ACCA Chair Addresses 13 SEER Business Management

August 28, 2006
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13 SEER Checklist. (Click on the chart for an enlarged view.)
Richard Dean is co-owner of Environmental Systems Associates Inc., Columbia, Md., which primarily services the residential replacement market between Washington, D.C. and Baltimore. The business is a factory-authorized Carrier dealer and has been awarded top ratings for customer satisfaction and technical excellence within its service area for the last five years in a row. Dean has personally been active in the HVAC industry for more than 30 years and was elected to serve as the 2006-07 chairman of the Air Conditioning Contractors of America (ACCA).

Dean was interviewed by Paul Selking of GE ECM by Regal-Beloit, which recently created a checklist to help contractors during the industry-wide transition to 13 SEER. Selking asked Dean how his company deals with the technical, business, and sales challenges presented by this higher-efficiency standard.

SELKING: On one level, the 13 SEER mandate is really just raising the baseline efficiency level of all new equipment. On the other hand, this change will make a major difference in product costs, new technology, and the way contractors run their businesses. What is your reaction to 13 SEER?

DEAN: When 13 SEER changes started in January, I wasn't really worried. We've been planning ahead, and look at this as an opportunity. Change is always happening, so it's just good business to always look at the future for coming challenges. Position yourself to meet and overcome those hurdles when the time is right. I took a look at the 13 SEER checklist and I said to myself, "This is a good thing. We are prepared for the transition and I feel very comfortable with where my company is right now." I think the checklist will really help a lot of contractors think through the coming changes, too.

SELKING: From what I've been hearing, North America Technician Excellence [NATE] certification is a big component of getting ready for this change.

DEAN: A hugely important part of being prepared is getting training and certification through third-party organizations like NATE, as well as taking advantage of your distributors' and manufacturers' expertise.

There was recently a joint partnership between HARDI and ACCA to create an Internet-based webinar that was very useful. Carrier puts together an Infinity and Puron workshop training session that they offer across the country, plus local training courses, brochures, etc. Other manufacturers are offering training, too. Manufacturer training is great because contractors often need more than one contact to really understand new products. Training really helps you keep up on new products.

From a marketing standpoint, I look for every edge I can find and NATE is definitely a part of that. We put the NATE logo on our trucks, Website and Yellow Pages ads. Some customers ask specifically for NATE-certificated techs. I let them know that I insist that all of my technicians are either NATE certified or are on the road to certification. We never subcontract work outside of the company, so every homeowner can be confident that his or her service is being supervised and performed by NATE-certified technicians.

SELKING: All of your technicians?

DEAN: Absolutely. Carrier re-quires that all factory-authorized dealers have at least 50 percent of their employees be certified, but NATE is a good benchmark for where a technician stands on both new technology and general HVAC practice, even for more experienced service techs. You may have been in this industry for 30 years, but how else can the customer have a level of confidence that you are up on all the new products coming out and that you understand the finer points of service?

Those who don't stay up on the latest technology will make mistakes because they don't understand certain aspects of the system. For example, matching issues - you can't always match an existing A-coil with a new condenser unit.

I also hear from some customers who are getting the wrong impressions of what 13 SEER requires. Contractors mistakenly tell customers that they will have to upgrade ductwork, replace whole units, or buy unnecessary equipment. Whether they are using scare tactics to increase sales or are just mistaken about 13 SEER rules, it's a liability.

Well-trained servicemen - especially those who have NATE certification - are able to give customers the best information about what the problem is and how to fix it so that the home is comfortable and efficient.

NATE certification requires a level of understanding that eliminates mistakes in diagnosis and repair, but it also gives technicians the skills to make creative solutions. For instance, a more knowledgeable tech might be able to use a thermal expansion valve (TXV) to fit a coil into a system, but you need the higher-level system knowledge to know if and how that would work correctly.

SELKING: Our checklist mentions it, but retrofitting will not always be possible, right?

DEAN: Right. The 13 SEER rules say that manufacturers can no longer create lower-efficiency units, but it doesn't say that homeowners have to install higher-efficiency. Homeowners are naturally going to want to retrofit new parts if possible instead of replacing the whole system. You have to understand if the components work together correctly, or else they will have poor performance, more problems, and shorter life expectancy.

Things become even more difficult as new products are created and older systems become increasingly obsolete. That's why we only install Air-Conditioning and Refrigeration Institute (ARI)-approved matching systems.

SELKING: Could you tell us more about ARI approval?

DEAN: ARI keeps a free, searchable list of equipment that has been submitted to independent testing (to make sure products perform at their published specifications) and whose manufacturers say match with other products. I go to www.aridirectory.org and run a search for a specific outdoor unit. The database gives me a list of ARI-approved indoor-coil matches, performance numbers, and heating-cooling costs.

Even with the TXVs you need to know the refrigeration cycle really well. If the coil doesn't have adequate capacity to work with a thermal expansion valve, then a TXV won't work with the system. In the end, what are you gaining by not installing a factory-matched system? Manufacturers are not going to want to warranty components that fail because of a mismatch. The industry as a whole could really be hurt by contractors who install incorrectly.

