Amazon HVAC Sales & Private Equity: How Technicians Can Protect Themselves with Gerry Wagner - Part 2
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All right. So part two with Jerry Wagner, guys. So if you listen to the first part, you're informed. If you haven't listened to the first part yet, go back and listen to it and get to part two. So Jerry and I continue the conversation of DIY and Jerry's very honest in his feelings. And so am I. And that's the amazing part of these podcasts is that we can have these conversations that in the past would have been kept private between a couple of people or a group of people. But now we can get these conversations out and open and

And people can listen to them and they can engage and they can provide their own thoughts through social media and email and all that kind of stuff later. So part two with Jerry guys, DIY HVAC. This is the HVAC Know It All podcast. And I'm your host, Gary McCready.

This podcast is sponsored by Cintas. And if you're looking for blue collar uniforms or anything that's an accessory to a blue collar uniform, check out cintas.com forward slash HVAC know-it-all for your blue collar uniform needs. Welcome to the HVAC know-it-all podcast recorded from a basement somewhere in Toronto, Canada.

Your host and HVAC tech, Gary McCready, will take you on a deep dive into the industry discussing all things HVAC, from storytelling to technical discussion. Enjoy the show. So I'm going to agree with you on the fact that the retiree that's ready to get out, that wants to get paid,

That's a good thing because they've, like I said, they've bled, they've sweat, probably cried a few tears over this through their career running this business and they have an out, they get paid and they live happily ever after. And I went to a business that is private equity owned and they bought up different types of businesses around and created this conglomerate. Yeah. And they do good things.

They're in commercial. They train, they try to hire the right people and then they train them from the ground up and how to be good technicians. Right. And that's fantastic. But they're not all like that.

Some of them, I hear horror stories from residential technicians that leave companies because they're brought into an office for training. They think they're going to get technically trained on how to do stuff, but it's how to sell granny a wifi thermostat. These are stories that I get from real techs in the trade. And they're like, I'm out.

I'm not staying here anymore. So there's good and there's bad, right? So we have to understand that. But the story, most of the stories I hear are not good ones, Jerry. And these are coming from people all over North America. Well, I hear you. I don't disagree with any of that. My only reaction to that, Gary, would be those companies are

are not going to be around five, 10 years from now. They're not. They're just not. I've seen that. History has proven that to be true. Companies that are not going to produce or offer a quality service or product are going to be gone. I mean, every one of them from my day had long been gone. So are they a pain in the ass while they're here? No question. Are they a problem while they're here? No argument.

but they're not going to be here long-term. And I think that's what we have to hold on to because that's always going to be a part of our business. I think it's always going to be a part of business period, no matter it's the trade or the industry. When something is recognized with exponential growth potential, everybody wants a slice of that pie, right? And not everybody's on the up and up. So again, I think it's a double-edged sword. I think that,

The trade, our trade has been recognized as having great growth potential and profit potential, which is wonderful for everybody involved. But it also, as you've mentioned, and it can't be argued, it does attract some of the less scrupulous people and therein lies the problem. Yeah. I mean, but what do you think of the $1,000 capacitor replacement? Do you think that's...

Listen, I'm fully trained. I've spent money. I've spent time. But I could never fathom charging somebody $1,000 to replace a capacitor on a service call. And that's kind of the stuff that's happening. So what do you think of that style of technique to...

to get in and out and make money. Yeah, no question. It's gouging in, in every way you can define gouging. You know, it is, it is negative. It is bad. And it's absolutely puts the trade in a negative light. There's, there's no question about it, but.

You know, look, Gary, I think I have to admit something here myself. If I learned anything from my post on LinkedIn, from the people who replied, and I am so thankful whether I agreed or not.

Everyone, first of all, was so respectful, which, as you know, that's not always the case. But everyone was super respectful of not only my position, but me to theirs. But something that came across with virtually every response was, you know what? This is a problem of our own making.

