American Refrigeration Company (ARC) has long been New England’s leading industrial refrigeration contractor, providing design-build, installation, and maintenance services for industrial, commercial and process refrigeration systems. While the company’s relationship-based approach made it the largest industrial refrigeration contractor in the area, the acquisition/merger with Refrigeration Engineering & Contracting Company further solidified that, combining the top two contractors in the north east.
Today, with over 140 employees, the company’s volume is approximately eight to ten times larger than its nearest competitor. ARC was founded in 1996 by Stephen Giannelli when he and a group of people at another refrigeration company decided to terminate their employment due to a difference of opinion with the parent company in Canada, hence the name American Refrigeration Company. Given the close relationships they had established with many of the customers and employees, the transition was a fast success.
The majority of ARC’s customers are manufacturers, processors, and distributors in the food and beverage industry. It also serves various pharmaceutical companies as well as businesses such as ice-skating rinks. Coca-Cola, PepsiCo, Anheuser-Busch, Trader Joe’s, Ocean Spray, High Liner Foods, Whole Foods, Dunkin’ Donuts, and the TD Garden arena in Boston, Massachusetts are just a few examples of notable clients served by ARC. The TD Garden is one of many long-term customers of ARC in which the business relationships were formed long before the company was created.
Until just recently, ARC was located in Andover, Massachusetts with a satellite office in Durham, Connecticut. After the acquisition of RECCO, which was based in Woburn, Massachusetts, ARC combined the two Massachusetts offices in June to form one large team at a new location in Wilmington. In the few years prior to the acquisition of RECCO, ARC was growing rapidly, at times upwards of thirty percent per year. The recent consolidation into one building was a significant investment, but the move is expected to return great dividends in the future. “Everyone being here in one office is exciting, and it’s long overdue. It’s going to help so much with the integration and making us feel like one team,” explained Chief Executive Officer, Michael Sirois. “RECCO and American were the two largest refrigeration contractors in New England, and now we have all of that experience and talent all under one roof, so it makes it a lot easier to work together and to leverage that talent.”
Many of the projects planned to ramp up in 2020 have been postponed due to the COVID-19 pandemic. While business is starting to pick up in the second half, this year’s revenue will likely be flat. “COVID paused quite a few projects, although we are seeing a turnaround now. Customers are beginning to feel a little bit more comfortable, and they are starting to release projects,” said Sirois.
An ongoing project for the company right now is an additional expansion for the Whole Foods facility in Connecticut. ARC has completed four expansions for the distribution center, and the most recent expansion of cooler and freezer space will bring the facility to roughly seven million cubic feet of refrigerated space in total. Recently, the company also completed the Trader Joe’s distribution center in Connecticut. The project consisted of two buildings: one three-million-cubic-foot freezer building and a 6.5-million-cubic-foot cooler processing hub building.
Integrity is essential and it has been ingrained into the company culture. “Just do the right thing,” is a common response to inquiries about unexpected problems that arise. This philosophy has no doubt attracted numerous customers over the years, but it is also highly beneficial in attracting quality employees. The employee retention rate is high, and Sirois even recalls one person who left for a short period of time before returning to ARC because the other company did not have the same standards for honesty and integrity.
If a mistake is made or an unforeseen problem emerges, the company takes responsibility and communicates openly with its customers. This approach empowers employees to make decisions they know will be supported by senior management, because they must simply choose to do what is moral and right.
With eleven in-house degreed engineers and over eighty field service technicians, ARC has a depth of engineering and technical skills that are superior to those of the competition. “We’re very fortunate with the talent that we have. Many of our competitors have tried –unsuccessfully – to woo a number of our individuals away, but we are very fortunate. We have some of the most talented people in this industry on our team,” said Sirois.
Many industrial refrigeration operations use anhydrous ammonia as a refrigerant. ARC offers other refrigerant options as well, but anhydrous ammonia is a common choice by customers because of its efficiency. However, the toxicity of anhydrous ammonia systems has caused various governmental organizations to release compliance initiatives. It has been a learning process for some ARC customers that have less than 10,000 pounds of ammonia and were largely left unregulated for years. The requirements outlined in the process safety management program are now being enforced similarly to smaller systems under the general duty clause. The Occupational Safety and Health Administration’s (OSHA) general duty clause states that employers must provide a workplace free from hazards that could cause harm.
As ARC explains to its customers that the compliance requirements now apply to smaller systems as well, some of these customers have decided to update with new installations and new buildings that use other types of refrigerants, although alternative refrigerants may be slightly less efficient. Customers are moving in that direction to avoid dealing with the anhydrous ammonia regulations. Ammonia remains the refrigerant of choice for large industrial refrigeration applications, with numerous low-charge options available.
Up until 2017, ARC was privately owned by Stephen Giannelli and Michael Sirois. Numerous companies pursued ARC to sell a part or all of the company for several years. It was in late 2017 that ARC sold some of its shares to private equity firm Southfield Capital. Businesspeople are often intimidated by private equity firms under the assumption that they are only concerned with the bottom line and cutting costs. However, ARC could sense that the two organizations had similar goals and good chemistry working together. Southfield values and respects the company’s culture and has no intention of changing it. When Southfield representatives occasionally come to visit the ARC office, they fit in well and get along with the employees. “They’ve [Southfield] brought and continue to bring scalability to our processes and infrastructure,” explained Sirois.
Southfield has used its resources to support ARC and make any upgrades that had been delayed. It brought in consultants to help envision the goal, provided business intelligence tools, and updated ARC’s enterprise resource planning system. Southfield noted that ARC had never used any formal marketing tools or outbound sales efforts and offered to help in that area as well.
“Our growth has largely come from our reputation; people know us and they know our capabilities. The plan for the future is implementing a formal marketing and outbound sales effort, I think that’s going to significantly help from a growth standpoint,” said Sirois.
Now that ARC and RECCO are settled under one roof prepared to collaborate, the team is looking forward to experiencing more growth from various avenues. With its new marketing efforts, the company expects its footprint to expand, most likely toward the Mid-Atlantic states but also down south. The organic growth will continue as well, as a result of the partnership ARC creates with its customers through open communication and integrity. This method is the foundation of the company and develops relationships that last for decades.
“All of our management have their cellphone on their business cards, myself included. Even though we have multiple field staff on call twenty-four hours a day, seven days a week, all of our customers know that if they’re panicked, they can call any of us, even if it’s 2:00 in the morning, and we’re going to pick up the phone and say, ‘Okay, what can I do to help you out?’”