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HVAC Contractors: Survive and Prosper in Hard Times

April 01, 2013
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The International Energy Conservation Codes (IECC 2009 and 2012) require HVAC ducts to be tested to prove a minimum leakage of a rather easily obtained 12 CFM/100 square feet of conditioned floor area. While many states and localities will adopt this code outright, it is likely that many will also amend it to allow inspection and sealing alternatives. Many HVAC contractors are bound to breathe a sigh of relief at not having to face potential failure and the subsequent looking for the “leak in the trunk line” that will eat up their profit margins by the minute.

Colin Genge
is the owner of Retrotec Inc, a U.S. company founded in 1990 that is the world’s largest manufacturer of air leakage measurement systems with customers in over 60 countries.

Except, is it really potential lost revenue? This type of thinking completely obscures one of the greatest opportunities that HVAC companies have had in decades. Isn't it really a lost opportunity?

The Opportunity Is There

By and large, the differences between different types of HVAC hardware are small. Selling one gray metal box over another is difficult, and you often end up in a price war where the lowest bidder gets the job because none of the contractors succeeded in differentiating him- or herself from the others. So here is the new opportunity.

Over the years, EPA and many state agencies have upped the stakes, requiring restrictive installation procedures, such as using mastic on all joints; time-consuming duct leakage testing; and annoying inspections by code officials. State contractor organizations in Washington State have sued to, as they put it, “stop the insanity.” In 2009, the Building Industry Association of Washington filed a federal courts lawsuit in an attempt to block the statewide green-building code; part of that code requires duct leakage testing. One complaint from builders was that the code would place budgetary constraints on both builder and buyer during the recession. Washington State is not alone. According to Kimberly Madrigal of GreenLandlady.com, a web site that offers green educational opportunities for multifamily, rental housing, coops, and condominium management, “An attempt to stop compulsory green-building codes was launched in 2008 by the Air Conditioning, Heating and Refrigeration Institute (AHRI). A trade organization for manufacturers, it filed against the city of Albuquerque, New Mexico, to enjoin them from requiring higher efficiency HVAC systems.” Many contractors offer discounts when the homeowner is willing to have new equipment installed without a permit. In some states, as few as 15% of new installations are code compliant.


(Retrotec)


(Retrotec)

At the same time and for the past 15 years, the top-selling, most profitable contractors nationwide have not only embraced these new measures but have taken them many steps farther. The ACCA contractors of the year offer a range of services, including blower door testing, duct testing, and air flow measurements with flow hoods (see “ACCA Contractors of the Year”). Many of these contractors have taken additional training on whole-house diagnostics from companies such as the Comfort Institute. This training has allowed them to give their customers superior system performance and greater comfort.

So What Gives?

According to EPA, a new HVAC duct system mounted in the attic or crawl space of a typical house will be leaky. In fact, in typical houses, about 20% of the air that moves through the duct system is lost due to leaks, holes, and poorly connected ducts. The result is higher utility bills and difficulty keeping the house comfortable, no matter how the thermostat is set. More energy is lost when ducts are insufficiently insulated. If your competitor could convince the homeowner that his company would guarantee to minimize those losses, what chance do you think you’d have of getting the job? No matter how low you bid?

Next, these leaking duct systems cause pressure imbalances in the house that can cause combustion appliances and fireplaces to backdraft. That backdrafting can pull in nasty stuff from the homeowner’s garage or musty crawl space. When your competitor can demonstrate these problems to the homeowner because he has the instrumentation to measure them and the skills to prevent them—he gets the job. When your customers learn from the media that building codes were designed to solve these problems, and that their energy costs are higher, and their houses less comfortable and less safe than they would be if their systems had been retrofitted to code, how likely are those customers to give you a referral? Initially they were concerned about price, but now the tables are turned, and your reputation is on the line. You could have prevented this if you had explained the benefits of doing the job right in the first place. Once customers see a demonstration that identifies these problems, they ask, Can you fix this? Showing your customers that you do the job right is an easier sale than selling purely on price.

Well, that’s what a few leaders are doing out there. Called performance contractors, these leaders are selling systems that outperform their competitors’ systems in every way. Their customers get a better deal, and so do they. They sell a bigger job and get a more-satisfied customer, which turns into more referrals.

ACCA Contractors of the Year

Here are some recent winners:
2012: AirRite Air-Conditioning Company (Fort Worth, Texas)
2011: CroppMetcalfe Services (Fairfax, Virginia)
2010: Conditioned Air (Naples, Florida)
2009: Apollo Heating & Cooling (Cincinnati, Ohio)
2008: Hobaica Services (Phoenix, Arizona)
2007: Atlas Butler Heating & Cooling (Columbus, Ohio)
2006: Castellano’s Air Conditioning & Heating (Tampa, Florida)
2005: Peaden Air Conditioning (Panama City, Florida)
2004: Air Assurance (Broken Arrow, Oklahoma)

Making the Case for Doing It Right

What about new-home installations where the low bid gets the job? In states that allow inspections without a duct leakage test, the inspection could take more time and cost more than it would if you had tested the ducts first yourself. It is actually faster to test the duct system after you install it than it is to have the building official inspect it carefully. That is exactly what code officials think when an inspection is requested; they say, “Just show me the test results, because I don’t want to climb around the attic and inspect all the joints.” And what about just using mastic without testing, as some states allow? Well, even if you do this, there is still a chance you’ll miss some connections, and who needs a callback to fix that? You should be using mastic anyway, to prevent the duct system from leaking, and from starting to fall apart in five years. Once contractors get used to testing their ducts as they build the system, they will save time and money in the long run.

For existing-system changeouts, using a blower door on the sales call tells you right away how leaky the ductwork is, and lets you demonstrate the problem to the homeowner. When the house is pressurized, smoke is placed in front of the registers and shows clearly whether leaks are present. Using a duct tester to measure the exact amount of leakage is the ideal way to demonstrate compliance, but it’s too slow and disruptive to use on a sales call. Instead of installing a larger system to compensate for leaky ducts, you can often install a much smaller system after the ductwork is sealed or replaced, and the smaller system will do a better job than the larger system, at a lower cost to your customers. Using a duct tester after installation will ensure that you did the job right and will pinpoint any areas you missed that would be hard to locate visually. Your liability will also be reduced if you use a duct tester after you install the new system because the new system is much less likely to cause pressure imbalances in the house, which will cause combustion appliances and fireplaces to backdraft. You can also stress to your customers the importance of duct insulation and combustion safety checks.

For new installations, your duct tester, and possibly a blower door with some artificial smoke, will let you quickly identify leaks in the ductwork, so you’ll know when you’ve got the job done right. HVAC installers need to pressure-test the ducts in the same way a plumber pressure-tests the plumbing.

learn more

For more on the benefits of duct sealing, go to the EPA Energy Star site.

How hard is it to meet the new duct leakage code requirements? Most contractors find they can get system leakage down to less than half of the requirement (as shown in Table 1). And after their second installation, they can do it in about the same amount of time they are taking now.

The new code requirements are coming anyway, so you might as well jump onto this new performance wave and sell higher-quality systems. It is much easier than selling the old way—on price alone.

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