You made it through a year that was filled with new and unfamiliar challenges.
Many HVAC contractors successfully dealt with the conversion to a new seasonal energy-efficiency rating. They were able to educate consumers about the change, as well as technicians about quality installations.
Even the devastating hurricanes and tropical storms of 2005 left an impact on contractors in 2006. But hurricanes Katrina and Rita were not able to stop many contractors from continuing their businesses and finding the equipment they needed.
So what is in store for 2007? So far, according to the major HVAC and sheet metal associations, no curveballs are expected, such as new energy standards or more hurricanes. But that doesn’t mean that contractors can just sit back and relax. In fact, they say, 2007 is the year to tackle ongoing business issues. Consider it a year to brush up on basic business skills.
So here are the issues you can work on in 2007 to better your business not only next year, but for years to come.
Keep recruitingYou can never find too many qualified technicians. That is why worker recruitment will continue to be a top priority for the Air Conditioning Contractors of America.
“The No. 1 challenge remains, and will continue to be for the foreseeable future, finding and keeping qualified employees,” said ACCA President and CEO Paul Stalknecht in an e-mail. “The contractors who are most successful at dealing with this problem are those who don’t view themselves as simply competing with other contractors for technicians, but look at the bigger picture in their communities. Simply swapping technician labor between contractors through employee churn is a recipe for continued trouble.”
To help alleviate this problem, Stalknecht said that contractors need to ensure a competitive salary and benefits with other leading employers. Offering continuing education to technicians is also a way to attract newcomers to the workplace.
Richard “Dick” Cramer, the new president of the Sheet Metal and Air-Conditioning Contractors’ National Association, agreed with Stalknecht.
“Down the road we are probably going to see some man-hour shortages,” he said. “As people retire, they need to be replaced.”
Cramer also suggests companies should do whatever can be done to appeal to younger people, but aim it in local communities. He said that recruitment efforts work best when they are done at the local level.
For example, he suggested, get involved in area vocational schools. Cultivate the potential employees that are in your own back yard.
The American Society of Heating, Refrigerating and Air-Conditioning Engineers’ has also developed a new recruitment tactic. The society recently unveiled a rap music video intended to promote engineering careers to young people.
“ASHRAE: Licensed to Chill” features a rap soundtrack along with interviews from young members of the HVACR industry.
Expect the unexpectedWhile 2007 may be looking like a normal business year, that doesn’t mean that there won’t be the usual bumps along the way.
According to Cramer, chairman for Dee Cramer Inc. in Grand Blanc, Mich., business is good for many SMACNA contractors across the country, but his state is currently experiencing an economic slump. This is mostly due to the statewide layoffs and plant closures from automakers such as General Motors and Ford.
Impending layoffs impact all businesses, including heating and air-conditioning contractors.
“We’re scrambling,” said Cramer. “We’re looking for business wherever we can get it.”
That is why Cramer suggests that contractors create action plans to confront such issues in advance.
“You can’t change the market, you just have to change your strategy,” he said.
Cramer said that many of these issues are cyclical. Like slumps in the economy, prices are always rising and falling. An example is steel and fuel costs.
Cramer believes that steel prices will remain high in the next year as China continues to develop at a rapid pace. In order to confront this issue, Cramer said it is important for contractors to prepare for price fluctuations. When making bids, contractors need to understand that steel prices can change and they need to make room for these variables in their bids.
The ACCA’s Stalknecht said that controlling such costs would continue to be a challenge for contractors in 2007.
“Health insurance costs continue to soar, fuel prices were a bump in the road, and raw material prices climbed so equipment and repair prices rose,” Stalknecht said. “As a result, many looked internally for ways to operate more efficiently, but in the end the customer pays for everything. There is a perceived need to add value when your price increases, even though it is costs that drive prices. As an industry we need to get better at raising prices.”
Contractors may also help their business by becoming more politically active. While SMACNA and the ACCA are reluctant to say what the political climate will look like next year, both organizations have lobbyists in place who could provide advantages for small-business owners.
Last year, SMACNA worked with Congress and helped to pass a pension reform bill. The group will continue next year with other small-business issues, such as estate tax reform, Cramer said.
For the ACCA, tax issues are also important, as well as adequate health care coverage for members.
“Our members are eager to see passage of a bill that would lower the cost of providing insurance to employees,” said Stalknecht. “Many employers have seen double-digit increases in premiums for several years in a row. This past Congress saw legislation to advance ‘association’ health plans pass the House, but fail in the Senate after rigorous debate. Association health plans offer the possibility of lower premiums to small businesses that don’t have the buying power of large corporations.”
So-called association health plans would allow small employers to band together and negotiate insurance rates directly with major health care companies. Under current laws, only large companies have that power.
‘Green' trend growingRecent legislation is pushing the continued trend of environmentally minded or so-called green building and sustainability. In fact, if it continues, the word “trend” may not be the appropriate way to describe green building.
In the last few years, many states and municipalities have started requiring all new publicly funded building projects to achieve a minimum Leadership in Energy and Environmental Design rating from the U.S. Green Building Council.
To show HVAC contractors and engineers that they should embrace such initiatives, the American Society of Heating, Refrigerating and Air-Conditioning Engineers is leading by example.
“The thing I’m most excited about is the renovation of our headquarters in Atlanta as a sustainable building,” said ASHRAE President Terry Townsend, P.E. in an e-mail to SNIPS. “We want to show we are ‘walking the talk’ by providing a facility that demonstrates the benefits of using ASHRAE’s standards.”
ASHRAE will soon begin offering guidance on green building with two new publications, the ASHRAE GreenGuide and Advanced Energy Design Guidance for Small Retail. The organization is also continuing to work with the USGBC and the Illuminating Engineering Society of North America, as well as contributing to a proposed standard related to water conservation and buildings.
The society is looking into developing a baseline sustainability standard for health care facilities in cooperation with the American Society for Healthcare Engineering and the USGBC.
Several of ASHRAE’s upcoming educational programs and proposed guidelines focus on energy and indoor environmental quality.
With all of this focus on green building, how can contractors get involved? Townsend suggests that contractors promote sustainability as “business as usual.”
“The key factors for anyone who wants to focus on green, sustainable buildings are education and attention to detail,” he said. “It has been shown by various owners that green, sustainable buildings do not really cost any more than conventionally built facilities.”
Townsend also suggested that green building and energy-efficiency issues are here to stay. One example is the 2005 Energy Policy Act, which provides tax credits for energy-efficiency measures implemented within a two-year timeframe. Efforts are under way to have the period extended to benefit both contractors and consumers.
“The contracting community should support this initiative and be proactive in the support of legislation that makes our country more energy efficient and independent of imported energy sources,” said Townsend. “President Eishenhower once stated, ‘The U.S. should never allow more than 20 percent of its energy to be imported, because of national security.’ How vulnerable is our country today? The contractors can be an important voice in making our country more efficient, more secure and a global leader in demonstrating how to conserve our country’s precious resources that cannot be renewed.”
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