HVAC and Plumbing Contractors
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Industry Overview
The US HVAC and plumbing contractors industry includes about 88,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $140 billion. Major companies include Comfort Systems USA, EMCOR Group, Rescue Rooter (owned by American Residential Services), and Roto-Rooter (owned by Chemed).
Competitive Landscape
Demand for services depends partly on new residential and commercial construction. Demand for maintenance and repair work on existing structures is also substantial. Profitability depends on the volume of work a company can acquire, since most costs are fixed. Larger companies may have a competitive advantage in winning projects that require both design work and installation and in serving businesses with facilities in multiple markets. Small companies can compete by specializing in individual markets and by focusing on customer service.
Products, Operations & Technology
HVAC contractors install and service furnaces, air conditioning (AC) units, and refrigeration systems, and the associated ductwork, pumps, and control units in residential and commercial buildings. Some shops fabricate their own sheet-metal ductwork. Technicians are trained on installation and repair but often specialize in one or the other.
Plumbing contractors install bathroom and kitchen fixtures and the associated pipes in residential or commercial buildings, and may also install gas appliances and pipework.
HVAC and plumbing companies usually specialize in either commercial or residential segments, as the work differs fundamentally. Within both segments, revenues are further split between installation and maintenance; commercial companies usually do both, in many cases providing continuing maintenance under long-term service contracts.
For installation work, companies buy equipment such as furnaces, coolers, and air conditioners from distributors. Major equipment is custom-ordered for each project. Some sophisticated HVAC systems incorporate computerized monitoring and control components. Compressors, chillers, blowers, and other equipment are bought from manufacturers like Carrier, Trane, and Honeywell. Most materials are bought from specialty distributors like True Value, Graybar, and WESCO, or from home improvement centers like Home Depot and Lowe's.
Most residential companies perform maintenance, repair, and replacement work. There are about 60 million central air conditioners and 110 million furnaces in US homes. Maintenance, repair, and replacement of these units generate about $30 billion in annual revenue.
Many plumbing and HVAC companies use project management software written specifically for their industry. This software helps contractors coordinate their schedules with a general contractor, other subcontractors, and suppliers. Customer relationship management (CRM) system allows contractors to maintain contact with customers to ensure repeat business such as maintenance business. It also allows the contractor to track installations and offer reminders for maintenance or updates.
