The Industry's Biggest Problem
Why is this so? What gave rise to this sudden burst of enthusiasm for radiant heat?
An obvious reason for the large gathering is because you represent all facets of the heating community — manufacturers, reps, wholesalers, contractors, engineers, all coming together in a common cause. Isn’t that refreshing! At most other conventions I hear a lot of grumbling about who’s trying to screw who in day-to-day business relationships. Here, everyone seems focused on cooperation. You are united in a common interest to develop the best products, designs, installations and troubleshooting techniques. Those of you who participate in other trade associations would do well to try to rub some of this off on those colleagues.
Another reason for the terrific attendance, in my opinion, is that this is a serious working event focusing on education. I don’t see any purely social activities on your agenda. This, too, is a lesson to bring home to your other trade groups ...
Radiant heat is not exactly new to this country. As you’re all aware, it got a false start back in the 1950s before people learned the hard way that certain materials do not hold up well when imbedded in concrete. There’s an old saying that the cat who jumps on a hot stove will thereafter avoid all stoves, hot or cold. Well, the heating industry went through the same kind of avoidance reflex with radiant heat for about four decades. Because of that past experience, the fiercest industry debates seem to revolve around tubing materials, even though there are many other things that can go wrong with a radiant installation. But this gathering is testimony to the fact that the heating industry at-large has overcome its phobia. Radiant heat is catching on with a large enough segment of the public to make it a vibrant industry in its own right.
Pioneers: I think one person who deserves a great deal of credit for this is Rich Trethewey. Television is an enormously powerful influence. The repeated exposure given to radiant heat by Rich on the “This Old House” program may be the single most important factor in the rising popularity of radiant heat.
The Internet has also played a role, I’m sure. Explore the various home improvement forums on the Net and you’ll see numerous inquiries and articles about radiant heat.
We in the trade press have done our part by focusing the trade’s attention on this fascinating technology. Rich Trethewey had a lot to say about it when he wrote for Plumbing & Mechanical back in the 1980s. Now we have John Siegenthaler writing about it along with the industry’s high priest of hydronics, Dan Holohan. Last year at this podium Dan called radiant the best heating system imaginable, and he has never wavered from that position. Dan has a fundamental difference of opinion with some of the people within RPA about how to best market this technology, but he continues to promote radiant heat with all his heart in his influential Plumbing & Mechanical column. I think we all owe him a debt of gratitude for that ...
Radiant heat has real value. And for that the biggest applause must go to all of the members of the RPA. You make terrific products, and your membership includes some of the best engineering and mechanical talent in the industry. Maybe it’s because the field is still relatively new. There is plenty of room for innovation and experimentation. Customs and tradition have not yet had a chance to form scar tissue in the industry’s creative minds. Radiant heat is an idea whose time seems finally to have arrived ...
I applaud you members of the RPA for bringing new life to this not so new, but oh so enticing technology. Now you are engaged in a long uphill climb to see if you can bring it out of the niche market stage and capture a significant share of the American heating market.
I wish you much luck in this quest. More than luck, I want to assure you that you will receive wholehearted cooperation from Plumbing & Mechanical and PM Engineer magazines, whose interests exactly coincide with yours when it comes to promoting radiant heat.
Who Will Do The Work? But what I really want to talk to you about today is something that threatens your progress. It is a problem that impacts the entire plumbing and heating industry, not just the radiant heating sector, but for reasons that I’ll go into shortly, I think it impinges on your business perhaps even more severely than most others.
The issue is, who is going to do the installing and servicing of this magnificent technology?
For the most part radiant heat requires skilled labor. Your jobs involve the assembly of boilers and expansion tanks, t & p valves and digital controls, gas and electrical connections. Your installers and service technicians must know how to read blueprints and understand engineering literature. They must have keen diagnostic skills. They must be more than a little acquainted with the laws of physics and mathematics. They must constantly be on the lookout for carbon monoxide hazards and other threats to life and limb.
And because radiant is still so young in this country, they don’t have a lot of past experience to draw from. They can’t turn for help to grizzled old veterans who’ve been doing it for 30 or 40 years. Radiant heating technicians must be able to think on their feet and improvise solutions to many problems.
Given these circumstances, cheap labor can be awfully expensive over the long haul.
Not only contractors, but you manufacturers and wholesalers all have a compelling interest in making sure the installers and service techs know what they are doing. You’re all too painfully aware that system failures cut the legs right out from under this industry back in the 1950s. Your fierce debates over material properties are based on the fear that the same thing might happen again. Well, material failure is just one way to botch a job. Incompetent contractors and mechanics present an infinite variety of other possibilities.
