decline as more companies decide to renovate. And with building managers earmarking a significant portion of their renovation budgets to hvac systems, Mikulina told the contractors, “Buildings exist for one reason: to make people comfortable. You have an opportunity to create a market, if you are open to it.”
He spoke about some of the challenges the hvac industry will face in the coming years, such as the push by some environmental groups to ban all synthetic refrigerants. But while such outside challenges are significant, Mikulina also reminded contractors of the roadblocks the industry erects itself. “The problem is our industry is slow to pick up new products,” he said. “Stay alert to things that could differentiate your firm, because you could make money from it.”
Mikulina’s talk was followed by “Trends and Innovations in Commercial Service from a Contractor’s Perspective,” a marketing-oriented discussion given by hvac industry consultant Ruth King. In a wide ranging presentation covering everything from marketing to management techniques, King told the audience successful employee management comes down to knowing how to make the “really tough decisions.”
She related the story of an hvac business owner who was forced to make the difficult decision to fire all of his residential service technicians. “You don’t have to be nice; you have to be fair,” she told the crowd. Watch your technicians, she said. In some cases, that may mean purchasing global positioning satellite (GPS) systems to make sure company trucks are used for company business. When dealing with homeowners, King reminded them to make sure every technician knows how to be polite, and male techs learn to communicate with women, since often it will be a woman technicians will encounter on daytime residential service calls.
To more effectively market your company, King said she is a big fan of direct mail to a targeted audience. However, in these times of anthrax spread through the mail, she added now may not be the best time to be sending envelopes. So she suggested postcards, which work just as well and are cheaper to boot.
Sustainable design was one of the topics of the Hvac Contractors Forum, also on Oct. 22. Douglas Mass, president of Cosentini Associates, told attendees that hvac systems have a major role in the sustainable design movement. And making a hvac system more environmentally friendly may be easier than you think, he said. “You don’t have to add a lot to a building. You can use the systems that you have, but use them in a (more) effective way,” Mass said. To that end, he predicted IAQ (indoor air quality) sensors and under floor air distribution will become even more popular as word gets out about these technologies.
Mass’ presentation was followed by Minnesota attorney David Cremons, who offered tips on how contractors can stay out of court and on the job.
“It’s really amazing that more projects don’t end up in court,” Cremons said. But contractors can greatly reduce their chances of ending up there by following a few guidelines:
- Know your employees and hire good supervisors. “The most frequent triggers of lawsuits are personal injuries and property damage,” so having quality people will minimize the chances of either occurring, Cremons said. “If you are unsure of the people you’re working with, include that in your price,” he added.
- Understand the source of project funding.
- Don’t be afraid to modify the contract.
- Tie your subcontractor payment schedules to when you get paid.
- Get insurance for design liability.
These steps won’t guarantee you’ll stay out of court, Cremons told the audience. “You can get into situations, just because everyone’s paranoia has increased.” If you do find yourself in a lawsuit, he suggested a few business practices you can implement that will make it less painful:
- Since so much communication is done via e-mail these days, keep records of e-mail conversations. “The old days of the written document that you handed to someone are gone.”
- Keep copies of faxes with the date and time it was sent.
- Take pictures of the project as it progresses.
And if you do all that and it still ends badly, Cremons gave this advice: “Worse comes to worst, you can always blame it on the lawyers.”
Architectural metals do’s and don’tsMore and more, durable, aesthetically-pleasing metal is being used on building exteriors. While rugged and long-lasting, there are nevertheless many pitfalls awaiting the unsuspecting or inexperienced architectural sheet metal contractor in working with some of these metals. Metal performance varies significantly with the application and the environment.
Selection and specification of architectural metals was the topic of a talk at the Architectural Forum given by Catherine Houska, Technical Marketing Resources, Pittsburgh.
A complete report can be found in the report “Stainless Steels in Architecture, Building and Construction” prepared by the Nickel Development Institute, which includes the following tips:
cEvaluate the environment and probable cleaning regime to determine the likelihood of accumulated deposits and air pollutants such as soot, iron oxide particles, sulphur dioxide, and salt exposure before selecting the stainless steel grade.
cUse a design that allows rain to rinse away surface deposits.
cSpecify a higher grade of stainless steel in sheltered areas that are not washed regularly.
cMinimize crevices in areas exposed to moisture and/or aggressive corrodants.
cUse a stainless steel fastener with equivalent or higher corrosion resistance than the component being fastened.
cNever use carbon steel brushes or steel wool on stainless steel. Use stainless steel brushes or soft-bristle brushes made of an inert material.
cNever use hydrochloric or muriatic acid on or around stainless steels. If muriatic acid is accidentally splashed on stainless, it should be washed immediately with large quantities of water before the acid severely damages the stainless steel.
cDissimilar metals should be electrically isolated from each other in applications where they may get wet. This can be achieved using inert washers, protective coatings like paint, and other physical barriers that prevent direct contact. Dissimilar metals should be avoided in applications where standing water is likely and it is not possible to insulate the metals.
cIf the design requires welding sections heavier than about 0.25 inches (6 mm) and the weld area will be exposed to a corrosive environment, use low carbon versions of the stainless steel (e.g., 304L or 316L) to reduce the risk of sensitization and improve weld corrosion resistance.