This is a problem of the trade and the industry's own making. You've brought it up with pricing structures where, you know, you were saying the homeowner can get the same part. I believe it was you, Gary. If not, nonetheless, you know, a homeowner can get the part for maybe 3%, three points less than what a trade person can get, you know, which is wrong. There, there's no question about it, but,

I think where we have to concentrate, we have power as trade people. We have power and the power is in our purchasing power, right? Is in our purchasing habits. We should be purchasing products. We should be purchasing equipment and the accessories necessary to install those, that equipment from,

traditional wholesale distribution companies that respect the trade that have our best interest as trades people at heart. And I shouldn't say that's limited to the traditional brick and mortar wholesaler, because there are a lot of good online companies as well. I don't want to paint with a broad brush here, disparaging a whole e-commerce industry, but

But, you know, we have to smarten up people. We have to realize who's in our camp and who isn't. Who wants us to be in business 10 years from now and who doesn't. And we should be spending our money with those who respect the trade. Yeah. I'm going to read you, as I mentioned in the beginning, we've got this survey that Ben put together. And I want to go through maybe the first three or four questions and I'll give you...

the top answer on each one. But I wanted to say, since you brought up brick and mortar and e-commerce, um,

I'm going to put it out there now that I think in 20, 30 years down the road, most of our parts and equipment is going to be done through e-commerce and there'll be centralized pickup spots to go get this equipment. And maybe there'll be a couple of branches around, but there'll be like little pilot branches that'll just have minimal stuff. Just, I just see the industry going this way, just the way Amazon has taken over. I mean, every day, every

Every day there's like three or four packages at my door when I get home from Amazon and I'm like, okay, what, what did we buy now? But it's the same things that maybe are bought at a store, but they're actually cheaper. There's things on Amazon you can buy cheaper. You don't have to spend the gas to go get it. So essentially you're saving money. And I just see the HVAC parts business going that way eventually as well, because it's

Big companies that provide parts and equipment, they're going to see like having all these brick and mortar stores. Um, I can save a lot of money if I do all this online and have one centralized pickup area, or if I ship the stuff directly to the shops or the, or the job sites and stuff. And you know what, Gary, again, going back to my point. And I think a lot of people's points that this problem is a problem of our own making of the trade in the industry's own making, um,

The traditional wholesale distributor, their value, and I hate to use that word because it gets a little dicey, but their value to the trade, to the fellas and the gals and trucks has diminished over the years. A problem of their own making, in my humble opinion. Back in my day, you could go your local wholesale distributor.

And get a heat gain, heat loss calculation done. Now I'm really dating myself, right? I mean, that was a beautiful thing. That would be excellent in these days. That was a beautiful thing. Yeah, of course. And what killed that? Liability issues, right? If somebody made a mistake, put a decimal point in the wrong place, came up with a bad design, everything went to heck. And that's what, that's really what killed that.

But again, I think everybody in the entire chain of distribution here has to take a close look at themselves. We have to be introspective here and we have to realize that if we are offering less value

Well, this is why people are going to Amazon. This is why the homeowners are trying to do it themselves. If they are perceiving or, or, or even if our trades people are, are perceiving there's less value, uh, in, in going to brick and mortar. It's a very broad subject that can be talked about for days. It is.

But let's go. So here's the first question from the survey and I will read you all the answers and I want you to guess what one you think maybe came ahead. I won't do this for all of them, but I'll, I'll just do this for this, for this one. Okay. First question. What do you think is the main reason DIY HVAC has become more popular? Okay. Option one, customers think professional install costs too much. Option two, too many YouTube videos making it look easy.

Option three, people trying to save money in tough times. Four, people don't trust HVAC contractors anymore. And five, online stores selling equipment directly to homeowners. So out of those, what do you think would be the top answer to why DIY HVAC has become more popular? I believe it was your first one. Customers think professional installation costs too much.

That was in second place at 25%. Let me tell you what my answer would be before you. My personal answer would have been online stores selling equipment directly to homeowners. That would have been my answer. But go ahead. What was the most popular? So the most popular answer at 33.33% is people trying to save money in tough times. Yeah. That is the most popular answer there. So I won't do this for all of them, but I'll give you the top answer.

for the next one. What's the best way to handle the DIY HVAC trend? The top answer at 43% was educate customers about what can go wrong with DIY. That was my answer. Yeah, absolutely. I love it. I absolutely agree with that. Question three, and this one was not really, is how much of your service work in the last year came from fixing failed DIY jobs? And

It's 66%, less than 10%. So less than 10% of us are going around fixing DIY mistakes. Is it because DIY is a small part of the market right now and not that big, or I don't know, maybe it just depends on where you live. But 27% said 10 to 25% of their work is fixing DIY mistakes.

