America's new millionaire class: Plumbers and HVAC entrepreneurs

My dad bought a failing HVAC business 30+ years ago, then made it profitable over the years and sold it back to his employees last year. He had the option to take a few highly lucrative PE deals, but it was clear they would squeeze the life out of the employees and customers he had worked hard to support over many years. I can’t imagine how low quality this kind of trade work will become if PE owns them all. It will be similar to vet, dentist, and dermatology clinics which now feel like factories that don’t care about the humans on the other end - often employing fear tactics and sales quotas to incentivize upsells.

I'm glad you mention dentists/vets. I make it a point to verify local businesses aren't PE owned before I will use them.

Of course one of the problems with PE is they hoover up _all_ the businesses in an area so you don't have a choice.

There really needs to be regulation in this area preventing a single beneficial entity/controlling entity from buying/owning more than a few percent of a certain type of business in an area.

There’s a PE cycle in several industries because economies of scales don’t help nearly as much as a skilled workforce. So PE companies can’t maintain customer service while maximizing profit and customers move to new small business which grows until owner wants out, and repeat.

I find it fascinating which industries are vulnerable and which aren’t. PE has been more successful with morticians because they can more effectively own an area and people only deal with so many funerals. Vets on the other hand seem to be easily taken over despite regular visits and skilled workers, presumably regulatory bodies play a major role? No really sure.

Hm what’s the best way to look up the owner of a business? I share this viewpoint on dentists and doctors

Our vet graduated before I was born, and I'm really old. He still charges 1978 prices. Hoping he hangs on until our last batch of cats goes on to coyote heaven.

In a way, our current system has similar kinds of incentives as Communism. The core incentive is to avoid suffering. There is no upside, only downside protection.

The secondary incentive is usually to sabotage every aspect of the work that the boss isn't paying attention to because 'hidden dirt' is the only way for an employee to gain leverage over their employer.

Unlike in communism, labor is not associated with any higher social ideals. There is literally zero reason for anyone to do things right.

This is why we have enshitification. The system needs goodwill in order to function well. Without goodwill, we get piles upon piles of hidden dirt which accumulate. We end up with products and experiences which seem great superficially, but only so long as you don't do anything unexpected like peeking under the carpet.

The model of PE in dentistry / veterinary clinics is to buy out all the private clinics in a region, then gradually raise prices. Small businesses would pop up, but the training horizon for new dentists / vets is quite long.

It isn't really about economies of scale so much as using local monopolies to set prices. They have a good moat because regulatory bodies have not regulated monopolies for 30 years, and professional organizations limit entry to each field.

> often employing fear tactics and sales quotas to incentivize upsells

This already happens. The most common AC repair needed is a new capacitor. It's a $20 part.

Call your dad's business, you probably get a quote for $100-ish and it's fixed in ten minutes.

Call a PE owned shop and they are likely to tell you that your entire system needs replaced. Quote $5-$8k.

Reports like this are already common place, and the roll-ups of former small-businesses in industry like HVAC that the PE people celebrate will only make this worse for customers.

"then gradually raise prices"

It's not exactly gradually. I would call it "aggressively". At least for vets.

:(

I have thinking about doing this for a while. How does one go about verifying whether a business is PE owned or not?

The fastest and simplest way is to ask them directly by calling or emailing. Searching for information about private legal entities, while possible, is inconvenient and usually incomplete/sparse.

you can kind of get an idea by looking up who owns it on your state's secretary of state website, if a personal name or an LLC with a local address is the owner it's probably local, but if it's an out of state address then you can probably google it and find out who's address that is associated with

Just curious, how do you verify this?

Try $250 for a capacitor here in Texas - they know you can’t afford to take a few days to shop around due to the heat. What I’ve found works over the years: get the phone number of a few HVAC guys as you encounter them and offer them $50 to come when you need them. They’ll never pull the “you should cal l my employer” because most are contractors who need to buy their own equipment.

Curious discovery on my part that VCA Animal Hospitals is now owned by Mars Inc (as in, chocolate bars), technically not PE as it's a private family-owned company.

Some of the things I've personally encountered are attempts to service refrigerant without first weighing tank, and a claim that R-22 systems can no longer be serviced due to EPA refrigerant ban; I suspect these are very common grifts.

Still worse, a brazen attempt to service an older R-22 system with R-410A, which would have completely destroyed a heat pump that I ended up getting an additional 5 years of serviceable life out of (after dismissing that clown on the spot).

Other ridiculous mistakes I've had to deal with are incorrect wiring of air handler emergency heat source during initial installation that prevented system from cooling; and on that same heat pump system less than a year later, discovering an improperly secured lug within exterior disconnect box that eventually created enough heat to fry ~6 inches of insulation before failing open and killing power to compressor (in retrospect, city inspector not only should have caught this, but should have required the contractor to replace the disconnect box altogether to remain in compliance with prevailing residential building code).

