If it's not one thing it's another. Just when it looked like the clouds were clearing, a new storm appears on the horizon.
After nearly three years of the pandemic COVID was finally under control. The the federal government gets the big infrastructure deal done putting potentially billions into the mechanical contracting pipeline—but then the supply chain goes from bad to worse, and with it inflation starts to skyrocket. Just when you're ready to bid that big new job coming up with an accurate bid is suddenly like hitting a very small, rapidly moving target.
The nation's largest mechanical contractors have all had their supply chain woes, but most of them have found ways to cope, and even thrive in these uncertain times. Here are stories about how three of our Giants have found ways to innovate, strengthen their relationships and find new pathways to success.
C.J. Erickson Plumbing Co.
Light at the End of the Pipe
While plumbing supplies have been mired in delays over the past two years, Chicago-area C.J. Erickson Pluming Co. has seen improvements for inventories and lead times.
ALSIP, IL — When you’ve been in business since 1906, you’re doing something right, for a long time. A Great Depression, recessions, and most recently a pandemic are some pretty significant historical economic shifters that Chicago-area stalwart C.J. Erickson Plumbing Co. has overcome.
Luckily, C.J. Erickson has seen minor supply chain issues—delivery delays—for specialty plumbing items and mostly equipment, as the company has purchased and taken delivery of certain orders to lock in pricing. “Luckily, we have not had much issue with acquiring bread and butter items recently. Pricing of materials is another story,” says Erickson.
'Staying fluid and nimble during times of chaos and uncertainty turned out to be a great philosophy.'
Erickson explains that while the company lost money on certain jobs due to old estimated material costs being less than the actual costs at time of purchase, the damage was limited to small dollar amounts. “Our estimating software is updated frequently with material list price changes as fast as they are announced and our bids are valid now for 30 days or less depending on the scope of work and bid-date schedule,” says Erickson.
Nevertheless, supply chain issues were the hot topic over the last year, and some contractors and owners/architects were not asking questions about supply chain. “At this point we are experiencing good communication from most contractors and owners/architects regarding supply chain issues. They are asking way up front in the bidding process about potential issues and we are communicating as much as we can as soon as possible,” says Erickson.
“There is light at the end of the pipe,” says Erickson who believes that price increases are going stop to some extent. However, speculation amongst peers, says Erickson, is that pricing will not decrease in the near future. According to Erickson, only demand in the building industry will lead to price softening.
And while supply chain issues have dominated the headlines for the better part of the last 12-18 months, “Unfortunately, we’ve been working harder for less margin over the last couple years. I attribute most of the challenges to pandemic-related issues of uncertainly around short- and long-term opportunities for work.”
Although Erickson says the company operates in the union construction market, they are not seeing much of a shortage overall. “There are challenges finding qualified plumbers for commercial and residential service work in both the union and open-shop market. For the Chicago metro area, the last two years have been steady with minor ups and downs in hours,” says Erickson.
As far as streamlining business operations over these difficult past couple of years, “We started expanding our use of the Microsoft 365 product suite as the pandemic hit in April of 2020 and we started using Microsoft Teams and Power Apps in April of 2020 to communicate with employees working remotely and get daily COVID illness reporting. In late 2020, we started using Trimble Earthworks for our utility work excavating,” says Erickson.
Emerging from the pandemic, Erickson looks back over the past two years and attributes company flexibility as a key component to future success. “Staying fluid and nimble during times of chaos and uncertainty turned out to be a great philosophy,” says Erickson. “We learned with each new wave and circumstances and are confident that we can easily deal with anything new that Covid throws at us."
McKinstry
Waste Not, Want Not in the Pacific Northwest
Seattle-based mechanical contractor McKinstry—with offices across the country—is working through supply chain complexities to navigate forward with continued growth.
SEATTLE, WA — To say that supply chain issues have taken over headlines in the P/HVAC industry would be a gross understatement. Interestingly, though, McKinstry has been fortunate enough to have been able to grow during these challenging times. It is a testament to the ingenuity of its people that the company was able to find opportunities in the challenges and ways to continue to deliver the best possible outcomes for its clients.
