Get ready to take advantage of change

WHAT'S MOST striking about Farmer & Irwin, our Mechanical Contractor of the Year, is how a company that turns 50 in October has been so adaptable to change. The contractor even viewed Hurricane Wilma last October as a good reason to remodel its office space and make other improvements.

That readiness to embrace change has served Farmer & Irwin well, and it sets an example for other contractors to follow. When we select our Mechanical Contractor of the Year, we're not necessarily looking for the biggest company in the industry, but we are looking for one that makes a great role model.

We did mention Farmer & Irwin in our 2005 Book of Giants, although not because it is one of the 100 largest mechanical contractors in the country. The company was the second most profitable one in our survey, with a net profit of 6.4% on sales of $23.5 million.

The company achieved these results after facing one of the most daunting challenges faced by many contractors — passing the business from one generation to the next. A buy-sell agreement that key executives began in 1997 with company founders Dick Irwin and Bob Farmer was completed in 2004.

While management and the founders carefully researched, negotiated and executed the agreement, they relied on the help of others as well. CEO Steve Irwin gives credit to the Plumbing-Heating-Cooling Contractors - National Association's Construction Contractors' Alliance for helping him and his partners through the transition. His CCA peer group gave him advice throughout the process.

Bob Farmer and Dick Irwin had been ardent supporters of PHCC, and Dick passed that legacy along to son. Steve Irwin says that becoming a charter member in CCA is one of the most significant moves he has made, and Farmer & Irwin has changed greatly because of suggestions from the noncompeting contractors in his peer group.

We've seen the value of contractors belonging to trade associations for a long time. Our Mechanical Contractor of the Year's membership in a trade group such as PHCC demonstrates its commitment to the industry. What a contractor invests in the industry through its participation is nearly equal to the benefits it gets back in networking with other contractors, education, member services and political advocacy.

Farmer & Irwin also demonstrates that investing in change can help to increase a contractor's profitability. The company's office staff runs sophisticated software programs on up-to-date computer equipment. Its personnel in the field, warehouse and fab shop all are connected with upgraded communication equipment, which includes 150 Nextel radios.

The willingness to innovate extends to the contractor's operations in its estimating, project management, material handling and prefabrication. The company now is introducing Lean Principles to some of these processes. All these innovations have made the company more profitable.

What they haven't done is detract Irwin & Farmer from its central goal of serving its customers. The company's motto calls for it do the job right the first time and on time, and its employees do what is necessary to back up those words with their actions.

As you begin the new year, you should keep in mind the example set by Farmer & Irwin. The construction market is changing in 2006, and you should be prepared for both the challenges and the opportunities it will present.

Among the challenges that you'll face are a drop-off in new home construction, rising material prices and the continuing consolidation of your suppliers — both wholesalers and manufacturers. Your opportunities include the marketing of high-efficiency equipment for space and water heating as well as alternative forms of energy such as electric radiant heat and solar.

Your ability to adapt to a changing market and your willingness to do things differently could well determine how successful you'll be in 2006. Regardless of the size or age of your company, as Farmer & Irwin has demonstrated, you can be innovative and profitable.