·
34 minute read
"Everything we're doing is just solving problems that we have," Hal Smith says. That's how the plumbing, HVAC and electric company he started in 1984, at 22, became Halco Home Solutions. Today Halco has a couple hundred employees, four offices across upstate New York, and around $40 million a year in work.
It's also a business private equity wants. Hal gets something like ten calls a week from firms looking to buy, and he keeps turning them down. On his second appearance on The Heat Pump Podcast, he explained how Halco got built, why he won't sell it, and how his crews commission heat pumps in January.
Every new service started as a problem on a job
Halco's growth rests on a decision Hal says he got right early: putting customers on monthly maintenance agreements paid by electronic transfer. Halco now has more than 10,000 of them. When it launches a new service, an email goes out and the phones light up.
The services came from problems on jobs:
- Basement waterproofing: Many of the houses Halco air-seals date from the 1800s, with dirt crawlspaces and laid-up stone foundations. Tightening them up made basement moisture the next problem.
- Gutters: These followed, and Halco sells them only when they're causing a moisture problem.
- Land clearing: Forestry attachments on its excavators now clear overgrown land for ground-mounted solar in a couple of hours.
- The supply house: Even PBS Supply started as a storage problem. Among its customers are former Halco employees who started their own shops, including Hal's brother. Hal calls it his way of "getting it back a dollar at a time."
Hal is quick to say he didn't think of all this himself. Joining Dr. Energy Saver put him in trainings alongside basement waterproofing companies. He's also clear about the timeline: it took 42 years, and nobody should expect to do it in two months.
After a sale, the gray warranty call stops going the customer's way
Hal's reason for staying independent is specific. Some of his customers had their boiler or furnace installed by Hal himself forty years ago. After a sale, he says, warranty claims that fall in a gray area get decided by whoever is watching the balance sheet, and they don't get decided in the customer's favor. The tech who always covered the gray call now has to tell that customer they're paying.
Hal sees the result in his own hiring. Techs and salespeople who don't want to deliver that news leave the companies that sold, and Halco is glad to take them.
Talent moves in both directions
Halco is losing people too. Hal says a few employees have left for the unions, especially the electrical union. The union is recruiting hard for data center construction and a push to finish solar farms, at prevailing wages Halco can't match. Two years ago, he says, this wasn't happening.
One detail makes Halco easier to recruit from. Hal says it's one of the only non-union contractors in New York with state-registered apprenticeship programs: HVAC, plumbing, electric, and energy efficiency technician. Registered apprenticeships are public record, so anyone recruiting can see who is enrolled. Most of his people stay, Hal says, but some offers double their pay.
What travels outside upstate New York
Most contractors won't build a Halco. But three of Hal's moves work at any size. First, build a recurring customer base before you add services, because marketing to customers who already trust you is far easier than finding new ones. Second, add a trade when the same problem keeps showing up on your jobs. Third, join organizations like the Building Performance Association, where people who've already done it will show you what to do and what not to do.
Timestamps
[00:00] - Introduction
[03:22] - Meet Hal Smith and Halco Home Solutions
[06:09] - Employees for Life, Customers for Life
[07:40] - Why Hal Hasn't Sold to Private Equity
[13:20] - Competing for Skilled Tradespeople
[21:37] - Why a Contractor Became an HVAC Distributor
[26:46] - Cold-Climate Heat Pump Technology and Midea
[32:13] - The Future Is Whole-Home Performance
[36:22] - How to Build a Home Performance Business; One Problem at a Time
[44:06] - Closing Remarks
Connect with Hal Smith:
- Email: hal@halcoenergy.com
- Company: https://www.halcoenergy.com/
Transcript:
00:00:00.000 — 00:00:55.680 · Speaker 1
Every time I sit back and watch some of the shenanigans that some of the private equity firms are using, it just reinforces why I don't want to be part of that game. I value my customers. A lot of those customers, I put their boiler in, I put their furnace in myself 40 years ago. I'm not going to sell them out, and I'm certainly not going to sell my employees out.
And that's what happens with a private equity. Well, it sounds all rosy in the beginning. And then all of a sudden, that warranty situation, it might be a little gray in color comes up and it never gets ruled in the customer's favor ever. Because we're watching the balance sheet every day. And then that poor employee that working for the original company knew that they would always cover a warranty if it was gray in color.
Now they've got to sit in front of the customer and say, we're not going to cover that. You have to pay. And so that puts that employee in a very awkward spot. And I've just decided I'm not going to do that.
00:01:00.050 — 00:03:50.800 · Speaker 2
Hey everyone. That is Hal Smith on why he won't sell. He gets something like ten calls a week from private equity and he keeps saying no. He's also hiring good people away from companies that did sell to private equity. But this is our second conversation with Hal and goes well beyond private equity. Hal was our guest on episode four, and this time get into how he keeps adding lines of business. He owns a supply house and some of his best customers. There are former employees who went out on their own, including his brother. He even bought forestry equipment recently so his crews can clear overgrown land for ground mounted solar. And we asked him the cold weather commissioning question that's been all over the internet lately.
His answer is that it hasn't been a problem for them, and he walks through exactly what they do. We're still learning on cold weather commissioning, but it's useful to hear Hal's view since he's installing heat pumps, a ton of them in upstate New York in January. Okay. One quick side note. Our Denver training with Power Head Colorado is full. We filled the class quickly, so thank you. That one was in person and only open to Colorado contractors. But if you've been hearing about it and you've been curious, our friends at SoCal Edison, the giant utility in California, invited us to teach two of the Denver sessions as free webinars. And so those are open to anyone.
