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2011 Contractor of the Year Article
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Cover Story: 2011 residential contractor of the year Now in its second generation of ownership, and looking forward to a third, Hobaica Services, Phoenix, AZ, is everything an HVAC company can be, by following the highest standards of service, ethics, and business management. Walking theWalk in Phoenix Although he’s now in his late 80s, the memories are vivid for Paul Hobaica: memories of growing up in hard economic times, of helping his immigrant parents make ends meet; of striking out on his own in business; and, best of all, of building a life as a husband, father, and business owner. Paul Hobaica founded Hobaica Refrigeration in 1952, working out of a three-car garage in Glendale, AZ. He soon moved to Phoenix, where there were greater opportunities in commercial refrigeration. Residential air conditioning became the company’s main business during the 1960s, when air conditioning was fast becoming a “must have” service, especially in the blistering heat of Arizona summers. Hobaica Services is an HVAC industry leader. It always has been a leader, even during its formative years, when profits were more elusive. Paul Hobaica’s quiet tenacity and belief in what he could do to help people live better and feel better set the bar for others to attain. Nowadays, Hobaica’s shows a profit in every year, and it continues to serve as a model of excellence, in business management, marketing, dedicated customer service, generous employee incentivizing, training and certification, and ongoing service to the HVAC industry and the community. in a supermarket, and performed various electrical side jobs. As air conditioning’s popularity grew, the company experienced slow but steady growth. The senior Hobaica did his best to provide for his family of seven children, and put them all through college. He was also committed to helping those less fortunate than himself. “My father founded the business on two basic principles: the more you give, the more the good Lord will provide; and, From Very Little to Very Much Paul Hobaica arrived in the U.S. from Cuba with his Syrian parents in 1924, at the age of three. They did the best they could to make a living, and Paul worked a variety of jobs while growing up to help support the family. After high school, he served in World War II. Back at home after the war, he studied refrigeration and business on the GI Bill at Phoenix Tech School. After four years of training, he worked for a short time for a refrigeration contractor, then 30 | CONTRACTING BUSINESS.com | FEBRUARY 2011 the Hobaica brothers (from left, Paul, Louis, and Mike) don’t just talk about excellent service, they deliver it. they’ll walk a million miles under the desert sun to guarantee every customer has ‘No Worries.’ PHOTO BY JENNY SPIRES PHOTOGRAPHY by Terry McIver, executive editor always treat others as you would want to be treated,” Louis Hobaica explains. “He provided free service, repair and installations for nonprofit organizations, churches and families in need. We’ve continued that tradition by helping the needy, churches and organizations.” employees were laid off. The business has since rebounded. It enjoyed 32% growth in 2010, and is looking at a record year for 2011. The company’s ideal goal is 15% growth per year, with 10% net profit, which they hit or exceed 60% of the time. The company has never suffered a year-end net loss at anytime in its history. Its gross dollar volume breakdown is: • installation retrofit: 65% • service: 30% • wine cellars: 5%. New Era Begins The company gradually worked into a new era of leadership. In 1978, Paul joined the company as an estimator. He had earned a degree in construction management, and was now ready to take up a larger role in managing and growing the business. Louis went on to earn a degree in business management, and joined full time in 1983. He and Paul began to apply modern marketing and business strategies for greater growth. The brothers bought the company in 1989, and grew it by about 15% in the following two years. Their brother Mike Hobaica, a mechanical engineer, returned to the company in 1995. He had been working as an engineer for Hughes Missile Systems, but changed his plans with the decline of the defense industry. Today, Louis is president, Paul is vice president, and Mike is secretary/treasurer. Despite a recession in 1992, and a drop in business following the attacks of 9/11, Hobaica Services grew through 2007. Then came 2008, a tough year, for Hobaica’s, and the industry at-large. Wages at Hobaica were frozen, and some Winning ‘Raving Fans’ Employee incentives help fuel the Hobaica engine. Cash incentives, “Raving Fan” awards (inspired by Ken Blanchard’s book, “Raving Fans”), and “Hobaica Bucks” are bestowed on employees for anything that brings in new business, or by contributing ideas or inspiration to weekly meetings. “Hobaica Bucks,” which are budgeted as a marketing expense, can be used for tools, uniforms, or for personal items such as gift cards, or gas cards. Radio and TV advertising are part of the presence. The bouncy Hobaica jingle — “You’ll lika… Hobaica” — is recognized throughout the community. One of the first things a company cuts during hard times is advertising and marketing. Not the Hobaica’s. “We increased it during the downturn, and we ramped incentives up in 2008,” Paul recalls. “We put a wage freeze Hobaica Services, Inc. Founder: Paul J. Hobaica Years in business: 59 Services: Residential HVAC replacement and service; residential wine cellars. 