Business Bits July 2011: Executive Interview with Ervin Cash

Business Bits July 2011: Executive Interview with Ervin Cash

From geothermal technology to contractor certification, Bosch Termotechnology is a quiet, but major player in the residential and commercial HVAC marketplace

When you hear the brand name Bosch, what do you think of? Answer: Power tools, right? Absolutely. But there is more to this company than drills, drivers, and other implements (bit.ly/Bosch_Factoids).

The key for HVAC contractors is that Bosch is also a producer of high-end HVAC products and components for both the commercial and residential forced air and hydronic markets. From geothermal heat pump systems to large commercial/industrial boiler systems, to tankless and solar thermal water heating technology, this international company, which began life in 1886 in Germany as a producer of magneto ignition devices, offers contractors a wide choice of products and services to help them differentiate themselves in the marketplace.

The division to keep in mind is Bosch Thermotechnology Corp. (bit.ly/BoschTT), which includes Buderus residential and commercial boilers (www.buderus.us), FHP commercial heat pumps (www.fhp-mfg.com), and Bosch-residential — which has a broad product offering such as tankless condensing water heaters, wall hung condensing boilers, solar thermal systems and geothermal heat pumps (www.bosch-climate.us).

In an exclusive interview with Ervin Cash, President and CEO for Bosch Thermotechnology Corp., Contracting Business.com learned much about the company and its focus on HVAC and plumbing contractors.

Cash's educational background includes three degrees: one in communications and human relations, one in mechanical engineering, and an MBA with a focus on marketing and finance.

"For me it has always been important to understand people," he says, "and how people use things, how they want to buy things, and technically, how products need to be delivered to achieve performance standards."

He says the key people in the Bosch strategy are the contractors — those who serve the HVAC and hydronics industries.

"We want contractors to be competitive and that means they need to be successful at sales, installation, and service. So we put forth an intensive effort to train them (bit.ly/Bosch_Solutions)."

Certification plays an important role in this strategy. Cash says that Bosch is a strong supporter of industry standards, from a product as well as a training standpoint.

"We work with North American Technician Excellence (www.natex.org) to make sure there are proper procedures for the installation and service of geothermal technology and are also working with them on other certifications. The point is to show the end-user that professional standards are being used and upheld and that proper procedures are being followed to ensure equipment is installed and maintained properly.

"Again," Cash says, "I'm a firm believer in building up professional contractors who can differentiate themselves in the marketplace."

He adds that Bosch's technical training doesn't just focus on products, but on application training as well. "We listen to how contractors conduct their business and look for ways to make it easier for them in terms of how they get leads, and make it easier for them in terms of accessories, so we can cut down on wasted travel and provide them with one-stop shops."

One-stop shops? Cash says this is what he calls a solutions-oriented business. He adds that contractors should be able to offer customers whatever options are necessary to solve their comfort problems.

"In my mind," he says, "solutions are made up of combinations of technology that enable contractors to listen to their customers and feel confident that they have the product and design answers those consumers need (bit.ly/Hybrid_Solutions)."

He says that for Bosch, solutions include products with higher efficiency levels, lower noise levels, and more compactness, plus easy serviceability.

In addition, Bosch is zeroed in on other technological trends that include communicating controls, Smart Grid, built-in modular flexibility, and even something that Cash calls, 'The Internet of Things (bit.ly/Internet_Things).'

“These are some of the fundamentals that make the technology very hot right now.

"For example, geothermal technology is very much leading the way in the U.S. The operational and first cost efficiencies of these systems is having a huge impact today. With the tax credits, rebates and other incentives available, these green systems are more affordable than ever."

"We respect the fact that each day, contractors have choices regarding who they work with. In my opinion, it's our job to earn their trust with our product brands. With our international reach, we pump lots of money into energy technologies and research, especially geothermal. We think that’s the right thing to do.

"We think with the package of technology we have, our commitment to training, plus the tools we provide for lead generation and marketing, we can help contractors be more productive, profitable, and successful. It's our goal to become the contractor’s partner in business so he can stand with us as we continue to bring new technology to him."
— Mike Weil, Editorial Director

Bosch Launches New Geothermal Line
In other news, Bosch Thermotechnology Corp. recently announced a series of enhancements to its product portfolio and HVAC professional support network for its geothermal heating and cooling systems in the U.S.

First, the company announced the rebranding of its FHP residential line of geothermal heat pumps to the Bosch brand name. The new line of high efficiency geothermal heat pumps will feature three product families: Geo 1000, 3000, and 6000.

FHP, acquired by Bosch in 2007 and a manufacturer of geothermal heat pumps since 1970, will retain its production facilities in Ft. Lauderdale, FL and manufacture the entire Bosch geothermal heat pump line in the U.S.