“Across the board, we are refining cost-reduction strategies, purchasing methods, and resource management to streamline our processes from engineering to installation to deliver the highest value supply chain solution for our customers,” says Brian Fisher, Director of Supply Chain, McKinstry.
Moreover, McKinstry is seeing the need to build more resiliency in its supply chain and to find efficiencies that allow it to deliver value to its customers. While the company should expect to operate under the current supply chain struggles for a while, “We need to build upon the lessons we learned and find new and innovative ways to drive waste out of our processes. The global economic conditions exacerbating these issues are complex and will take time to figure out,” says Fisher.
McKinstry leverages its relationships with suppliers to help manage expectations with its clients and offer them solutions to the supply chain issues as they arise.
In part, McKinstry’s success has been through a proactive approach as it started building systems before the pandemic to get organized around the supply chain, manufacturing, pre-construction and sales. “We recognized the importance of being able to internally flow information on shortages, products, news on increases in costs or schedule, delays, or other topics that might impact our clients. Because of this, our teams were able to build strategies and make decisions on how to buy material and manage the supplier landscape, mitigating the impact on our customers,” says Fisher.
McKinstry recently implemented a new shop management platform to manage the day-to-day flow of orders, understand true cost, and connect our network of shops and the end-to-end supply chain from order to installation. “The real-time operations data allows us to make the most of our manufacturing capabilities and provide high-quality, low-cost goods to our customers,” says Fisher.
Finally, recruiting and retaining a high-quality workforce is a competitive environment. It is becoming increasingly critical to create a working environment that makes people excited about the work they are doing. “McKinstry’s PeopleFirst Work program is a hybrid approach that allows us to preserve our collaborative culture while offering our employees the flexibility to balance their needs with the needs of the business,” says Fisher.
The road hasn’t been without its fair share of bumps as of late, but McKinstry continues to evolve in ingenuity and innovation, its people and its commitment to the environment. “We are looking forward to building on our lessons learned and driving the waste and climate harm out of the built environment,” says Fisher.
Southland Industries
Certainty of Outcome, In Uncertain Times
Southland Industries, which specializes in MEP building systems, exemplifies the importance customer and employee steadiness through trying times.
WASHINGTON, DC— Business has been strong, says Jim Meacham, Division Leader, Mid-Atlantic Division, Southland Industries. “Sure, we have had some down sectors, but overall, it has been a strong year,” continues Meacham.
From a supply chain issue perspective, it is going to be a few more years before things begin to settle down. This may seem like a long time, says Meacham, but there is a lot to work through, including the balance of supply and demand for materials, shipping durations and bottlenecks, and labor shortages that are all contributing to this bumpy ride. “As a design-builder, having the ability to offer alternative engineering solutions that meet our customers' requirements is paramount in the speed-to-market equation,” says Meacham.
'It is important for your customers and employees to remain steady, and we are very appreciative of all our employees who have been on the front lines.'
Southland is well positioned to plan around any disruptions in the supply chain by designing projects based on product availability and fabrication resources. In addition, the company is engaged with national purchasing groups that source products where they are available for the most competitive rates to support its clients.
In addition, part of the overall solution is communicating with and listening to clients. “Listening to and understanding the business problems our customers are trying to solve are critical to our daily lives, so we know how to focus our program and project teams. This ensures we are working toward a solution that ultimately supports our clients’ business, which is critical in dynamic environments like the one we are in,” says Meacham.
Southland is in the “certainty of outcome” business, and this year was just another example of how its employees have delivered on these commitments. “It is important for your customers and employees to remain steady, and we are very appreciative of all our employees who have been on the front lines providing a steady hand to our clients and field forces to maintain continuity during this challenging time,” says Meacham.
