Lifecycle cost and listening well can do most of the work before tax credits enter the equation

MEANS TO AN END: Long before service and maintenance scenes like this, contractors can sow the seeds of success by promoting clean energy in their areas, offering financing, and listening to customer preferences as broad as the desire for no outdoor equipment. (Courtesy of Igshpa)

Tax incentives can dominate the conversation about the geothermal market. However, HVAC contractors who consider offering geothermal services have to consider other factors first and, if they make the move, must be prepared to sell geothermal to new customers regardless of any incentives.

Several experienced geothermal contractors and professionals at the International Ground Source Heat Pump Association have weighed in recently on key non-tax questions surrounding the “if” and “how” of successful geothermal contracting.

Location and Loads

For potential residential geothermal contractors, the map matters. Kortney Lull is IGSHPA board chairwoman and vice president of business development for Midwest Geothermal. Jason Cullum is an IGSHPA board member and vice president with Ground Loop Heating and Air. They bring considerable experience from their own companies but speak collectively on behalf of IGSHPA in this article unless otherwise noted.

In their estimation, Southern geothermal markets may be underserved compared to others. However, on the commercial and institutional sides, they add that enterprising engineers in the 1990s sold a lot of geothermal systems to school districts. Condominiums along the coast also have embraced water-source heat pumps in decent numbers.

That represents an above-average level of general consumer awareness and a more mature market for ongoing system maintenance or replacement.

No matter the location, IGSHPA advises a contractor to get to know their local utility and likewise put the business on the utility’s radar for references.

The association strongly encourages taking the time to locate an IGSHPA-certified loop installer for contractors who may want to outsource that part of the work.

The current labor shortage can reflect in driller availability, prices, and types of drilling they are willing to do. This varies considerably from place to place, sometimes partially because of the type of earth or rock that must be displaced.

For those with a background elsewhere in HVAC, proper load calculation is also no less important in the geothermal sector.

“Geothermal is not like a furnace,” said Cullum and Lull. “Once a geothermal loop is sized, there is a limit to how much heat it can provide.” Not accounting for things like insulation, wall materials, and window condition can make for bad outcomes.

They note that pairing a high-output furnace with a smaller air conditioner may be a traditional move with other equipment, but “when sizing geothermal, you are sizing both heating and cooling with the same system, and you cannot put an 180,000 Btu geothermal system in a 2,000-square-foot residential home.”

What’s The Rush?

At a recent IGSHPA webinar, moderator and geothermal distributor Darrin Beller asked contractors their single biggest obstacle for selling geothermal systems.

“Payback is probably the first,” said Rob Derksen of Michigan Energy Services.

“They tend not to say ‘no,’ but to say ‘not right now,’” he explained. Maybe the existing furnace isn’t old enough, or maybe natural gas prices locally reduce a sense of urgency.

One other approach can make inroads against a customer’s impulse to not dig into geothermal quite yet.

Derksen does bring up that there can be a cost to waiting. One customer decided to wait but then wound up with no air conditioning. Making matters worse, they had already replaced their driveway in the meantime, instead of installing a loop and redoing the driveway.

So while they had looked at geothermal as the best long-term decision — eventually — now “they had to go with their second choice (of a heat pump system) and also get through six weeks of heat.

“Don’t sacrifice your long-term goals with a short-term decision,” he tells customers. Don’t risk creating unnecessary discomfort “and sometimes even the technology you wanted because you put yourself in an emergency,” he said.

Look Past Payback

For those with payback and initial cost concerns, Derksen said it is past time to embrace an established tool rather than keep preaching to the same small target market with more disposable income.

“We need to move toward financing along with the rest of the industry,” he said. Derksen pointed to multiple resources “to expand the potential customer base and offer geo to more people without making assumptions about who can afford it. We need to offer affordability options.”

Cullum said that the biggest thing his companies does is point out that “you have to spend money to replace what you have,” so the decision about geothermal or not comes down to its first cost but also the difference over that amount and the payment.

If the customer’s willing to see it from that point of view, Cullum said, that drastically changes the idea of “payback” and the decision process. IGSHPA also points out that this will naturally require some discussion of how long the customer plans to own the building or home.

Mark Sakry of Northern GroundSource Inc. shows customers the 30-year cost of ownership and annual savings in order to illustrate that the “extra” cost is not as much as they might think, especially after any rebates or breaks.

“What they like is to hear that they’re able to convert their own property into an endless thermal resource that will cover roughly 70% [of their heating/cooling/water needs] forever,” he said.

Derksen would like contractors to get away from “payback” altogether and embrace the focus on lifecycle costs. In that scenario, “geo wins every time, even when you factor in natural gas costs and before you even talk about tax credit.”

Tax credits are the last part of the conversation for Derksen.

“Instead of leading with it, it kind of seals the deal.”

Customer-Guided Process

Michigan Energy Services uses a consultative selling model in an effort to help the customer make the best long-term decisions.

“A lot of times, they may not be asking about geo up front,” Derksen said, “but we’re offering a geo solution based on what they’re telling us.”

“People make purchasing decisions based on what matters to them, no to us,” IGSHPA advised. “So it’s important to ask questions. It may be as simple as them telling you that they don’t want to have any outdoor HVAC equipment.

“By asking questions, you will uncover geothermal sales that you never would have expected.”

Moreover, whether the setting is residential or nonresidential, “when people purchase a product with higher up-front costs, they expect more,” IGSHPA said.

