One of the industry’s major commercial refrigeration consolidators is Arcticom, which has now acquired six leading contracting firms in the Western United States. CEO Jim Pape provides insight into Arcticom’s plans for serving supermarkets and nurturing the workforce.
Walnut Creek, Calif. — The Arcticom Group (TAG), a leading provider of commercial refrigeration and HVAC services that’s expanding across the western United States, recently announced two acquisitions:
• KIC Refrigeration in southern California, a southern California full service maintenance and repair company that focuses on supermarkets, convenience stores and commercial buildings;
• Victory Construction and Refrigeration, a Denver-based company that offers refrigeration installation and service.
Previous acqusitions since Arcticom’s founding in January 2017 were: PMC (Nocal/Socal); Refigeration Unlimited (California, Washington, Oregon, Idaho, Alaska); Protec Refrigeration (Arizona); and A&J Refrigeration, San Luis Obispo, Calif.
KIC was founded by Justin Cockle and Jason Fay, both of whom will remain involved in the day-to-day operations of the company while also taking additional leadership positions with TAG.
“Jason and I are excited to be part of The Arcticom Group where we’ll have increased support to grow our business operations, while also expanding our own professional opportunities as members of this network,” said Justin Cockle, co-owner of KIC Refrigeration. “We were very selective about choosing the right partner and we’re confident The Arcticom Group’s values match our own.”
“Victory is a well-run company with a great reputation along with a very impressive management team and group of technicians,” noted Jim Pape, CEO of The Arcticom Group. “Denver and the Front Range region represents an important market that connects well with our existing service area.”
“This is a really exciting development for our company and our clients and we are now even more well positioned for continued growth,” said Jim Elmore, co-owner of Victory Construction and Refrigeration.
“Working with The Arcticom Group, we’ll continue to stay focused on executing our work with honesty and integrity, but will now have the benefit of enhanced infrastructure and access to customers we don’t currently serve as well as robust employee training and development program,” added Tom Swafford, co-owner of Victory.
The two acquisitions bring to six the total number of acquisitions Arcticom has completed since January 2017.
Jim Pape Describes the Arcticom Approach and Advantage
In an exclusive interview with Contracting Business, Arcticom CEO Jim Pape—whose HVAC background includes management positions with Johnson Controls, Hussmann and Trane — spoke about the strengths of Arcticom, its approach to supermarket contracting, and the qualities that made KIC and Victory two attractive prospects.
“Arcticom’s strengths start with quality of service, and the total service experience. We have a group of companies that know how to work in the complex world created by large clients. I’m extremely proud of the quality of work we do,” Pape said. “We fix it the first time, and we work the customer’s way. To me, that’s an important part of growing in a market that is heavily penetrated. Ten large companies have 70% of the refrigerant tonnage used in the marketplace. If you can’t work the way Target, Costco or Walmart want you to work, you’re not going to survive in this market.”
“Another strength is our evolving geographic footprint, and an ability to solve customers’ multi-geographic problems, by giving them another choice in the marketplace, for one-stop shopping for service and installation services.”
“If you can’t work the way Target, Costco or Walmart want you to work, you’re not going to survive in this market.”
Among the many challenges contractors face, is the downward pressure exerted by large chains on prices. Pape agreed, and said Arcticom’s size will help it compete, and added that the complexity of supermarket refrigeration contributes to much of the service ticket bottom line.
“Complexity drives cost. Forming this business was about building something with the scale necessary to serve those processes, without the cost being inordinately high on one particular business,” he said.
“An important part of our strategy is to bring things to smaller, independent contractors that they couldn’t formerly afford themselves. One is the infrastructure needed to manage customer complexity.”
“An important part of our strategy is to bring things to smaller, independent contractors that they couldn’t formerly afford themselves. One is the infrastructure needed to manage customer complexity. There are many other things you can bring as well, around training, and ways to improve the service technician’s quality of life.”
Pape said there are some advantages of scale that give Arcticom’s contractors the ability to compete in the complex market and meet business needs.
“Look at a small independent contractor, and the work he’s doing just to get paid, just to get an invoice out that the customer will accept. A larger organization that has systematized the processes related to both serving and invoicing accurately, and managing the rules of engagement on the job, can begin to leverage scale. I hear small refrigeration contractors say, ‘We don’t know how to make money with them.’ But there’s another business in the same city that’s also serving that customer, and is surviving and meeting the customers’ needs.”
Pape said Arcticom is not out to change the way a business operates. It wants very much keep in place the processes that have made each independent business a successful one.
“It’s about taking what someone has figured out, turning it into a best practice, and leveraging that best practice across the footprint, and saying, ‘OK, you’ve figured out how to make a good living and you’re serving Walmart well. Tell us all how to do that. That’s a key explorable thing. Later, you say ‘Wow, if we can approach the work that way, maybe there is a way to serve them.’ Because the biggest stress is just in the ability to serve and make money doing it.
“To say, ‘You’ll just have to work 70 hours this week’ is not sustainable. The future of the industry is about having sufficient amounts of qualified labor and being able to dispatch them based on their location and their desire for hours.”
“It’s a positive when we see business owners who have built great businesses, with good leadership, and an interest in service as a recurring revenue stream, who want to keep working hard, and see the brand continue to flourish.”
Recruiting & Retention Plan
Since no interview of an HVACR business today is complete without broaching the subject of employee recruitment and retention, we asked Pape about Arcticom’s take on recruiting new technicians and keeping them happy. His answer included a concise description of Arcticom’s approach to employee development.
“Getting and retaining skilled technicians is the single most important success factor for our business,” he said. “Being the ‘employer of choice’ in our chosen markets is one of our main goals. That requires a holistic approach to labor force growth and retention. It starts with benefits.
• “We’ve just put out a standard benefits package for our non-union teams that we think is the best in the industry.”
• “It’s about managing the quality of life for the technician, through ‘intelligent dispatching,’ which means that as we grow, we have to do a better job of matching quality of life with the expectations of the technician. To say to a technician, ‘You’ll just have to work 70 hours this week’ is not sustainable. The future of the industry is about having sufficient amounts of qualified labor and being able to dispatch them based on their location and their desire for hours.”
• “It’s about giving technicians great tools to work with. We’re putting in a common ERP (Enterprise Resource Plan) and field labor tool for all the Arcticom businesses that I think will put us in a ‘best in class’ category, for our ability to collaborate with each other, our ability to keep and maintain in-depth records of customer’s equipment and the performance of that equipment.”
• “It’s about building a training curriculum that serves the needs of current employees and gives you the ability to hire, train and turn people not familiar with refrigeration into revenue-generating people.”
Pape said Arcticom has partnered with a known HVAC training program. Arcticom will provide its own refrigeration training. arcticomgroup.com