Fire-Fighting for Profit
AUGUST 01, 1991 by NANCY W. POOLE
Nancy W. Poole is a free-lance writer based in Scottsdale, Arizona.
Fire-fighting services don’t need to be provided by government. For-profit is better, and Scottsdale, Arizona, industry leader Rural/Metro Corporation proves the point. Mayor Herbert R. Drinkwater doesn’t need prodding to lavish praise on Scottsdale’s second largest nationally headquartered company. “I’m a great believer that the private sector can normally do things a little better than the public sector—and for less money,” says Drinkwater. “Our fire service does a superb job,” he continues matter-of-factly. “The citizens of Scottsdale love it. I get compliments all the time on Rural/Metro’s performance.”
Statistics back the mayor’s enthusiasm. A recent poll by Arizona Opinion and Political Research found that by a margin of six-to-one, Scottsdale voters prefer Rural/Metro to the option of a municipally owned fire department.
Moreover, the price is right. Drinkwater says that because of Rural/Metro, Scottsdale citizens benefit from a superior level of fire service at a considerably lower cost than if the city had a municipal fire department.
Drinkwater, however, doesn’t want to focus exclusively on economics. “Even more important,” he stresses, “the kind of service Rural/ Metro provides is based on incentive and innovation. So our citizens aren’t subject to the constraints experienced with traditional municipal fire departments.”
For example? “The traditional emphasis is on fire response,” Drinkwater answers. “We think Rural/Metro’s emphasis on prevention is a more effective way to deal with fire protection service. The company’s core philosophy is prevention. As a result, Scottsdale citizens are offered a much better balance between response and prevention than is available in most communities.”
Rural/Metro’s unique mix of part-time firefighters working alongside career professionals makes Scottsdale’s fire protection service one of the most economical in the nation, and one of the most effective.
There are literally hundreds of small private fire companies along with seven industry leaders in 14 states, according to Private Sector Fire Association statistics. Rural/Metro is not only the largest such company in the country, it is an industry model for customer service, excellence, cost containment, and innovation.
For example, an increasing number of established departments are emulating Rural/Metro’s subscription services in remote areas. Rural/Metro created the concept of providing fire protection to areas that might otherwise have difficulty obtaining any fire or emergency medical service at all—communities without the tax base to subsidize fire departments. Rural/Metro currently services communities in Arizona, Tennessee, and Oregon on a subscription basis.
The subscription process is voluntary. Rural/ Metro contracts with home and property owners in subscription areas, who pay annual fees for fire protection and emergency medical service, level of service is based on population density and geography.
Rural/Metro is the first-responder agency in these locales. A non-subscriber must pay a fairly high hourly rate per fire-fighting unit if it is necessary for Rural/Metro to respond to a fire at that person’s residence or property. (The adequate protection of members’ properties requires response to all fires and medical emergencies in a subscription area.)
Service Tailored to Needs
Another company tenet is the tailoring of services to each area’s needs. For instance, poisonous desert reptiles are removed from members’ homes or properties, at no extra charge. Or how about bursting water pipes? Rural/Metro subscription customers know the company will shut off utilities and remove excess water from their homes as a matter of routine, at no additional cost. The list goes on and on.
Typically, the difference between public and private fire-fighting services isn’t a matter of available resources, but in the management of those resources. The private sector depends on management skills for its results. In the case of Rural/ Metro, the average per capita cost to subscription customers in Arizona is 25 to 50 percent lower than for similar services nationally.
“We are forced to be more economical but at the same time provide excellent service, since the private citizen has other options,” says Robert Man-schot, Rural/Metro’s president and CEO. “Otherwise, we will not survive. Communities can and do have specific cost and performance requirements; if we don’t produce, our customers can release us. This is a task not easily accomplished when a community has a municipal department! Because we pioneered the concept of matching manpower and equipment to each service area’s needs, we can do a better job for less money.”
Rural/Metro’s vice president of fire operations Robert T. Edwards puts it another way, half-jokingly: “Our fire-fighters must bleed green.” His statement refers to a company slogan about loyalty. Rural/Metro began painting its fire apparatus lime green in 1972 for safety purposes, after a national study showed this to be the most visible color in evening and all weather conditions.
Edwards continues more seriously. “Can you imagine what our liability risk would be flour firefighters weren’t extremely well trained and state-of-the-art in performance?” With a sharp rap of knuckles on the wood conference table, he points out that, so far, no Rural/Metro fire-fighters have lost their lives on the job. “Naturally, this shows we’re doing something right; but what it really shows is that the guys we train are trained to think. They see a hazard and don’t wait to be told what to do.”