Writing a check for double, triple, or quadruple the cost of a more familiar HVAC system translates to high expectations for not only the result but the process.

“Cleanlines, professionalism, customer service … this principle also applies in the commercial or industrial setting” in IGSHPA’s experience.

“How Does Geo Work?”

There’s another question contractors must be prepared for. The details again vary from location to location, but Cullum shared his answer.

“The ground’s 55°, you’re trying to keep it 70° up in the house. It doesn’t take a lot of energy to go from 55° to 70°” is often good enough for the sales process.

Or, he said, “forget about temperature and think of it as there’s heat in the ground, you need to move it out of the ground and put it in the house, or vice versa.”

Especially when considering extreme temperatures, he said, people can intuitively understand that it is easier to do that with a ground-source system than with an air source. Ground source brings the benefit of not trying to dump heat into hot outdoor air.

Sakry acknowledged that sometimes he successfully avoids getting into the deep particulars another way.

“I prefer not to explain to people how it works,” he said. Instead, he will say, “Do you know how the computer on your car works? But you still drive the car.”

Hal Smith of Halco Energy in Phelps, New York, frames geothermal as “just moving heat.” He points to how a refrigerator works by removing heat as a familiar comparison.

Ultimately, Derksen said, “if they’re calling us, they’ve done some research.”

So he asks people to talk to him about the research they have done. Then, “we simply validate their level of knowledge or correct it where they’re misinformed.”

This active listening approach keeps the conversation on a laymen’s level, Derksen said, and sets the table to move forward with the conversation from a common point of reference.

But long before any kitchen table conversations, contractors might note what Smith did to plan the seeds of success.

Halco Energy’s team went to any town halls and similar gatherings to promote clean energy wherever they could, and “eight or nine years later, we’re almost overloaded with leads.”

These days, adapting that strategy means “doing a lot of Zoom meetings” in addition to traditional advertising options like postcard mailings and/or radio. “It took time to develop, but we’re seeing the results,” he said.

September 21, 2021

Robert Beverly

KEYWORDS geothermal market / geothermal system / geothermal tax credits / Sustainability and HVACR

No matter where your HVAC business is located, you probably have some stiff competition in the industry. This is where having the right internet marketing strategy can really help you stand out among your competitors. Not sure where to begin when it comes to boosting your digital presence and creating an HVAC marketing plan? These five simple steps are a great place to start.

Begin with a Responsive Website

Is your website set up to be viewed across all devices? Take some time to test your site not just on your computer or laptop, but a tablet and smartphone as well. If things are looking a little off, then your site’s coding probably needs some updating. This is something you can either do yourself with a simple (and free) HTML template, or you can hire an experienced digital marketer. After all, mobile traffic makes up more than half of today’s web traffic—so if your site isn’t mobile-friendly, you could be missing out on business. Not to mention, a lack of responsive web design is also bad for your search engine rankings.

Use Blog Content to Your Advantage

Speaking of search engine rankings, you can employ some HVAC digital marketing strategies to boost your Search Engine Optimization (SEO). Creating, publishing and sharing unique and useful industry content is one of the best ways. If your HVAC site doesn’t already have a blog, now is the time to start one. From there, you can begin to establish yourself as an industry authority by publishing blog posts regularly. You might even consider becoming a guest blogger for another industry website. This digital content exposure can go a long way toward improving your search engine rankings and building credibility for your company.

Encourage Clients to Leave Reviews

These days, potential HVAC clients are reading third-party reviews before they hire anybody for the job. This is where having a lot of five-star reviews can help your business stand out. If you haven’t already been doing so, start asking happy clients to leave you a review on a platform like Google or Facebook. These excellent reviews can also help your local SEO, so it’s a win-win.

When you see that a new review has been posted, it’s also good to respond to the review with a personal comment. Even if it’s a five-star review, leaving a comment thanking the customer for their business shows the public that you care enough about your reputation to read (and respond) to these reviews.

Stay Active on Social Media

Social media platforms like Facebook can also be used to your advantage from an HVAC contractor marketing standpoint. Maintain an active social media page for your brand and be sure to share new blog posts and other relevant news to your followers. You can also build more of a relationship with your followers by being accessible on social media.

Share Useful How-To Videos

Creating your own video content can be fun—and it can also work wonders for your online presence. Consider putting together some useful how-to videos with your team, walking your followers through things like changing a furnace air filter or cleaning an air conditioner’s condenser unit. From there, you can share these videos on social media, your website, and even through your email marketing list. These types of videos should be part of any great HVAC marketing plan.

Digital Marketing for HVAC Businesses

Building a strong online presence in the HVAC industry isn’t something that you can do overnight. Instead, you’ll need to spend some time gradually building your reputation. By following these practical tips, you’ll be well on your way to an improved online presence, better search engine results, and a leg up on the competition!

For more information, contact our CE team today: https://www.carrierenterprise.com/contact/.

Contributed by Katie Conigliaro. Excerpted from CE News

The cold storage market is heating up

One of the interesting trends brought about by the pandemic is the skyrocketing demand for cold storage warehouses. And this trend is significant, according to consulting company Emergen Research, which reports that the global cold storage construction market is expected to reach $18.6 billion in 2027, up from $7 billion in 2019.