On November 12th, I'm teaching how to build a heat pump sales and marketing motion for high performance contractors from your website and advertising all the way through delivering the quote and getting to yes. And then the next week, on November 19th, Eric is going deep on designing heat pump retrofits that won't come back to haunt you. He'll cover manual J, manual S, some duct evaluation, and things that go beyond manual S, like efficiency and utility bills. There are two separate trainings with two separate registration links. Both are eligible for Nait continuing education units, which is awesome. You register through SoCal Edison's training site, but absolutely anyone can sign up. All right, so check out those links and if you like the show, leave us five stars on your podcast app. All right. With that, on to our conversation with Hal Smith of Halco.
00:03:54.680 — 00:03:57.370 · Speaker 2
Hi, and welcome to the Heat Pump podcast. I'm Ed Smith.
00:03:57.370 — 00:04:00.090 · Speaker 3
And I'm Eric Fitz. We are co-founders of Amply Energy.
00:04:00.130 — 00:04:10.130 · Speaker 2
Today we're delighted to have back Hal Smith, founder owner of Halco in upstate New York. Hal, thank you for being a repeat guest.
00:04:10.170 — 00:04:16.450 · Speaker 1
Glad to be here. And that would be Halco Home Solutions, is what we go by these days.
00:04:16.450 — 00:04:59.220 · Speaker 2
I love it. Indicating the expansion of your guys services that you have been doing relentlessly for the decades you've been in business for sure. Awesome. Now, how you were episode four. So thank you for being a guest on our podcast when we weren't sure there would be an episode five. You're going to be episode 60 something.
I think with this one. So for listeners, we're not going to go as deep into Hal's personal story if you guys want. I highly recommend go back to episode four. It's a super compelling story. But, Hal, for folks who haven't listened to episode four yet, give us the overview of you and how co. So folks have a sense of your extremely remarkable business that you've built.
00:04:59.260 — 00:06:44.710 · Speaker 1
Sure. Quick overview. Started in business in 1984. That makes us here for 42 years. I was very fortunate to get started. At 12 years old, I was on a church youth group trip. The chaperon was a master plumber, took a liking to me. I became his apprentice. I took trade school at the Boces program for plumbing.
My junior and senior year, got out of high school, went right to work for a plumber while taking night school four nights a week for HVAC. Went in business at 22 years old. So 42 years later, that makes me sitting here today, 64 old. We've got a couple hundred people working. We do about $40 million in volume in upstate New York.
We have four offices, two in which we do operations out of. We have our original office out of Phelps, New York, which is exactly halfway between Rochester and Syracuse. And then we have an office out of Ithaca, New York. We're Cornell University, Ithaca colleges, and then the other two offices that we have, one out of Rochester, one out of Syracuse, our sales offices.
We started as a plumbing, HVAC electric company. We started doing insulation and air sealing home performance. We started putting ground source heat pumps in where our first heat pumps, we did those, I don't know, 25 years ago. All of them are still in working, functioning wonderfully. We're doing a lot of solar these days.
We're getting into a lot of the indoor air quality, health, safety. We'll talk more about that. But our business continues to expand. We got a crew of carpenters, crew of electricians, just everything that has to do with fixing old homes. And it all ties together.
00:06:44.750 — 00:07:02.080 · Speaker 2
That's awesome. And from our prior conversations, I know one of your mantras is we're all about that customer for life. Would you just tell us a little bit more about what that means to you, and kind of how that led you to add more and more services over time?
00:07:02.120 — 00:07:57.010 · Speaker 1
If you look at any of the site of our trucks these days, it will say employees for life, customers for life. And those two things we hold very dear. I've done lots of things wrong in the 42 years. Lots of mistakes for sure. One of the things that I did right early on was I started a easy pay maintenance agreement program when all my peers were out collecting $10 partial deposits.
I said didn't know. I put people on a monthly easy pay electronic transfer. And so we've got over 10,000 of those customers now. And I found it. It's a lot easier to market to those existing customers with new services than it is to go out and always be looking and finding new customers. So when we have a new product or new service, we're sending in an email, blast out into the phones, just light up because those customers know us, trust us, like us, because we're doing business with them on a regular basis.
00:07:57.050 — 00:08:54.260 · Speaker 3
If folks haven't been to a conference or had a chance to see how speak in all the different forms that he participates in, I think the other kind of remarkable story of both you and your business is that so many of these things that you've learned either the hard way, the mistakes you've made, or the great ideas that you've implemented.
You have been so generous in sharing those ideas and lessons. And so certainly Ed and I have both benefited from your stories. And that's just it's so fun to talk again today. One story or question that comes up a lot right now in our industry is related to private equity. We've heard from you. I think you get something like 5 to 10 calls a week with private equity looking to buy your business.
There's lots of PE buying up your competitors. Why haven't you sold? What makes you confident that staying independent is the right path?
00:08:54.340 — 00:10:22.200 · Speaker 1
Yeah, well, that's a great question. And we get all of ten a weakness just nonstop. And in the Rochester Syracuse market that I'm in. They were some of the first large customers to sell to private equities a number of years ago. And so it's been around our area for a while now. Every time I sit back and watch some of the shenanigans that some of the private equity firms are using, it just reinforces the way I don't want to be part of that game.