The Growth of Rural/Metro
When newspaperman Louis Witzeman founded Rural/Metro Corporation in 1948, it was probably the last thing in the world he’d planned on doing. There was no fire protection for his home, and he simply wanted to get it. Neighbors promised to pay him $10 a year for fire protection, and the 21-year-old Witzeman invested his last $900 in a fire truck. So much for promises. Stuck with the truck when his neighbors didn’t follow through, Witzeman had to go into business. So it was that one truck, four men, and a modest budget started a fire protection subscription-based business that grossed $30,000 in its first year.
What is now the city of Scottsdale was incorporated in 1951, and Rural/Metro has continued to provide fire and medical emergency services. Since that time, the community has grown from a town of 2,000 people to a thriving metropolitan area of 126,000.
Today, more than 50 communities in five states take advantage of Rural/Metro’s innovative private-sector approach to emergency services. Over 1,800 highly trained specialists provide fire, ambulance, and other services to five million people, responding to over 300,000 calls for assistance each year. Rural/Metro operates the equivalent of over 20 fire departments nationwide.
In addition, Rural/Metro has a wild-land fire division, and offers fire and safety services to the Potlatch Paper Company and other private companies—plus providing training programs in handling hazardous materials and manning industrial fire brigades.
When Witzeman left the company in 1978, he sold it to his employees, making Rural/Metro unique in this respect among private sector emergency services. “We believe that employee-owners make better employees,” Edwards stresses. “For example, a fire-fighter who finds a bulb out on his truck could open a package with two bulbs in it, use the one he needs, and throw the other one away. An employee-owner will put the extra bulb back on the shelf. He is cost-conscious.”
“Furthermore,” says Mansehot, “since the owners of Rural/Metro respond to our customers’ emergencies, they respond faster, better, and with genuine caring.”
Accordingly, a recent study by The University City Science Center of Herndon, Virginia, praises Rural/Metro as “one of the best departments we have had an opportunity to review.” The report cites the company’s “model prevention and inspection program . . . [which] provides citizens with a higher degree of safety than available in most communities.” Beyond that, because of Rural/Metro’s strong prevention ethic, Scottsdale enjoys one of the lowest fire incident and loss records in the nation, for a city its size. This helps keep the costs of Rural/Metro’s services low compared with other communities.
New Management Sparks Innovations
Robert Manschot became Rural/Metro President/CEO in 1988. After 14 years of running hotels internationally for Sheraton and Intercontinental, he had joined The Hay Group, a human resources-oriented consulting firm—the largest of its kind in the world—becoming a worldwide parmer. Rural/ Metro hired Manschot as a consultant in 1987, and then offered him the position of chief operating officer, which he accepted.
Why Rural/Metro? Manschot answers quickly. “After working with hundreds of companies, I had the urge to practice what I preached. Rural/Metro is one of the most unique companies I’d ever worked with, and it attracted me because of characteristics I felt were related to my strengths. Expertise in fire, ambulance, and various other lines of business were already in place, but Rural/Metro had expanded so rapidly it lacked established infrastructures.”
“No other privatized emergency services company can boast our kind of diversity,” Manschot points out, referring to Rural/Metro’s multi-state and international operations. “Falck, located in Denmark, is the largest privatized emergency services company in the world. However, last year we entered the international arena in a joint venture with the Holland-based Smit Fire & Ix Prevention Company to provide off-shore and petro chemical fire-fighting expertise internationally.”
As a result of this agreement, Rural/Metro fire fighters were three of six specialists called from around the world last summer to successfully battle a fire on the Norwegian tanker Mega Borg in the Gulf of Mexico.
Since joining the company, Manschot has streamlined operations to bring about maximum communication, efficiency, and cost-effectiveness. The energetic Dutchman leans forward for emphasis. “I believe that your strongest asset is your people—not your capital, not your equipment, but your people—the empowerment of the employees, which has nothing to do with unions.”
“What we like to do,” he continues, “is push the entrepreneur role down to our general managers; then these managers push it down ever further to our employees, stretching them to be innovative.”
Every month, Rural/Metro’s “Idea Program” offers innovative employees who contribute ideas that are implemented a percentage of whatever dollar amount the company makes or saves as a result. Rural/Metro also rewards “Conscientious and Responsible Effort” (CARE) on a regular basis. Don Niesen, an employee in Yuma, Arizona, received a CARE award last October, in recognition of the many extra hours of time he had donated for equipment repairs and maintenance. The CARE award is a $50 gift certificate for dinner at a restaurant of choice.