SELKING: As the industry works through the 13 SEER transition, there is another big one on the horizon. R-410A coolant will be mandatory for all new installations in 2010.

DEAN: That's another great example of an opportunity to see coming business challenges and be ready ahead of time. We've made the change to Puron early - all of our recovery machines are R-410A - and we are recognized in our service area as a cutting-edge service provider. If there is one thing you can be sure of in the future, it is change. Waiting until the last minute is a bad idea. R-410A is a foregone conclusion. It has been in development for a long time and is a signed international agreement.

When it comes to the customer, I ask them, "Where do you want to be 10 years from now when your system starts showing signs of age? Once manufacturers have changed equipment to work with R-410A, older equipment will be harder to find and systems will be more difficult to support."

SELKING: From a planning standpoint, it would be a good idea for contractors to talk about what sort of support can be offered for older systems, then.

DEAN: There are definitely concerns over what supplies will be available in the future. Carrier, for example, has made some major changes to phase out old residential equipment. OEM and distributor support are very important issues.

Aside from what's available, there are other logistic questions, such as, 13 SEER equipment is larger than 10 SEER, so will it fit in the vans you have? Do you need a lift gate on your pickup truck? Is there room for a larger system in the existing space? Will you need to send a larger work crew for transportation and installation?

SELKING: Not to mention other installation dynamics, like getting the system tonnage correct and making sure existing ductwork is adequate to avoid increasing static pressure?

DEAN: Installation codes and enforcement standards are different depending on the service area. Still, every contractor should pay attention to the existing insulation, sealing on the ductwork, and local code. Our county actually requires all contractors to do a Manual J before any new construction or renovation, but every service tech should be doing that anyway to be sure they choose the right system tonnage. The Environmental Protection Agency (EPA) and ACCA are currently looking into getting ductwork installation quality standards in place someday.

Static is a concern for installations. Of course, the Carrier systems we install don't have as many problems with static because they can make some adjustments for system pressure. Consider all of the different elements that impact comfort in a home and make problems for installation: static, climate-specific humidity, energy consumption, heat losses from poor insulation, aging components, and the inherent efficiency losses of certain technologies ... it approaches a whole-envelope issue. A totally new system that includes new products will properly address those elements and improve the homeowner's quality of life.

Variable-speed motors are one of the best inventions in recent history. Some contractors only think of them based on the price to install and replace alone. I can't overstate the value of the ability to ramp speeds. Truth is, you don't often have to replace them anyway. It's pretty much an accepted fact in my company that this is the age of the premium ECM system.

My technicians like the Carrier Infinity and Bryant Evolution systems. They look at it as a point of pride that they install and are familiar with such an impeccable product. It is important to have your technicians know the systems you offer, because they are some of your most effective sales people. When something goes wrong, the customer is pretty thirsty for information. They trust the tech because he's the guy who's there to fix things, so be sure that technicians are trained to offer solutions to homeowners.

SELKING: What other things do you keep in mind from a sales and marketing perspective?

DEAN: Well, my sales model isn't the best model for everyone. If you are in rural Okalahoma, take a look at your market and adjust to people's needs. Our county code requires more of contractors than other locations, so we market ourselves accordingly.

Customers might come to us looking at price, saying that they want to compare, "apples to apples." I like to respond, "You want to compare apples, but you have to realize that we're selling apple pie here!"

There is more to consider than the price of individual components. There's our service record, the ability to work in your house without tracking in mud or creating a mess, customer service, technician training, our ability to do almost every job within one day, quality of thermostats, and other issues that are important beyond the bottom line price.

Even before the 13 SEER mandate, prices had been raising because of recent material shortages. Now that 13 SEER is here, smaller businesses have more required investment. Those selling on price alone are pinched tighter. Contractors who primarily do new construction probably haven't seen 13 SEER as much. People who were operating very closely to the edge of profitability might have their margins fall off that edge because prices will be going up and they might not be able to respond quickly enough to that change.

If costs go up, raise prices! Not everyone realizes the obvious. Don't prejudge what a customer can afford. Some contractors come at it from a defensive, apologetic viewpoint.

"I'm sorry to have to charge you so much," they might say. If you are offering a good product, then why be embarrassed? Deliver value, then you have no reason not to charge more. I feel that it's irresponsible for you not to charge enough to be around in five years if the customer needs warranty service.

SELKING: Anything else?

DEAN: For sales, I just start a dialog with the customer to find out what his or her needs are instead of making them feel like they have to sit through a pre-prepared sales pitch. The news is always talking about oil prices and rising energy costs. I recently read in The Washington Post that this summer energy costs could increase by as much as 74 percent!

When it's The Post saying it, I don't need to push the issue because the customer already knows. Many homeowners can afford more efficient systems, and energy costs help them understand why better systems are important. Variable speed is just the icing on the cake. I avoid talking in terms of energy cuts making a system pay for itself because the next season might be more intense or the customer's habits might change and I don't want to paint myself into a corner.

Sales should focus instead on system costs in terms of amortization: return on investment. Instead of selling on price alone, sell on comfort and overall system efficiency.

Publication date: 08/28/2006

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