Yet there is a critical shortage of labor throughout the pipe trades and every other skilled construction trade. It is THE biggest problem in the industry. Contractors talk about it more than anything else.
The plumbing and heating trades simply are not attracting the quantity and quality of people they need, and they are having trouble holding on to those that do give it a try for a few months or years.
Image Isn’t Everything: People often blame it on the poor image of the trade in the eyes of the public. They point their fingers at high school counselors who invariably direct talented teens toward a college career path. Many contractors tend to blame the problem on today’s youth itself. They say those darned Generation Xers lack ambition, and that the work ethic isn’t what it used to be. They complain that too many of today’s kids are strung out on drugs and alcohol.
Perhaps there are kernels of truth to all that stuff, but I think for the most part those excuses confuse cause and effect. I’d like to show you what I believe to be the main cause of the skilled labor shortage.
The chart you are looking at depicts nonunion pay scales and fringe benefit rates throughout the pipe trades and HVAC field, broken down by different kinds of work. The numbers were compiled by a company called PAS Inc. out of Ann Arbor, MI. It is the only organization that I’m aware of that systematically tracks open shop compensation in the construction industry. They’ve been doing it for quite a few years and their data base covers thousands of contracting firms and tens of thousands of workers.
This chart shows national averages. The rates may vary by a buck or two region to region, but overall this is about the best snapshot available of industry pay scales. It shows that the average nonunion pipe trades journeyman earns somewhere between $13 and $15 an hour. Foremen and people categorized as top journeymen make a few bucks an hour more, but in no category does even supervisory pay top $20 an hour.
Full-time employment in the construction trades is generally defined as 2,000 hours of work in a year. Multiply these numbers by 2,000 and you’ll find that most journeymen in this industry end up making between $25,000 and $30,000 a year. Foreman generally make somewhere between $30,000 and $35,000.
Union workers are higher paid, by about a third. Their pay scales project to between $40-45,000 a year at full-time employment. However, for the most part union contractors aren’t much of a factor in the residential markets that supply most of the business for most of you in this room. Home construction, renovation and service work is about 90 percent nonunion nowadays.
Besides, even union wages aren’t all that dazzling. Some of you may be familiar with the newsletter Cockshaw’s Construction Labor News & Opinion. Publisher Peter Cockshaw came out with an article showing that union construction pay has fallen around 20 percent in relation to inflation since the late 1970s. I talk to quite a few people who serve on union joint apprenticeship committees. Recruiting is as big an ordeal for them as it is for the nonunion side.
Benefits Stink, Too: Also take a look at the fringe benefit rates shown in this chart. They generally total 14 to 16 percent of the nonunion pay scale.
My wonderful wife Jennifer works as a human resources executive. I asked her how these fringe rates compare with that of the working world at-large. She told me that on average most firms throughout our economy pay about 25 percent in fringe costs. Most United Association labor agreements that I’ve seen have fringes topping 30 percent of pay.
Just ask around. How many contracting firms in this industry have attractive health plans — the kind that cover not only the worker, but his family as well? The kind that includes dental coverage. How many contractors have retirement programs? How many offer more than two weeks paid vacation no matter how many years of service an employee might have?
There you have it, my friends. Never mind all the psychobabble about kids staying away from our industry because they don’t like getting their hands dirty. Construction jobs have always been dirty and rugged. But youngsters used to sign up for apprenticeship waiting lists because the trades offered some of the best pay in the blue collar world.
Now, the pay and benefits STINK! ... Even kids who don’t go to college know they can get better jobs than this industry offers working in a factory, or delivering mail for Uncle Sam or packages for UPS.
Flight Of Fancy: There’s a popular movie out right now called “Liar, Liar,” in which Jim Carrey plays a lawyer who suddenly undergoes a magical spell that compels him to tell the truth for an entire day. Let’s take a moment to fantasize that someone cast the same spell on one of our industry’s recruiters at a career day event. Here’s what his pitch might sound like —
“Kid, have I got a job for you! You’ll be on call at all hours, and when it’s below zero, that’s when you’ll find yourself up all night tending to emergency no-heat calls. However, this will be balanced by all those summer days when you’ll be sweating it out in attics and crawl spaces in 100 degree weather.
“You’ll have to be careful because the work you’ll be doing has one of the highest injury rates of any field. But don’t worry. People in this business get to the point where they shrug off all the burns and bruises and cuts and sprains. If you’re lucky, all of your injuries will heal.
“Work tends to come in boom and bust spurts, and when there’s not enough work, you’ll probably be laid off. But don’t worry. When work is plentiful, you’ll be putting in 60 and 70-hour weeks of back-breaking labor.
“True, it’s not a very glamorous job. In fact, the majority of your customers will constantly look over your shoulder making sure you don’t rip them off. Many will treat you like dirt. But hey, what do you care as long as you’re getting a paycheck!
