The Uncertainty Factor
Whether you’ve been in the industry 20 years or two, there is one thing I’m sure you have realized…being an HVACR contractor means dealing with a lot of uncertainty! Nothing is more frustrating than trying to predict what’s around the next blind corner. However, after many years in this industry, I’ve learned a lot about this uncertainty; how to manage it, how to prepare for it, and how to accept it.
Probably the biggest uncertainty factor for a contractor is the weather. In an ideal world we’d have blazing hot summers and freezing cold winters that last six months each. Unfortunately, none of us can control or predict the weather and we simply have to accept that we won’t always have the best weather for customers to need our services. However, we all should know what the weather is typically like in our areas and prepare for the off -season accordingly. For some that means having a strong maintenance agreement program that keeps employees busy all year round. For others it’s offering home and building performance services. And for some it’s both, it just depends on your market area and your business.
The second biggest source of uncertainty is the government and the federal agencies that create regulations. As an example, let’s just look at the uncertainty we’ve faced in the past 12 months.
THE 25C TAX CREDITS. We’ve been there before and we will likely go there again. These popular tax credits helped many contractors get through the leanest years of the recession. However, the values have been lowered significantly since 2009 and 2010 and for the past few years, their renewal has occurred far too late in the season for contractors to market them to customers.
Let’s face it, tax credits were nice and they helped, but now it’s time to drop our dependency on them. They are always short term, not all homeowners are eligible, and they can go away at any time. So, to deal with this uncertainty, let’s just stop worrying about them. If we focus on our companies and our business practices, we don’t need tax credits. Superb customer service, quality installations, and professional business operations will keep us all in business.
R-22. Unfortunately, we are still talking about the price and supply of R-22. For more than a year, the EPA created a volatile situation with R-22 by delaying the announcement of the production and import allocations for manufacturers. In notices to the industry, the agency surprised many by proposing a wide range of allocation reductions, but then took nearly two years to finalize a number. This inaction and uncertainty caused huge price jumps for R-22 that contractors had to pass on to their customers. The spike in prices led to confusion and anger for customers. Thankfully, earlier this year the EPA set allocations through 2014, so this issue is laid to rest for at least a year. But watch out, the agency has already started to work on the allocations for 2015-2019, the last years before production and import of virgin R-22 are phased out completely.
REGIONAL STANDARDS. Are you still confused about what is going to happen with regional standards? Here’s the short story of what’s happening: Using new authorities granted by Congress, the DOE set regional standards for residential HVAC equipment in 2011. Within months, the American Public Gas Association (APGA) fi led suit against the rules. As the lawsuit dragged on, the industry anxiously watched the calendar as the May 1, 2013, compliance date crept closer. Early in 2013 both sides of the lawsuit proposed a settlement agreement, but it has yet to be accepted by the Court. Instead an emergency motion to stay the implementation of the rules holds them at bay until the lawsuit can be resolved.
What does that mean for contractors? The good news, in some people’s eyes, is contractors continue to have the option to install noncondensing furnaces in the northern region. For others it was a nightmare, because many customers felt that their contractor had lied to them about needing to upgrade their units early to save money on retrofitting installation costs of a condensing furnace. And for everyone it means we don’t know what is going to happen until the case is resolved. On top of that, there has been no enforcement plan implemented to ensure compliance with the regional standards.
The best thing contractors can do at this point is to start educating their customers to the benefits of installing more efficient equipment and get them used to whatever the new standards are. Because regardless of whether the rules are thrown out or are implemented as is, there are going to be regional efficiency standards in the future.
So, as you can tell we are surrounded by uncertainty. While we can’t change these things, we can certainly prepare for them, so we are ready to face them and see our businesses thrive.
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