Articles

Air Systems reborn

As printed in the San Jose Biz Journals
by Doug Caldwell

One of Silicon Valley's largest mechanical contractors has been pulled out of a bankrupt Texas corporation and reborn under its old name by its original executives.

Air Systems Inc. of San Jose is now in its third week as an independent company after a Texas bankruptcy court approved its purchase by John Davis, the founder of the former Air Systems and executives Art Williams and Don Billups, both of whom also owned a portion of the old company.

Privately held Air Systems had been sold in 1999 to Encompass Services Corp., which also bought other Northern California mechanical contractors at about the same time, folding them into the $1.2 billion Houston, Texas-based corporation.

But Encompass fell on hard times brought on by the recession, increased competition and the collapse of the telecommunications industry taking with it high-profit accounts, the company said last November as it filed for Chapter 11 bankruptcy protection.

Messrs Davis, Williams and Billups made an offer for their old company in February with court approval coming March 12. Mr. Williams declined to reveal the final price tag but said the three men paid it out of their own pockets.

"We have very little debt," Mr. Williams says. "Encompass had such a large debt load they had to maintain some pretty aggressive bottom-line earnings, and they couldn't do it. We don't have that pressure."

The purchase included various assets and liabilities along with the assumption of business in the pipeline "whether it was good or bad," Mr. Williams says.

Mr. Davis is chairman of the board, Mr. Williams is president and Mr. Billups is executive vice president.

Mr. Williams says the three decided to buy back their business because their industry "is too close knit. We knew if a vendor or customer was damaged, it would affect us for the long run."

Within hours of the purchase approval signs were changed from Encompass to Air Systems and the company vehicles, many of which were repainted when Encompass bought Air Systems three years earlier, were repainted back to the Air Systems colors, a spokeswoman says.

The roughly 500 employees with the Encompass-Air Systems operations had been working under the bankruptcy action and became Air Systems-only employees with the buyout.

The new company is expanding beyond its original heating, ventilation, air conditioning market to including plumbing, piping, sheet metal and electrical work, but at its foundation will be its continuing service business, Mr. Williams says.

The tough economy has played a part in Air System's new business plan, Mr. Williams says.

"We don't expect the economy to turn until late 2004, maybe 2005," he says.

© 2003 American City Business Journals Inc.