This market revenue growth has primarily been driven by increased online grocery sales and expanded e-commerce channels, which flourished during the pandemic, resulting in the need to expand cold storage facilities. The report predicts that demand for processed and fresh products through online channels will continue to drive market growth, which is good news for refrigeration contractors, who may be able to leverage this demand into more business for their companies.

COOL INSTALL: An Evapcold LCR-P air-cooled, 70-ton, low-charge ammonia, penthouse unit is shown being installed on a 133,000-sq-ft Lineage Logistics cold storage facility. (Courtesy of Evapco)

Increased Demand

While the shift to e-commerce has increased demand for cold storage facilities, there are other driving forces as well, including existing facilities reaching maximum capacity and an aging infrastructure, said Brian Kelly, industrial refrigeration sales director for Danfoss Climate Solutions. He added that the trend is also being driven by years of underinvestment in the cold storage real estate market due to prohibited speculative development opportunities.

“We’ve seen the largest growth at facilities that deal in food distribution and direct-to-consumer at the national level,” said Kelly. “The demand is coming from cold storage operators at both new construction and retrofitted existing facilities. When retrofitting existing facilities, operators are seeking to increase their refrigeration capacity and improve system efficiency.”

The increased demand for cold storage facilities in the U.S. and Canada is significant, agreed Kurt Liebendorfer, vice president at EVAPCO Inc., who noted that his company has seen a substantial increase in cold storage retrofit and construction work over the last year. Aging cold storage facilities and rapid growth of e-commerce that now includes frozen and refrigerated foods are primarily driving the increase around the country, but particularly in urban areas such as Denver, Houston, Phoenix, and Dallas.

“In addition, there is a lot of new investment and acquisitions taking place in the cold storage market,” he said. “Lineage Logistics is a good example, where they have acquired dozens of cold storage companies and facilities in just the last couple of years. They’ve also initiated a lot of new construction as well. This new investment money has also led to new entries into the cold storge construction market by large commercial architectural engineering (AE) firms, general contractors (GCs), and REITS (real estate investment trusts).”

Another issue driving growth is that a growing number of consumers are expecting fresh or perishable food that is ready to serve/cook all year-round, and they are also demanding a greater variety of foods, said John Collins PE, industrial sales manager-east at Zero Zone Inc., Systems Division.

“Retailers are responding to this demand and capitalizing on the opportunity to increase revenue and profit by delivering what their customers see as higher value product for which they are willing to pay more,” he said. “To provide these products, producers and retailers need a more extensive and robust cold chain to support the consumer demand. This shift in expectations and the demand for ever more options in the choices we have as consumers is driving changes and growth in the entire cold chain.”

Choices and Considerations

Since each cold storage facility is custom-built to fit specific design requirements, the type of refrigeration equipment used can vary from one facility to the next, said Kelly. When it comes to choosing which type of refrigeration and/or control system to install, however, cold storage operators generally take three key issues into consideration.

“First, they’re evaluating the end user’s existing controls and the capability of the current system (e.g., performance and capability limitations, longevity of the system in place, age of technology),” he said. “Second, they’re considering the potential improvements in energy efficiency, performance, and capabilities of the new system over the existing system. Lastly, food safety and regulatory compliance remain critical issues for operators.”

To that last point, temperature control is a critical issue in cold storage facilities, but the system’s cost and complexity can also play a large role in deciding which refrigeration system to use. As such, most end users need to find a balance between initial construction cost and overall life cycle cost of the refrigeration system, as well as complexity, said Collins.

“For example, an inexperienced facilities operator may prefer a simpler system with less sophisticated controls, and more conventional equipment may be preferred over a system that brings the benefits of newer technologies but more complex refrigeration equipment,” he said.

Probably the most common type of refrigeration system that is utilized in the cold storage industry is the central plant recirculated ammonia system, said Liebendorfer. This equipment has been used for over 50 years due to its reliability, flexibility, energy efficiency, and cost effectiveness, and it still enjoys widespread use, he said.

“However, over the last decade, the industry has experienced its own technology revolution on several fronts,” he said. “Though core refrigeration equipment hasn’t changed radically – components of evaporators, compressors, condensers, and pressure vessels remain the fundamental building blocks — the way they are put together, fabricated, piped, packaged, controlled, managed, and monitored has changed substantially. Material science has also advanced. For example, at EVAPCO, we offer improved heat transfer technology and corrosion protection by utilizing enhanced stainless steel heat transfer surfaces.”

Refrigerant type is also a fundamental consideration in the choice of a refrigeration system, said Collins. “With HFCs and other synthetic refrigerants, the materials of construction and components are different than for natural refrigerants such as ammonia or carbon dioxide. The capabilities and training for the operators of refrigeration systems varies greatly with the choice of refrigerant.”

Regulatory Issues

Speaking of refrigerants, the impending phasedown of HFCs will likely have an impact on how cold storage facilities are designed, built, and operated in the near future — particularly for smaller cold storage facilities that are less than 50,000 square feet, as these were primarily built with split systems using HFC refrigerants, said Kelly. These split systems are also commercial-grade — as opposed to industrial-grade — and will be at their end of life over the next five to 10 years.

NATURAL MOVE: Zero Zone expects cold storage facility operators will move toward natural refrigerants such as carbon dioxide, due to new regulations. Here, a technician works on a CO2 rack assembly. (Courtesy of Zero Zone)

“With the regulatory changes occurring in refrigeration, operators are feeling more pressure to transition away from higher-GWP refrigerants to other alternatives,” said Collins. “This is driving decisions and creating significant change in the type of systems we are providing for our refrigerated facilities today. There is a move toward natural refrigerants, especially carbon dioxide in recent years, which is dramatically increasing the number of these systems now being installed across the U.S. and in other countries.”

