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In 1992, Welsch Heating & Cooling Company was awarded the prestigious Residential Contractor of the Year Award by
Contracting Business Magazine. Here is a reprint of this tremendous award...
 REFOCUS TO SERVE
Changing the direction of a century-old company takes foresight, courage, commitment, and drive.
by Lisa M. Murton, Associate Editor
In 1995, Welsch Furnace Co. will celebrate its 100th anniversary. It’s
been guided through nearly a century of operation in the City of the
Arch, Gateway to the West - St. Louis - under the helm of four family
generations.
Started in 1895 at 1501 Manchester Avenue, Welsch Furnace - a
$7,000,000 new-construction and replacement/service business - is now
situated on Welsch Industrial Court, where the company moved in 1970.
Currently under the presidency of George "Butch" Welsch, the facility
occupies approximately 22,000 sq.ft., which includes offices and an
expansive sheet-metal shop.
Upon entering Welsch Furnace Company, a visitor is treated to a
barrage of historical photos dating back to the early 1900s. On one
side of the wall, you see the trucks of yesteryear gearing-up for a
day of coal-furnace installation, attended by the weathered, smiling
faces of men in baggy overalls. On the other side, you see dramatic
four-color shots of upscale housing developments, along with the
recent recognition plaques awarded to the company for its outstanding
services and affiliations.
Butch Welsch, a former SMACNA (Sheet Metal & Air Conditioning
Contractors National Association) president, admits he’s competitive -
not only to succeed in business, but be- cause he loves to win. From a
distance, you may not pick-up on this aspect of his personality. He’s
a friendly man - professional and extremely family-oriented. Yet, he’s
also an avid tennis, golf, and hockey player; auto-racing enthusiast;
and fitness buff - all sides of his personal life that reinforce his
self-description.
That love-of-sport is also displayed in the way Welsch runs his
company - a trait that has been passed down throughout the
generations. As the years have gone by, each Welsch has in some form,
refocused the business to meet a changing market. And, judging from
the company’s success - each one of them was up to the challenge.
Back in the late 1940s and 50s, before Butch joined the company, it
experienced a surge of new-construction work after World War II. At
that time, his father Vincent Welsch was president of the company.
Vincent had taken over operations when Butch’s grandfather died in
1929. "We grew tremendously in the 50s, with the housing boom after
the war," says Butch. "Managing such a huge amount of volume really
put my father to the test, especially with the hand-labor type of
sheet-metal methods that were used back then.
"After the new-construction market started to slow in the late 50s, my
father changed the company’s direction to concentrate on the add-on
air conditioning market. A few years later, in 1963, I joined the
company after graduating from Washington University with a mechanical
engineering degree.
"By the end of the 60s, the add-on air conditioning market was nearly
saturated, so we reduced our service work," Welsch adds. "We began
concentrating heavily again on new residential and commercial
construction.
"We maintained a steady, slow growth through the 70s, yet faced some
difficult times. Having been an organized shop since the late 50s -
employing laborers from the Sheet Metal Workers Union - we went
through two long strikes during that period.
"Fortunately, there was a building slump in 1974-75. It sounds ironic
because nobody likes a downturn - but somehow the timing saved us.
After the last strike, business also picked up again."
When the next slowdown in new construction occurred during 1980-82,
Welsch decided to get aggressive; he went out and obtained several
new, large accounts.
"As the industry picked up between 1983-87, our work also increased.
We employed about 90 sheet-metal workers in 1986-87."
However, when the new-construction market took yet another dive in
late ’87, Welsch determined the slowdown was going to be long and
severe.
"To survive, we needed to change our business direction," he says, "so
we decided to actively pursue the service and replacement business. We
hired Roger Zahn for the newly created position of service manager,
and Paul Kallestad as a replacement salesperson."
Zahn, Kallestad, and Welsch all complement each other well. While
Welsch oversees new-construction and fosters builder relationships,
Zahn focuses on service, marketing, and advertising. Kallestad, a
former Lennox territory manager, turns leads into customers.
After adding Zahn and Kallestad tc, the Welsch team, the company’s
replacement business increased over 70% in 1989, 42% in 1990, and 20%
in 1991. Today, about 80% of Welsch Furnace Co.’s work is residential
new-construction, with 20% service and replacement. They have about a
35% share of the local homebuilding market.
Zahn, who had 15 years experience at another hvac company - from
service technician, to sales, to service manager - was introduced to
Welsch by a local wholesaler. Excited by the opportunity to build a
service division from the ground-up, Zahn eagerly accepted Welsch’s
offer to join the company.
During his first year as service manager, Zahn executed a plan that
resulted in over 600 new service contracts. In 1991, the year he took
added responsibilities as general manager, the company reached nearly
1,000 service contracts. His goal for 1992 will be to bring that
number up to 1,200. These figures are commendable, considering that as
little as four years ago, the company had no service contracts at all.
