Richard Nichols has been in the service business for decades, and served in several different industry organizations. He is currently director of IPSSA Region 10, which includes the bay area south of San Francisco.
How does the service business look from where you stand?
For my company here in the Bay Area it's pretty good, but I do talk to some guys that are really struggling.
Where I've seen the big difference this past year is in the commercial business. We've lost a number of accounts to price. Because you have an influx of people coming into the business — I mean all you really need is a truck and a pole and you can call yourself a pool business — and these new pool people are coming in at very low prices.
In all fairness, I would point out that that's how a lot of us started out in this business. We had to start somewhere. I went into this with my father-in-law and neither one of us knew what we were doing; mostly we picked it up through trial and error. It was easy to get into this business then, and it still is today. You don't need much to start.
But we've lost customers I've had for 25 years because they found someone who could do it for less, which amazed me because the rate they had was really great because they'd been with me for so long. But overall we're holding our own.
Are unlicensed contractors an issue in your area?
The unlicensed contractor issue remains huge here. If you make more than $500 you're supposed to have a contractor's license. And it's not that difficult to get.
The state really doesn't have the money to enforce the law, unfortunately, so you have the licensed contractors playing by the rules and you have the unlicensed ones not playing by the rules and hiring illegal labor.
Here in California we have Title 20 and 24. Well, the only guys that are abiding by that are licensed. So when a homeowner has a pump that goes out, we're quoting them two grand in some cases to put in a variable-speed pump and a controller, and this unlicensed guy is coming in with a $600 quote for a pump that we're not supposed to use any more.
And I understand where the homeowner is coming from because that two grand is hard to swallow. And here's a guy saying it's only $600.
And part of it is the state's fault, because they've done nothing to advertise Title 20 and 24, so a lot of homeowners still don't know anything about it, even though it's been around for quite a while now. So they put in the same thing they've always put in, and do it very cheaply.
How do you deal with that?
It doesn't hurt us as much as some other guys I know because we've been in this business for 35 years, and we have a lot of repeat customers. They'll call me and I'll tell them what's going on and they buy into it.
What we have a problem with are the cash calls: someone who has never heard of me before in their life, and I'm telling them this amount of money, and the other guy says, "I can do it for much less."
Will you be hiring this year?
I'm holding off hiring because I'm really concerned about expenses. I provide health insurance for my employees, and with the new laws that were passed, we just got hit with a steep increase, about 30 percent. I'm speaking of what some people call Obamacare. I had a whole bunch of 21 to 25-year-olds added to my health insurance, people I didn't have to pay for before. But the new mandate calls for that.
We've always provided healthcare for our employees and their children, and when their children turned 21, they would drop off, and our costs would go down. But now with the new law, we've had these young adults added back to our policies, which has increased our costs.
You can't blame the employees for taking advantage of it. But under this law, it doesn't even matter if the 24-year-old is married and living away from home. They don't have to be in school; they could be employed someplace else. It's ludicrous.
And of course gasoline is a rising expense. Not just my own direct expense, but the people who supply us, their gas is going up, which is passed along to us.
Is Internet sales competition a big problem for you?
It's a problem I hear guys talking about a lot. They go to a customer and get a quote to put a new sweep in. And that customer can go online and get that same sweep for less than we can buy it through distribution. And same with pumps, filters, heaters. What we've started doing is just quoting prices for installed items. And that's typically how we handle it. We don't get into this game of here's the price of the pump, and here's the cost of installation.
Do you see any work coming out of the new ADA rules?
Not yet. There's still some debate as to who will have to [make ADA accommodations]. I've seen some pools with these portable lifts sitting on their decks, and they're very expensive, but I saw some at places that I don't think are required to have them.
It's not every commercial pool, it's every pool that's open to the public. So there are questions and still some debate about who has to have it done.
