National Hydronics Group: An Old-school Company with Cutting-edge Skills

Summer 2010 - National Hydronics Group (NHG) is a mechanical contracting company with an old-school approach to business management, but it is modern in its employees' uses of innovative installation techniques. The company, which was incorporated in 1973, has root going back to the 1960s when it was founded by Helmuth Musil, whose son, Rick Musil, is a partner with the company. While continuing to grow over the years, taking on larger and more complex projects, NHG has maintained the feeling of a family-run business.

The other two partners, Ron Jassmann and Mike Vesterback, joined the NHG ranks in 1989 and 1990, respectively. With Mike taking the role of company president, the three formed their partnership and bought National Hydronics Group in 2003. With over 70 years of combined experience in trades, engineering and management, the partnership continues to grow the business, each partner contributing in their areas of expertise.

Self-sufficient Divisions

The partners, Vesterback states, enjoy and are supportive of NHG’s old-school atmosphere. “We’re a UA170 Plumbers and Pipefitters union company,” Vesterback shares. “We make up a small segment in this market, where only 20 percent of mechanical contractors remain union affiliated. We’re one of few union companies that continue to compete successfully in the area of residential high-rise mechanical construction; whereas the majority of the union sector relies on institutional and commercial work, we have the capacity to work profitably in all three areas.”

Regardless of the sector, NHG brings its expertise in plumbing, mechanical systems and sprinklers to each jobsite. From the company headquarters in Surrey, British Columbia, the company’s 40 to 100 employees (varying by season and job requirements) operate throughout the Vancouver region, bringing in annual revenue of $10 million to $20 million.

According to Vesterback, NHG keeps much of its work in-house, including all of the typical mechanical work. “We subcontract sheet metal controls and insulation and occasionally fire protection, although we require our fire protection division to bid competitively for sprinkler subcontracts as though they were an outside contractor. If they are the low bidder, they get the contract. Each division has to be self-sufficient. If they can’t compete, we’re not going to support something that doesn’t have its own legs,” Vesterback further explains.

When selecting a subcontractor, much of NGH’s choice is dependent on the type of work and the location of the project. “We openly tender the greater part of our work, but will occasionally rely on preferred companies that share a similar approach by contracting by way of select tendering. We don’t want to reduce our ability to competitively tender on projects by narrowing the subtrades to a single list or too small a group. However, where the opportunity exists, a select, tight team approach will produce a better product, faster, with less conflict and the potential for more profit,” Vesterback notes.

Building through Partnerships

NGH made use of its open bid subcontractor process to keep costs low on recent projects, including the new Robert Lee YMCA in Vancouver that opened in 2010. “The original building was built in 1941. We worked with Concert Properties, a major developer in Alberta, Ontario and British Columbia, and general contractors Bosa Construction,” informs Vesterback.

NHG’s expertise in coordinating subtrades was required in this facility specifically for some key features, like a 25-yard indoor pool, whirlpool, steam rooms, café, 18,000 square feet of lifestyle space, computer lab, community kitchen, rooftop playground, and underground parking facility. In addition to the usual mechanical systems found in buildings, NHG installed heat recovery ventilation systems, steam rooms, radiant floor heating, water-to-water chillers and water-to-water domestic preheat combined with heat pump heating and cooling units.

Working with Concert Properties has benefitted NHG’s growth. “Our crews work very well with Concert and its partners. They are a developer that employs pension fund resources to increase pension returns, while also supporting union trades Year-by-year, Concert properties make investments in new construction that not only improve the pension fund, but that employ only union trades while doing so. Knowing that we will be bidding a project that employs skilled qualified tradesmen allows us to tender with certainty on our cost, in addition to competing with other bidders who have similar labour cost. Concert has built a strong team over the years that we are proud to be a part of,” Vesterback clarifies.

NHG also worked with Concert Properties and Bosa Construction on an assisted living facility called Tapestry at Wesbrook Village, near the University of British Columbia. “It has regular condos in combination with assisted living for people of an older age that may need more help than the average older retired people. It’s not a health care facility, but assisted living with the option of meals, recreation facilities, a dining area, a hair salon, and other amenities all available in-house so people that are less mobile can live comfortably with help available should they need it,” explains Vesterback.

NHG partnered with Centerville Construction and developer Concord Pacific for another significant project. “Concord Pacific bought the False Creek area and built 30 or 40 residential towers. We completed ’Area 6,’ which consisted of five buildings including Concord’s ‘FLAGSHIP’ building, extremely very high-end area residential tower,” Vesterback shares. Some of the building’s distinctive aspects that required NHG’s expertise are spa-like bathrooms with steam generators, Italian brass fixtures, soaker tubs, floatglass custom counters and glass sinks; and the indoor pool, whirlpools, steam room, sauna and movie theatre in the Esprit City Club.
As for the company’s commercial work, NHG’s largest project was with Bird Construction at the Matsqui Complex, where the companies built the new Abbotsford’s Regional Health Centre, a Public Works Canada project. The multi-use facility includes medical buildings, classrooms, workshops, and inmate rooms for 400 men, service buildings and security features. The multi-building complex was heated using existing physical plant and a buried, pre-insulated piping system that consisted of several thousand feet of welded pipe.

Building for the Future

These projects were all successfully completed, despite challenges from the recent economic downturn. “The market has contracted on residential high-rise projects in the past two years, with many being shelved, delayed or cancelled, so while we have seen a reduction in our crew, we are shifting our focus to our commercial and service business to generate work,” Vesterback reveals. “Being union, the flexibility in wage makes an impact – open shops will reduce rates and we don’t have that option, so we count on our expertise and innovation to compete.”

Vesterback sees the economy changing. “We anticipate an improvement over the next two years, though it's probably next spring or summer of 2011 before we really see it bounce back. It is a slow process to get people to a comfort level with their business, so we are seeing companies under-pricing their work in an effort to achieve sales volumes of 2008, which cannot be reasonably sustained.”

While NHG anticipates improvement in the economy, it continues making plans to grow the company in the current market. These growth goals will require updating some of the company’s traditional business approaches, including creating a website. “Most of our business is repeat customers, so we historically haven’t done much with advertising overall. As we move forward with the growth of our service division, we plan to open up web support,” Vesterback shares. “Ron Jassmann, one of the partners managing field operations, moved into the office specifically to oversee and grow this division. It is an area that needs a lot of hands-on management to be an effective and profitable part of the group. We have a lot of experienced people and if new construction is not available, the service side still has growth potential.”

Implementing this dynamic plan to expand the service division and add new technology to the long-established company traditions will provide stability for the present and allow for expansion as the economy improves. With this goal as a guide for its next couple of years, National Hydronics Group will meet continued industry success.