What Makes The IQA Worth A Million Bucks?
It all began one day in 1997 when Henry Scherer, owner of the Easton, Pa., plumbing/HVAC service firm Edwin Stipe Inc., got a call from a competitor. Not just any competitor. Gino Nicolai was the owner of Hannabery HVAC, the biggest HVAC company in the area, and as such regarded by Scherer as “the enemy.” Nothing personal, because Scherer had never met the man, just a gut feeling caused by the competitive juices that flow through most entrepreneurs. Scherer had no idea what to expect when out of the blue Nicolai invited him to lunch.
Tom Grello, owner of another local HVAC firm, Tru-Comfort Inc., also was invited to that luncheon meeting. It's unclear exactly why Nicolai singled out these two service contractors. Probably it had to do with the fact that they were reputable, and maybe in part because with Stipe based in Easton, Tru-Comfort in Bethlehem, and Hannabery in Allentown, they represented each leg of their tri-city market. Perhaps Nicolai also had heard through the grapevine that they shared his wish of remaining independent when omens pointed the industry in a different direction.
Those were turbulent times for the PHC service industry. Consolidators and utility companies were buying up HVAC and plumbing service firms all over the country - and nowhere was this activity hotter than in their eastern Pennsylvania region.
“We were scared,” admits Scherer. Although it seems laughable in retrospect, at the time the consolidators and utilities seemed to have bottomless pockets and a huckster's gift for convincing people they were the wave of the future.
Nicolai had no master plan to combat them. All he knew was he wanted to hang on to his business without being overrun in the marketplace. All three competitors felt the same way, and their early discussions quickly identified technician training as their biggest need if they were to compete effectively against the emerging giants. Yet, each was too small to concoct a first-rate training program on its own.
More meetings followed and a plan took shape for what would become the Independent Quality Alliance (IQA). Each of the three founders stuck $4,000 into a kitty to fund the new organization. Nicolai's vision called for them to consolidate functions where strength in numbers brought advantage, such as training, yet remain independent where that really counted, i.e., by retaining ownership and authority over their companies.
IQA TodayFast forward to May 2005. Gino Nicolai, sadly, is no longer around, having gone the way of all flesh three years ago. He was blessed, however, to live long enough to see the 2001 dedication of IQA's own training center at Lehigh Carbon Community College (LCCC), named after the two contiguous counties it serves. The training facility has been named after Nicolai, and his company remains as one of 10 present members of the IQA. Hannabery's controller, Rich Lichtenwalner, currently serves as its president.
Along the way, IQA worked with LCCC to develop a wide-ranging curriculum covering plumbing, hydronics and HVAC, including NATE (North American Technician Excellence) and NORA (National Oilheat Research Alliance) certification courses. A full-time instructor, John Hufford, is employed by LCCC but his position is funded by IQA, thanks to the group's most stunning achievement.
One day Scherer read a newspaper article about a large manufacturer obtaining a job training grant from the State of Pennsylvania. Why can't IQA get a grant? Scherer wondered. He showed the article to grant writers at nearby DeSales University, which the IQA had a relationship with prior to hooking up with LCCC. Why can't? turned into, why not? Staff at DeSales put through a grant request for $500,000 to the state's Customer Job Training (CJT) program aimed at teaching people useful job skills.
That grant, good for three years and renewable if meeting eligibility requirements, expired in 2002. LCCC's Workforce Development Dept. put through another request, and IQA was awarded $200,000. A third grant application is in development and expected to be submitted by the time you read this. Nothing's guaranteed, but neither is there any reason to think they won't get it.
Although some CJT money is earmarked for small businesses, IQA had a better chance of getting funds by approaching the state as a consortium with a workforce totaling more than 500 people. Grant money is distributed to IQA members proportional to their employment numbers, which range from around 10 employees to Hannabery's 175.
CJT funds are exclusively targeted to technical and equipment-specific training. LCCC helped the group secure additional funds from another Pennsylvania program for training pertaining to computer use, office management, time management and other white collar disciplines. IQA's total tally in grant money is approaching a million bucks worth of training money.
