Plumbing Company Sees Business Improve Thanks to Operational Change

Hawaiian plumber finally learned how to work on his business, not in it

Plumbing Company Sees Business Improve Thanks to Operational Change

 The management team from Allens Plumbing includes, from left, supervisor Ken Davis, owner Steve Allen, project manager Josh Kamaunu and operations manager Kane Coile.

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When Steve Allen established Allens Plumbing on the Hawaiian island of Maui in the early 1980s, he had no grand strategy for becoming the owner of a multimillion-dollar-a-year operation. Instead, he found himself attending the School of Hard Knocks.

“My main business plan was hunger — just trying to make a living so I could eat,” Allen says. “Happiness is being too stupid to know what to worry about, so I just kept plugging along.

“I did business like that for about five years,” he continues. “Then I found a little source of direction and I’ve been following it ever since.”

Transforming the company into one of the larger service-and-repair plumbing companies in Hawaii required Allen to drastically change how he did business on several fronts, including getting out of a truck and into the office full time.

The results speak for themselves. This year, the 64-year-old Allen expects his company — based in the city of Kahului and serving the islands of Maui and Oahu — will generate more than $7 million in gross revenue. The company employs 40 people, runs more than 20 service vehicles and is a well-diversified business, with drain cleaning and trenchless pipeline rehabilitation divisions.

About half of the company’s revenue come from commercial and residential service and repair work, with drain cleaning contributing another 25% and the balance generated by trenchless pipe rehab. But Allen notes that drain cleaning is very important because it often leads to service work. In fact, Allen pays his drain cleaning technicians a referral fee if they generate work for service plumbing technicians, he says.

A FOCUS ON PROFITS

What helped Allen morph from what he calls “a bumbling idiot” into a businessman? First of all, he’s competitive, both personally and professionally. On the personal side, he still runs in the masters division of the annual USA Track & Field competitions, running the 100-, 200- and 400-meter races.

“I’m competitive by nature,” he says. “I don’t like finishing second.”

Along with that competitive streak, Allen adopted strategies for growth. Chief among them is charging service rates that are high enough to generate sufficient profit to pay quality technicians competitively, as well as leave enough money left over to invest in quality, productivity-enhancing equipment.

“Some business owners think profit is a dirty word,” he says. “As a business owner, it’s easy to forget the importance of profitability because you’re too busy trying to make things look right — get the right image with your trucks and your technician’s uniforms and build a reputation.

“When I first started out, I was too busy trying to be pretty, not profitable. Sometimes you get lost and don’t see the forest for the trees,” he adds. “You have to make money to pay people properly and buy good equipment.”

TAPPING OTHERS’ KNOWLEDGE

Allen also wasn’t afraid to ask other plumbers for advice, he notes. When he took vacations, he often went to Southern California, kept an eye out for nice-looking plumbing trucks and then tracked down the owners to ask them questions. One such venture led him to a plumber who recommended a business management software called Compushare; Allen’s company still uses it today.

Furthermore, Allen was an early adopter of profit sharing plans for employees and flat-rate pricing. “Between the profit sharing and buying the (business management) software, I became a real company,” he says. “Learning about profit sharing gave me a direction to be responsible to employees and to create a company with long-range plans.

“The software forced me to become more business-oriented because I had to learn to fill in blanks with the data that the software was requesting,” he says. “Computerizing the business really pushed things forward. If you’re not thinking business, you’re not going to be a business. Before that, I used to run my business on 3-by-5-inch Rolodex notecards.”

Last but not least, Allen embraced new technologies that allowed his technicians to work more efficiently and opened up new markets, such as trenchless pipeline rehab systems like pipe bursting and pipe lining.

FROM TRUCK TO OFFICE

Allen began his career at a plumbing outfit in Los Angeles County. After finishing his apprenticeship, he moved to Hawaii. “I always wanted to live there,” he says. “I didn’t have any money at the time, so I figured if I have to work for a living, why not work where people come to play?”

The company’s growth increased significantly around 2000 when Allen got out of his truck and started working on the business, not in it, as he puts it. “The toughest thing is setting down the tools,” he says. “It was a very rough transition. But it wasn’t a good combination to work in the field and also try to run the business at the same time.

“You cannot be in the field and manage a business of any magnitude properly,” he adds. “You just can’t.”

One thing Allen worked on was setting up formal processes for all areas of the company, from dispatchers to field technicians. “I focused on how we dress, how we answer phones, how we greet customers — systems, systems, systems,” he explains. “I wanted to make sure everybody does the same things the same way.

“It’s kind of like the way McDonald’s delivers consistency for customers,” he continues. “Without consistency, employees don’t know what to deliver; and if things aren’t uniform, you don’t have a good business — you’re all over the place.

“After 10 years or so, I realized we actually had a real company here.”

How did Allen know what to do? He says he read trade journals, attended trade shows and conventions, and visited other shops that he heard about through the proverbial grapevine.

ENTER TRENCHLESS TECHNOLOGY

Around 2000, Allen diversified the company by moving into trenchless pipe rehab technology. He recalls being blown away after watching a pipe bursting demonstration for the first time.