I value my customers. A lot of those customers, I put their boiler in, I put their furnace in myself 40 years ago. I'm not going to sell them out, and I'm certainly not going to sell my employees out. And that's what happens with a private equity. Well, it sounds all rosy in the beginning. And then all of a sudden, that warranty situation, it might be a little gray in color comes up and it never gets ruled in the customer's favor forever, because we're watching the balance sheet every day.
And then that poor employee that working for the original company knew that they would always cover a warranty if it was gray in color. Now they've got to sit in front of the customer and say, we're not going to cover that. You have to pay. And so that puts that employee in a very awkward spot. And I've just decided I'm not going to do that.
We're going to continue to take the hard road. And I don't know if it's a hard road we're going to take. I feel the right road, the right path and do the right thing for the customer and the employees.
00:10:22.240 — 00:10:37.680 · Speaker 2
How that makes a ton of sense. You and I have talked in the past about in places like the warranty, you end up with an edge over private equity. So I'm curious, like where is a private equity owned competitor? Where do they worry you and where do they not worry you?
00:10:37.720 — 00:11:45.970 · Speaker 1
I think certainly they have made us a lot more aware of technology in the fact that we've got to stay on top of our game. Technology wise, it's just you've got to stay on top of your game and we pay close attention to it. AI is a thing. We use AI but use it conservatively and don't get overboard with it. But I think that's where they have the edge.
They obviously have a lot of money, and they've got people that are very technologically advanced with all of that technology though. What I see them doing is falling to old time. I call them shenanigans. They're dressing up salesmen in service techs uniforms, and then they run a special tune and clean on your furnace for $49.
And here comes this slicker salesman in a service tech uniform. And he's not there to clean the tune at furnace. He's selling do it. And that gets around. You can't send a man in a service tech in a truck. We have lots of women service techs, so I correct myself. I should say better to truck. We have some wonderful women service technicians and they have a lot better touch on the details.
00:11:48.580 — 00:11:54.340 · Speaker 2
Oh, man. My wife is gonna love. I don't have to be a clip we put on social media. My wife is gonna love that.
00:11:54.980 — 00:12:04.180 · Speaker 1
Yeah, I think when they do that stuff, you can't put a service pack in a truck and tell somebody here to clean it, too, in their furnace for $49 and not expect something.
00:12:04.220 — 00:12:21.020 · Speaker 3
The technology side, that's more of what you're kind of paying attention to. That's where they might have an edge occasionally. And it's more about this. They're using technology to streamline their operations in across the business as that's the piece that.
00:12:21.060 — 00:13:07.470 · Speaker 1
Yeah, there's some scary things that happen. Two weeks ago we had four different websites, and we had two of them through Google. Get shut down on suspension. No idea. No reason why you fellows know the person that hosts our website? Top notch. Excellent company. Yeah, they can't find a reason from Google and I don't have any proof, but I strongly suspect that there's somebody from a private equity firm that knows some magical way to put a stick into spokes.
How do you get two websites? We have 4.9 Google ratings. Tens of thousands of Google ratings. We got two websites the same week. Shut down that suspension without an explanation, I don't know. Again, we're still trying to find out why, but it certainly makes you wonder.
00:13:07.510 — 00:13:08.390 · Speaker 3
That's wild.
00:13:08.390 — 00:13:09.270 · Speaker 2
Fascinating.
00:13:09.310 — 00:13:23.310 · Speaker 1
I don't know, something happened in Google so far is unwilling to. Now we were able to get them turned right back on within a couple of days, but they won't give us any explanation of why they were shut down to begin with.
00:13:23.350 — 00:13:37.710 · Speaker 2
Wow. That's wild. I'll be very curious if you guys find out what those reasons were, because that is certainly the tens of thousands of Google reviews you have on your website are something you pride yourself on, and that's impossible to fake.
00:13:37.750 — 00:13:58.240 · Speaker 1
There's no fake. I have went to an extreme where an employee that says, hey, do you want me to call in a Google review? And I'm saying, if we worked at your home and you're happy with the work we did, certainly to call in a fake review and just pretend that you're a customer. No way, no how. I don't want any part of that.
It's just not how we roll.
00:13:58.280 — 00:14:20.040 · Speaker 2
Yeah. One of the things you've mentioned in the past about private equity is that as private equity has acquired some of your competitors, you have acquired some great employees out of it because in the transition, they don't like the culture change. Would you talk about that for a second? Because it's one of those long term oriented wins that I think a lot of folks who have been in the game less time than you don't fully see yet.
00:14:20.080 — 00:14:48.130 · Speaker 1
Yeah. Think about that employee that's worked at a company for a lot of years, and that company was a good company and always did the right thing for the customer. And they knew that, and they represented that company with pride. And now they're out saying this thing is warranted for two years, but it's two years and two days, and you've got to sit there and say, sorry, you're out of luck or whatever the case, I can't imagine any employee feeling good about being put in a situation like that.
00:14:48.170 — 00:15:01.370 · Speaker 2
Yeah, and so when that happens enough, they look for a new place to go. And Palco is a very welcoming landing place for for a high quality salesman, service tech, lead tech, whatever for sure. Yeah.
00:15:01.410 — 00:16:08.550 · Speaker 1
And I can tell you a very recent experience that we're having. It's not a pleasant experience. Just the opposite. We've actually lost a few employees to unions, especially the Electrical union. There's a big abundance of work through these data centers, and they are out recruiting hard and they're able to pay very high prevailing wages.
And so that's a tough thing to compete against. That is one of the disadvantages that we do have for New York State Department of Labor apprenticeship programs, registered apprenticeship programs as a nonunion contractor, where one of the only nonunion contractors to have registered apprenticeship programs, we have one in AC, one in plumbing, one on electric, and fourth one is an energy efficiency technician.