An IQA training committee, currently headed by Dave DeWalt of Maitz Home Services, is in charge of developing the IQA curriculum based on needs identified by the individual companies. A recent example was an advanced soldering and brazing class requested by Edwin Stipe, which would be open to other IQA members as well as Stipe technicians. Most classes are held in the Gino Nicolai Training Center, although sometimes they take place on company premises. NATE certification classes are also available to non-IQA members for a fee, although IQA may restrict classes to its membership if enrollment surpasses available space.
The collaboration with LCCC has led to a program resulting in an associate's degree in HVAC technology, which recently graduated its first three technicians. The HVAC curriculum encompasses hydronic heating as well as warm air, as virtually all IQA member firms do some hydronics business. This month's cover photo was taken in the group's new radiant training lab, unveiled in April. (See sidebar below.)
To date, only two of IQA's 10 member firms - Edwin Stipe and Maitz Home Services - do a significant amount of plumbing work, so the plumbing curriculum has been slower to develop. That is a work in progress and something of a priority with DeWalt. As of this writing, two other plumbing firms were being considered for membership, and their acceptance would add impetus to the plumbing program. The training committee also is at work devising skills and competencies checklists for both plumbing and HVAC technicians, and is working on obtaining CEU (Continuing Education Units) credit for many of their programs.
“Pathway to Success” is another incipient program being developed by IQA, which would take IQA employees all the way from apprenticeship through a Bachelor of Science degree from Temple University in nearby Philadelphia. It's still in the development stage, but IQA has reached general agreement with Temple about the program.
MembershipDuring my visit in May, about a half-dozen new membership applications were being considered by IQA. Whereas most organizations are anxious to expand, this group is far more concerned about quality than quantity.
Recruitment is by word of mouth. IQA participants envision eventually expanding into electrical and other trades, but for now the focus remains on plumbing and HVAC firms. Applicants must pass muster by a unanimous vote of the membership to gain admission. “We don't want contractors who burn through employees,” notes DeWalt.
Company size is not a major consideration, as long as an applicant has the wherewithal to meet IQA's standards. Membership criteria include marked vehicles - including willingness to display IQA insignia - uniformed employees, a minimum of $3 million in liability insurance coverage, 24-hour service, and abiding by a code of ethics. A compliance committee visits members once a year to assure they meet all the requirements.
Although training is the focal point, IQA also looks at itself as representing the best in PHC service professionalism. A local advertising campaign is underway to build awareness of the IQA to the public at-large. The alliance also does some group purchasing, and recently started an associate member program for suppliers who are enthusiastic about participating.
Can It Happen Elsewhere?Three IQA members - Edwin Stipe, Maitz and Tru-Comfort - belong to the Nexstar affinity group. Henry Scherer contends they have shared their IQA experience with fellow Nexstar members around the country, and that several have attempted to organize similar alliances in their areas without success. A conversation ensued speculating about why they've succeeded where others seemingly cannot.
It may well be a “chicken and egg” phenomenon that prevents IQA-type collaboration from taking root elsewhere. That is, an organization needs to be able to provide tangible benefits to attract members, but until they reach some critical mass of cooperation, it's hard to get very much done. Scherer recalls that IQA started slowly and didn't attract much attention from other contractors until they opened their training center - a big tangible benefit.
Negotiations with LCCC were rather laborious, recalls Scherer, because some of the college's faculty and administrators were understandably wary of IQA usurping the school's vo-tech role. One of the ways that was resolved was to appoint Scherer to an LCCC vo-tech advisory board. His presence helps to assure that IQA and LCCC do not duplicate efforts.
IQA does not offer an apprenticeship curriculum per se. That remains the bailiwick of LCCC's vo-tech program, while the IQA sponsors more specialized training pertinent to its members. According to Scherer, the vo-tech curriculum leans a little more toward theory and book learning, while IQA's offerings involve more hands-on work.
Tru-Comfort's Tom Grello raised an interesting point that getting too large may in fact be detrimental to an organization like IQA. “I think there's a limit to the number of people that can belong to an organization like this,” he said. “Right now, everyone in the IQA pitches in and pulls their weight. I don't know where the limit is, maybe it's around 15-20, but when a group gets too big, there tends to be a core group that ends up doing all the work, while the rest sit back and complain about the job the leaders are doing.”
Right now, everyone is chipping in. IQA is governed by a five-person board that includes representatives from the three original members, and has committees to deal with training, membership, purchasing, compliance and any other issues that arise. Members are allowed to miss no more than two IQA meetings per year, and everyone in the organization participates in the effusive networking that takes place day by day.
