BY ROBERT P. MADER Of CONTRACTOR’s staff
LEAWOOD, KAN. — The mechanical construction industry continues to be a challenging arena in which to do business, acknowledges Mike Gossman, incoming president of Mechanical Contractors Association of America. Consequently, the best thing MCAA can do is to continue its outstanding educational programs, said Gossman, chairman and CEO of Midwest Mechanical Contractors.
MCAA keeps its educational offerings current and relevant through constant observation of the needs of its members and the state of the industry, he said.
“During my presidency, I plan to continue our strong focus on educational programs tailored specifically to the expressed needs of our member companies,” he said. “In the coming year, we will be rolling out two strong new programs: an advanced version of our very successful Institute for Project Management and a series of seminars for graduates of our Advanced Leadership Institute.”
Part of the challenge facing MCAA members is the constant emphasis on price.
“As with most companies these days, our biggest challenge is how to make sure we exceed our customers’ expectations while being the low-cost producer,” Gossman said. “This forces us to continue to develop new methods to perform our work.”
Even alternative delivery systems, such as design/build or negotiated work, do not take the emphasis off low cost. In addition, mechanicals have to deal with owners, construction managers and general contractors who want to buy out the equipment themselves, and the use of Internet Reverse Auctions for procurement of mechanical services.
“While I don’t agree these methods will produce the lowest cost, it is clear that achieving the lowest costs is the driver in spite of the method of delivery,” Gossman noted.
The thorniest business issue mechanicals may face is finding insurance and bonding.
“The consolidation of the insurance market is going to have a dramatic effect on the industry,” he said. “Already you are seeing many companies that are no longer able to bond their work and companies that have reduced the limits or dropped some insurance coverage altogether. This is going to force general contractors and owners to accept more risk themselves, or only work with the companies that are financially strong. This situation will be one to watch over the next couple of years.”
MCAA can help its members control their risk exposures by educating them about acceptable contract language. MCAA is also working with other associations to develop standard contract language that is acceptable to all parties.
Gossman has been in the construction industry since 1973 and holds a B.A. in accounting from the University of Missouri — Kansas City. He started as an estimator in 1973 for Sanders Plumbing & Heating Co., a mechanical contractor in Kansas City, Mo. He worked for Sanders until it closed in 1988. During that time he also worked as a project manager, chief estimator, vice president and CFO.
Gossman did consulting work until 1990 when he joined Midwest as president. In early 2000, he was promoted to CEO. In January 2002, he assumed the position of chairman.
During his tenure at MMC, the company has made the dramatic transition from a family-run company to an employee-owned firm.
“At the end of 1999, we established an ESOP that purchased 30% of the company,” he said. “Then, at the end of 2002, we became 100% employee-owned. We went from a family-owned company to one managed by a team of executives. We also added outside directors to our board in 2003 after becoming 100% employee owned. In addition, we started an ESOP Communications Committee to get the employees more involved in the company that they now own.”
MCAA continues to have a strong relationship with the United Association and President Marty Maddaloni. The union has done a good job providing well-trained crafts people, Gossman said, although the union and MCAA need to work harder at overcoming the negative stereotype of construction among young people.
Union contracting has been strong of late, he said.
“The late 1990s saw a reversal of the decline in union membership,” Gossman said. “Taking our association as an indicator, we have increased membership from 1,800 contractor-members to 2,300 in the last five years, despite the decline in the economy. While the gains may not appear significant, you need to consider that the growth in construction has primarily been in the residential sector, where union construction is less prevalent.”
MCAA has been in the business of serving the interests of mechanical contractors for 118 years, he pointed out, and its biggest challenge has always been to use its understanding of the industry’s challenges and opportunities for the benefit of its members.
“Through these many years, MCAA members have consistently expressed appreciation for the excellent return they receive on their investment in MCAA,” Gossman said. “The gain in membership is clear evidence of that. We intend to continue to earn their high esteem.”
Gossman has been active in the association on both the national and local level. He chairs the Investment Advisory Committee, and he has served on the Education/Convention Committee (including two terms as chairman), the Advanced Leadership Institute Committee and as the contractor liaison to the Manufacturer/Supplier Liaison Committee. On the local level, he serves on the board of the Mechanical Contractors Association of Greater Kansas City, as the MCA representative on the APSC Labor Management Committee, as Pipe Fitters Local 533 Health and Welfare trustee and as Pipe Fitters Local 533 JAC chairman. He has also served on the Negotiation Committees for Locals 8 and 533, as MCA representative CIAC, on the MCA Substance Abuse Committee and on the Local 533 Joint Apprenticeship Committee.