Liebendorfer also expects the HFC phasedown to increase interest in CO2 and ammonia refrigeration systems, noting that cold storage facility operators will have to make decisions about retrofitting/removing high-GWP refrigerants in exchange for new, natural refrigerant refrigeration systems — or else abandoning older facilities in favor of new construction.

With the impending regulatory changes and greater customer demand, Liebendorfer expects the growth of cold storage facilities will continue until supply catches up with demand, including the addition of some needed backup capacity.

“The last decade has seen cold storage capacity that is short of demand, and this has been increasing as the legacy facilities continue to age and reach the end of their useful life,” he said. “The pandemic also put a spotlight on the fact that the cold storage market has limited redundancy or excess capacity — as illustrated by the supply disruptions over the last year.”

This, along with the continuing need to respond to evolving demands and expectations from customers and adapt to changing logistical and regulatory requirements, is driving continued growth and development in refrigeration technology and equipment, said Collins. But for all this to occur, a skilled workforce is necessary.

“A key factor in meeting the refrigeration needs of the industry going forward will be the availability of skilled and knowledgeable professionals who can design, build, and operate systems with the new technologies of today,” said Collins.

August 18, 2021

Joanna R. Turpin

Looking back can help with preparing for moving forward

It’s shocking to say, but we’ve passed the one-year anniversary of total lockdown. The year 2020 changed everything for us — and while the HVAC industry was deemed essential, it didn’t mean “business as usual” for any of us. Through the unprecedented times, we adapted. With the many changes that occurred, from working from home to virtual gatherings, learning from this new way of operating was key to staying afloat. As we continue to navigate 2021 and the evolution of the pandemic, it's time for us to reflect on how the past year has shaped our businesses and to take inventory of the tactics and solutions that will propel us forward. By being mindful of these insights, contractors can grow their HVAC businesses in the right direction.

Here are a few considerations for HVAC businesses this year:

Accounting for a Shift in Consumer Mindset: Within the past year, we’ve seen a new desire and need for cleaner air filtration systems in businesses, restaurants, schools, and even in homes — and this trend is seemingly something that has stayed top of mind. The pandemic had people thinking about what’s in the air they breathe at home more than ever before. A shift in consumer mindset is apparent, and those who don’t oblige may be left behind. The year 2020 ushered in the time of the conscious-consumer, and we don’t see any signs of this customer segment slowing. It’s more important than ever before to appeal to the desires of our planet-conscious consumer.

As such, education around the options and solutions available to customers is extremely important.

Education Around the State of Air Quality: As this attention to cleaner air will only increase this year, it is an area that HVAC companies can invest in. Contractors should educate their customers about air filtration and basic maintenance that they can do themselves. Information around replacing filters — how often, with what kind, where to buy them, etc. — is invaluable to this group and will be noticed throughout the purchasing experience.

This topic is particularly top of mind in urban areas. Airborne pathogens and general pollution, especially in big cities, are always going to be around. As traffic increases again and travel, manufacturing, and business pick up, our air is going to be filled again with pollutants, especially in heavily populated environments. The International Energy Agency (IEA) recently pointed out global carbon emissions in 2021 are projected to bounce back significantly, marking what could be the second-largest annual increase recorded. While these are global figures, it informs us a trend is arising. As the world opens up again, our air quality will suffer, and consumers will endure the effects if they aren’t aware of what they can do to increase the quality of their indoor air.

Delivering Affordable Options: While there has been a demand for cleaner air systems, on the other hand, economic uncertainty has halted many optional upgrades and/or needed replacements for homeowners and businesses. To address this, contractors can provide basic education of what IAQ is and what building managers can do about it without spending a ton of time or money. Additionally, it’s to the owners’ benefit to invest in the maintenance and filtration of their systems — as it’s clearly a selling point for bringing in future renters.

Proper preventive maintenance is a requirement of many manufacturers to be covered under limited warranty eligibility. We saw an increased need for all these things in residential properties with people staying at home with their kids and pets, working from home when possible, and generally spending more time indoors than they normally would. Even with many return-to-office plans in action this summer, people are finding they will still require a flexible work-from-home environment to accommodate the shifts (i.e., staggered days in office).

Additionally, many homeowners and property managers are taking this time to remodel or renovate spaces — a great opportunity for people to switch out an old, inefficient system with something that provided an affordably sustainable option. We’ve seen very extreme weather in the past 12 months in different parts of the country, which just goes to show the importance of maintaining safe temperatures inside the home, especially while more vulnerable people are cooped up inside.

Adapting to the Times: With an increase in businesses going virtual, it is crucial to incorporate online services into the customer purchasing experience to be successful now and in the future. Just like real estate agents are conducting virtual tours of the homes they’re aiming to sell, contractors can leverage video content to help educate their customers on basic things like how to replace a filter or what the best product is to service their needs. During the pandemic, we’ve seen more and more transactions happening online and digital is truly the future of commerce.

E-commerce has slowly been increasing in importance in the HVAC space, and now more than ever, people are choosing to buy appliances and higher value products online. Contractors should be aware of what brands are available to purchase online and which brands allow them to use their own e-commerce platforms to sell online. Further to this, social media has never been more frequented. All businesses should be leveraging a digital-forward approach to engaging and communicating with customers this year.