Giants in the News
Andy J. Egan Co., Grand Rapids, MI
Mechanical contractor and fabricator Andy J. Egan Co. (Egan) was named West Michigan’s Top Area Specialty Contractor by the Grand Rapids Business Journal, which ranked area contractors in its Feb. 7 edition. Egan employs more than 300 skilled trades personnel. Recent major construction projects in the West Michigan region include Graphics Packaging, Mel Trotter, Ministries, Grand River Aseptic Manufacturing and. In addition, the Feb. 16 edition of the Wall Street Journal included a list of the nation's top employers, as evaluated by the National Association for Business Resources. Egan was listed as one of the Top 101 Companies in the Nation.
Dunbar Mechanical, Toledo, OH
Dunbar Mechanical helped sponsor the Day of Hope, the culmination of a week-long campaign in support of the Toledo Trauma Recovery Center. The Mercy Health – Toledo Trauma Recovery Center (TRC) was established in 2019 as a result of a grant from the Ohio Attorney General’s Office and with help from Mercy Health. The TRC provides mental health care and victim advocacy for victims of crime and their families, as well as support in the form of emergency housing, transportation, food, and clothing.
EMCOR Group, Norwalk, CT
For its first quarter results, reported on April 28th, Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “The Company posted record first quarter revenues reflecting year-over-year growth in all segments even in a very difficult operating environment. We continued to deliver for our customers, achieving revenue growth of 12.5% during the quarter, 10.4% of which was organic, led by double-digit growth in our U.S. Electrical Construction, U.S. Building Services, and U.S. Industrial Services segments. Operating margin contracted to 3.9% of revenues as we navigated challenging supply chain and COVID-related impacts.”
E. M. Duggan, Canton, MA
E. M. Duggan held a clothing drive to support Ukrainians during the Russian invasion. Ukrainian soldier Maxim Hetmanchok, wounded in the war, received an E. M. Duggan T-shirt during his recovery that he called, “A hug from people in the US,” in a letter thanking the company.
Harris, St. Paul, MN
Michel Michno, CEO, Harris, spoke at Advancing Prefabrication 2022, a thought-leadership conference held in Phoenix, AZ April 26-29. In the run-up to the event Michno said, “The biggest challenge is securing buy-in for prefabrication. It starts with convincing business units’ leadership and must continue with project leadership. The obvious benefits associated with prefabrication of safer, better, faster, and cheaper require new processes or existing processes happening at different times.”
John W. Danforth Co., Tonawanda, NY
Throughout the month of March, Danforth celebrated Women in Construction with a special workshop event. Women in the office, fields and shops had the opportunity to participate in a workshop on mindfulness, facilitated by wellness coach Lindsay Amico of Picture Perfect Mind. For the second year in a row, the company also highlighted some of our its women in construction with WIC Spotlight features. “It is great to really get to know some of the women of Danforth and tell the story of their journey. We know there are plenty of opportunities for women in construction and we have the ability to highlight some of our colleagues to a larger audience,” said Christina Crane, Marketing Specialist.
Limbach Holdings, Warrendale, PA
Limbach CEO Charlie Bacon attended the 34th Annual ROTH Conference from March 14 – 15, 2022. The conference is one of the largest in the nation for small-cap companies, and is noted for on-demand presentations by executive management from approximately 400 private and public companies in a variety of growth sectors. Bacon was available for one-on-one meetings throughout both days.
Murphy Co., St. Louis, MO
Murphy Company recently closed on the asset acquisition of State Mechanical. State Mechanical is based in St. Louis and has provided refrigeration construction and service expertise since 1991. In its 30 years in business, State Mechanical has provided installation and support of essential refrigeration systems. State’s additional expertise and resources complement Murphy’s long-standing refrigeration offering.
TDIndustries, Dallas, TX
TDIndustries, Inc. earned an Eagle Award, Pyramid Award and Safety Excellence Pinnacle Award from Associated Builders and Contractors (ABC). The awards were presented at the 32nd annual Excellence in Construction® Awards during the ABC Convention 2022 held in San Antonio, Texas, on March 16. The Excellence in Construction awards honor all construction team members, including the contractor, owner, architect and engineer. The winning projects are judged on complexity, attractiveness, unique challenges overcome, completion time, workmanship, innovation and safety.