April 2023 Newsletter

A Word from our President

Shawna

by – Shawna Granman-Fenix Heating & Cooling

Cooling Season is finally here!!! I hope you are all as excited as I am about the warm weather. I hope you all have a successful and profitable season.

I would like to thank Alan Griffin from Moore Sales for the great presentation in March.  Hope everyone who made it out is excited to get their Reme Halo as I am. 

This month’s guest speaker will be Daniel Fenn with Federated Insurance to talk about Behavior based safety, this meeting will be a 1 hour Non-code CEU.  Pleas be sure to RSVP via our website, no more call in reservations.  Bring your business cards for the $100 drawing and Federated will be giving away a cooler, see below.  2 prizes and a non-CEU credit, RSVP on-line @ kccaks.com

Please feel free to email or call Shawna at (316) 945-4842 or shawnag@fenixheat.com with any concerns or questions.


Education

Thank you to everyone who attended this years Spring classes.  Be on the look out to see class dates for the Fall coming out soon.


KCCA $500 TOOL SCHOLARSHIP
The board revised the Tool Scholarship a little. KCCA wants the employee to be working for the KCCA member for 3 months before they are eligible for the $500 tool Scholarship. So in short the employee or employer need to submit application and proof of graduation from one of our local trade school after the employee has worked for them for 3 months.


March’s General Meeting

Thank you Alan Griffin from Moore Sales Corp. for coming out and giving us a great presentation on the different Air Purification systems available.  We had 23 attendees and everyone present received a Free Reme Halo. 

Hope to see you @ future meetings!! All general meetings are held on the 3rd Thursday of every month except August & December.


2022-2023 Meetings

 
April 20th               Federated @ Scotch, RSVP on website @ kccaks.com
May 18th                Honewell @ Scotch
June 16th               Darrell Bogner(Possible CEU) @ Scotch

This list is subject to change due to speakers not able to make the date we have selected for them.

Contractors Predict Growth in Service/Repair this Year

Slight dip in equipment sales could be offset by greater demand for service

BUSINESS CONCERNS: According to PHCC’s BIT, small businesses remain concerned about inflation and rising interest rates. (Courtesy of Schuler Service Inc.)
March 27, 2023

HVAC contractors have been busier than ever these last two years, thanks to consumers who felt the time was right to invest in new systems and IAQ equipment. They are hoping that momentum will continue this year, thanks to the Inflation Reduction Act (IRA), which will offer hundreds of millions of dollars in incentives to consumers purchasing high-efficiency HVAC equipment.

But this silver lining also comes with a cloud, as the economy appears to be cooling, inflation and interest rates remain high, and it’s harder than ever to find skilled labor in order to keep up with demand. Still, contractors are mostly optimistic about how 2023 is shaping up.

Economy

The economy is the biggest question mark of the year, as some economists predict a mild recession in response to high inflation and rising interest rates, while others believe the economy will continue to grow, albeit at a slightly slower pace than in recent years. The PHCC—National Association Business Intelligence Team (BIT) sees some warning signs ahead.

PROACTIVE CONTRACTORS: To address the labor shortage, chairman of MSCA, Rich Happel, believes contractors need to be proactive in order to entice more people to explore a career in HVAC. (Courtesy of MSCA)

“Remodelers are seeing customer reluctance from high prices and high interest rates; home builders are concerned with higher construction costs and lower sales expectations because of higher interest rates; commercial builders are expecting lower revenue and finding skilled workers remains a challenge; manufacturers are seeing demand leveling off with supplies normalizing and high employee turnover; and small businesses remain concerned about inflation and rising interest rates,” according to PHCC’S BIT.

Still, the mechanical service industry appears to be holding quite strong, said Rich Happel, director of service at Emcor Services Mesa Energy in Phoenix, Arizona, and chairman of MSCA.

“Depending on the source, we are either still in one of the largest building periods we have ever seen in this country or we have just begun to come down from that,” he said. “However, each new construction project converts into a new service opportunity immediately after the building is completed. The larger the built environment is, the greater the opportunity for ongoing preventive maintenance and repairs on all of these mechanical systems.”

GROWING SERVICE: Martin Hoover, vice chairman of ACCA, predicts that service and repair will likely grow this year, while new equipment installs will shrink slightly or remain flat. (Courtesy of ACCA)

Indeed, Martin Hoover owner of Empire Heating and Air Conditioning in Decatur, Georgia, and vice chairman of ACCA, predicts that service and repair will likely grow this year, while new equipment installs will shrink slightly or remain flat.

“In our service and replacement model, I think there will be some increase in repair over replacement,” said Hoover. “Margins are higher on repair, so overall I think we will be better on net profit and a small increase in gross revenues just from the pricing increases. There is lots of talk about recession and correction from the great growth we have recently enjoyed. I think a correction is in order but don’t think it will impact residential replacement much. However, construction will likely struggle, and we might see some of those people move to repair/replacement.”

“I believe that high-efficiency HVACR equipment and retrofits will continue to lead sales for 2023.”

– Rich Happel
director of service
Emcor Services Mesa Energy and chairman of MSCA

Supply Chain

Fortunately, supply chain problems appear to be easing, but a few problems remain. According to Hoover, there are still delays with some products including air handlers, but for the most part he has been able to acquire components and equipment without delay over the last couple of months.

“It seems to be a revolving basket of items that are hard to get,” said Hoover. “We see some catch up and then we see shortages again in short order. Items that have been more difficult to get include commercial equipment, flex duct, PVC, and welding supplies.”

