NASHVILLE, Tenn. — Despite the uncertainty surrounding the fate of residential and commercial geothermal tax credits, which are set to expire at the end of the year, WaterFurnace Intl. Inc.’s Annual Sales Meeting in Nashville kicked off on a heartening note. All 332 attendees were asked to stand to signify how long they’ve sold geothermal equipment. About half of the conference remained standing to signify they’d offered geothermal equipment for more than 25 years. Even more stood to signify 20 years, and so on. By the end of the demonstration, every contractor in the room was on his or her feet. And, unanimously, the group pledged to keep selling geothermal even after the tax credits expire.
PREPARING FOR ANY OUTCOME
The two-day event, which focused on helping dealers strengthen and grow their businesses, featured presentations on WaterFurnace products, marketing tools, training, financing, and more.
Doug Dougherty, president and CEO of GEO, said the industry is campaigning for the tax credits to be extended at least five more years in order to maintain parity with the solar and wind industry’s tax credits. Of the five technologies previously afforded tax credits, only solar and wind were extended as part of the recent Omnibus bill that passed late last year.
“We’ve gone to Congress and said, ‘You’ve created an uneven playing field, and you need to fix this,’” he said. “I’m pretty confident we’re going to get this done. I believe there is a willingness to fix this problem Congress created. You can’t have an un-level playing field in an industry. You can’t pick winners and losers. And, if we’re trying to incentivize people to do something different in terms of heating and cooling, and you’re using a tax code to do that, then it ought to be equal for everybody.”
Dougherty had discussed the possibility of an amendment to the Federal Aviation Administration (FAA) reauthorization bill, which would have extended the geothermal tax credits an additional five years; however, Congress passed the bill with no amendments just a few weeks later.
“The battle is not yet lost,” he said. “Our tax credits are still in force until the end of 2016. Congressional leadership remains committed to fixing the problems they created last year, and GEO will make every effort to make equal treatment for our technology a priority during the coming months.”
Michael Albertson, senior vice president of sales and marketing at WaterFurnace, said he’s telling dealers to prepare for any outcome.
“A lot of them rely on [tax credits], but the last thing we want to do is set them up with the expectation that the tax incentives will be extended,” Albertson said. “Because, then, they may sit back and wait for it and then not be prepared if nothing happens. My answer is: We remain hopeful, but I believe there is a low probability that the tax credits are going to be extended. There are several great things at work being done by GEO and other folks to get the extension, but we’re dealing with politics, and until it’s signed, it’s not done. I don’t mean to be pessimistic when I use that approach, but I think we have to create a sense of urgency by saying we remain hopeful, but there’s not a significant probability they will be extended. It’s kind of a call to arms. We need to come up with a game plan to make up for those margin dollars that our customers are going to miss out on as of Jan 1, 2017, if the extension does not occur. Before the advent of the tax credits, our dealers were successful. We want them to know that, with or without them [tax credits], going forward, they will continue to be successful.”
“We plan for the worst and hope for the best,” added Sean Dillon, director of dealer sales, WaterFurnace. “But, does it weed out some of those contractors that shouldn’t be installing geo? It might. If it’s not a slam dunk for them, they might pull out. Whether that’s good or bad is open to interpretation once the sales numbers come in, but it might be good to weed out the garden because these installations have to be done right on the front end — they can’t just be an afterthought.”
The Annual Sales Meeting also included a tribute to Tom Huntington, the former WaterFurnace president who recently lost his battle with cancer. Additionally, WaterFurnace’s parent company, Nibe, a large European water-source heat pump manufacturer based in Sweden, updated and assured attendees of the company’s future support during a video message from CEO Gerteric Lindquist.
Weldon Long, New York Times bestselling author of “The Power of Consistency” and a consultant who teaches business owners how to build profitable contracting companies, discussed the importance of focusing on the little things to create success, thriving in the face of challenge, and the power of believing what you’re selling during his keynote address.
The event also included presentations on recent marketing initiatives, such as the success of a national television advertising campaign and upcoming online and print campaigns; products and technologies the company plans to introduce later this year, such as the 5 Series RezPak geothermal outdoor packaged unit and the return of a popular dealer success panel discussion.
Dealers were also given the opportunity to attend six breakout sessions: Finding and Keeping Qualified Employees, Local and State Incentive Path, Troubleshooting Tips for Techs, Radiant Geothermal Applications, Increasing Sales With Financing, and a New Product Showcase.
WaterFurnace highlighted financing as one way the geothermal industry can combat the lack of a tax credit going forward.
“The majority of replacement HVAC systems are financed one way or another,” Albertson said during his presentation. “Traditional air-to-air systems can be financed to the homeowner for $175-$200 a month. A 4-ton Waterfurnace system costing $34,000 equals $269 a month and does not include a tax credit. How many of us can upsell $69 or $94 a month?”
Top-performing dealers were also honored during the event. Outstanding Sales honors went to Peters Heating & Air Conditioning, with multiple locations throughout Illinois and Missouri. Peters was also recognized as a member of WaterFurnace’s $2 Million Club. Ground Loop Heating & AC in Darlington, Maryland, received the award for Top Sales for a single location and was recognized as a member of the $1 Million Club.
HELPING DEALERS SUCCEED
Albertson said the industry needs to do more to change the way people think about geothermal. “We’ve gone out of our way to make this a niche market. Yes, this is something really special — it’s the highest-efficiency product out there. It’s going to provide the maximum comfort for your home, and it has the lowest cost to maintain and the longest system life. You get heating, cooling, and domestic hot water out of it. We’ve almost convinced ourselves it’s such a special system that it’s almost not available to the masses. We’ve gotten in our own way in getting the message out to other homeowners who aren’t high-income earners building mega mansions, and we’ve worked ourselves out of a lot of opportunities.”
“We’re 1 percent of the market because we’re only selling to that 1 percent,” Dillon noted. “A lot of times, we don’t even offer the education. The dealers may pull up to the house and see the car and think, ‘nope, this is not a geothermal application.’ It gets cancelled right off the bat. We don’t promote or want salespeople who are pushing this. We want salespeople who are putting this on the table, explaining it completely, and letting the homeowners make educated decisions. Not leading with the system will cost $30,000, but instead, leading with all of the benefits that go along with it and financing information. We’ve taken the choice out of homeowners’ hands.”
Albertson said WaterFurnace is committed to its dealers and helping them grow their businesses.
“We’re committed not just to this industry, but to working with our customers to do what we can to see them become more successful,” he said. “It’s a mutual commitment — our customers trust WaterFurnace to support them, and we’re committed to utilizing the valuable feedback they provide. We just want them to know we have their backs.”
“We’re there to support their geothermal businesses and help them in any way we can, and that makes a difference to a lot of these guys,” Dillon added.
Publication date: 8/15/2016