When Two Integrators Merge: Who Knew Central Vac Could be so Profitable?

When Minnesota integrators JJ Vanderson and Orion Home Systems merged in 2014 to form JJ Orion, they created a profitable powerhouse doing residential central-vac jobs up to $50,000.

JJ Vanderson and Orion Home Systems were two top integrators in the Minneapolis area when they merged in 2014 to form JJ Orion. Similar in size and focus – home automation, audio, video and related home technologies – they created something that no one else in the area could offer: domination in the central vacuum market.

Both were strong in the category before they merged, but as one entity they could really exploit their central-vac expertise, along with their relationships with home builders and the community, to bolster their entire home-technology business.

“When we merged our companies together, we raised our sales by 20 percent in the first year, which is not normal,” says Keith Stanze, founder of Orion Home Systems. “Typically in the merger world, when you merge two companies together, two and two doesn’t equal four. … You usually go downhill.”

To be sure, the success hasn’t been all about central vacuum systems, but it sure helps.

JJ Vanderson was founded in 1985 by the father of Jay Vandermyde; the son took over the business about a decade later. The company started out doing nothing but central vacuum installs, private-labeling a system made by Panasonic Matsushita at the time. The company later expanded into security, intercoms and audio/video systems but always embraced central vac.

Meanwhile, Stanze was installing security systems in the area for a company based in Iowa. That company, which primarily worked with production home builders, also expanded into new product categories … including central vac. Orion became the area’s first notable Beam dealer.

Eventually, JJ Vanderson bought a Beam corporate store. Between the two friendly competitors, they enjoyed a good chunk of the central-vac business in the Twin cities, and employed some of the most experienced central-vac installers in the area.

“We were both the vacuum guys,” says Stanze, “and now we’re the vacuum guys.”

If a Twin Cities home builder or home owner wants a central vacuum system, and also other home systems, there’s a good chance that JJ Orion is going to get that business.

“In the Minneapolis market we're fortunate because there's not a lot of competition,” according to Stanze. “There just aren’t a lot of other … integration companies that do audio and video and everything else, but also do central vacuum.”

Lose the Glamour, Love the Profit

It is clear that offering central vacuum services is a nice entrée to the home-building community. But are the jobs themselves profitable?

“Central vacuum is more closet-type stuff, and people don't think it's glamorous. Frankly, it's a great profit center for us.”

— Keith Stanze, JJ Orion

For JJ Orion, very much so.

Currently the company is working on four large projects with central vac jobs ranging from about $30,000 to $50,000. And that doesn’t include the other home systems.

Jobs that large take a special expertise, which the combined JJ Orion has established over the past couple of decades. It helps that the company has “probably the best vacuum installer I've ever been around,” says Vandermyde.

“Other guys might be able to do a small three-inlet, four-inlet kind of job, but when you've got houses that are 18,000 to 20,000 square feet, it takes a lot of work and planning to get the units in the right spots … and it's not easy,” says Stanze. “To Jay's point, we got the only guy in town. There's nobody else in our market that can do what this guy can do. It's easier for us and more reliable for the builder.”

But even the smaller jobs take finesse to be profitable. JJ Orion did about 300 central vac systems in 2015 and the company is running about 10 percent ahead this year. A typical job, which costs the homeowner around $2,500 to $3,000, might include about six to eight inlets with one Beam VacPan in a 3,000- to 4,000-square-foot home.

To maintain profitability on these average-sized jobs, “I think the efficiency of the install is huge,” Vandermyde says. “I think what kills a lot of companies is the amount of time it takes them to install a central vac. They can't sell it for enough. It prices them out of the sale. You've got to learn how to do it fast but with quality to be able to make good money on it.”

JJ Orion’s quality work is what gets the builders’ attention. For some jobs, all the company does is the central vac. Vandermyde explains, “Those are builders we don't typically work with, but they're calling us for the vacuum because they know probably nobody else in town could do the job well for them.”

And once they grab the builders’ attention with central vac, they can go in for the kill.

The duo concedes that few low-voltage installers lead with central vac these days, but having experience in the category does open doors for JJ Orion.

Given this company’s success with the product, why do so many other integrators leave central vac off the table? Mostly because it’s not particularly sexy, Stanze suggests.

Shiny new TVs are “beautiful things people see every day of their lives,” he says. “Central vacuum is more closet-type stuff, and people don't think it's glamorous. Frankly, it's a great profit center for us. They don't break. They don't require a lot of service.”

And that is what makes the central vac business glamorous after all.