What is the key to such impressive figures in a down economy? "It’s
our customer-service philosophies," says Zahn. "We also have a real
advantage because of our standing in the new onstruction market; we
turn many homebuyers into service customers. Three months after a home
is built, we send the homeowner a letter introducing ourselves. Eleven
months later, we send another letter telling them their 1-yr. warranty
is about to expire. At this time, we further explain the benefits of a
service contract.
"We find that offering five major lines - Bryant, Trane, Lennox, Rheem,
and Janitrol - provides us an added advantage," he continues. "Most
customers are familiar with these brands, as well as the Welsch name,
which many of them have grown up with. Our logo highlights how long
we’ve been in business."
Other leads for service customers are generated through advertising
and direct mail programs. One method they have found particularly
effective is offering introductory coupons to customers of local
grocery stores. They are color-coded, so employees can monitor their
effectiveness.
Additionally, Welsch Furnace advertises on cable TV and radio, in the
newspaper, and through a professionally-produced video cassette
showcasing the company’s history, facilities, and capabilities.
"In addition to using it for promotional purposes, we give every
potential customer the Welsch video," says Zahn. "It’s our way of
thanking them for their time."
"We’ve been advertising since the early 1900s," adds Butch, pulling a
box of old Welsch Furnace matches from his office closet. He also
displays a metal fumace tag, one of many that were installed on
systems as far back as the late 1940s.
"We are extremely committed to advertising," says Zahn. "In tough
economic times, it can be tempting to cut back on advertising dollars
- but we simply can’t afford to. It’s so important to have our name
out there."
What challenges do the Welsch team face, developing and growing a
service and replacement division after so many years focusing on
new-construction?
To begin, Zahn had to hire an entire force of service technicians.
From his own personal experience, he knew what good qualities to look
for.
"We have several outstanding technicians. In addition to technical
training, we also teach them how to sell the benefits of service
contracts. Technicians are our best salespeople because customers
trust them. They earn commissions on service-contract sales because we
believe incentive is important.
"We also have open lines of communication. I motivate the crews by
listening, coaching, and by being a friend as well as a technical
advisor. We hold monthly meetings to maintain a good dialog."
Working with Zahn to keep operations running smoothly are Denise Webb,
assistant service manager, and Sharon Ewing, dispatcher. Webb handles
service administration duties, while Ewing ensures that all customers
are served promptly. Both strive to give technicians logical service
routes so they can make as many calls as possible on a given day. For
example, since each technician drives their truck home at night, their
first job the next morning is scheduled as close to home as possible;
they don’t have report to Welsch headquarters until later in the day,
so this cuts down on drive time.
Another important position in the service department is parts runner.
The current full-time employee in this position, Scott Talbert, is
responsible for stocking each truck, ordering and logging inventory,
and assisting technicians who need things brought to the field.
"Good organization is vital," says Zahn, "which combined with our
follow-up service on new-construction, gives us a real edge. No matter
what business you’re in, service is the most important element."
Butch Welsch has never been big on titles. His management style is a
far-cry from the boss of the 50s and 60s. He instead prefers and
fosters a team atmosphere in the work environment.
"Our job here is to serve customers, and that means everybody does
anything that is necessary. Our departments are ."ross-functional;
each knows what the others are responsible tor. We don’t have one
person with a customer-service representative title - we’re all
customer-service representatives."
Welsch promotes company-wide understanding and par- ticipation through
such means as newsletters, social activi- ties, and a yearly off-site
meeting for all employees. At the meeting, everyone is encouraged to
discuss their concerns, and give suggestions for improvements during
the upcoming year. Additionally, management ex- plains plans, goals,
and the company’s direction.
"It’s a way for everybody to be a part of things," says Welsch.
"That’s one of the most important requirements for being a team that
provides quality service."
Unsurpassed customer service, to Welsch, means doing the best possible
job - giving the customer the most value in the job that is best for
them.
"It includes doing everything you say you are going to do - when you
say - and then following up immediately if anything else needs to be
done.
"I believe it’s important to give buyers what they need. Fortunately
we don’t have to sell one more furnace or air conditioner to stay in
business if it isn’t right for the customer.
Paul Kallestad agrees. He is so dedicated to customers, that he spends
at least 1M hrs. on every sales call. "I don’t call myself a
salesman;" he says, "I’m a problem-solver. My job is to meet with
customers, define their needs, and then present solutions. That takes
time, effort, and good listening skills.
"When a customer buys hvac products, its a big investment. I run a
heat loss/heat gain analysis on every potential job, and then discuss
energy savings and payback. It’s so important to present a
professional image. Customers need to know they can count on you."
