The last few years have been challenging for numerous HVAC contractors. The poor economy has resulted in financial stress for many in the industry, and recent federal legislation has caused concern about additional burdens that may be imposed on companies that are struggling to contain operating costs. Even with these recent difficulties, there are numerous reasons to be hopeful, said Paul Stalknecht, president and CEO, Air Conditioning Contractors of America (ACCA).
“There’s no doubt that many contractors have experienced a lot of turmoil. A lot of our members are smaller than they were three years ago, but to be honest, a lot of them are actually more profitable than they were three years ago,” said Stalknecht.
“Contractors who inventoried their operations and cut back on non-essential operations, while increasing their investment in areas essential for growth, such as marketing, education, and new service offerings - these folks didn’t panic when the economy turned. They were focused on their businesses with an approach that ensured that they would make it through the downturn and come out stronger.”
This strength is evident in ACCA’s Contractor Comfort Index (CCI), which was launched last February and gauges short-term growth prospects, including new customer acquisition, existing business, and employment numbers. An index of 50 or above indicates anticipated growth, and in its first year, the CCI consistently painted a picture of a cautiously optimistic contracting industry. Indeed, many contractors noted that 2010 ended up being a banner year for them.
Many of these successful contractors are the same ones who take the time to attend ACCA meetings, as well as the annual conference, which will be held Feb. 15-17 in San Antonio, Texas, said Stalknecht. “It has been amazing to me how optimistic these events have remained throughout the past two years. Many of our members faced change head-on, made changes they needed to make, and focused on growing their businesses no matter what the economy was doing. Companies that failed to make any changes, or just went into hunker down mode - a lot of them have already gone out of business, and I would not be surprised to see more do the same.”
LEGISLATIVE CONCERNSNot surprisingly, ACCA has been very busy on Capitol Hill over the last few years, testifying in front of Congress about how proposed legislation could affect HVAC contractors. In fact, ACCA was one of the first associations to identify the problems with the new 1099 requirement in the health care reform bill, which is one of the reasons why the organization opposed the legislation.
“We were not pleased that the health care overhaul passed as is, since it contained a number of provisions designed to increase costs on business owners. We do not believe the Congressional Budget Office’s original budget estimates, and we think this bill will wind up costing more than those projections. It seems clear that the new rules will push small business owners to stop offering health insurance, since it will basically be less expensive to move employees into the new insurance exchanges once they are up and running.”
On the plus side, Stalknecht is happy that ACCA was able to help pass an extension for 25c high-efficiency tax credits through 2011, although he is disappointed that the final legislation reduced the credit back to pre-stimulus levels. “We do believe that the higher credits were more of an incentive, but in this very difficult political environment, with such (rightful) concern over deficit spending, the big victory here was that we got the credits extended at all. As long as they are alive, there is the potential to increase them.”
That being said, ACCA will continue to focus on restoring the 25c tax credits to their full $1,500 value, while also emphasizing the need for a robust and effective commercial equipment incentive. “We are also working with our coalition partners to abolish the ridiculous new 1099 filing requirement included in health care ‘reform,’ and we are expanding our internal policy operations with the addition of new expertise in state and regional energy policy, which is of growing national importance and nationwide impact.”
Now that the elections are over and there are greater numbers of Republicans in the House and Senate, ACCA is hoping to see more action on legislation this year that will benefit small businesses. A number of bills that ACCA tracked closely in the last Congress - climate change and card check, for example - are not likely to move forward in the 112th Congress. However, this means the Obama administration will likely use regulatory agencies to push its agenda, cautioned Stalknecht, so it has be- come even more important to keep a close eye on those agencies.
“It is sometimes surprising for small business owners to learn just how powerful these agencies are and how much autonomy they can have in forming new regulations that cost you money and create new requirements. We’ve already seen the EPA looking at using the Clean Air Act to enforce a reduction in greenhouse gas emissions. We fully expect action soon on such items as regional standards for HVACR equipment, something we are heavily involved in.”
LOOKING AHEADWhile legislative issues on Capitol Hill are sure to keep ACCA busy in 2011, the association is looking forward to a stellar year in other areas, as it rolls out new programs and benefits for members. “Our biggest priority is launching our new Quality Assured Contractor Recognition Program,” stated Stalknecht. “We are also developing new software and mobile applications designed to help contractors in the field, some of which will be launched in 2011. And we are expanding our educational offerings with new online class options for technicians and contractors.”
Stalknecht noted with pride that even in this tough economy, ACCA is operating in the black and its membership has grown slightly over the last three years. The association’s programs, including conferences, products, applications, and other training programs, have seen significant growth, which has allowed ACCA to flourish during this current difficult time.
“We are led by a dynamic board of business entrepreneurs, and thanks to their leadership and foresight, ACCA has not been afraid to take risks and be innovative in its efforts to provide services to our industry,” said Stalknecht. “Like our best members, we keep our eyes on the prize, adapt to changing realities, and introduce regular innovations in order to provide this industry with the top representation and service it deserves.”
Contractors must also adapt to changing realities, as they will not thrive and grow in the future unless they stop thinking of themselves as contractors and start thinking of themselves as businesspeople, said Stalknecht. In addition, contractors must start looking at HVAC equipment as part of an entire building system, rather than components that function within a vacuum.
“This is a very different industry than it was even a few years ago, but a lot of contractors don’t seem to have come to terms with it,” added Stalknecht. “Contractors must grow in their understanding of the entire system; how it works together - and how new technology will communicate with, and between, the components of that system. HVACR professionals have a bright future if they make the right choices.”
ACCA’s goal is to help members adapt to this new reality; in fact it is the basis for the new Quality Assurance Contractor Recognition program, as well as current standards and educational programs that cover both technical and business issues.
“Our focus is simply on helping HVACR contractors operate more professionally, and more profitably,” stated Stalknecht. “That goal - reached through a wide variety of programs, publications, and events - has never wavered.”