The new year is all about moving forward. Leave the past behind, let "auld acquaintances" be forgot and all the rest. But while we might try to leave some things back in 2005, it doesn't always work that way. And with the passing of every New Year's Eve, it is guaranteed that new challenges and changes are bound to arise over the next 12 months.

With this in mind, Snips went to HVAC industry officials to find out what they think the top challenges will be in 2006. In no particular order, here is the top five.



1. Trying to reason with hurricane season

Katrina and Rita, tropical storms and flooding. While severe weather and the disasters that followed this fall's two biggest hurricanes were huge news stories in 2005, their impact will likely be felt well into 2006, according to the experts Snips consulted.

In an e-mail from the Air Conditioning Contractors of America, Paul Stalknecht, ACCA president, said, "Hurricane Katrina is going to affect the industry by impacting equipment availability and bringing our industry's labor issues to the forefront."

He explained that as restoration and rebuilding begins in damaged areas such as Louisiana and Mississippi, the construction market could be faced with a lack of trained labor needed to install new equipment. Even finding available HVAC units to replace damaged ones may also be difficult, Stalknecht said.

On the labor side, the ACCA is working to make sure that those unemployed due to the Katrina disaster find work, and employers get qualified technicians in their areas. Temporary employment or relocation assistance can be found by going to www.acca.org/katrina.

On the equipment side, Donald Frendberg, executive vice president and COO for the Heating, Airconditioning, Refrigeration Distributors International, is more optimistic.

Frendberg said that the availability of products would be an issue when it comes to replacing units and components in the areas affected by the hurricanes, but the real issue will be the "shuffling of products."

He admits that a void will be created outside the normal need for equipment, but wholesalers and distributors should be able to accommodate contractors. He explained that distributors with good networking among their branches would be able to order needed equipment. Frendberg believes that contractors may have to wait for a piece of equipment, but it will be available.

"The concern is on coordination" of distributors, not necessarily the lack of equipment, said Frendberg.

He said that when it comes to the availability of equipment, 13 SEER is a bigger issue.

2. 13 SEER is here

According to Frendberg, there will need to be "a lot of market balance due to 13 SEER."

As reported in the September issue of Snips, companies will no longer manufacture air-conditioning equipment below a 13 seasonal energy-efficiency rating after Jan. 23.

Contractors are able to buy and install equipment rated below 13 SEER after the January deadline, but only while supplies last. At that time, the only equipment available will be 13 SEER and higher.

In the meantime, while all older equipment is being phased out, manufacturers must make sure that they are producing enough 13-SEER equipment to meet the expected demand. In turn, wholesalers and distributors must make sure they have enough in stock. But manufacturers may not know how much to produce until the phasing out of older equipment is complete.

"Every manufacturer is trying to determine what the market will be," HARDI's Frendberg said.

More importantly, while the 13-SEER transition is under way, contractors must know how to properly install the equipment.

Frendberg said that contractors and technicians must make sure that they are not mixing and matching 13-SEER equipment. For example, the coil for the indoor unit must be rated the same as the outdoor unit.

What happens if mistakes are made?

"You're paying for 13 SEER and only getting 11 SEER," said Frendberg.

Frendberg and Stalknecht agree that contractors need to be prepared when installing 13-SEER equipment.

"In terms of 13 SEER, contractors need to understand the technical issues involved," Stalknecht said. "Mismatched equipment is potentially a huge problem. And because of the larger size of the equipment, there are going to be lots of headaches with customers who have units in space-constrained areas."

To help the situation, the ACCA has been conducting in-person training and online seminars to educate members about the challenges associated with the new equipment.

3. Politics

Like the federal government-mandated 13-SEER standard, there are many other issues the HVAC and sheet metal industries are watching in Washington.

For the ACCA, adequate, affordable health care is a topic that the association has been tackling for a long time. Stalknecht says health insurance costs have "simply become unbearable."

"There seems to be no end to the increases and small businesses simply can't afford it," he said. "As we head into the midterm elections, both parties are going to find that their rhetorical ‘comfort zones' aren't going to work anymore. The Republicans need to understand that they could very well lose a huge portion of their coalition if they don't do something to get health insurance costs under control."

Stalknecht said that Congress needs to allow small businesses to band together in order to purchase health insurance the same way unions and large corporations do.

"The insurance industry and the state insurance commissioners need to stop protecting their turf and do the obvious, right thing. But nothing will change if contractors and small businesses don't turn it into a huge issue," he said.

The ACCA is also monitoring tax issues that are on the table in 2006. For example, Stalknecht said that ACCA members are still demanding permanent repeal of the so-called death tax, where the government takes extra money when a business is sold or transferred after the death of its original owner. The ACCA also supports reducing the depreciation of commercial HVACR equipment, which it says would encourage quicker replacement of systems.

4. Energy efficiency and prices

Energy efficiency will also have a large political role in 2006, at least according to the Sheet Metal and Air-Conditioning Contractors' National Association.

Newly named SMACNA President Keith Wilson, in a recent e-mail, said, "It appears that the time may have finally come when Congress and national policy leaders, including the president, will make energy efficiency the ‘big story' and the cornerstone of the energy program on Capitol Hill and the state legislatures will follow the national lead."

Wilson said that the Energy Act passed by Congress in 2005 and signed by President Bush lacked the "tax incentives, efficiency incentives and grants" in the energy bills that stalled in Congress.

"Some of the incentives in the recent Energy Act were reduced to a relatively small amount and excluded the homeowner and the contractor as recipients, so that limited the attractiveness of the incentives," said Wilson.

He also said that in 2006, Congress might want to rethink some of this year's energy initiatives.