Kallestad follows-up on every sales call by bringing invoices to
customers, and making sure everything is working properly. It is that
extra attention, he says, that makes all the difference.
The semi-annual St. Louis Home Show is approaching rapidly. Employees
are busy putting promotional packages together, making phone calls,
and looking over photos of last year’s booth.
"The Home Show is a big event for us," says Zahn. "It’s tough work and
long hours, but we make a lot of contacts."
Indeed, their booth is impressive. Staffed by Welsch’s good-looking,
approachable employees, consumers can stop by to take a look at the
latest in home comfort equipment.
"We also encourage our builder customers to attend by sending out free
tickets and inviting them to visit our display to pick up a free
promotional item," says Butch.
"During the show, the local homebuilders’ association also holds an
annual Product Showcase," he adds. "This is a one- day event where
suppliers and subcontractors use tabletop exhibits to display the
latest developments in their particular industries."
At the last Product Showcase, Welsch played the host of a just-for-fun
version of Wheel of Fortune.
"It was both networking and an opportunity to get my picture on the
cover of the local homebuilders’ magazine. This is just another way to
keep our name out there."
Welsch works actively with the local homebuilders’ association. He
serves on committees, keeps builders up-to-date on hvac issues,
attends meetings, and sends regular informational mailings.
"We have as much of the builder market as we possibly can at this
point. That’s not to say we wouldn’t like more, but there are several
factors at play. First, some of our best customers usually allot about
15% of their work per year to other contractors. Second, there are
some builders we just don’t want to work for because of their methods.
Finally, there are other contractors who have had the same
long-standing relationships with their builders as we have with ours,
including family connections.
"Personal relationships are vital," he continues. "My father began
teaching me the importance of contacts and networking back in the
1940s. It’s b en a family tradition for years."
Welsch also networks at his community’s country club - Forest Hills -
where he serves as a board member. He recently completed a $3.5
million dollar renovation at the club’s complex.
Additionally, Welsch sits on the board of a local bank (where many of
his fellow board members are customers), and participates in St. Louis
Counts - a volunteer organization of business and civic leaders
working to attract new business, build community spirit, and promote
St. Louis County. He has also made numerous contacts and friends by
being ac tively involved in the social lives of hi children Wendy, now
24, and Bryan 19 for instance, he’s served as an announcer for Wendy’s
former swim team, and shares in Bryan’s love of fiying.
Wendy, who has a master’s degree in elementary education, met her
now-husband Matt Finch at DePauw University in idiana. After they were
engaged in 1990, Butch offered Finch a place within the company. After
their wedding last June, Finch and Wendy came back to St. Louis to
accept the offer. Bryan Welsch, who is studying for a career in
aerospace engineering, was happy with the news.
"I’ve never pressured Bryan to join the company, but rather encouraged
him in other areas in which he is so talented," says Butch. "He was
really thrilled to hear that Matt was coming aboard, so the
family-tradition could be carried on. My only brother is a clinical
psychologist, so I would have otherwise been the last Welsch in line
for the business."
Finch has a degree in economics with a background in food service
management. He is currently performing general services at the
company, getting a feel for how the business is run. He’ll work in
various parts of the company to see which areas he is most talented
in.
"It’s interesting leaming about hvac," says Finch. "Because of my
background, I too have high standards for service. A good service
philosophy and work ethic is important in any type of business."
"We’re taking the whole thing one-step-at-a-time," adds Welsch,
"seeing where it all will lead."
It’s a sunny morning, brisk but pleasant, and Butch Welsch pulls up in
his sporty mini-van. He’s ready to tour the outskirts of West County,
to show-off beautiful displays of homebuilding where his company has
installed hvac systems.
"Most builders here are experiencing a harsh slowdown," he says, "but
there are alternate projects going on, such as new, affordable housing
developments." Welsch is also working on some apartment and retirement
complexes, as well some commercial-service accounts.
Meeting with Don DeLonjay, fabrication and installation
superintendent, Welsch discusses the work at a nearby jobsite.
"Everything’s on schedule," says DeLonjay, who often begins his
mornings at 5:00 a.m. He currently oversees about 50 fabricators and
installers.
"We have good people," he says. "Many of them are from sheet metal
families with a tremendous work ethic. It’s fulfilling to see them
grow, learning to use new technologies such as the plasma cutter."
"Our union-trained employees are outstanding," adds Welsch. "We hire
those who have been through the apprentice training program, and also
provide ongoing training of our own. We often have manufacturers’ reps
come in to perform onsite training."
Also working with Welsch and DeLonjay is sales engineer Scott Martini.
He joined the company in 1990 with seven years experience in the hvac
industry. Martini does plan takeoffs and designs for both residential
and commercial heating and air conditioning applications. He then
provides estimates for use in preparing company bids.