While supply chain challenges are expected to ease this year, noted PHCC’S BIT, volatility may remain for several years. This is due to several factors, they said, including the Russian invasion of Ukraine; growing U.S.-China tensions; China’s COVID challenges and worker unrest; U.S. sovereign debt (now 95% of GDP); higher oil prices as the U.S. pursues alternative sources from less reliable unstable regions; and workforce shortages that continue to drive higher wages.

PHCC’S BIT believes that efforts to localize supply chains through near-shoring, on-shoring, and friend-shoring will expand as businesses look for more reliable and resilient sources of materials, parts, and products.

Even though supply chain-related issues are gradually improving, Happel notes that there are still some products that continue to be a challenge to obtain. Hard-to-get products now seem to be more random than they were before, he said, but he does not think this will dampen sales of new equipment, which he believes will be at least as good as last year if not better.

“I believe that high-efficiency HVACR equipment and retrofits will continue to lead sales for 2023, as well as equipment using HFO refrigerants beginning to gain traction (based on code adoption),” said Happel. “The movement toward electrification will also likely begin to take hold and drive equipment selections towards those available electric options instead of gas.”

MORE HEAT PUMPS: Brian Stack, an ACCA executive board member, believes that the push for electrification will lead to more interest in heat pumps and variable-speed systems. (Courtesy of ACCA)

Brian Stack, owner of Stack Heating, Cooling and Electric LLC in Avon, Ohio and an executive board member with National ACCA, agrees that the push for greener products and electrification will lead to more interest in heat pumps and variable-speed systems. He added that the 25C tax credits will also likely spur sales of heat pumps.

Labor and Other Concerns

Although there may still be robust demand for equipment and services this year, the shortage of labor could result in contractors not having sufficient workers to fulfill that demand. Happel noted that the industry has experienced a skilled worker shortage for years and that contractors need to be proactive in order to entice more people to explore a career in HVAC.

“We need to begin recruiting potential skilled workers much younger, like in middle school,” he said. “Let’s lobby to get the shop classes (metal shop, wood shop, auto shop, agriculture shop, etc.) back into our schools so that students can evaluate for themselves whether this is a path they are interested in and believe they could be successful at. By the time the students are in high school, many parents are already directing them to four-year universities instead of the skilled trades, which isn’t the best path for every student. Imagine a five-year education, while you’re working full time without any student debt. This is very attractive, and we all need to do a better job in getting the word out.”

Another demographic to target may be young adults who are looking to change careers. As Hoover noted, the industry used to be able to get kids right out of high school, but that is not happening anymore.

“The sweet spot for getting new team members is 26- to 28-year-olds who are looking to get into a good solid career.”

The labor shortage is not the only issue that concerns contractors. Stack, for example, said that it has been difficult to purchase new vehicles, and used vehicles continue to be very expensive. Hoover agrees with that assessment, but he is also closely watching the IRA legislation and the details surrounding it to see how he can best provide its benefits to their customers. He is also concerned about the refrigerant transition — particularly how expensive the refillable tank options will be, as well as their space requirements on vehicles and in the shop.

The refrigerant transition, which is part of the AIM Act, is a concern for PHCC’S BIT as well. The team is worried that the looming step down to a 60% allocation starting in 2024 could affect product availability and pricing toward the end of the 2023 calendar year. After the 2024 production cut, the next reduction comes in 2029, which will reduce allocations to 30% of the baseline, so the industry is on an accelerated timeline to adjust to new refrigerants and technologies, they said.

That could be an issue, said Chuck White, vice president of regulatory affairs at PHCC, because, “very few jurisdictions have updated their various codes to allow the use of the new A2L refrigerants. Without code approval, availability of new products has lagged. The resulting lack of inventory could be an industry obstacle in 2024 and moving into 2025.”

Happel is watching the electrification movement, as he said there is much to learn in order to assist customers undertaking those projects. He said it also presented wonderful opportunities for contractors who get it right.

“We are living in a time when our customers don’t allow us to rest on the laurels of our past performance but rather, we are evaluated at every interaction,” said Happel. “This requires thinking differently about the work we perform and how we perform it. I believe there is significant opportunity for those companies that are nimble and can be flexible in how they conduct their business.”

KEYWORDS: ACCA (Air Conditioning Contractors of America)economic outlookeconomy and HVACMSCA (Mechanical Service Contractors of America)PHCC (Plumbing-Heating-Cooling Contractors)Trends in HVACR


Funny Photos


risk management corner

Questions to Smoke Out Fire Hazards at Your Business 

You’ve worked hard to help make your business successful, but something as small as a frayed electrical cord could turn into a large fire and wind up costing your company millions of dollars.

When was the last time you took a fire safety survey and asked yourself critical questions about your business’ safety procedures? Are you actively assessing your business on a regular basis to ensure a fire doesn’t spark up?

It only takes a few minutes, but a couple of simple questions could help you more closely review your property, assets, people, and processes to ensure preventative strategies are being followed. Ask yourself:

 Have you done a fire safety walkthrough in the last 30 days?

 Do you provide annual fire prevention and safety training for your employees?

 Are your fire suppression equipment and systems inspected and maintained at the required intervals?

 Are you familiar with the top fire hazards in your industry and strategies to minimize risk?

Federated® offers a wide variety of resources to help with fire risk management. If you answered “no” or “unsure” to any of the questions above, we can provide specific flyers, brochures, and videos on how to handle those topics and more.

In addition, as you ask yourself these questions, take note of areas you know could use improvement, and areas that may be “red flags” that need immediate fixes. Remedying these right away could be the difference between a successful business and one that faces deadly and costly losses.

Controlling fire hazards is everyone’s responsibility, not something that is a one-and-done fix — and it starts at the top with you. Access a fire prevention and safety checklist sample on mySHIELD®, and reach out to your local marketing representative for more information.