Downside of that is when you have registered apprenticeships it's public knowledge. Any union can go and see your whole list of registered apprenticeships right out there clear as day. And so that makes it, in my opinion, a little unfair. They got their names and numbers and all their information right out there.
Right. The public. Did they just skip and pluck them?
00:16:08.550 — 00:16:14.350 · Speaker 2
Fascinating. What an example of how the market is always changing.
00:16:14.390 — 00:16:57.920 · Speaker 1
Yeah. No question. We didn't face this two years ago, but with I think some of it has to do with solar tax credits going away. There's a big push to get these solar farms finished. So the electric unions are very busy with that. And they've got a lot of these data center construction starting up and all big public dollars.
And when you're a nonunion contract and we don't play in that world at all, our work is all fixing up old homes. And so when you're trying to compete against very high prevailing wage public work dollars, which we don't participate in. It doesn't make it easy. Yeah. Yeah. Now, most employees are loyal and are getting the phone calls and not jumping ship, but some can't resist the temptation because they're literally, in some cases, doubling their pay.
00:16:57.960 — 00:17:43.890 · Speaker 3
Yeah. Depending on where you are in your career or what's going on in your own situation. Some people, it's hard to resist. I like to believe optimistically, that the people that are draw, to leave, to go to this other opportunity, ultimately are not the employees that you really looking for longer term.
You're looking for people that believe in the mission, want to be part of this team that you've helped create, and recognize that something like this firehose of money being dumped into data centers is like a flash in the pan. It's going to be a little gold rush and reading stories about it. There's these big projects that are going in, but they typically they last for a year to 18 months, and then the data center is up and running and there's not a lot of long term jobs around those projects, so.
00:17:43.930 — 00:17:50.730 · Speaker 1
I miss this cycle has happened many times over the street. And exactly they sit the bench is what they do.
00:17:50.770 — 00:18:09.770 · Speaker 3
Yeah. And the trade off a lot of them. They're working like companies that for some of these big data centers in the Midwest where they're working 13 out of 14 days. So every 14th day they get off, but they're working 10 to 12 hour days. They're getting paid really well. But it is long hours, really tough work.
It's no joke.
00:18:09.770 — 00:18:15.690 · Speaker 1
But they're rolling in the bank. And but then how many of them put their money aside and how many of them go just blow it?
00:18:15.730 — 00:18:16.730 · Speaker 3
Yeah, it's a good question.
00:18:16.730 — 00:18:19.970 · Speaker 2
Buy a new F-150. Yeah, yeah.
00:18:21.130 — 00:19:07.300 · Speaker 3
All right, let's switch gears. Another big topic. Cold weather, heat pump commissioning. There's been a lot of conversation about this in particular. And we felt like, who's better to ask about this than how you've been installing geothermal heat pumps for well over 20 years, and air source heat pumps pretty close to the same amount of time you're in upstate New York.
Your winter design conditions are around zero degrees Fahrenheit, but there's this question around commissioning the equipment in particular, and issues related to the outdoor temperature being below 40°F. How do you manage this problem? Is this a problem that you've experienced in the years of installing cold climate heat pumps in a very cold climate?
00:19:07.340 — 00:20:00.710 · Speaker 1
I guess I would answer that. I feel that if you didn't pay attention to your environment and didn't understand the environment you were working in and challenges with, that, it would be a problem for us. It hasn't been a problem. We use good refrigeration practices, certainly protecting a line set, making sure that it doesn't become uncovered.
It's until you're right there, ready to put the fitting together and braise it. Nitrogen. Triple nitrogen and braise it. It's we do things making sure that when as soon as possible that we turn power on to the crankcase heater, the compressor to get that warming up well, in advance of starting up a system, we're following 200 micron triple evacuation procedures.
And I gotta say, we just doing all those things. We have had no issues.
00:20:00.710 — 00:20:09.190 · Speaker 3
And so you're out there installing units in January in upstate New York. And you follow those practices and things are good.
00:20:09.230 — 00:21:11.400 · Speaker 1
We've not had challenges now are we all? So let me say that we have electric furnaces on hand carts. We have lots of ways to give people temporary heat. So if the day of the install, it's 15 below freezing and the wind's blowing 40 miles an hour, 50 miles an hour, we might postpone that by a day. And the homeowner understands that.
But we've got the homeowner nice and toasty warm in their house, so we're not going to work in the most extreme conditions. High winds, snow, and blowing freezing will provide temporary heat into it on a more reasonable day, so I'm sure that's part of the equation as well. Got it. We have a whole series of heat pumps or excuse me, electric furnaces, air handlers around our shop that are all wired with a big extension cord that it's ready to wire right into the electric panel, and we can provide just temporary heat to a house in a matter of less than an hour.
00:21:11.440 — 00:21:47.340 · Speaker 3
That's amazing to have that this is a smart thing to do. It's better for the customer. It's better for your team to have that at the ready. So if you get that emergency call, you make sure pipes are not going to freeze. But you're also not trying to do the install when it's blowing 50 miles an hour and it's 2:00 in the morning, you can make sure for sure, calm things down, get decent weather, do it during regular business hours.
That's excellent. And I know you've worked with a bunch of different manufacturers products over the years, have you noticed any differences or challenges between the different brands of equipment that you've used around this particular issue, or is it?
00:21:47.380 — 00:21:57.580 · Speaker 1
No, I can't say that I have, and we've used several and no differences when it comes to how we treat good refrigeration practices and problems down the road.