"Scott has also been very helpful in the field," says Welsch. "He
works with me to maintain positive personal relationships with our
builders and suppliers."
The view over St. Louis at night is fabulous. Busch Stadium yawns
while the Arch stretches out its arm over glitzy showboats slowing
tugging along the Mississippi River.
"Being born and raised here, we love this city," says Butch’s wife,
Carol, over dinner. "But during Butch’s year as SMACNA president, we
had so many fascinating opportunities to see North America," she says.
Welsch joined his local SMACNA chapter in 1970. Previously he had been
(and still is) involved with the Air Conditioning Contractors of
America. He served as local president for that association - then
known as NESCA - for three years.
As an active association member, Welsch has given countless hours of
his time to the industry. Beginning in 1972, he served as chairman of
SM.ACNA’s Residential Programs for 10 years. In 1978, when the
association’s board of directors conceived a Future Managers
educational program, Welsch and four others were named to the
committee to design the curriculum.
"The Future Managers program was designed to train the next-generation
of members. It was a one-week course held for three consecutive years
at the University of Colorado. We developed it in conjunction with an
outside consultant. It was very professional and challenging. It
continued for about 7 or 8 years, until we finished training the
majority of the next generation - about 600 people. Many young SMACNA
leaders have been through that program."
Welsch has also worked as chairman of the Business Management
Education Committee, helping develop seminars, publications, and the
Contractor’s Financial Management Library (a 12 volume workbook/video
series). He had just been named chairman of the Membership Committee
when he took over the presidency of SMACNA lll 1989.
Welsch’s year as president was unexpected. The original candidate
slated to be president that year was unable to serve, and the
president-elect and vice president still needed more time to prepare
for their terms. An executive board member recommended Welsch for
consideration.
"It was a unique situation," says Welsch. "I was an objective person
who didn’t have platforms or preconceived notions for the
association’s di- rection that year, so it allowed for some creativity
and innovation. On the other hand, I probably didn’t do as much as I
could have, had I a few years to prepare.
"It was a big time commitment. I was away from my business % of the
time. I went on 65 trips, many of which Carol accompanied me. It was a
spectacular experience. I was proud to see how well-respected the
association is throughout the world. During my term, we signed a
chapter in Brazil, and have since signed one up in Japan.
"It’s very gratifying," he adds, "to look back and say you’ve been the
president of an association - and did it without having the walls
tumble down."
Currently, Welsch serves as chairman of SMACNA’s Convention and Trade
Show Committee. What drives him to be so committed to serving the
industry?
"The most important factor is giving back to the industry. Yet you
also get a great deal of personal satisfaction, and your business
benefits, too. When you’re involved, you know what’s going on from all
points of view - the Union, builder codes, education, technology, etc.
Everyone has the ability to provide input, encourage change, and be
involved. It’s really a shame that more people aren’t involved."
Where is the hvac industry heading? Welsch sees more emphasis on
indoor air quality, including air cleaners and air-to-air heat
exchangers. "Those types of products will probably be popular for the
next three or four years," he says. "By then, we’ll probably see
prices drop on condensing furnaces, making them more cost effective.
"I think the cost of high-efficiency equipment will probably fall
considerably," he adds. "And we’ll continue to see evolution in
higher-SEER air conditioners as scroll compressors get wider
distribution."
Does Welsch see a shakeout of less-professional contractors in
upcoming years? "I think the need for recovery, recycling, and
reclamation may force some of the smaller shops to become legal,
honest, and reputable, and charge high enough prices to pay for the
equipment and refrigerant. There will always be those who dart
in-and-out of the business, but now consumers will be more aware that
they’re not playing by the rules.
"I think manufacturers are encouraging more professionalism. The
sophistication needed to run a business, as well as the technology
required to service equipment, is much greater today than it was 5 or
10 years ago.
"It seems that manufacturers are trying to reduce their total dealer
base and weed- out weaker companies - those who have a lot of
installation problems or don’t pay their bills - and concentrate on a
smaller group of contractors to get the same amount of volume. For
quality dealers, this is good news."
As far as entering other markets, Welsch says for now, his company
will continue to do what it does best.
"We have a long way to go in service and replacement. We’ll spend a
lot of time and money developing our strengths in those areas over the
next few years.
"I’ve heard seminar leaders stress the dangers of trying to learn a
new industry, when you’re having a tough enough time in an industry
you know. I think it’s very important for business owners to remember
that."
Drawing on what they’ve lear.ned for four generations makes the Welsch
team pretty knowledgeable. Running and refocusing a company that is
nearly 100 years old is an honorable challenge - tough but rewarding.
Happy (almost!) birthday, Welsch Furnace.
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