2010 revenue: $5.4 million. Total employees: 32, with 18 service technicians, seven installation technicians, and two comfort specialists. Management team: Louis Hobaica, president/service manager; Paul Hobaica, Jr., vice president/installation manager; Mike Hobaica, secretary/treasurer, sales manager. Motto: “No Worries” Management Support Team: Wendy Elam, customer service/dispatch manager; Cindy Will, controller. Community Service: St. Vincent de Paul Society; Business Entities Getting Involved in Our Neighborhoods (BEGIN); and many others. Memberships: Air Conditioning Contractors of America (ACCA); National Comfort Institute (NCI); Building Performance Institute (BPI); Arizona Heat Pump Council. Recognitions: ACCA Contractor of the Year, 2008; The Best of Arizona Business, 2009; Phoenix Business Journal ‘Book of Lists’ recognition, 2009; Better Business Bureau Ethics Award, 2008. Lennox Centurion Award, multiple years; Lennox Award for Outstanding Performance, 2007; Arizona Heat Pump Council Customer Service Award, multiple years. Certifications: North American Technician Excellence (NATE); National Comfort Institute; Building Performance Institute; and various manufacturer and local utility certifications. FEBRUARY 2011 | CONTRACTING BUSINESS.com | 31 Cover Story: 2011 residential contractor of the year on in May of 2008, and we basically couldn’t afford any more overhead. However, if sales allowed for it, we could afford the incentives. In 2010 our employees earned $140,000 in bonus incentives and over $23,000 in vacation incentives.” ‘Hobaica’s attention to detail is second to none.’ — Sal Farina, president, Empire Metal Products Strategic Planning Maps the Future Louis Hobaica would agree that Hobaica Services would be only half the company it is today without strategic planning. “I’m a type-A person. Everything has structure, place, and process,” he says. “That includes having standard operation procedures complete job descriptions, and planning for the future, next year and the next five years, and how we’re going to get there.” This includes one- and five-year financial plans, company and departmental budgets, and more. Managers participate in monthly budgeting and financial meetings, a monthly business operations meeting, weekly marketing planning meetings, and a monthly owners meeting. PHOTO BY KEVIN NUTT Paul Hobaica (center), the patriarch of this HVAC-leading company, with his sons, (from far right) Paul, Mike, and Louis. From far left are his grandsons, who will someday run the show, Jimmy, Richard, and Andy. Goal Setting & Follow-up Six key performance indicators are tracked and updated twice each month: new residential maintenance agreements; new commercial maintenance agreements; equipment leads; units sold; Raving Fan testimonials; and total revenue. Peer Group, Association Activity The service department tracks activIn 1998, the brothers joined an Air Conity per department and per technician, ditioning Contractors of America (ACCA) and provides reports on: service revManagement Information Xchange (MIX®) enue; new residential and commercial Group, known as the Excellence MIX maintenance agreements; sold equipGroup, which provides opportunities to ment leads/equipment revenue; warshare ideas and management problems ranty service percentage; Raving Fan with other contractors who operate in a testimonials; comfort enhancement different geographical area. sales; and new customers. “Membership in an ACCA MIX® Group “Every employee of Hobaica Services is the single greatest proponent of our is a sales person. Growth is driven by Hector Gonzales, left, and Raud Hampton growth and success,” Louis says. “Our are Hobaica comfort specialists. Their all employees, as they all participate in comfort system suggestions are based on group consists of 12 of the finest HVACR very generous bonus, spiff, and vacation thorough questioning. and plumbing companies in the country.” programs, where they earn monthly bo“The group took us to a different level,” nuses and free vacations by providing our customers with Paul adds. “It gave us ideas we never had before. In a MIX our products and services,” Louis says. Group, you’re not reinventing the wheel. You take proven methods that others have found to be successful, and use Time Devoted to Training them in your company. Training sessions are held every two weeks, customized Hobaica’s is also a founding member of The Service for service technicians, installers, and comfort specialists. A Roundtable, a leading online source for “best practice” company-wide meeting is held every two weeks, followed by tools and information, such as sales letters, brochures, the installation meeting and service meeting. and pricing calculators. Service Roundtable membership Training topics are determined by current issues. has been a source of valuable support for the company. “Because they’re held so often, our training meetings most “The Service Roundtable has been an awesome resource often include topics that have come up in the last month or for information we can’t find in other places,” Paul says, “with 34 | CONTRACTING BUSINESS.com | FEBRUARY 2011 PHOTO BY TERRY MCIVER so,” Mike says. “I also spend time with the installers