Keeping in mind that the world has changed drastically for not only us, but our customers too, is the key to success in this post-COVID era. While we’ll slowly return to a new normal regarding operations, the consumer mindset has shifted permanently. Being cognizant of the challenges many people have faced and staying present when interacting with new clients will ensure success in the year ahead.

July 18, 2021
-Bryan Davenport, general manager for Oxbox, a brand of Trane Technologies.

https://www.achrnews.com/articles/145217-a-look-at-the-hvac-industry-a-year-after-the-pandemic

The Manasota Air Conditioning Contractors Association (MACCA) held a panel discussion with Manatee County Sheriff Rick Wells and Sarasota County Sheriff Kurt Hoffman focusing on Unlicensed Contractors on June 3, 2021.

Both County Sheriffs suggest the best way to curb the issue of Unlicensed Contractors within our community and businesses is to stay up to date with current technology trends and to educate others, especially our seniors. An example of advancements to technology is Automated license plate readers (ALPRs) equipped with Geofence technology which capture numbers that come into view, record the location, date, and time and alert officers when there’s a hit against a national database. Our local Sheriff’s departments use these surveillance mechanisms to determine whether a vehicle was at the scene of a crime, to identify travel patterns, and even to discover vehicles that may be associated with each other.

Sarasota County Sheriff Kurt Hoffman, Manatee County Sheriff Rick Wells and Sarasota County Law Enforcement Division Commander Major Brian Woodring

Manatee and Sarasota counties both plan to continue to combat unlicensed contractor activities on a multitude of fronts. Sting operations are extremely effective. However, there are substantial expenses behind these operations that require extensive planning and observation which does create limitations. Both counties plan to continue to hire more employees to shorten dispatch times at the Sheriff’s Office. Sarasota County has put in a third tactical unit to address neighborhood calls. To address this issue in the future, both counties stated they will be focusing on monitoring social media operations.

They suggested the best way for our members to help is to educate others through social media, prevent victimization by educating seniors within the community, be an ambassador and report any suspicious unlicensed contractor activity by collecting a tag number and description of the person or vehicles involved in the crime prior to making the report.

Please report any unlicensed activity to Florida Department of Business and Professional Regulation (DBPR) Hotline #1.866.532.1440 or email the department at ULA@DBPR.state.fl.us.

BECOME A MACCA MEMBER. For More information on Member Benefits please visit: www.macca.us.

Mitsubishi Electric Trane HVAC US (METUS) Chief Executive Officer, Mark Kuntz, was among the top executives from building and construction industries convened this week by the Biden administration for a virtual roundtable discussion about the equitable decarbonization of residential and commercial buildings across the country.

The event, titled “Accelerating Building Decarbonization: A White House Roundtable with Government & Industry,” took place Monday, May 17 as part of the Better Buildings, Better Plants Summit presented by the U.S. Department of Energy (DOE).

As a leading supplier of Ductless and Ducted Mini-split and Variable Refrigerant Flow (VRF) heat-pump and air-conditioning systems, METUS was selected to participate in the conversation on decarbonization, associated opportunities for jobs, and new programs for efficient electrified buildings. Heat pumps were an important part of the dialogue. DOE representatives mentioned heat pumps and new heat pump technology for performance in cold-climate areas, such as Mitsubishi Electric’s Hyper-Heating INVERTER® (H2i®) technology, multiple times during the event.
Core members of the administration who participated in the event were Gina McCarthy, National Climate Advisor on the White House Office of Domestic Climate Policy; Brenda Mallory, Chair of the White House Council on Environmental Quality; Jennifer Granholm, Secretary of the U.S. Department of Energy; Michael Regan, Administrator of the U.S. Environmental Protection Agency; and Katy Kale, Acting Administrator of the U.S. General Services Administration.

The roundtable was moderated by Mark Chambers of the White House Council on Environmental Quality.

To learn more about the Better Buildings, Better Plants Summit, and to view a recording of the roundtable, visit betterbuildingssolutioncenter.energy.gov/summit. For more about Mitsubishi Electric Trane HVAC US visit, metahvac.com.

About Mitsubishi Electric Trane HVAC US LLC
Formed in May 2018, Mitsubishi Electric Trane HVAC US LLC (METUS) is the exclusive provider of Zoned Comfort Solutions® and leading supplier of Ductless and Ducted Mini-split and Variable Refrigerant Flow (VRF) heat-pump and air-conditioning systems in the United States and Latin America.

A joint venture between Trane Technologies plc and Mitsubishi Electric US, Inc., the company provides innovative products, systems and solutions capable of heating and cooling a broad range of applications, from a home to a large commercial building with superior efficiency, comfort and control.

The family of brands supported by METUS includes: Mitsubishi Electric, Trane®/Mitsubishi Electric, and American Standard®/Mitsubishi Electric. More information is available at www.metahvac.com.

Tropic Supply and Ruud have partnered with Heating, Air-conditioning and Refrigeration International (HARDI), Homes for Our Troops (HFOT) and four of the distributor’s suppliers to donate the HVAC system and supplies needed for SGT Justin Callahan’s home in Jupiter, FL. Sporlan, Evergreen/Regal, Nu-Calgon and Refrigeration Technologies donated a percentage of certain product sales in May and June to help with the effort.