00:21:57.620 — 00:22:52.430 · Speaker 2
All right. Help. Thanks for weighing in on the cold weather commissioning. We're genuinely trying to learn on this one. We're seeing what folks are saying like from the lab, but we're really interested to hear from folks who are just practicing at the scale you are. Thousands of installs a year. So a super helpful to hear your perspective on that.
I'd love to change tacks a little bit. And you are the consummate entrepreneur. The level of business expansion you have done, I find to be just super inspiring. And one of the things I found out when I was in your area last December, and you showed me the full lineup you have of Midea equipment. Through your distributor, I learned that you also own a distributor.
So tell me why you got into that business and then why Midea, as one of your marquee brands that you're distributing. Sure.
00:22:52.470 — 00:24:37.930 · Speaker 1
Yeah. We've been in business with PBS supply for 22 years. So we were in business 20 years, and then it was real simple. We were running out of room at our facility. It was before we put a big addition on it, and there was an existing supply house six miles down the road that was for sale, and it had been for sale for going on three years, and the price started out very high, and three years later the price was considerably less and we needed the room.
And one thing that you find out is a contractor, whether you want to be or not, you do have to become your own supplier to some certain extent, you've got to stock an inventory things, and if you're going to make any attempt at job costing and charging those things out, it can't be. I'm going to buy a bundle of these.
Put them on the shelf and everybody healthy selfie. And then expect to have any an accurate job costing so it doesn't work. So you're almost forced to be a supplier of some sort. So I said I don't have any more room. We hadn't put our addition on yet. I got this place six miles away that already is a supplier.
They've got 25,000ft². This makes sense. And what it immediately did was it solved our problem with our room. We had a lot of in the 20 years we had been in business, there was quite a few small one man contracting businesses that were former employees that had went out on their own. We always had a good relationship with them and did it on good terms.
Those became our customers at PBS supply, so it was my way of getting it back. $1 at a time.
00:24:39.050 — 00:24:42.650 · Speaker 1
For now, my competitor. But they're buying their supplies and equipment from me.
00:24:42.690 — 00:24:43.810 · Speaker 2
Fascinating.
00:24:44.010 — 00:27:23.710 · Speaker 1
Yeah. My brother Paul was one of them. Paul worked for me for 15 years. He's my younger brother. And when we made this transition to blower doors in the house as a system, he was a sales person for me. And he was not about to carry a blower door out or go down that path. I sent him to the BPI classes and he had told me it was a bunch of garbage.
So he went out and started his own contracting business. And we're friendly competitors. But in Great Brothers, we got a great family relationship. But he became one of our best customers at PBS supply. Nothing wrong with that. Yeah, yeah. So a whole bunch of years later, we had an opportunity. We do a lot of work in Ithaca.
There was a professor from Ithaca College that knew of us because she's there. She's a Chinese doctor at Ithaca College. She had went into the energy business, and she had gotten a distributorship for my idea for the whole northeast. She operates out of Queens, out of New York City, and she's got the media distributorship for she speaks the language, right.
She contacted us and said, hey, have you thought about a new line of equipment? And we said that it was. We checked it out and found out. Didn't really realize at that point, Midea was a name that was just starting to be recognized. They had always manufactured there a big company of all types of appliances, and they're a fortune 500 company or technology.
Their research and development is unbelievable, but they always manufactured under other brands and you didn't know it. So people were buying another brand. And all this time they'd been using my idea but had no idea they were because it had a different sticker on it. And some of these were premium brands.
These are premium brands that are using their products. So once I learned all that, I said, wow, this is a heck of an opportunity. And so we took on the line and they would give PBS supply a new set of legs. We now had a distributorship right from the Hudson Valley all the way to the rest of the state, right up through Buffalo.
So first thing we did is build this big mobile showroom. We showcased it this last May in Saratoga at the BPA conference. We took the big mobile showroom up there and showcased it and had a great turnout and lots of interest. So we've got this 42 foot show trailer with all the equipment in. We got working equipment, it's well displayed.
So we're instead of not having a showroom in all these areas, we got a mobile showroom on wheels that we can take right to the customer's doorstep. So far, so good.
00:27:23.750 — 00:27:41.210 · Speaker 2
That's awesome. Well, this dynamic is one that I'm just fascinated by because in a bunch of ways, it's just it's a little bit the story of America. These marquee brands, HVAC, manufacturing names you would know forever, are no longer manufacturing.
00:27:41.250 — 00:27:46.170 · Speaker 1
Major markets in Syracuse, New York. They might ring a bell with some people in the HVAC business.
00:27:46.210 — 00:28:24.730 · Speaker 2
Totally. And yet these brands don't manufacture their own stuff anymore. It's like it's moved to Asia and the opportunity to be disrupted by a company like my idea seems so obvious and clear. And now it's happening. And we hear from folks like they'll talk to their rep from the US brand, and they don't understand the equipment because they're not manufacturing it anymore.
It's someone else's equipment. What's your view on this dynamic in HVAC? This hollowing out of some of your marquee US brands? And then folks like Midea coming in with just better, cheaper products in a bunch of ways.
00:28:24.730 — 00:29:19.340 · Speaker 1
I have to say that I wish I could buy an American made piece of equipment that was the same quality and the same price level. I'm a red blooded American. I certainly wish that I could. But when it comes to cold climate, heat pumps. Show me one. They're not there, right? Midea? I can tell you that their research and development.
