Plumbing in a New Direction

Jet Plumbing reorganizes and rebuilds into a stronger company with better revenue control and cost allocation.
Plumbing in a New Direction
The leadership team at Jet Plumbing includes (from left) Don Smith, drain department supervisor; Bill Garlick, technical expert/quality control; Jason Deen, plumbing department supervisor; Jim Walker, owner; Tommy Stegmaier, operations manager; Bill Burgess, underground department supervisor; Al Solomon, HVAC department supervisor; and Drew Rolley, vice president of marketing.

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Jim Walker’s family-owned plumbing business had been around nearly 40 years when the recession hit and his staff was reduced from 50 to only 25 in a matter of months. Walker realized he had to halt the bleeding, so in 2008 he took some measured but necessary steps.

Jet Plumbing, Heating & Drain Services serves Reno and the surrounding area, including Lake Tahoe. The family-owned business started out in 1969 primarily doing drain work, but by 1990 plumbing, jetting and CCTV inspection were on the menu. At that time, Walker and his sister, Nanci Thomas, became partners, with Walker being the majority shareholder. They soon expanded into underground sewer and waterline work as well as HVAC services. They added pipe bursting in 1999.

Things were rolling along smoothly until the bottom dropped out of the economy. When business started to suffer, Walker knew he needed to reorganize. He created four distinct departments within the company and put a new focus on accounting practices and accountability so every dollar and every hour could be tracked.

By the end of 2014, the company was back up to 45 employees, with 25 service vehicles on the road and a solid residential and light-commercial customer base.

 

Road to recovery

The company had always operated as one entity without separate service departments. Plumbing was the driving force with HVAC, drain and underground services sharing near equal percentages of business, but they were lumped together as one for accounting purposes. When searching for the right measures to restore the company, he realized that results of revenue and costs were so blurred that it was impossible to sort out. Everything and everyone worked under the same umbrella, and there was nothing that clarified where the profit was coming from or how to properly account for expenses.

“What I did at that time was set up a profit and loss program and formed four separate departments so basically we could see where we were making money and where we needed to concentrate our efforts,” Walker says. “It took us probably five months to get this all set up so we could begin to allocate the different expenses. It was kind of an evolutionary process. Once we felt we were good with the numbers, we could take a closer look to see what they were telling us.

“We found that each department has a very unique set of indicators and gross profit,” he says. “It makes sense actually.”

Each employee is now designated to a specific department. There are some “combo guys,” but they still belong to one department and their time is cross-billed when they assist in another. For instance, a plumber might cross over on occasion to work in the drain department. The drain department gets the revenue, but the plumbing department gets the cost of that plumber’s time and the money is allocated from drain back over to plumbing. “This makes sure all is whole,” he says. “We then put a supervisor over each department. These were critical steps for us to take during the financial crisis.”

Walker gives credit to his wife, Robin, a CPA who manages the office. He says her accounting skills have been critical in the transformation.

 

New roles

Jet Plumbing supervisors are all technicians who have been with the company for many years and offer a wealth of experience. Bill Burgess oversees Underground; Don Smith, Drain; Al Solomon, HVAC; and Jason Deen, Plumbing. Collectively they total 86 years of service with the company.

Other changes in the corporate structure included promoting plumbing supervisor Tommy Stegmaier to service manager, overseeing field operations for all divisions.

“This was critical for me as the owner,” Walker says. “Do I want to spend all my time doing fieldwork or do I want to be an owner looking forward and achieving things you have to do to grow a business?

“Chain of command and accountability are buzz words, but it is so true. I tell my employees business is business. We just have a different product. So we try as hard as possible to make it a well-run business.”

Bill Garlick filled another key role when moved into the position of technical expert/quality control. “Bill is our ‘go-to guy’ when our techs run into problems,” Walker says. “He is awesome at everything.”

At the end of 2014, the plumbing department represented 47 percent of Jet’s overall revenue. Drain, HVAC and Underground represented roughly equal portions of the remaining 53 percent.

 

Staffing up    

Walker acknowledges that it’s difficult to find skilled people. They typically hire on an as-needed basis but do keep resumes on file. If a highly qualified individual applies, he’ll try to find a way to bring that person on board.

“Our hiring is based on the applicant’s experience, but it also depends on what we need. We have seen people with mechanical aptitude but no experience, but we will spend the time to train those people. If we find someone with some good experience with another rooter company, we will pick that person up.

“With new hires, we put an individual with one of our techs for a couple weeks. This accomplishes two things: We can get feedback from our service tech, and secondly the new hire can learn our way of doing things.”

New technicians are taught to engage in a good dialogue with clients to help them make informed decisions. “We don’t want anyone to feel pushed into anything.

“We can provide a camera inspection (Vivax-Metrotech) for an extra fee, but we never want to seem to be selling something they don’t need,” Walker says. “This is where the dialogue comes in. If we run the snake down and hit a bad spot, we know it is a bad spot. We will know the general condition of the line. We would gain more knowledge from the camera, but we can also tell the customer that we could service the line once a year and it will probably be fine. If we believe there is root infiltration, we might suggest twice-a-year service. On the other hand, if the system backs up it might flood the basement. There is a flip side. That is kind of what we do to help them make a decision.

“We want our customers for a lifetime. We offer honesty and trust. If we don’t make them happy, somebody else will.”

 

Where rubber hits the road

The company service vehicles are Chevrolet and Ford 3/4-ton extended vans. They are kept in service up to around 150,000 miles, but that all depends on the vehicle itself and its history. Walker says it’s kind of like threading the needle to make these decisions. Sometimes it will cost more for repairs than to replace, and he goes on long-term statistics in making the subjective calls.

“We have nothing really set in stone, but sometimes you have a vehicle well cared for, still looks good. Everything’s OK. You might want to do a new transmission or engine. That costs way less than payments for a new van. On the other side, you might have a van that is dinged up and doesn’t really present well. Time to get rid of it at 130,000 miles.”

Each service vehicle carries from $4,000 to $5,000 in inventory.

Heavier equipment includes a 2002 GMC 10-yard dump truck, a Case Construction 580 Super K backhoe, a Caterpillar 303.5C mini excavator and a Bobcat 830.

They operate out of a 1-acre fenced facility with a two-story, 7,000-square-foot building. Technicians are free to return their vehicles to the yard or bring them home at the end of the day. It all depends on the location of the last job and the situation at hand.

 

Team building

Walker’s efforts to build a more efficient and cohesive working unit continue to benefit the company. From the first call to dispatch where Walker’s niece, Tara Terry, sorts out the issue to the final phase of a job, the pieces of the puzzle fit nicely together.

Wednesday morning safety sessions allow all departments to discuss their experiences, challenges on recent jobs and customer interactions. It provides insight and perspective and helps everyone serve their customers better.

Walker says 95 percent of what they do is routine. “But the 5 percent always offers a learning opportunity, and that includes the hands-on work and interacting with the customer,” he says. “Whatever, whenever something like this can be a story from the field. Knowledge we can all collect. We have to keep in mind that we are really just another plumbing company, but we want to offer honesty and integrity that sets us apart wherever possible.”

He says there are two distinctly separate but rewarding aspects of running the company. “First is the people — our employees — seeing their development, from a guy sitting across the table and my not knowing that person, to the growth and friendship that develops over the years. You just never know at the beginning. That is rewarding.

“The second thing to me, as an MBA, is running my own company. Running a business and trying to do all the things that business philosophy suggests and then getting them implemented and seeing the results. That is very rewarding.”



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