"With more than 45 years of combined expertise in geothermal heat pump manufacturing, the union of FHP and Bosch under the Bosch brand name represents a new era in geothermal technology for the United States," says Ervin Cash, Bosch Thermotechnology Corp. President and CEO.

"From our geothermal heat pumps to condensing tankless water heaters and solar thermal water heating technology, a full suite of high efficiency heating, cooling and water heating products can now be found under the Bosch umbrella.

"These represent substantial cost savings for the consumer when paired together or as a stand-alone solution, as well as a new revenue stream for HVAC professionals who carry the Bosch line," Cash adds.

He adds that the new line of heat pumps is Energy Star-certified and backed by a 10-year parts and labor warranty.

Industry Leading Support. In addition to the new geothermal product line, the company has also created a unique online lead generation resource for contractor professionals that also provides access access to a comprehensive training and sales program to promote the sale and installation of Bosch geothermal heat pumps.

Upon registering at www.boschwaytogrow.com, contractors will receive a personalized portal with a product registration area as well as access to a Bosch loyalty program, customizable ads, and available special promotions. Direct sign-up for factory and online training classes and continuing education sessions can be found in a tab at the top of the page. A full suite of product literature and sales collateral — customizable to include dealer logo, photos, and text — is available for download.

"We're a committed partner dedicated to working with our dealers to help them grow their business by adding innovative energy efficient products such as our Bosch line of geothermal heat pumps," Cash said.

For more information on Bosch Thermotechnology and the Bosch series of high efficiency geothermal heat pumps, log onto www.bosch-climate.us. To learn more about the Bosch dealer portal, visit www.boschwaytogrow.com.

Carrier Corp. Petitions EPA to Close R-22 Loophole

Carrier Corp. filed a petition with the U.S. Environmental Protection Agency (EPA) in February 2011 requesting a rulemaking to close a loophole created by the agency’s December 2009 HCFC rulemaking that allows manufacturers to produce and ship uncharged R-22-based air conditioning condensing units. The loophole (see bit.ly/DryR-22) is based on what Carrier Corp. calls a misclassification of the condensing unit as a component.

In an interview with both John Mandyck, Vice President, Sustainability & Environmental Strategies, Carrier Corp., and Drusilla Hufford, director of the Stratospheric Protection Div., Environmental Protection Agency, Contracting Business.com magazine learned that Carrier’s petition to the EPA was for a reclassification of the condensing unit from a "component" to a "sub system," which would effectively close the dry ship loophole.

Mandyck explained that in December 2009, EPA surprised the HVAC industry when they released their final HCFC ruling by defining the condensing unit as a component and allowing for the production and sale of uncharged components for R-22-based air conditioning systems (see bit.ly/R22_Politics101 for Contracting Business.com's perspective on this).

Hufford says that from the EPA's view, there was no surprise. She states that the EPA defined pre-charged components to include "all refrigerant-containing components including condensers, coils, line sets, etc., in the Pre-Charged Appliance (PCA) rule, the goal of which was to create a level playing field for U.S. manufacturers.

"EPA has consistently stated its interpretation that individual components such as condensers, evaporators, compressors, line sets, and valves in themselves do not constitute an appliance. The term "appliance" is defined in Title VI of the 1990 Clean Air Act Amendments. Over 16 years ago, in a rule addressing sales of pre-charged appliance components, the Agency stated that pre-charged components "are clearly not appliances" (November 9, 1994; 59 FR 55912).

Mandyke says, "We believe the condensing unit is more than a component. It's actually the heart of the technology for an air conditioner. The condensing unit is a sub-assembly of components consisting of a compressor, fan, coil, and other devices.

"That's why Carrier believes the EPA should create a new regulatory definition for condensing systems as a sub-assembly of an air conditioning system. The EPA never could have intended for all condensing unit manufacturers to re-enter the R-22 market, and we would like them to take action now to close the loophole."

Mandyck says the EPA's original intent was to assure that existing systems that used R-22 refrigerant could be properly serviced, so the law should allow manufacturers to make and sell components with which to service existing R-22-based systems. He noted that Carrier was forced to re-start the manufacture of R-22 condensing units after several competitors re-entered the market.

Hufford agrees with Mandyck regarding the intent of the original ruling. But she adds, "During the lengthy notice and comment process of developing the current PCA rule, EPA received several comments, including one from Heating, Airconditioning & Refrigeration Distributors International (HARDI), indicating that the condenser should be listed as an appliance component. Another commenter noted that the typical practice for some R-22 equipment was to replace the entire condensing unit when a major part, like the compressor, fails."

Carrier's petition was filed under the Administrative Procedures Act, which provides a way to ask the government to do a rulemaking. The ball is now in the EPA's court. According to Hufford, the EPA is currently evaluating the petition and will determine whether to proceed with a rulemaking, or whether they need more information, or decide simply not to proceed.

