Contractors are working on internal processes to prepare for an improving economy.

While the construction industry is still reeling from the effects of the “Great Recession,” many plumbing and heating contractors contacted as part of Plumbing & Mechanical’s annual Pipe Trades Giants survey are being proactive in attracting new business, satisfying existing customers and working on their internal business processes so they are ready when new construction and remodeling projects start up again.

“We have adopted the three ‘Ls’ - Lean, LEED and Learn,” notesBill Miller Jr., president of Charlotte, N.C.-based Tri/Meck Mechanical. “We have shifted our focus to LEED projects, doing more with fewer people and learning about our business focus and people.”

Kosciusko, Miss.-based Ivey Mechanical has reduced its overhead, concentrated on its key customers and continued training its staff at all levels, says Executive Vice PresidentDenny Terrell. In addition, the company has improved and increased its use of prefabrication.

For Abacus Plumbing (Houston), “aggressive marketing” during the recession has helped it to move past many of the company’s competitors, explains PresidentAlan O’Neill.

B & I Contractors’ PresidentGary Griffinsays his Fort Myers, Fla.-based company has improved its focus in many areas: service; green and LEED projects; training; using its strong financial position and bonding capacity limits to its advantage; and investing in technology tools to improve worker productivity.

Thomas Johns, general manager of Andersen Plumbing (West Allis, Wis.), says the company has used the recession to improve communication within Andersen, which has “greatly improved” its position in the market and company productivity.

Increasing investment in energy and “green” services (such as efficiency upgrades, solar, wind and geothermal) were cited by many companies. Ashland Comfort Control of Ashland, Ohio, began a program of educating its customers on the many different tax credits and rebates available to homeowners for energy-efficiency upgrades, says PresidentJeff Reep, as well as offering more financing options to customers.

A few respondents hired business consultants to help them refine their message to existing customers - through e-newsletters, customer-satisfaction surveys and direct mail programs. Some are promoting maintenance service plans to ensure steady work. For new prospects, a few companies are increasing their radio, television and billboard advertising.

Using building information modeling, lean construction and other project management best practices is slowly gaining ground in plumbing and mechanical contracting businesses. Survey respondents are also bidding more federal government projects, “firing” bad customers, and investing in more training for personnel (especially sales and safety training).

Some survey respondents are spending money on new trucks to bolster company image and new software (back-office systems as well as field communication) to improve productivity. An increased focus on professionalism is a key driver of this trend.

The Stats

Over the last 12 months, 22 percent of respondents reported increased profitability (vs. 28 percent in the 2009 survey), 35 percent reported flat profitability (the same in 2009). Just over one-third of respondents (39 percent) expect 2011 revenues to increase, compared to the 25 percent in the 2009 survey.

Fifty-one percent of respondents say their workload and labor pool are in balance; only 10 percent say they have more work than they can handle with their present workforce. However, 41 percent say they expect work to increase this year; a small number noted that service and repair jobs are up in their areas, as well as remodeling projects.

Private work dominated public work last year (69 percent vs. 31 percent), and new construction vs. service/repair work was even for survey respondents.

Almost 70 percent of respondents stated they had taken part in constructing a LEED-certified building. Sustainable building projects comprised 17.5 percent of respondents’ business, up from 14 percent the previous year.

(Editor’s note: The Pipe Trades Giants are not ranked on total sales volume, but what we call “pipe trades volume” - the percentage of a company’s revenue that comes from plumbing, piping, hydronics, fire protection and water/wastewater treatment. HVAC, electrical and other revenue is not included in our computations.)