The grift has gotten so bad over the years that a few friends---a professional ME and electrician---have gone out of their way to earn § 608 tech certs[1] to legally purchase refrigerant and have sufficiently tooled themselves up to handle common failure modes.

[1] https://www.epa.gov/section608/section-608-technician-certif...

Could someone ELI5 why AC capacitors are so fragile? I had one fail last year on a unit that was just out of warranty.

I had a bad capacitor this past summer and ended up having to drive over an hour because the only place in town that would sell me a capacitor was Grainger on the opposite end of [moderately large town]. Everywhere else I called declined to sell me one for "safety reasons". Several did offer to send a tech out to do it for me...

Most are electrolytic for practical reasons including cost and available capacity+voltage rating. Electrolytes in the capacitors dry out in the hot weather as well as other things like other components going bad and drawing too much current, both of which cause further overheating. Overheating makes the electrolyte dry even faster (making the capacitance plummet and resistance increase, i.e. stop capacitoring) and generate gasses (=>swell/pop).

Tldr hot weather is hard on them. They have a finite lifetime and suffer most when you need the AC the most.

It’s not so much that they are fragile, as they’re a part that gets a lot of very heavy duty use and they’re expensive to make invulnerable. Ain’t no residential customer going to pay for a 100mfd 240v tantalum cap (how big would it be even?).

Think of them like a car starter motor or transmission (for old ICE vehicles).

Assuming we’re talking motor start capacitors anyway. For most of them, every time the compressor starts they see a dead short at 240v for a couple milliseconds, typically in the 10,000+ amps range.

And most people use their AC the most when it’s hot and nasty out. Which doesn’t help.

By "mfd", do you mean µF? I have some basic knowledge of electronics and am not familiar with "mfd" in this context but assumed you must mean microfarad.

Apologies, yeah most motor start caps for some reason use mfd to mean micro farads. [https://www.packardonline.com/electrical/capacitor/motor-sta...]

I guess from before the days of Unicode?

µF == the same thing, but tends to be the ‘more correct’ modifier used in electronics and engineering, rather than industrial parts supplier catalogs.

> What I’ve found works over the years:

Going to Ferguson.com and ordering a replacement capacitor to have on hand for $30 works even better.

It’s literally just turning off the power to the compressor, using a screwdriver to open the panel, unplugging the old capacitor, and plugging a new one in.

Mars is one of the biggest manufacturers of pet food in the world

Are more robust capacitor designs not an option because the capacitive properties of the paper ones are better for the use case?

Oh, wow, this is so bad. m usually means "milli" not "micro". At least they could have used u instead of µ, which is a more common replacement when you don't have the keyboard character available.

Just wait until you see the actual dimensions of a 2x4!

But why would they respond with that information?

PE already has a pretty bad press, so they know that customers are calling only because PE is a red flag.

They could just serve some meaningless half-truth and try to confuse you.

Aren't electrolytic caps polarized? That can't be used for AC. Iirc these capacitors are film types instead.

Incidentally, most repairs to an HVAC system are quite self serviceable.

The channel https://www.youtube.com/@WordofAdviceTV/videos has saved me a lot of money.

On a complete tangent on the topic of “home maintenance you should know”, hot water tanks should be purged yearly (to get rid of the debris collecting on the bottom), and have a sacrificial anode rod to stop corrosion and should be replaced every ~3 years (magnesium) or ~5 years (aluminum)

When my AC broke on the weekend, I got a capacitor from Amazon that arrived next day.

Non-polarized electrolytics are somewhat uncommon, but they definitely do exist. They get used rather frequently in things like crossover networks for loudspeakers[0].

They tend to cost more, and tend to be larger than their polarized kins. They're not advantageous in circuits that always have some DC bias, so they only get used where it is necessary.

0: https://www.bennic.com.tw/en/ec/index.asp

More robust capacitors exist. They just cost more.

In HVAC world, the practical differences between a motor start cap and a motor run cap are price, physical size, and longevity.

A start cap is cheaper, but is meant only for intermittent duty and is unsuitable for use as a run cap.

Meanwhile, a run cap costs more but can serve as a run cap or a start cap.

All things (except for outliers like the McLaren F1) are built down to a price.

I owned a house once that was balloon framed, with 2"x4" black walnut studs in the walls.

They just don't make things like they used to. :)

For AC these units use non polarized, oil-filled metallized polypropylene film capacitors. But overheating is a problem for them, as it is for electrolytics.