“I thought to myself, holy crap — they just installed a new 50- or 60-foot sewer line and didn’t do anything but pull a new pipe through the ground,” he says. “Pretty impressive. It opened my eyes to a whole new area of plumbing.”

Since then, Allen has immersed himself in trenchless techniques. The company currently owns pipe bursting systems made by TRIC Tools and a cured-in-place pipe lining system made by MaxLiner USA, using felt liners from Applied Felts. It also owns a Quik-Coating System built by Pipe Lining Supply.

“Underground trenchless rehab was a game changer,” Allen says. “It gave me a new direction. On one project, we burst, lined and coated pipes, plus we did some spot repairs. That’s what you need in order to succeed in this industry — a quiver full of arrows, not just one arrow.”

The company also runs 20 service trucks, mostly Mercedes-Benz Sprinters and a few Ford Transits; a Mercedes-Benz Metris van for drain cleaning jobs; four trailer jetters (18 gpm at 4,000 psi) made by Sewer Equipment and US Jetting; a larger trailer jetter (60 gpm at 2,000 psi) from Sewer Equipment; around 10 Brute portable cart jetters (9 gpm at 4,000 psi) made by Jetters Northwest; nearly two dozen Quadra Plex drum cable drain machines; Maxi Miller, Midi Miller and Mini Miller drain machines built by Picote Solutions; more than 20 RIDGID SeeSnake pipeline inspection cameras; a pipeline inspection camera manufactured by RauschUSA; and more than 20 Gvision V1 inspection camera monitors made by EPL Solutions.

Allen knows many of the owners of these companies and says he often provides input on ways to improve products. How does he know so many people in the industry? “I meet them at trade shows,” he says. “I’m passionate about this, baby. We’re all going to the same place together, so we all have to work together to figure out how to get there.”

REMOTE LOCATION

While working in a natural paradise like Hawaii is nice, it also poses challenges. While the time it takes to get materials, parts and tools shipped from the mainland has improved significantly over the years, some items can still take a long time to arrive. That forces the company to plan ahead and carry more inventory than a typical plumbing company might, he says.

Shipping costs also make buying big items — service trucks and larger tools and machines, for example — more expensive. “To ship a cube truck might cost us $5,000 extra and a hydro jetter might cost another $5,000 to $6,000 in freight,” Allen notes. “We pass those costs along to customers.

“Hawaii also has some of highest tax rates in country, too,” he continues. “And the state mandates that we pay health insurance premiums for anyone who works more than 20 hours a week — and that includes medical, dental and vision. We’ve been doing that for more than 20 years.”

There’s also the matter of commuting between Maui and Oahu. Allen solved that problem by obtaining a pilot’s license about 15 years ago. He flies a Piper Saratoga to commute between the company’s two offices every week; it takes around 45 minutes to make the 90-mile flight, he says.

Looking back at his career, Allen says there’s no big secret to success. “It all comes down to desire — and for me, it also was fear of failure,” he notes. “There’s not much magic involved, you just wake up every morning, get out of bed and work hard — be the best you can be.”

As for the future, Allen sees more growth for his company, guided by senior management employees like Ken Davis and Darren Kenny, the general managers of the Maui and Oahu operations, respectively, and Kane Coile, the company’s operations manager.

“These are the guys who will take the company forward,” he says. “They’re already assuming more responsibilities.”

Does that mean retirement looms? “Naw,” Allen says. “I don’t see any reason for that yet. Why would I want to miss out on all the fun stuff?”


Employee retention 101: Bring on the passion for plumbing

Ask Steve Allen how he retains quality employees at Allens Plumbing, headquartered on the Hawaiian island of Maui, and he just might tell you a story of what spurred him to enter the trade.

Allen’s aha! moment came in February 1971, during the aftermath of the so-called Sylmar earthquake, a 6.6 magnitude quake that lasted 12 seconds, killed 64 people, injured 2,500 more and did $550 million in property damage in California’s San Fernando Valley.

“I was 15 years old at the time, and my father, who was a plumber, asked me to work for him in the field, restoring water and sewer service to homes,” he says. “I got a badge that allowed me to go anywhere, even behind police and National Guard lines.

“I did that for about three weeks, and that’s when I really and truly understood how important plumbing is,” he recalls. “I’ve never forgotten that. Seeing all those families with no water or sewer services. It was pretty powerful — a defining moment for me.

“I still talk about it at company meetings to stress the importance of what we do, which is deliver a much-needed and required service.”

That passion for plumbing is contagious, he says. And beyond pay and benefits, it’s one of those intangible things that he believes helps the company retain employees. Allen uses a sports metaphor to make the point: A-level players don’t want to play for B-level coaches.

“I’ve been told many times that I have a strong passion for what I do, and it spreads,” he says. “I have managers who to this day still tell me that I showed them how to do this or that and they enjoyed the passion behind it — how we challenge our employees to be the best we can be and always stress how much our work adds to people’s quality of life.”

“If people can’t flush their toilets or take a hot shower, life changes real quick,” he concludes. “We have a responsibility to make sure people can flush their toilets and have hot water. It’s just that simple.”



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