I'll do one more and then we can, um, we can just talk for a minute. Can I just make one comment though on that third question? Go ahead. I think geography has something to do with that question.

I am going to be working on a proposal to do training in the Northern territories of Canada, quite frankly, in indigenous communities where there are no Gary McCready's, there are no McCready HVAC services. They have very limited personnel with very limited knowledge of systems. So

So you can see where geography and population could possibly influence that is my point, Gary. Where there's a limited amount of skilled tradespeople, there's going to be a higher amount of DIY. There's no question of that. So I do think geography, logistics, and the amount of skilled tradespeople in an area influences that question and the answer to the question.

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F I V E code is valid through nine 30 25. So that would be September 30th, 2025.

No, you're definitely bang on, on that. I'll do one more. And then I want to ask you about your, your new venture that you're setting out and you kind of describe what you might be doing with it. And I just want to give you a, to let, allow you to tell the audience what you're up to because it might benefit them in some way. Okay. Which DIY mistake is the most dangerous for homeowners and 49%, almost 50%.

says getting gas connections or combustion set up wrong. I, that's the one I picked when I did the survey because how many people have succumbed to carbon monoxide poisoning because they tried to do something that they shouldn't have done. And it's our latest newsletter was about that. And it's, it's something that,

Is super dangerous. I mean, if you have a gas leak in a house, you can create an explosion. Sure. Carbon monoxide. You can poison people, send them to the hospital and potentially die from it. There's, there's just a lot of things that could go wrong with DIY HVAC if you're not trained to

In certain parts of the trade, electrical, refrigeration, gas. I mean, we have a multifaceted trade that kind of combines a bunch of different trades together really is what it is. But so let me get your final thought on this, Jerry, and I'll let you open it up to your, your new venture that you're out to set on.

One final thought I want to throw into this, again, because I'm very conscious that I want to be fair to all sides of this discussion. It's not an argument. It's a discussion that we're having about DIY. And I can't take the manufacturer out of this equation. The people who are producing, who are building HVAC equipment,

you know, kind of wash their hands of this a little bit. Well, you know, we sell it to X, Y, Z, and then they sell it down the line. We have no control over how it gets distributed after our initial sale. Okay. You know, can't, can't argue that.

But, you know, there have been companies, they've all succumbed to it sooner or later, but there have been companies that tried very, very hard to stay off of the internet with sales. There are still companies that will only sell through traditional wholesale distribution or what we in the business side of it would say traditional two-step distribution, manufacturer to wholesale.

So again, I don't want to let the manufacturer off the hook. This company that started all this in my head, right, that inspired this post that I made on LinkedIn, again,

Gary, they don't make anything. You know that everybody who buys for them or anybody who knows their name knows they don't make anything. Right. They put their brand on on a product and they say they're out of a southeastern state out of the US, but the product is made in China. Right.

Now that sparked a whole nother thing with my post on LinkedIn. People were saying private labeling is not the problem. I'm not saying it's private labeling is not the problem. I had no issue with private labeling. It's, it's a fine business practice, but

But when you're private labeling again and distributing marketing directly to a homeowner as a DUI project, that's where it goes awry. That's where it gets sketchy to say the least on being polite. So again, the manufacturer of that product, we all know who they are. They have some culpability in this too. I don't want to dismiss that.

Because, you know, for the last 20 years or so, I've been associated with two very highly known brands in the U.S. and Canada.

And they're a part of this, right? They're a part of this. I can't deny that. And I'm not hiding it. I'm putting on the table, right? I'm admitting that, right? So even products that I have associated my name and my reputation on for decades now are a part of this. I understand that. And anyway, again, I think it's a greater...

issue than what many people who read my post came back with. A lot of it was, I just describe it as apathy, Gary, where people were saying, oh, come on, Jerry, it is what it is. It is what it is. I heard that over. It is what it is. Well, it doesn't have to be that way. This can be at least

You know, we don't want to get this thing, let this thing get out of control. As I speak to you right now, I'm told this company sells more mini splits than any other company you can name. Any other brand you can think about that brand M brand F brand D they sell more product than all of those companies. That's mind boggling. It blows my mind. Think about that. And majority of that product is marketed to the DIY market.

