Fuel costs just the latest to hit sheet metal industry
First it was the economy, then steel prices, and then it was $2.25 a gallon for gas.
It seems like sheet metal and HVAC contractors are experiencing their share of challenges these days.
During the last few years, businesses have had to keep coming up with creative ways to keep money coming in - and in some cases, just keep the doors open.
In the course of doing research for our story on fuel prices and their effect on industry contractors, I discovered that they haven't crippled sheet metal businesses as much as some others.
But for all the grumbling from contractors I talked to, no one said it was as serious an issue as steel prices, for example. Maybe after the rapid run-up in steel costs during the last two years, fuel seems like a small problem.
It's reminds me of what Peaden Air Conditioning's Robert Wilkos told me: many people, especially homeowners, not understanding what all goes into running a successful HVAC company. Cost pressures are a constant in many industries, and sheet metal is no exception. Perhaps contractors are lucky in that gasoline is one expense that can be partly passed along to customers, at least in some cases. Other expenses aren't so easy to explain or cut.
I was surprised at the different approaches contractors took to the fuel problem. Obviously, no two markets are the same, and what works for residential contractors is seldom applicable to high-volume commercial outfits, but the different answers still surprised me.
For Wilkos in Panama City, Fla., surcharges don't work. They generate too many complaints. He finds it's easier to raise his overall service charges, although he added that the company absorbs many additional expenses.
A few years ago, many hotels in the Western U.S. had a similar experience. California was suffering from blackouts and the region's electricity demand was at an all-time high. Many hotels started adding an "energy surcharge" to room bills. These $3 to $5 fees were listed as a mandatory expense on many bills. Hotels chose to add the fee instead of simply raising the standard room rate.
A number of travelers, myself included, were surprised when they were told about the additional fees when arriving at their destinations. Some hotels waived the fees for those who complained; others didn't.
There have been lawsuits filed over the added charges. While I'm not sure suing over an additional $3 a night is the right solution, I've always been mystified by such fees. While changing rates after a contract has been signed is unethical and sometimes illegal, I've never understood why adding a line-item surcharge due to fuel, energy costs or whatever, is preferable to a slight hike in basic service charges.
Most homeowners, even those who quibble over an additional $3 fuel fee, probably would not say much if overall rates went up a small amount.
I also found it interesting that several contractors I spoke to said such surcharges aren't fully covering their added expenses and they're looking for other ways to save. Some are limiting the amount of cargo they carry and telling supervisors to take more fuel-efficient vehicles if possible.
Steve Graves of the Du-Mont Co. in Peoria, Ill., asked me if anyone knew exactly how cargo weight relates to fuel consumption, such as a formula contractors could use. Obviously a full truck uses more weight than an empty one, by just how much? It was a good question I wasn't able to answer.
Readers, maybe you can help me out. Do you know how much weight impacts fuel efficiency, especially in service vans and trucks? What are you doing this summer to keep fuel costs down? Write me at BNP Media, Snips magazine, 2401 W. Big Beaver Road, Suite 700, Troy, MI 48084. You can also e-mail me at email@example.com. I might use the responses in a future issue.