They've just now come out with a tank unit through the wall tank in our market. All the hotels have through the wall tanks with electric heat. The whole hotel is being heated with straight electric heat. And very soon this fall, they're going to be in production where they can slip in the same sleeve. A padded, cold climate heat pump.
My idea in a third bill. Buy over two thirds warm from electric heat to cold climate pump.
00:29:19.380 — 00:29:20.340 · Speaker 3
Yeah it's fantastic.
00:29:20.380 — 00:29:59.390 · Speaker 1
They're not the only one, but they've got the cold climate heat pump window unit that installs in a window. It settles over a window, takes only less than three inches of the window space, and it's a permanently installed cold climate heat pump window unit. And they've got a unit that an air handler that's configurable.
It's built in three different sections and it just clips apart. And we have in our market a lot of old low boy gas furnaces, low boy oil furnaces. And we can put this thing side by side and mock up an old little boy furnace and slip right in under the existing low boy ductwork. And it's a wonderful thing there's no other manufacturer that has such a thing.
00:29:59.390 — 00:30:10.070 · Speaker 3
So they've got tac units coming out. They've got a window unit, they have ductless, they have ducted. What else is it their product line that you think is. Yeah. That folks should know about.
00:30:10.070 — 00:31:18.840 · Speaker 1
I don't know of one thing that they don't have that's currently on the market and they're constantly working on new stuff. I got to say their engineering support is unbelievable. Our tech support, first line of tech support is out of this branch in Queens. And there's a Chinese engineer there. His name is Victor.
This supports us as our first line of defense. It's an answer the victor can't get. He's got a Chinese engineer on the phone within minutes. Try that with some other brands. You won't get the engineer from China on the phone in months, let alone minutes. Yeah. It's unbelievable. We had a couple weeks ago where the customer was calling in and had one of these window heat pumps, and it was making a strange noise, and he'd sent us a recording, and we sent that to Victor, and he knew exactly what it was in a second.
They've got this. Their condensate sprays on the coil, so there's no leakage to the outside. It atomized it on the coil, and the noise that the customer was hearing was that and C being sprayed onto the coil. But it was like to get a response that quick in.
00:31:18.880 — 00:31:19.600 · Speaker 3
That quick.
00:31:20.040 — 00:31:21.360 · Speaker 1
Cell phone recording.
00:31:22.680 — 00:31:25.050 · Speaker 1
Wow. This is good stuff.
00:31:25.170 — 00:31:33.730 · Speaker 3
Yeah, and the performance specs are pretty incredible. What are their 100% capacity? Down to what? Temperatures now on most of their products.
00:31:33.770 — 00:31:36.770 · Speaker 1
A lot of them are down to minus what, 23, I think.
00:31:36.810 — 00:31:38.530 · Speaker 3
Yeah, with a two LS. And yeah.
00:31:38.570 — 00:31:53.810 · Speaker 1
It competes with the best of the best. I'm not going to say they have the absolute best in every single category, but they're in the running on everyone. Every certain manufacturer can have one piece of equipment that's slightly better than another and have bragging rights, but across the board they toe the line.
00:31:53.850 — 00:32:12.330 · Speaker 3
You mentioned this truck that you this mobile was the way you described to showcase mobile showroom. Showroom. Thank you. Of the products you said, do you put that together as part of BPA? There was some mention of BPA. I wanted to switch gears and talk a bit more about your role with.
00:32:12.370 — 00:32:17.610 · Speaker 1
Know BPA had their regional event in Saratoga.
00:32:17.650 — 00:32:20.090 · Speaker 3
Oh, that's when you first you took it to.
00:32:20.130 — 00:32:45.990 · Speaker 1
This past May. Got it. And so we sponsored the prix night cocktail hour. What happened is everybody always goes to those events, and they're signing in the night before the motel, because the conference starts at 8:00 the next morning. And I said, if you'll let me pull this 42 foot showroom in the front of your traffic circle here, I'd love to sponsor a cocktail hour the night before at 6:00 at night when people are signing in, and it worked out wonderfully.
00:32:46.030 — 00:32:48.070 · Speaker 2
Wow. Clever marketing.
00:32:48.150 — 00:32:49.070 · Speaker 3
Yeah. That's great.
00:32:49.110 — 00:32:49.790 · Speaker 2
Yeah.
00:32:50.150 — 00:33:10.230 · Speaker 3
And so I want to hear more. I know you sit on the board of the National BPA, and I. Do you really across the whole space around whole home performance contracting. Do you think it's gaining ground? Is it stalling out a bit? What are the things look like right now from a weatherization and whole home performance business?
00:33:10.270 — 00:36:34.990 · Speaker 1
Yeah, I think I'm a firm believer in performance contracting. I think it goes much deeper than performance contracting. Frankly, I think the comfort, the health, the safety, especially the health and the safety. Are part of the equation and you can deal with that comfort, health and safety with these high performance products and high performance buildings and fix problems that you could never fix before.
So I don't think the industry is stalled out at all. I think that there are setbacks again, a lot because of data centers, electric rates in my market. They have more than doubled in the last year and a half. So that certainly doesn't make it easier to sell heat pumps versus fossil fuel. But when you look at all of the other advantages that the heat pumps provide, we have a media system that's a dual fuel heat pump system.
So we can have the best of both worlds where the customer can choose, but really paying attention to the performance contracting to. We know this company called amply that does this marvelous heat loss, heat gain, room by room. And how many people are still old school to closest 20,000 BTUs. Fossil fuel.