DIY market. I mean, okay, so here's the HVAC market.

And here's the DIY market. So it makes sense if that's true, that they're selling more than any other brand, but. And, and a whole nother, we didn't, we didn't, I know we're running out of time, but I just, you know, a whole nother thing that came back at me was warranty. Well, well, Jerry, if you look at the warranty, it requires that a professional licensed installer install it. If the warranty is going to be, uh, honored.

Look at their warranty. Go on their website. I pointed this out in my post as well. Look for the warranty. The only time that that is spelled out where a licensed HVAC installer is required for the warranty, it's buried. In fact, you have to go to a separate tag and click it open to finally see that.

So to me, that's a little bit of trickery. You use the word trickery in your response to me on it. To me, that's trickery. There's no question. They're hiding that they're burying it in.

Yeah, if it's hidden, it's definitely trickery. The sales texts that go out to homeowners and call a capacitor a compressor booster, that's also trickery as well. I don't even want to get started on that. But my closing thoughts are, if you are good at your job,

If you're a good company, you have a good reputation, you'd never stop learning. You never go, ah, I'm never stalling that. I'm sticking to contactors and capacitors. Well, that's the mindset that's going to put you out of business. That's the mindset that's going to allow someone to leapfrog you and take over your job at the company you work for. So stay up to date, stay with the times, learn as much as you can.

and be a top-notch technician and you will never, ever, ever be out of work. And that's my closing statement on that. Amen. Amen. So.

Jerry, you have a new venture. You have left the company you were previously with. Yes. On good terms, as you mentioned on LinkedIn. And you want to go into this for yourself. So you have a company. Let's say that, tell us the name of it and what you're going to be doing with it. The formal name is Education Services and Product Company or FD.

ESPCO is the acronym, ESP company. And boy, that's a big name, right? And it's kind of all encompassing. And I did that on purpose because training is what most people identify me as. And I'm proud of that. It is my passion to say the least. And I want to continue to do that.

But I also want to offer other services and potential products along with that. So again, that's where the name kind of derived from. But what this allows me to do, Gary, is instead of being employed by a single company,

employer and being tied to a single brand. Now I have the opportunity to work with many different brands, many different companies, whether they be manufacturers, distributors, independent manufacturers, reps, and even independent installers who want to have me come to their facility to do training specific to their product, specific to their audience and specific to

to their needs. And, um, I am thrilled to tell you that, uh, already my client list is growing literally daily, which is thrilling for me. Good for you. Yeah. And, um,

I'm going to be announcing some dates in Canada. My first training dates will be up in Canada. I'll be announcing them very, very shortly. So keep an eye on LinkedIn, everybody connect with me on LinkedIn, please. I'm also on, on Instagram as well. I'll also have a website to tell you about associated with the company. It's going through some renovation right now, but yeah, I'm excited, Gary. And it,

it allows me to merge many of my passions. And, and of course my main passion, how I've made my living for 45 years is the HVAC trade, but I'm also bringing motorsports into it with helping people get sponsorships from HVAC manufacturers for motorsports. I'm also offering services with product design. And so it's,

It's exciting. My age, most guys, most gals would be slowing down and maybe even calling it a day. It's just not in my makeup. I tell people, Patricia and I are very blessed. We are under no financial stress whatsoever. This move has nothing to do with finances, just the opposite. It just has to do with my passion and my belief that I still have something to offer. So that's what it's all about.

Well, maybe you and I can work together on a project at one point now that you're, you're on your own and out there in the, in the wild, that'd be kind of cool. So Jerry.

Thank you very much for this. This was a great conversation. It was honest. It was open. It was candid. And that's, that's what I, that's what I love about you, man. You, you always tell it how you see it. And that's, that's, what's great about this. So thank you. Well, I love you back, Gary. You know that you're a great friend. You're such a huge resource and benefit and value to our, our trade in our industry. And, uh, thank you for, I think this is the third time I've done a podcast with you. So I, I'm always, uh, so honored when you ask.