SGT Justin and Katie Callahan during a Tropic Supply “Meet the Callahans” Zoom meeting

Justin Callahan joined the Army as a combat engineer at the age of 18 in 2000, with the desire to do something meaningful for his country. He served in Korea before deploying to Afghanistan in 2003 with B Company, 41st Engineer Battalion, 10th Mountain Division. On Jan. 15, 2004, SGT Callahan was conducting route clearance operations outside of Bagram Airfield when an improvised explosive device (IED) went off. SGT Callahan lost his left leg as a result of the blast. Following his injury, Justin endured several surgeries and months of physical therapy at Walter Reed Medical Center before medically retiring in May 2004. In the years since his injury, Justin has gotten married and started a family with his wife Katie. They have two sons, Callum, who was born in 2016 and Connor, born in 2019. Justin completed a master’s degree in Social Work (MSW) from Florida Atlantic University and continues to serve Veterans as a Social Worker at the West Palm Beach VA Medical Center. Justin enjoys attending church with his family, fishing, exercising, weightlifting, and swimming. Justin believes the gift of a new home will enable him to maintain his health and be a productive member of society. He plans to use his degree to work with other Veterans transitioning into civilian life, and he and Katie would like to expand their family. Additionally, the financial freedom of the home will give them the opportunity to save for their sons’ futures.

HARDI is a not-for-profit international organization serving wholesaler-distributors and their suppliers within the HVACR industry. HARDI is the Official Supplier of HVAC for Homes For Our Troops (HFOT), the Massachusetts-based organization that builds and donates specially adapted custom homes nationwide to severely injured post-9/11 Veterans, to enable them to rebuild their lives.

The HVACR industry is sliding toward a unified generation of low-GWP refrigerants

At this time last year, the HVAC industry was in state of upheaval. Half the country’s state governors were in the process of implementing the EPA’s invalidated SNAP Rules 20 and 21; the American Innovation and Manufacturing (AIM) Act seemed stalled in Congress; and California’s Air Resources Board (CARB) was moving ahead with proposed regulations that outpaced the state’s building codes. These factors, along with others, were leading to a patchwork of regulations that threatened to derail the U.S. HVAC industry’s global leadership. A year later, however, many of those issues are seemingly resolved and the industry is on the verge of moving toward a unified and safe transition to a new generation of low-GWP refrigerants. 

U.S. Air Force Senior Airman Stephanie Holt, 366th Training Squadron, HVAC/R Apprentice course, checks the HVAC system’s refrigerant pressure at Sheppard Air Force Base, Texas. (Courtesy of Picryl)

California Air Resources Board (CARB)

A year ago, California was pushing ahead with proposed regulations that would put the air conditioning industry in an awkward position. Its proposed regulation prohibiting stationary air-conditioning equipment with a GWP higher than 750 meant that — because building codes would not be updated in time to accommodate mildly flammable A2L refrigerants — there might not be legal products available on the January 1, 2023, implementation date. During the summer of 2020, the state’s fire commissioners rushed to review the new codes and standards, but when they announced that they would not update the state’s building codes ahead of the next code cycle, CARB and the industry worked together to find a solution.

CARB agreed to move its proposed implementation date for stationary air-conditioning back to January 1, 2025, and is currently working with the industry to establish a reclaimed refrigerant program that will help offset any increase in emissions due to the date change. Its implementation date and GWP limit for comfort chillers remain January 1, 2024, and 750, respectively, while its rules for industrial process chillers are based on discharge temperature to provide flexibility for niche low-temperature applications. In addition, the state’s supermarket industry and CARB collaborated on the following rules for grocery stores:

• Refrigerants with a GWP greater than or equal to 150 will not be allowed in new stationary refrigeration systems charged with more than 50 pounds, effective in 2022.
• Existing food retail facilities with refrigeration systems charged with more than 50 pounds must collectively meet a 1,400 weighted average GWP or 55 percent greenhouse gas potential (GHGp) reduction relative to a 2019 baseline by 2030.

The American Innovation and Manufacturing (AIM) Act

When it was signed into law at the end of 2020, the American Innovation and Manufacturing Act, or the AIM Act, gave the U.S. EPA the authority to phase down HFCs using the same mechanism is used to phase out Ozone Depleting Substances (ODS) under the original Montreal Protocol. As opposed to SNAP Rules 20 and 21, which were vacated by the federal courts, the AIM Act does not rely on the Clean Air Act to regulate greenhouse gases. Rather, it gives the EPA the narrow authority to phase down HFCs without “opening” the Clean Air Act, which would leave the door open to regulate other sources of emissions.

The AIM Act follows the Kigali Amendment’s phasedown schedule, seeking to reduce the usage of HFCs by 85 percent in 15 years based on a baseline which the EPA is currently developing. That baseline will be finalized by September 2021 along with allocation rules for regulated sectors. While there are no sector-based controls in the legislation, industry and environmental groups can submit petitions to the EPA asking for limits for certain sectors. The Air Conditioning, Heating and Refrigeration Institute (AHRI) is currently working with its member companies to develop sector-based controls petitions for comfort chillers, stationary air conditioning, and commercial refrigeration. It is expected that these industry petitions for stationary air conditioning and comfort chillers will closely follow what CARB has proposed, while the petition for commercial refrigeration may vary from CARB’s weighted-average GWP approach.