An observer watching them interact has to be reminded that IQA members operate independent businesses that contend against one another in the Yellow Pages. Yet, they all grasp a fundamental truth about the PHC service business. That is, there is more than enough work available to support all of them and more. IQA members frequently recommend one another for jobs they are too busy or ill-equipped to handle.
They see the real issue not as the number of competitors, but the nature of the competition. Astute contractors would rather compete against other astute businesses rather than the garage-shop operators that can be found in every market. IQA sees itself as raising the bar of professionalism in its local industry, to the mutual benefit of all.
More about IQA and its training efforts can be found at its Web site, www.theIQA.com.
IQA Member CompaniesAir Care & Restoration Co. Inc.
Burkholder's Heating & Air Conditioning
Deiter Bros. Heating-Cooling-Security
Edwin Stipe Inc.
Lande Heating & Air Conditioning Inc.
Maitz Home Services
Trexler Haines Inc.
New Life For Old FirmsMaybe you can't teach old dogs new tricks, but IQA member companies are anything but dogs. Some are pretty old, though. One of the founding firms, Edwin Stipe Inc., dates all the way back to 1894. Edwin Stipe III, grandson of the company namesake, was Henry Scherer's partner until Stipe sold his interest to Scherer upon retiring a couple of year's ago. The company originated as a plumbing firm and still gains about 35 percent of its revenues from that sector, the rest from HVAC and hydronics.
For all its longevity, Scherer has some decidedly modern ideas about running a PHC service firm. For example, he requires all employees to undergo at least 40 hours of training each year, whether technical or otherwise. Without it, they will be ineligible for raises or even continued employment.
“I tell them to look at it as an investment in their future, whether they continue working for our company or go elsewhere,” he says. Scherer notes that the company pays employees while they are taking classes, which amounts to a week's pay per employee per year for training.
Maitz Home Services is the other IQA member doing plumbing work, which comprises around 75 percent of revenues. This company is a youngster compared with Stipe, however, having been around “only” since the 1920s. Owner Dave DeWalt bought the company from his father-in-law in 1990, who in turn had owned it ever since the 1960s.
“I was reluctant to join IQA at first due to the time commitment,” DeWalt comments. “It's turned out to be one of the best things I've ever done in business. The energy in this group is infectious.”
IQA's New Radiant Training LabLast year, contractor-turned-rep Dave Bennett was looking for a place to test new radiant heating products.
by Steve Smith
“I wanted to create a facility that would help my company learn more about new radiant technologies,” says Bennett, a rep with L&R Associates, Hatfield, Pa. “It soon snowballed into a much larger project.”
Bennett ended up at the Gino Nicolai Training Center, the hands-on heating educational facility owned and operated by the Independent Quality Alliance, located on the campus of Lehigh Carbon Community College. The space includes operating boilers, oil burners, heat pumps and furnaces, complete with piping, ductwork, and various components and controls - everything but radiant floor heating.
Bennett initially approached the IQA in 2003, asking for a little space inside the center. But after several discussions, a separate, but adjacent, facility was determined to be more effective. With the IQA's help, Bennett set about constructing an 8-ft. by 21-ft. utility shed, connected to the center. Work began late last summer and was completed this March at a total cost of around $7,000.
Another $10,000 in equipment and materials was donated by various manufacturers, including Uponor Wirsbo, one of Bennett's main lines, which provided the lion's share of the tubing and controls.
Like the Nicolai Center, the new “Radiant Floor Heating Simulator” is a hands-on affair.
“The idea is to do theory training in radiant technology in the center and then move to the simulator to see how a system is actually installed and how it operates. I wanted the students to be able to see and touch the tubing and equipment, and even to change their configurations to better understand how it all fits together.”
Key elements of the facility include:
The Simulator held its grand opening last April with a day-long workshop led by Dan Holohan, attended by about 125 local contractors and their employees.
A formal class schedule will commence this fall, with sessions offered days and evenings. The IQA will also arrange special, independent courses of different durations for its members, and the college will do likewise for any local contractor who is interested.
Bennett will be developing the curriculum for the new Simulator and hopes to teach a class or two as well.
Some IQA members also may use the lab as a sales tool, bringing over prospective customers to see and feel the cozy warm floors that is the prime attraction of radiant heating.