Manschot and other Rural/Metro managers spend one-third of their time visiting employees on-site. “We want our employees’ ideas,” Manschot stresses. “However, I also believe that employees must be taught how to be more autonomous and participate in decision-making. Empowerment goes hand-in-hand with accountability,” he continues. “Managers and employees must be accountable for their own success. The strategy must be pervasive and ongoing. That is why we have task forces and ‘shadow’ boards to deal with strategic issues. Since we almost are the industry, we must train our own managers.”
Paramedic Bob Videan gives an example. His immediate supervisor, Clint Vardeman, returned to home base recently from the Florida operation. “Clint has put together two weekend-long ‘camps’ held at his home,” explains Videan. “I saw enough value in the first one that I volunteered to be faculty for the latest session. The presentations are well organized, and we have time at the end for open discussion—which is very active.”
“For one thing,” he continues, “these ‘camps’ have helped us know Clint, and certainly have ereated an esprit de corps. Employees from all over the country were at both ‘camps.’”
According to Vardeman, employees receive special invitations to these weekend sessions, which are structured and informational with ample time for brainstorming during the day. After dinner, all present break for games and socializing. Eventually, every ambulance company employee will be invited to a “camp.”
“At the end, we summarize our ideas, and all employees receive a copy of the summary,” Varde-man comments. “We follow up by letting them know when ideas from these sessions are being implemented.”
Manschot indicates that a Rural/Metro firefighter or paramedic can be a senior manager within eight or nine years. “If we want to continue at our present rate of expansion,” he emphasizes, “we will need 50 new managers five years from now. This is the reason we have a very strong training and development program.”
In 1987, Rural/Metro acquired Arizona Medical Transport (AMT), a private ambulance company, and AMT paramedic Videan became a Rural/Metro employee. “Within three months,” he says, “we were better equipped than we’d been at any time during the previous 10 years since I started with AMT. Mr. Manschot has brought about extensive communication between top-level management and field crews. The difference is like night and day.”
Fighting Fire with Prevention
Rural/Metro has a strong prevention ethic. “The best way to fight fires is to prevent them,” comments Edwards. “For example, we have a much higher number of inspectors per capita than is the norm.” Rural/Metro fire inspectors are also asked to serve as fire-fighters, so that their awareness of hazards in buildings throughout the community often aids in the suppression of fires. “For us,” Edwards explains, “it’s not prevention and sup pression; instead, it’s prevention/suppression—the two components interact.”
As a national leader in the development of fire prevention programs, Rural/Metro abundantly communicates prevention to its customers through many training and education programs. These include home fire-safety inspections, CPR classes, emergency first aid, water and mountain rescue courses, and hazardous materials services, as well as fire safety education classes in the schools.
With top performance records and dramatically lower costs than publicly owned counterparts, Rural/Metro is a hard-to-beat sell. Nevertheless, since public sector turf is often just across the street, the company’s nonunion, privatized operation is frequently a target for intra-city politics and media misconceptions. (Rural/Metro’s employees recently voted down union membership.) Firefighter Wes Kemp elaborates. “Our position as a privatized emergency services company is a challenge because we are continually up against the municipalities to prove ourselves.”
Historically, a rivalry has existed between Rural/Metro and unionized municipal departments. “We position the company not in a directly competitive mode with these departments, but as a fire service alternative,” says Suzanne Brossart, Rural/Metro’s corporate communications manager. Brossart adds that Rural/Metro does not approach communities that have established municipal fire departments. “Instead,” she explains, “we prefer to target small but growing communities that don’t have fire departments or that want to expand volunteer departments into full-time services. With this approach, we can build our strong fire prevention and operational philosophies directly into a community’s development.”
President/CEO Manschot adds, “We must continue building relations with other agencies, and reinforcing an atmosphere of mutual cooperation and respect.”
Rural/Metro’s philosophy translates into financial success. Corporate revenues have grown over the past 10 years from $6 million to almost $65 million annually, increasing in the past three years alone by over $24 million. Revenues for the current fiscal year are estimated at nearly $68 million.
Rural/Metro Corporation has shown that fire-fighting and other emergency services can be privatized, with outstanding results. As municipal budget crises plague many communities, privatization is an option that merits careful study.