Talk about going from a luxury to a necessity. That's exactly what has happened with the expansion of the residential tax credits last February by the American Recovery and Reinvestment Act. In January 2009, these were $150 to $300 tax credits on $5,000+ HVACR system installations, i.e., big deal. The following month, they were $1,500 credits at higher efficiency levels for most HVACR products, along with an uncapped credit for onsite renewables like solar and geothermal systems. Even in the early months after the credits were expanded, choices were limited for qualifying equipment, but today we have manufacturers talking about “good, better, best” offerings ABOVE 16 SEER.
Despite a brutal 2009, HARDI distributors are reporting modest growth or at least flat years, thanks largely to these expanded tax credits; several members say the credits not only saved jobs but actually justified new hires in some cases. Many in the industry and on Wall Street have a very optimistic outlook for 2010 with complete, tax credit-eligible product lines and more informed contractor and homeowner bases about the tax credits for a full 12 months. I certainly agree that 2010's tax credits provide ample opportunities; however, fear is slowly outweighing my optimism that our industry could become preoccupied with driving this year's sales growth and forget what a tax credit-less 2011 could look like.
When the government increased qualifying levels for central air conditioners last year to 16 SEER, 13 EER, many HARDI members were justifiably concerned about what they were going to do with the 14.5 and 15 SEER systems with which they had planned to enter the season. Now we could see a 2011 with product offerings strong above 16 SEER but with no catalyst to sell the products if there is no extension of these tax credits. I've repeatedly argued that the residential energy-efficiency tax credits were perhaps the only true example of stimulus in the entire $800 billion stimulus bill. Should this stimulus truly end up a two-year wonder, will the HVACR industry share auto dealers' fate, post cash-for-clunkers?
HARDI's Congressional Fly-In this May will feature perhaps the most tangible and important political objective in the association's brief government relations history. Whether it was great foresight or simply luck that HARDI's leadership decided to start hosting Congressional Fly-Ins three years ago is immaterial, because the fact remains that this is the HVACR distributor community's best shot to extend the best business-generating policy ever seen by our industry. You've got the data, stories and proof as employers and taxable business entities to make it happen, but you've got to be in front of your representatives to do it. I'm not a big fan of “rah-rah” articles, but I'll be the first to grab the pom-poms if the members agree to charge onto the field.
Go to www.hardinet.org/events right now to register for the 2010 Congressional Fly-In, if you haven't already.
Talbot Gee is vice president of HARDI. Contact him at 614/345-4328 or [email protected].