Never even did a room by room in her life. It's always block loads and even the block loads were just guesses, right? When you start analyzing every single room in a home and then start matching equipment up, it makes a huge difference in the overall performance, and that's recognized. And sometimes it's not all about what is, whether the electric is $0.02 more than the fossil fuel.
It's about the overall health comfort, safety piece of it. So paying attention to the envelope, we use a product called Air Advice. We do indoor air quality testing on all of our jobs. As a standard part of our initial evaluation. We're taking that test. We're doing radon testing. Unbelievable. The amount of radon that we're finding in homes, that part of our solutions.
Now, when you learn that radon is number two, Cause of lung cancer, right under cigarette smoking. It's unbelievable. And so we're looking at that whole house as a system and really treating the whole house. My wife is a nurse, has been a director of nursing the last 34 years. And she joined us at Valco and brings a whole new level of expertise to the health side of the business.
And we're actually now focusing on being able to treat people with asthmatic problems and asthmatic triggers in homes, and that's part of our overall solution. So I don't think the industry's stalled at all. I think it's start to provide a much better service than traditionally has been provided. Who could put the cheapest oversize furnace in is what was traditionally provided, and that's what still gets provided by most contractors, frankly.
So I think when you go out there and you set yourself up with these high tech tools and a high tech audit and really show the people the difference when the other guy was in and out in ten minutes and you're there for 2 to 3 hours. Blower doors and lidar scans and the whole thing. Indoor air quality tests. And we're leaving behind a carbon absorption test for radon.
And we just set ourselves way apart. And so I don't think that's slowing down at all.
00:36:34.990 — 00:36:47.030 · Speaker 2
I love that answer because we would like to see more. Hal goes, and there are some I don't know that anyone is your signs, but there are people who have smaller versions of Alco.
00:36:47.070 — 00:36:50.310 · Speaker 1
It's after I lost weight. You keep poking me about my size.
00:36:51.670 — 00:36:52.830 · Speaker 2
You look great, Hal.
00:36:53.150 — 00:36:54.510 · Speaker 1
Get down to your bed.
00:36:57.230 — 00:37:45.160 · Speaker 2
I'm trying to beef up, so we'd love to see more. When I talk to folks who have aspirations, I keep hearing two challenges. One is the complexity of managing the business. You have different trades. You have different scheduling, you have different materials that you're storing. So it's super interesting.
You bought PBS and have that. But so there's the complexity of the business. And then there's the challenge of communicating to a homeowner how and why you're different. And you just started to talk about that. You're in the home for 2 or 3 hours. You're doing all this different stuff. I'm actually curious, do those feel like the two biggest challenges?
And if they are, maybe go a little deeper on how you solved both of those? For folks who aspire to be something like Alco?
00:37:45.240 — 00:38:48.420 · Speaker 1
Yeah. So the challenge is with continuing to expand the business and provide all these different products and services are adding on the people with that particular skill set. And that doesn't happen overnight. And it's a slow, steady process. But when you look ahead and you say, hey, I'm insulating an air ceiling, this house, we've just cut the air changes in half.
I got to pay attention to the moisture in this basement. I have a basement that's got a dirt crawlspace, a dirt slab, laid up stone foundation walls all very common in our marketplace. Our housing stock is from the 1800s, so we have to manage moisture. Okay, I guess I need to be in the basement waterproofing business whether I want to be or not.
And one of the things that factor into that is try to find good, reliable subcontractors that are going to be there when they say they're going to be there and that are going to call and communicate with the customer. I find that a lot more challenging than I do creating it myself, to be honest with you.
00:38:48.460 — 00:38:48.820 · Speaker 2
Wow.
00:38:48.860 — 00:41:07.400 · Speaker 1
Yeah. So it takes time and you've got to build the people and you've got to educate them and you've got to send them to classes. And it doesn't happen overnight. But little by little, step by step, you start to build these different divisions. So now we're in the basement waterproofing business. Here comes an opportunity for gutters.
I never thought I'd be in a gutter business for the life of me. And I still really am only in the gutter business when it pertains to basement waterproofing and solving moisture issues. We have a spectacular gutter. They're not inexpensive. They have gutter guards. They're a great gutter, but it's a solution when the gutters are a big problem of a moisture in the basement.
So we solve it then and only then. But let's just everything we're doing is just solving problems that we have last year bought two pieces of forestry equipment and people. Why do you have this forestry equipment? We've already got excavators to do our geothermal work, and we've got track loaders and we've got landscape rakes as we restore the property and hydro seed after we do a geothermal.
So these forestry equipment is just attachments to the excavators, to the track loaders. What can I do with them. There's a lot of potential for ground mounted solar. Again we're from a rural market, lots of land and a lot of times there's not that unshaded roof space that gives enough solar. But there's a big piece of land out here that we could have a great site for ground mounted solar, but it's all overgrown, grown up with trees.
I can come in with this piece of forestry equipment, and I can have that cleared in a couple of hours and be putting a solar system on there the next day. So one opportunity just leads to another is we get more into helping these asthma attacks, the people, the community, health agencies that are helping these asthmatics.
They're saying, we've got this person also has an accessibility problem they can't get in their tub anymore. Can you put a walk in tub for them or plumbers? Sure. We can put walk in tubs in. We can. What about grab bars? Yeah, I think I could find somebody that could put grab bars out. So it's like you start serving one population with an asthma problem.
That same population is the elderly. People are having accessibility issues and slip and fall problems in. So it just one thing adds to another.