to talk about issues they’re having in the field. The salesmen will be in those meetings, and that’s helped us tremendously; the comfort consultants who are selling the equipment are in the meeting with the technicians who are installing them, and they’re able to talk through issues that come up in the field.” Rick Hutcherson of RHI Training provides sales training twice each year. He devotes an entire week to review sales and communications for all employees, with a specific focus on field employee sales and communication. an entire library of documents, and readymade advertising pieces. Service Roundtable CEO Matt Michel has some awesome ideas.” When the brothers took over the business in 1989, they became more active in the local ACCA chapter. Louis and Paul are both past presidents. Paul is chairman of the ACCA Public Policy Committee and served on a national subcommittee looking at new technologies. Mike is a chairman of activities, and Louis just finished a term on the board of directors. are doing their homework. “We have an ‘aware’ consumer base. They’ve heard about SEER ratings, zoning, indoor air quality, and energy efficiency,” Mike says. “So we take the entire system approach, we do what’s in the homeowners best interest, exceed their expectations, and be the expert they rely on,” Mike says. WHAT IS THE CONTRACTOR OF THE YEAR? 100% NATE-certified Hobaica’s commitment to customer-first quality and excellence is evident in its commitAnswering the Call ment to technician training and certification. to Customer Service Training includes timely updates on technolWhen asked to comment on the biggest ogy and equipment, such as the Trane and challenge now facing HVAC contractors, Louis Lennox systems it installs, and other compoHobaica has a two-word response: “customer nents, such as Arzel zoning, Emerson, Copeservice.” land, and Honeywell. ‘Hobaica’s has “The economy will go up and Its field technicians are all down, and we have to roll with it. certified by North American always maintained Technician Excellence (NATE). What’s more important is toucha level of ing customers and creating such Hobaica’s is among the elite few a relationship that they wouldn’t that have professionalism.’ companiescertification.reached even think about calling someone 100% NATE — Tony Nolan, vp, other than us,” he says. “NATE gives us a step up on Johnstone Supply, Phoenix “When you build that relationour competition, and provides ship and trust, and you provide incentives to our employees with additional knowledge,” employees to market those services, you’re Paul says. “We’re always training in new techhelping to create ‘raving fan’ customers; the niques, increasing their knowledge. It’s been kind who will tell others in the grocery store very positive in terms of getting them onboard. line to call Hobaica.” NATE is becoming more and more accepted. That customer service mandate is ampliTo have 100% of our field employees NATE cerfied by the realization that today’s customers tified is a big deal for us.” Best-of-the-Best Hobaica Services, Inc. represents the bestof-the-best in residential HVAC contracting. It’s a company whose leaders are in tune with industry changes and improvements. They seek advice from other experts and peer groups. They know what makes employees tick, and provide employees with what they need to improve. On the customer front, they’re grateful for devoted customers, and strive to be worthy of the trust their customers place in them each and every day. For all of the company’s contributions to the industry, the community, customers, and employees, and for an unwavering commitment to building a successful business, we’re pleased to name Hobaica Services the The ContractingBusiness. com Contractor of the Year represents an elite group: a forward-thinking class of HVAC contractors who are dynamic and professional in every aspect of their business. They constantly seek new ways to improve their businesses through quality contracting, and they strive to maintain the highest levels of customer service. These contractors maintain superior treatment of their employees, customers, and suppliers. They establish a reputation as providers of superior products and services. They have an eye on the future, and are aware of changing market conditions as they respond quickly to opportunities in their niche. The high-quality management of their companies parallels that of many top corporations in the U.S. today. These contractors follow strategic plans and maximize their returns on investment, and are always exploring new ways to improve their operations. They maintain high levels of communication within their organizations, are aware of changing market conditions, and respond quickly to opportunities. They’re the leaders of our industry. They’re committed to their businesses and the industry, and aren’t afraid to take calculated risks, and explore new market areas. We welcome nominations for 2012. Visit: http://bit. ly/CBHVACCOY for the entire list of our nomination criteria. Then, nominate your company or a colleague. Send nominations to Terry McIver, executive editor, at [email protected] PHOTO BY KEVIN NUTT ContractingBusiness.com Mike Hobaica visits with an installation team, as they complete a two-system home project. “These guys are fabulous,” the homeowner exclaimed. 2011 Residential HVAC Contractor of the Year. FEBRUARY 2011 | CONTRACTING BUSINESS.com | 35