The Kigali Amendment

The Kigali Amendment to the Montreal Protocol is an international treaty signed in 2016 that aims to reduce greenhouse emissions from HFC refrigerants. The treaty allows each ratifying country to determine its own regulatory structure such as an outright ban, a quota system, or an allocation. Thus far, more than 120 countries have ratified the Kigali Amendment, including the European Union, Japan, Australia, Mexico, and Canada.

While the AIM Act’s phasedown will bring the United States into compliance with Kigali Amendment, the U.S. Senate has not ratified the treaty. Even with compliance outside of ratification, there are several reasons why AHRI and the Alliance for Responsible Atmospheric Policy are pushing lawmakers to ratify the Kigali Amendment. The U.S. has more than 30 years of leadership with the Montreal Protocol and ratifying Kigali is consistent with that legacy. In addition, failure to ratify, even with compliance through the AIM Act, risks allowing U.S. competitors to delay their own ratification until the U.S. does so.

SNAP Rules 20/21 & The U.S. Climate Alliance

To achieve the first two phasedown steps in the Kigali Amendment, the U.S. EPA under the Obama administration set a phasedown schedule for high-GWP refrigerants using rules 20 and 21 of its Significant New Alternatives Program (SNAP). These rules were used to regulate the phaseout of CFCs and HCFCs during the initial Montreal Protocol and the EPA believed the Clean Air Act gave it similar authority to act on greenhouse gases. Two refrigerant manufacturers, Mexichem and Arkema, however, sued the EPA in federal court over this interpretation and won, effectively limiting the federal government’s ability to regulate greenhouse gases without new legislation.

When President Trump announced he would withdraw the U.S. from the Paris Climate Accord, many governors from around the country formed the U.S. Climate Alliance. This group, which now includes 24 states and Puerto Rico, has pledged to implement policies that advance the goals of the Paris Climate Agreement. The Climate Alliance represents 55 percent of the U.S. population and an $11.7 trillion economy and about half of these states have included HFC regulations as part of their climate plans.

All of these states, except California, are planning to implement some form of the former SNAP Rules 20 and 21. The AIM Act’s phasedown, however, goes well beyond that of SNAP Rules 20 and 21. And while the AIM Act does not include federal pre-emption, which would prohibit states like California from regulating further than the EPA, it does obviate the need for the other Climate Alliance states’ SNAP regulations. Currently, the industry is helping the Climate Alliance states to understand the AIM Act’s phasedown and its impact on their SNAP Rules.

SNAP Rule 23

In the spring of 2020, the U.S. EPA issued a Notice of Proposed Rule Making for SNAP Rule 23. This rule proposes to list a number of A2L refrigerants as acceptable substitutes in several sectors, including:

• R-448A, R-449A, and R-449B for food retail refrigeration.
• R-452B, R-454A, R-454B, R-454C, and R-457A for residential and light commercial air conditioning and heat pumps.
• R-32 for residential and light commercial air conditioning and heat pumps, excluding self-contained room air conditioners.

Once finalized, this proposed rule will help pave the way for a smooth transition to A2L refrigerants since R-32 and R-454B are the two leading low-GWP candidates to replace R-410A in residential and light commercial air conditioning applications.

Building Codes

With the passage of the AIM Act and ASHRAE and UL standards for A2L refrigerants either completed or well on their way to completion, state and local building codes that incorporate those safety standards are the next hurdle for the refrigerant transition in the United States. The AIM Act gives the U.S. EPA the authority to regulate the use of HFCs; however, it is up to states and local jurisdictions to allow for the use of mildly flammable A2L refrigerants in their building codes. Should these localities not update their building codes with the latest ASHRAE and UL safety standards ahead of the EPA’s implementation date, they risk not having legal products available to their constituents. In fact, that is exactly the choice CARB faced as it was pursuing an implementation date of January 1, 2023, for stationary air conditioning.

Currently, the International Code Council’s (ICC) International Building Codes and the International Council of Plumbing and Mechanical Officials’ (IAPMO) Uniform Mechanical Code, the two most commonly used model codes, are currently in their 2024 update cycle. During this cycle, the model code councils are reviewing the ASHRAE and UL safety standards for incorporation in the next edition of their model codes. Should these standards be adopted by the model codes councils, which is expected, states and local jurisdictions that use those model codes can incorporate them into their individual buildings codes ahead of January 1, 2025, the expected implementation date for stationary air conditioning in California and, potentially, nationwide under the AIM Act. States and local jurisdictions can also incorporate safety standards directly into their building codes without waiting for model code updates.

As AHRI works with states to help them better understand the implications of the AIM Act, the issue of local building codes is coming to the fore. In Texas, which has no statewide building codes, a novel legislative approach has emerged to ensure local building codes are ready for a national refrigerant transition. State Senators Nathan Johnson (D) and Paul Bettencourt (R) recently introduced SB 1210, legislation that would clarify that local building codes applicable to commercial or residential buildings or construction cannot prohibit the use of a substitute refrigerant allowed by the U.S EPA. The effective date of the legislation is January 1, 2023. This legislation would effectively force local jurisdictions to update their building codes to allow for A2L refrigerants, paving the way for a smooth transition in the state. AHRI and its member companies are supportive of this approach and it could emerge as a model for other states as well.