00:41:07.400 — 00:41:19.410 · Speaker 3
How do you assess. Because I think of I'm trying to channel a smaller business and everything you just talk through makes sense. But it also it feels overwhelming. I assume that when you're coming across these opportunities.
00:41:19.490 — 00:41:30.050 · Speaker 1
Yeah. Just remember it took 42 years, right? For some of you to think that they're going to do that in two months, it's not going to happen. Right? I'm telling the story of 42 years and little by little, girls by girls.
00:41:30.090 — 00:42:00.290 · Speaker 3
Yeah. And I'm assuming that I'll use the gutter problem or opportunity as an example. It's not like you the very first time. Now, you started the basement waterproofing service, and then the very first time you discovered. Huh? And actually, this is maybe more of a how we're dealing with the water shedding off the roof is actually the real problem.
The first time you saw it, you were like, oh, yeah, I'm going to start a gutter service line now. You must have run into it over and over again. And then to think, hey, we.
00:42:00.290 — 00:43:33.830 · Speaker 1
Were I gotta say that I was some of this becomes being in the right place at the right time. Lock business affiliations A whole bunch of years ago, I joined up with a group out of Connecticut called Doctor Energy Saver, and there an insulation air ceiling. They're out of Connecticut and their primary business was basement waterproofing.
So as I joined as the Doctor Energy saver, I'm going to these trainings and these conventions, and here's all of these basement waterproofing companies. And I start to absorb all of that and understand it. And then they come out with their own line. They bought it from another company, a patented gutter system with gutter guards, and they started offering that.
And so we used those. They've got an amazing portable Hepa three stage filtration. Hepa air filter. That's first stage is Merv 13 pre filter. The second stage is three and a half pounds of carbon to absorb chemicals and VOCs. And then the third stage is a true Hepa. And these are a portable air cleaner. It'll handle up to 1500ft².
It's a patented product through them and an amazing product. They've got dehumidifiers that are 99 pints a day that are Energy star rated. So I'm not pretending it's all me. A lot of it is the affiliations and the relationships that I've established over all those years and put all those things together.
It's not that I had the magic wand and went out and thought of every one of these things myself, just. But I think there's a big lesson there. Affiliate with the right people and good things will happen.
00:43:33.830 — 00:44:09.600 · Speaker 2
It's a huge lesson and I just went to the Doctor Energy Saver website. It's got a map of the states where there are Doctor Energy Saver customers, and I click on Massachusetts because that's where I live. And zero in Massachusetts. Massachusetts is served by one company in Connecticut, and I'm shocked by that, given all the incentives in Massachusetts to do this sort of thing.
So even if you're affiliated, it's still don't undersell your abilities. Well, it still seems pretty darn hard, given that there's nobody serving Massachusetts based in Massachusetts. But I think that's great advice to affiliate with three.
00:44:09.640 — 00:44:31.320 · Speaker 1
You have to participate in their trainings. It doesn't just happen, right? You've got to. I was blessed to get hooked up with you guys with your lidar scan in your room by room, heat lost, heat gain. Up until then, we were manually sketching houses and spending way more time than we do now. Add that piece of the puzzle and with a lot less accuracy, right?
00:44:31.360 — 00:45:07.800 · Speaker 2
Yeah, the blessing goes both directions on that one. We are deeply grateful to be partnered with you, and you guys have given some of us the best product feedback anyone has given us. But I like the vein we're going. I think it's a good place to wrap. So I'm curious about advice to people who want to build something like Alco.
You just gave us one affiliate with the right place. I think you've had others do things one step at a time. Don't try to eat the whole whale in one sitting like a bite at a time, little by little. What else? What other pieces of advice would you give folks who aspire to do something like you've done, and assuming they're willing to put 40 years into it.
00:45:07.840 — 00:46:12.990 · Speaker 1
You've got to be the person that understands that. You're going to continually learn in life. You're never going to stop learning. You've got to be dedicated. You can't be the person who's going to give up. There has been so many times it would have been easier for me to throw the towel and then keep going, but I'm just not a person that'll ever quit.
I just won't. I think organizations like the Building Performance Association, we have a group in New York called the Building Performance Contractors Association that I helped to rejuvenate. I'm actually just this is my last day. I'm cycling. I've been president of that for six years, and I'm cycling off the board.
My term is up after six years and we've got a congratulations. Yeah, so but that's a group in New York that's doing wonderfully, doing great things all about performance contracting a bunch of insulating and air sealing contractors and heat pump installation contractors. So those type of things affiliate with those type of organizations, because they'll bring you lots of wisdom and lots of ways that you should be doing business, and tons of things that you shouldn't be doing.
00:46:13.030 — 00:46:25.830 · Speaker 2
Yeah. Awesome. Hal Smith, thank you so much for joining us again on the Heat Pump podcast. I learned as much or more on the second one, so we're definitely going to have you back for a third if you're willing.
00:46:25.870 — 00:46:29.030 · Speaker 1
All right. Aw, sure, I enjoy it. And thank you so much for having me.
00:46:29.070 — 00:46:29.990 · Speaker 3
Thank you Hal.
00:46:30.110 — 00:46:31.430 · Speaker 1
All right. Thank you.
00:46:34.630 — 00:47:01.030 · Speaker 3
Thanks for listening to the Heat Pump Podcast. It is a production of Amply Energy and just a reminder that the opinions voice were those of our guests or us, depending on who was talking. If you like what you've heard and haven't subscribed, please subscribe in your favorite podcast platform. We'd love to hear from you, so feel free to reach out! You can reach us once again at hello@amply.energy. No .com just energy. Thanks a lot.