"Many in Congress have indicated that when the winter heating bills arrive at the homes of voters - on top of the gasoline price hikes we have seen this fall - that a major response in Congress and at the polls will follow," said Wilson. "Congress should put real resources behind energy efficiency, no matter which party is in power."

It's no secret that this winter, heating bills are expected to take dramatic upswings. According to the Energy Information Administration, which compiles statistics for the U.S. Department of Energy, on average, households heating primarily with natural gas can expect to spend about $350 more this winter on fuel, a 48 percent increase. Households heating with heating oil can see as much as a 32 percent increase, while propane could see a 30 percent hike.

The government also reports that gasoline prices will remain high due to tight international supplies of crude and losses due to the recent hurricanes. However, some economists are expecting crude prices to fall to around $56 a barrel by next June.

"That fall could result in mid-grade gasoline prices in the $2.40 to $2.60 (range) on average for 2006, according to the Department of Energy," said Wilson. "Oil-driven, fuel-based increases in freight and other transportation costs will also affect contractors in 2006. Contractors need to anticipate these higher costs and factor them into upcoming bid proposals."

Like gas prices, sheet metal prices are expected to come down a bit, but not dramatically.

"There are a lot of factors affecting steel prices, some of which may ease somewhat in 2006, but not to any significant extent," said Wilson. "High demand and raw material shortages are the current state of affairs in the steel industry. Increasing transportation or freight rates, steel mill closures and consolidations, high energy costs affecting pricing and supply are all contributing to costly steel prices."

Wilson says that contractors need to be aware of contract clauses dealing with time- and price-sensitive materials like steel. SMACNA has made available a legal memorandum, "Steel Prices and Availability Crisis," to help member contractors prepare for possible steel shortages during a project.

5. Greener on the other side

One way to save money and energy is through so-called "green" building and "sustainability." The topic is nothing new, but 2006 is looking like a big year for this environmentally friendly building movement.

In a report issued by the U.S. Green Building Council in August, the annual market for green building products and services was $7 billion, up 37 percent from 2004 figures. And some in the industry believe this trend will not slow down next year.

SMACNA believes that green building will have a prominent place next year, especially with more publicly funded projects adopting U.S. Green Building Council standards.

"From a SMACNA contractor perspective, it should position us to offer services that can be tailored to meet the needs of the owners and designers when considering the various options to them for designing and constructing a sustainable green building," said Wilson.

The USGBC's Leadership in Energy and Environment Design, or "LEED" rating system, which sets standards and building guidelines, has been adopted by several states. Those that make LEED ratings mandatory for the construction of state-funded buildings include California, Oregon and Washington.

According to Terry Townsend, president-elect of the American Society of Heating, Refrigerating and Air-Conditioning Engineers, as more states learn about LEED certification, contractors are going to want to be prepared.

"I feel like the area of sustainability is one of the ways we can solve some of the energy problems our country is facing," he said.

Townsend, who is also the society's USGBC representative, said that green building and sustainability is going to be a large focus of ASHRAE next year. At the association's winter meeting, Jan. 21-25 in Chicago, a little less than half of the symposiums will focus on green building and green-building technology.

The focus on environmental building is not just stopping at the association's national level. Townsend said that many ASHRAE chapters are asking for programs on sustainability that they can provide to their members. Townsend said he believes that members want to get prepared because building owners and customers are already asking for green building products and better energy efficiency.

Townsend said that products are already available on the market to help building owners achieve a 30 percent increase in energy efficiency. According to Townsend, ASHRAE wants to guide the industry towards products that are 70 percent more efficient, and eventually beyond that.

He said that ASHRAE wants to "provide guidance on achieving a net-zero energy facility."

That term means a building is able to provide enough of its own energy to use over the course of a year. These types of facilities are already being built in the United States.

Utility companies are also embracing the trend. According to Townsend, buildings that can produce their own energy takes strain off energy providers and eliminates the need for them to build more energy-producing facilities.

But ASHRAE is not just interested in green building to save on utility costs, he added. Occupants' comfort needs also have to be balanced.

"I could build you the most energy-efficient building you want," said Townsend. "But you'll be hot in the summer and cold in the winter."

Townsend said that ASHRAE is focusing its efforts on helping contractors achieve the benefits of green building, but while keeping in mind the necessity for proper ventilation, indoor air quality and security of HVAC systems.

"Don't forget that you have to have all of these to work together," he said.

(For reprints of this article, contact Jill DeVries at (248) 244-1726 or e-mail devriesj@bnpmedia.com.)

Sidebar:
SMACNA'S RESOLUTIONS

The Sheet Metal and Air-Conditioning Contractors' National Association have a lot of issues to look at in 2006, but according to Keith Wilson, SMACNA's new president, these are some of the biggest topics the association will confront next year.

SMACNA has developed a document called "Temporary Uses (Early Start-Up) of Permanently Installed HVAC Systems in Building Construction Projects." The paper outlines the risks of using HVAC equipment before the construction of a building is finished.

According to Wilson, "In 2006, we see the issue of utilizing permanently installed HVAC systems for temporary heating/cooling during construction as a more common problem with some of the rigid specification requirements from the design community."

Wilson said that more contractors are being required to perform early start-up of HVAC systems for temporary heating, cooling or dehumidification during the construction process.

"This practice can pose a significant impact on the integrity of the HVAC equipment and HVAC distribution," said Wilson.

Concerns over early start-up range from problems with filters to warranty issues.

The association will also take a look at duct leakage and sealing in response to California's Title 24, which took effect Oct. 1. The new state regulation requires a more complete examination and testing of air-distribution systems to ensure minimal leakage.

SMACNA is also making progress on its bid-specifications reference document for use with general contractors and owners. The new document is based on the Construction Specification Institute's MasterFormat Division 23-HVAC, which includes relevant HVAC items not recognized in previous editions.<