Mikulina used examples from the commercial building construction trends, as most of his audience represented commercial construction and service. He said the long-term trend for growth in this market is "moderate." Mikulina noted, "There has been a lot of construction [since the 1960s], but the market really hasn't grown too much."

He pointed out some trends in various segments of the construction market, including manufacturing. "Manufacturing construction is lower than any point in its history," Mikulina said. "Health care will make up 17 percent of the U.S. gross national product next year. This market is something we ought to pay attention to."

Mikulina also noted that educational facility construction continues to be flat as the number of K-12 students continues to decline. However, he did say there is an increase in the number of college students, which may lead to the need for more post-secondary facilities.

Mikulina said the "wildest swings" have been in the hotel/motel construction market. But, he added, "This market isn't as important as other markets we see."

He noted market trends show an overall increase of 6 percent in new non-residential construction in 2004-2005, but he isn't ready to buy into that estimate. "We don't believe this number," Mikulina stated. "We think this is overstated; it should be more like 3 to 4 percent."

Selling Comfort And Productivity

Mikulina said that in the 70s and 80s, consumers complained the loudest about equipment maintenance. Now, he said, consumers are complaining about comfort and many of them are not getting answers. "For some reason, the systems we are putting in aren't working," he said.

Mikulina gave examples of how comfort takes a back seat when construction budgets are set. He described it, "setting the HVAC budget before defining comfort requirements is getting the cart before the horse. Budgets are determined too early."

And if comfort levels suffer because of inadequate HVAC systems, productivity also suffers. "We can't think about first costs or facility costs. We have to think about what we can do to impact the comfort of building occupants and their productivity," Mikulina noted. "We need to market the leverage that HVAC has on productivity." He added that the more money invested in HVAC, the more money is made out of productivity gains.

In his final remarks, he told contractors that they should recognize and accept change, keep abreast of changes by staying educated, continually re-examine strategic plans, build alliances, and be proactive, not reactive.

"The companies that are getting ahead are the ones that are thinking ahead," Mikulina said.

Depreciation Legislation

Tom Mikulina made a passionate plea to contractor members of The Unified Group to contact their local legislators and ask them to sign up and sponsor H.R. 3953, a bill in the current U.S. House of Representatives. The bill would reduce the depreciation period of certain building equipment, including HVAC systems, from 39 years to 15 years.

H.R. 3953, sponsored by Pete Hoekstra, R-Mich., is crafted to "amend the Internal Revenue Code of 1986 to provide a shorter recovery period for the depreciation of certain systems installed in nonresidential buildings."

If the bill passes, Mikulina said building owners will "likely pull and replace old systems with more energy-efficient equipment."

Publication date: 12/27/2004