Conclusion

After a year of unprecedented uncertainty—not to mention a pandemic, a smooth U.S. refrigerant transition is finally starting to come into focus. The potential for CARB’s GWP limits and implementation dates to align with the EPA’s sector-based controls under the AIM Act create an environment in which a de facto nationwide HFC regulatory framework could actually emerge. And with model building codes on track to incorporate updated safety standards by 2024, all of the pieces are falling into place for a safe transition to low-GWP refrigerants.

May 1, 2021 -John Sheff

https://www.achrnews.com/articles/144845-the-refrigerant-policy-landscape-a-national-framework-comes-into-focus?oly_enc_id=0628A8667290C2T

Many of you will say cash is most important. Yes, it is critical for survival, paying the bills and payroll. But, what if you have a false sense of security because you have cash in the bank?

What if you have more than $800,000 in the bank? Is this too much? A participant in one of my Building Profit and Wealth classes had more than $800,000 in the bank. Many people told him to take money out of the business, however, his company was hit with a lawsuit, where he ultimately prevailed.

Legal fees? Around $700,000 over a 5-year period. What if he didn’t have the money in the bank? That would have severely affected the ability to operate his business. Yes, the time was still a hassle. However, he didn’t have to worry about finding and paying for the best legal representation available. He didn’t have to worry about the company going bankrupt over the lawsuit.

What if Your Cash is Growing?
That is good, maybe.

Two partners started a company and grew it to $2 million in revenues over a 12-year period. The owners paid attention to the amount of cash in the bank and whether they could take their supplier discounts.

When the company hit $2 million in revenues, growth leveled out. The lack of growth caused cash problems. Occasionally they had to struggle to meet payroll. Taking discounts on payables? Not frequently. They just didn’t have the cash to do it. They were smart enough to get help.

When I did the analysis, the company was losing a nickel for every dollar they took in the door for that time period. Their pricing was way too low. They didn’t pay attention to the overruns on materials. Cash, yes. Profits, no.

This story illustrates that just because you have cash does not mean your company is profitable.

Profits are Necessary
Profits turned into cash are even more necessary. Your company can be profitable and still go out of business. How? A bank calls your line of credit because management philosophy has changed and the bank thinks construction loans are too risky. This has happened to many contractors who were profitable, yet didn’t have the cash to pay back a loan in 30 days.

This past year, COVID-19 was the culprit. Contractors with restaurants or restaurant suppliers holding 80 percent of their customer base didn’t make it. Those who survived quickly found customers in other industries and had the cash saved to survive the few months before PPP loans took effect.

It’s much better that your company have the cash savings to be its own line of credit. Saving 1 percent of all revenues that come in the door and all residential maintenance prepayments will help you do it.

Never have more than 25 percent of your customer base with one company or more than 25 percent of your customer base in one industry. If a customer goes bankrupt or an industry dies, your company will suffer losses. However, they won’t be catastrophic losses.

Profitability
Even more important than profits are continuous profits, i.e. profitability.

Continuous profits, turned into continuous cash, give your company the best chance for survival and building wealth. It makes no sense to have a profitable month, then a loss the next month, then a profit, then a loss. Or several months’ loss and having to hope for hot/cold weather to make up for the losses. What if the weather doesn’t turn hot or cold?

It’s better to determine how your company will have continuous profits. Yes, there might be a month or two in the year when the company experiences a loss. However, year over year, the company is getting more profitable. It is building its profitability. Assuming this is happening, find ways to at least break even in the one or two months that never seem to be profitable.

A revenue contest for all employees works. When the company achieves the dollars in revenue that it needs to break even that month, then the owners take everyone, including their spouses, for a dinner at a nice restaurant and pays for the babysitters. Send the contest information home to the spouses and significant others. They will help get the company employees working toward the goal. They probably would enjoy an evening out! And, the company will at least break even in a traditionally unprofitable month.

Or, ask your team members how to achieve a certain revenue goal. Give them an incentive to achieve it. If everyone is focused on the revenue goal there is a high likelihood that it will be achieved (you determine the profits from those revenues and don’t necessarily have to share the profit goals).

The answer to the question posed in the title of this article: Profitability, then profits, turn those into cash. Save the cash. You will be your own line of credit and sleep better at night.

Originally published: 04.01.21 by Ruth King
https://www.hvacrbusiness.com/cash-profits-profitability.html

David has been with Target Sales for eight years and will continue his duties in the field as a trainer for both contractors and distributors alike on the gulf coast and center of the state.

At the end of 2020, Target Sales founder Grant Meyers named David Waugh Vice President of the company effective January 1, 2021. David has been with Target Sales for eight years and will continue his duties in the field as a trainer for both contractors and distributors alike on the gulf coast and center of the state. In his new role he will further liaise with principals at all levels of the industry here in Florida. David has been in and around the industry since prior to college with a background in field work, manufacturing and business administration.

About Target Sales
Founded in 1984, Target Sales is “a training company that sells”. Primarily focused on the Florida HVAC/R industry, the company prides itself on having a knowledgeable sales staff willing and able to train and educate their clientele. With an extensive catalog including over a dozen leading manufacturers from around the globe, Target Sales is proud to have represented Dust Free products for 10 years, LG Residential/Light Commercial Ductless products for 14 years and Panasonic Ventilation products for 18 years!

For more information on Target Sales, visit www.targetsales.com or call 813-899-9498. Contact David Waugh by calling 813-323-8317 or emailing david@targetsales.com.

4 May 2021
https://hvacinsider.com/target-sales-names-david-waugh-vice-president/