Soon-to-be SMACNA President Mark Watson (left), with brothers Peter and John in front of Climate Engineers Inc.'s headquarters.
CEDAR RAPIDS, Iowa - Mark Watson said it's going to be a balancing act, working as SMACNA president while helping run Climate Engineers Inc., but added he's up for it.

"I think we've got some good things in place," Watson said of the Sheet Metal and Air-Conditioning Contractors' National Association's programs. "I think we're doing some great things with the SMWIA and market expansion."

Watson, 52, becomes SMACNA president Oct. 1, at the end of this year's annual convention.

For some SMACNA contractors, used to spending most of their time in the office or at a jobsite, the frequent travel the association requires during the yearlong term might come as something of a shock. But Watson is used to change. In fact, he credits it for the success of Climate Engineers, a $17 million, full-service HVAC and mechanical contractor with 130 employees, represented by Sheet Metal Workers' International Association locals 91 and 263, and operations in Cedar Rapids, Iowa, and Rock Island, Ill.

Founded 56 years ago, Climate today has about 40 percent of the Cedar Rapids, construction market, where the company has its headquarters. The company was started by James H. Maloney, a lumber broker who owned several other construction-related businesses. One of Maloney's operations, Green Gable Builders Inc., was a manufacturer of prefabricated metal structures. Climate was created as a metal-forming operation to supply the metal for Green Gable's construction projects.

Climate Engineers' main location in 1963, near downtown Cedar Rapids, Iowa

A family operation

Although Climate had different people responsible for its day-to-day operations from 1947 to 1953, for most of its existence - and all of its growth - a member of the Watson family has headed the company, which is why Mark Watson considers it a family corporation. Today, three Watson brothers - President John Watson, Vice President Peter Watson and Mark, who serves as secretary and treasurer, run the company.

"We've each got our own areas of expertise," Mark Watson said.

Watson's background is in business, having graduated from the University of Iowa in the early 1970s. After moving to San Francisco following graduation, Watson returned to Iowa in 1975 to help run the company when his father, John, who had supervised Climate since the early 1950s, was diagnosed with cancer.

Under Watson's father, the company experienced several changes. In its earliest years, Climate concentrated mostly on residential heating and installation. Receipts in 1953 totaled about $105,000. But the growing popularity of residential and commercial air conditioning in the post-World War II era convinced John Watson and other company officials to enter the cooling and ventilation markets as well. Around 1959, the company left the residential marketplace to focus on commercial and industrial work.

Climate's past projects include the business college at the University of Iowa.

Big-time jobs, clients

Major commercial clients during the next decade included the University of Iowa, Mercy Medical Center and Merchants National Bank.

By 1975, Climate had approximately 20 employees and $900,000 in annual sales. One particularly large project around this time was the Stouffers Hotel - now known as the Crowne Plaza Five Seasons - and an adjacent arena in downtown Cedar Rapids. In 1977, Climate was hired to make and install 150 tons of ductwork and new HVAC systems in the landmark buildings. It took more than two years for Climate employees to install all of the large-diameter duct the buildings required. And in the case of the arena, the job meant working more than 100 feet off the ground.

By the end of the 1970s, with the U.S. in a recession, Climate again changed its focus, this time concentrating more on industrial projects from clients such as General Mills and Quaker Oats.

"It's served us well over the years," Watson said. "If one market was down, the other one might be up.

"It eliminates the roller coaster type of thing."

In 1982, in another high-flying project, the company made and installed the duct for a $1 million heat-recovery project for the Hubinger Co. in Keokuk, Iowa. The flue-gas duct system was installed 1,000 feet above the roofs of the 15 plants. Duct ranged from 48- to 68 square inches. The ductwork, made with 10-gauge steel plate and stiffeners, was shipped and erected in 25-foot sections, which had to be lifted into place by helicopter and bolted together. The system used 49 structural steel supports that were also made by Climate workers..

'Survival mode'

Today, the company's fabrication and installation work is mostly industrial and commercial, with about 10 percent of the company's time spent making heavy-gauge metal products for other contractors.

Like many in the construction industry, today Climate finds itself in what Watson calls "survival mode" - trying to stand out amid ever-increasing competition and make money amid ever-decreasing profit margins.

"You've got a heck of a battle going on these days," Watson said. "In order to bid work, you've got to bid low. If you make a mistake, it's going to cost you money."

With profits continuously squeezed, in 2001 company officials decided to implement a "lean production" process in his sheet-metal shop. Lean production is a work-flow method designed to eliminate waste and employee inactivity. Originally estimated to cost less than $40,000, the company eventually spent more than $250,000 to rearrange its HVAC shop, even moving it to a different building.

Although there was much grumbling when they started, "By the end of the process, there was not one person who said that was not money well spent," Watson said.

Such changes are what Watson hopes will make Climate a $25 million operation in five years.

"I think the key is that you have to become better at what you do, because the market is not going to let you increase your pricing," he said.