Mr. Waterheater keeps Pittsburgh market hot

BY BOB MIODONSKI OF CONTRACTOR'S STAFF PITTSBURGH Using a variety of marketing methods, Mr. Waterheater sells and delivers from 400 to 500 water heaters per month in the Pittsburgh area. "We hit everybody on everything TV and radio commercials as well as print ads in the Yellow Pages, Yellow Book and local Penny Saver," President John Sembower Jr. told CONTRACTOR. "Our catch phrase is Keeping Water

BY BOB MIODONSKI
OF CONTRACTOR'S STAFF

PITTSBURGH — Using a variety of marketing methods, Mr. Waterheater sells and delivers from 400 to 500 water heaters per month in the Pittsburgh area.

"We hit everybody on everything — TV and radio commercials as well as print ads in the Yellow Pages, Yellow Book and local Penny Saver,"

President John Sembower Jr. told CONTRACTOR. "Our catch phrase is Keeping Water Hot. We have a new trademark on it. It's printed on everything, and it's on our Website, mrwaterheater.com."

Mr. Waterheater has run commercials on TV for five years, both on WTAE, which is local Channel 4, and Comcast Cable. New commercials are scheduled to air in mid-June. The radio spots are broadcast on news and talk station KDKA, mostly during morning drive time.

The advertising helps to keep Mr. Waterheater's name in the minds of consumers in a market where The Home Depot and Lowe's are among the contractor's biggest competitors.

"Home Depot advertises the most," Sembower said. "But their service can't compete with ours. We all put in a lot of time and effort. We make sure that everybody can take care of their job — from the person answering the phone to the installers."

The big-box retailers also can't compete on price.

"We're the lowest prices in Pittsburgh," he said. "We're from $50 to $80 lower than they are."

Like other contractors that sell water heaters, the company has had to raise its prices in the last couple years due to increases in the cost of equipment tied to changes in technology and energy efficiency. Government regulations prompted new technology as of July 1, 2003, that made all conventional 30-, 40- and 50-gal. gas atmospheric models resistant to ignition of flammable vapors.

On top of that change, new requirements in the National Appliance Energy Conservation Act increased minimum efficiency standards by 10% for gas water heaters and 5% for electric models. Further cost increases were experienced in the cost of steel and other raw materials.

" Prices really have increased, and we have to pass along our cost increases to our customers," Sembower said. "We work on a very high volume to maintain our profitability. We also sell extra things like expansion tanks when they're needed."

Two years ago, customers of Mr. Waterheater paid less than $300 for a 40-gal. water heater installation, he said. Now with all the changes, it's about $430, installed.

Mr. Waterheater operates seven trucks in a company that bills more than $2 million per year, primarily in retrofit, replacement, delivery and service. The company installs-most of the water heaters that it sells, but it also delivers units that are installed by builders and building owners. In addition, the contractor does after-sale service work for Home Depot and on units installed by other contractors. It does no new construction.

The contractor charges flat-rate prices for its services and pays its installers on commission, Sembower said. Mr. Waterheater's primary brand is Ruud; its secondary brand is Bradford White. Along with water heaters, the company sells expansion tanks, water pressure regulators and backflow preventers, which are being required more frequently by local codes, he noted.

Sales are weighted heavily toward the residential market, but the contractor is taking steps in commercial replacement too. The company will install close to 30 commercial water heater replacement units this year, Sembower said.

The company has 12 employees, including the five owners. Along with John Sembower Jr., brother Scott Sembower is treasurer, brother-in-law Richard Navari Jr. is vice president and sister Debra Navari is secretary. Another sister, Terri Allison, also works in the business.

They got their start in the plumbing business — as well as their values — from parents Donna and John Sembower Sr., John Jr. said. In addition to Mr. Waterheater, the family owns Sembower-Mikesell Inc., a full-service plumbing, heating and air conditioning business. John Sembower Sr. is the majority owner of that business, although he recently retired.

Mr. Waterheater's service level and pricing are helped by the family's ownership of a plumbing wholesale business, Weiser-JIMCO Distributors. The family bought the wholesalerin 2001, three years after the acquisition of Mr. Waterheater from its original owners, who had started it in 1981.

Today, Mr. Waterheater stocks 300 to 400 water heaters in a 6,000-sq.-ft. facility, which is mostly warehouse. JIMCO has 200 to 300 units in a 3,000-sq.-ft. warehouse.

" We're outgrowing both buildings and thinking of putting them together," Sembower said. "We're looking at a building of just over 12,000 sq. ft."

Mr. Waterheater buys product from JIMCO as well as from local wholesalers such as Pittsburgh Plumbing & Heating Supply and Robertson Heating Supply. Likewise, JIMCO sells to other contractors, who initially were reluctant to buy from a supply house owned by a family in the contracting business.

"We took care of them with special pricing and service, and they came back to do business with us," Sembower said. " About 95% of our wholesale business is with plumbers whereas the former owners used to sell to homeowners too."