Here in the UK I think it takes about 10 days to obtain the certification to be able to install AC, plus the cost of approximately 1 AC unit. Installation costs are about 2-3x the unit price, so it's actually massively cheaper to get certified and install your unit than wait for "the professionals"

Seems like you skipped the discharge step..

Just don’t lick it haha

PE often doesn’t care because most folks don’t know what is going on. Private practitioners are usually proud of it.

You forgot to discharge the capacitor, the most important step. This is why people who don’t understand what they're doing should not touch an A/C start or run capacitor (or any electrical equipment, really) for any reason.

Please don’t give out dangerous advice, if you want to risk electrocution, that’s your choice. Don’t encourage others to perform work unsafely.

Assuming you value 10 days at the cost of 1-2 AC units.

If it saves you a single $8k "we have to replace the entire thing" grift, those 10 days can be valued at about a $200k salary ($4k a week).

> hot water tanks should be purged yearly (to get rid of the debris collecting on the bottom)

Note that this is only the case if you have been doing this already from when it was new. It isn't necessarily a great idea to try to purge on an older water tank since the valve can start to leak if you open it and it hasn't been used in a long time.

Good catch, but the point remains that it’s a simple repair most can be prepared for and not have to wait for someone else to come fix it for you.

Maybe print the instructions and leave it with capacitor or watch a couple YouTube videos first.

I've had people come out and look at my furnace because it wasn't turning on properly.

They looked at it for 5 minutes, told me it's too old and needs to be replaced.

It needed a $5 sensor which I replaced myself after doing some basic testing. There are so many grifters in the trades. It is so hard someone honest, that is going to show up on time and do the job.

I almost want to start or buy a construction business.

If they have techs they don't want to sell you parts, they want to sell you service. Granger sells parts. Would you call up restaurants trying to buy a raw potato?

You can control when a capacitor will blow, by placing it at a certain distance to a heat source. They do not like heat and you can thus determine the lifetime of a device on a bell curve around time * times constant average use. Nasty but legal.

Would be neat to have an AC to keep the electronics nice and cool.

This is why you call a supply house and not an HVAC company. As long as you aren't trying to buy refrigerant they really don't care.

No one uses an electrolytic type capacitor for the 60 Hz winding of a "single-phase" induction motor.

They aren't. The ones you buy nowadays just aren't engineered to last.

> Maybe print the instructions and leave it with capacitor

The UX to make this consumer replaceable looks more like

1. Add a bleed resistor to the capacitor (its default state when unplugged should be discharged)

2. Use a modern consumer grade connector (ie sealed molex or deutsche)

Highly efficient Mini-split heatpumps are becoming simpler for the moderately technical homeowner to install everyday. 5-6 years ago installation typically involved a vacuum pump, a gauge set, sometimes a flaring tool to re-dress factory terminated line fittings, etc. Fairly inexpensive new 4th gen Mini-split heatpumps are drop-shipped from Amazon, have pre-evacuated line-sets that just bolt up to the inside head and pre-charged outside compressor units. I wonder how wide availability of these relatively cheap units are going to impact the bullish picture described in the WSJ article.

American capitalism really worked way better when it had a geopolitical competitor. Funny how that works.

DIY is a worthy approach, but people have to gauge their own limits.

If you really don't want to run the risk of being electrocuted, it might just be worth the 250 dollars to have someone who does this sort of thing all day to come and do the repair.

Point taken, but pretty good chance that a blown cap isn't too great at holding a charge anymore.

Indeed, I did some basic double checking before I posted but I guess the info I read was bogus+I was also having a brain fart to not know better because you're definitely right. Thanks for correcting.

I actually mostly called up HVAC supply places but they wouldn't sell me a cap and offered to refer me to one of their "preferred" service providers. Maybe it's some backdoor colluding in my area, who knows, but yeah I was really surprised they wouldn't. I think I called 3-4 before someone told me Grainger sells 'em.

Unfortunately Amazon in my area at the time had been taking a week or more for any deliveries. It was really annoying.

How do you find out who owns the business?

Literally what kind of question would you ask on the phone?

And if the capacitor wasn't blown but it was instead a seized motor or something?

If you did that then how would Jira cards move across the board?

It's pretty common for outfits like that to be "trade only" and not do retail sales at all. Electrical wholesalers are often the same.

Electrolytic capacitors are a perishable good. Age even when sitting on a shelf unused.

Then why are you replacing the cap?

General debugging of hardware might lead to that.

Regardless .. discharge the cap, blown or not.

Clear the chamber, even if you removed the magazine and checked it yesterday.

etc.

The general principles of health and safety are intended to be largely overkill and mostly not strictly required, they're in place for that one time that kills or injures.