“About that paycheck — think of it, kid, after putting in years of study to learn about heating technology, and keeping your nose to the grindstone day after day on the job, the average heating technician makes almost $30,000 a year! Heck, most of them even have some half-assed medical coverage.
“So, kid, when do you want to start!”
No Laughing Matter: I’m sure Jim Carrey could get some laughs out of that spiel. Unfortunately, as one who wishes this industry well, I find it more depressing than funny.
Look at those numbers again. Do you really think these wages and benefits are going to excite anyone who’s on the ball? Do you really think that 30 grand a year is fair compensation for someone whose job takes years to learn and whose mistakes have the potential to be life-threatening?
The pay stinks! The benefits stink! The working conditions stink!
Then we wonder why talented youngsters don’t want to work in the pipe trades. Until the workers in this industry are compensated at a level commensurate with the skills and effort demanded of them, this industry will continue to be perceived as a career ghetto.
Peter Cockshaw recently pointed out that the last census showed manufacturing wages topping construction wages for the first time in history. Think about that. This is stunning news considering that most manufacturing jobs require only modest skills at best. A $14-an-hour wage isn’t bad for someone who puts widgets together on an assembly line. You can take almost anyone off the street and teach them to do that in a few hours or few days.
But it is absurd to expect heating technicians to work for those wages when they require years of training to do their jobs correctly. When they are responsible for heating systems costing thousands of dollars, sometimes tens of thousands of dollars. When they hold the lives of their customers in their hands.
The pay stinks! The benefits stink! The working conditions stink!
Idiot-Proofing: I recently was chatting at another industry convention with a mechanical contractor whom I respect. He was complaining about all the training time apprenticeship programs must give nowadays to remedial reading and writing. This contractor foresaw a day when the equipment manufacturers would respond by dumbing down their products into modular components. He drew an analogy with copying machines. Their technicians require only a few months of training, because when something breaks down, they simply pop out one big module and put in another. This contractor was not happy seeing the industry headed in that direction, but he said the manufacturers might be forced to do it.
Is this where the heating industry is headed? Would this be good for the industry? I suspect that you manufacturers have a hard enough time designing products for peak performance. Making them idiot-proof on top of that is a challenge you may find rather daunting.
Most of you in this audience came up through trade ranks. You are proud craftsmen. Is this what you want to see happen? Do you want to see your trade devalued to the point where it becomes little more than grunt work?
If you expect to entice bright young people to your line of work, you will have to get pay scales a heck of a lot higher than 30 grand a year. How can you do that and remain competitive? Well, my good friend Frank Blau has some ideas about that. Some of you attended his program this morning. If you missed it, he’s doing it again tomorrow morning.
Pay attention to what he has to say. I can tell you that the technicians who work for Frank Blau’s company make a lot more than 30 grand a year. Most earn twice as much and more. He knows how to sell value. Do yourselves a favor and attend his program to see how they do it.
It’s time to do some soul-searching and ask what you can do to advance your trade and its technology. Do you value their work highly enough to put your foot down and refuse to undersell yourselves?
Or, are you content to eke out a living through the use of cheap labor and by cutting corners on the job?
Call To Action: You members of the Radiant Panel Association are in a little better position than the average contractor when it comes to upholding standards of craftsmanship. Radiant installations are never going to make much headway in the market if their sales revolve around the issue of price. There is no way you can compete with scorched air in the eyes of bargain hunters. It’s like trying to sell Dom Perignon in a skid row liquor store.
Your message must be one of maximum quality, maximum comfort and maximum service. And all that requires maximum skill on the part of your employees. Prospects for radiant heat must be made to understand that you cannot deliver top-notch quality, comfort and service while paying your most important workers $14 an hour.
Look around this room. Feel the energy. You are smart people who know a better way of doing things. A few years ago you came from nowhere to grow into an organization capable of drawing as big a crowd as any trade association in the industry. You did so by paying more attention to the future than the past, by appreciating innovation more than tradition.
It will take people like you to recruit the craftsmen and women of tomorrow. It will take people like you to realize their value and pay them what they are worth. It will take people like you to sell that value to customers who are looking for systems that embody performance rather than the cheapest price.
Look around you. You are growing while most of the other trade associations in the industry are in decline. Something’s happening here with the RPA that the entire industry can learn from.
You represent the best of what the heating industry has to offer. Don’t sell yourselves short. Don’t succumb to the simple-minded notion that cheap labor is the way to maximize profits.
Show everyone in the industry that the good old days were not the best days for the industry. Show them that they lay ahead in the future.
And whatever you do, don’t sell yourself short.