From a contractor perspective, the R-22 loophole has been a cause of concern and uncertainty (bit.ly/R22_Confusion). Says Mandyck, "As an industry, we were prepared for the R-22 transition — manufacturers had invested in the new technology and contractors had invested in technician training, as well as in helping consumers prepare for this transition. The loophole threw all that up in the air."

"The EPA rules," Hufford says, "disallow the creation of completely new systems assembled in the field; thus, shipping of dry condensing units can occur without increasing the overall national equipment base for R-22. We understand most, if not all, condensing unit manufacturers offer dry R-22 condensing units.

"We are committed to transitioning U.S. markets from ozone depleting substances (ODS) through a continued gradual decline in allowable production of HCFCs. A companion rule to the PCA, also made final in December 2009, reduced U.S. HCFC production amounts to 75% below the initial baseline."

She adds that the EPA, which enjoys a "close partnership with AHRI, ACCA, and other key players in the refrigeration and air conditioning industry," shaped the originally proposed PCA rule in 2008, as well as the final rulemaking in 2009, using comments received from those organizations and other stakeholders.

"This close interaction with outside stakeholders allows us to say with confidence that our definition of precharged components was not a change made late in the process of developing the rule, nor was it made without opportunity for public comment and discussion," Hufford says.

For Carrier, Mandyck adds, "The enemy of innovation is uncertainty. The R-22 loophole has placed the entire HVAC industry into a place of uncertainty. The goal is to close that loophole and re-establish what we all believed was the intent of the Clean Air Act and the protection of the ozone layer."

Hufford says the PCA rule levels the playing field between equipment importers and domestic manufacturers, while still providing homeowners the ability to maintain existing R-22-based systems.

She adds, "HVAC contractors play a vital role in protecting the environment," she concludes, "by reducing refrigerant emissions, while offering their customers options to meet their air conditioning needs.

"They can continue to play this crucial role by explaining to their customers both the near-term and long-term considerations of repairing existing R-22 systems with dry condensing units or replacing systems with new equipment.

Mandyck concluded the interview with some startling statistics. He says, "If 20% of the market uses these dry R-22 units, we wipe out nearly 10% of the gains achieved by the entire 13-SEER efficiency rule. If the market moves to 80% of dry R-22 units, we wipe out nearly a third of the gains from the new energy rules. That’s energy efficiency we’re leaving on the table."

The fate of the Carrier petition remains in the hands of the EPA, and no timeline for a response has been provided.

For more information about the Carrier Corp. petition, please visit carrier.com. You can also follow the discussion thread on R-22 replacement units on HVAC-Talk.com at the following URL: bit.ly/R22_Replacement_Units.
—Mike Weil, Editorial Director

National Comfort Institute Summit Hits Home Run

Members of the National Comfort Institute (NCI) were treated to some groundbreaking information with regard to advances in system testing during that organization’s seventh annual conference, held in Scottsdale, AZ.

Breakout sessions ran the gamut from growing your Home Performance business to the NCI CommonCents™ program, as well as classes that examined energy accountability software and performance-based marketing strategies.

Members were treated to exhibits that highlighted new products and existing services available through NCI’s ContractorsOne member rewards program. Sponsors included TSI, Goodman, Field Controls, Service Net, and To Your Success.

Keynote speaker and 25-year HVAC industry veteran, John Garofalo, kicked off the opening session with his presentation on leadership, walking audience members through what it takes to become a true leader, and how strong leadership coupled with the right implementation steps can help contractors weather any economic storm.

During an awards banquet, NCI President Rob Falke recognized the folowing companies for their "sustained success in the HVAC industry."

"These companies are the best of the best, and we're proud to have them associated with National Comfort Institute, he said.

Following are the NCI Contractor of the Year recipients: 2010 Technical Excellence Contractor of the Year (small business category) Jim Brown of The Jim Brown Company; 2010 Technical Excellence Contractor of the Year (large business category) Jim Glennon of Modern Service; 2010 Business Leadership Contractor of the Year (small business category) Scott Shubert of Miller Heaing & Cooling; 2010 Business Leadership Contractor of the Year (large business category) Michael Davis of Davis Services.

The highlight of the banquet was the presentation of the award named in honor of the late David Debien for his pioneering work in HVAC system design and installation. This year’s David Debien Technical Excellence Award was presented to Tom Spall of T.E Spall & Son.

Another new award was the NCI National Training Excellence Award. The inaugural winner: Hal Smith of Halco Heating.

CEO and Chairman Dominick Guarino presented Daniel Squires of Vincent’s Heating & Plumbing with the 2010 NCI Chairman’s Award.

For more details on the winners, please follow this link: bit.ly/NCI_Summit. For information on NCI, it’s programs, and membership, go to nationalcomfortinstitute.com.

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