• Last Word: Thoughts on the Business Climate Conundrum

    Oct. 11, 2012
    Last month I met up with Editorial Director Mike Weil during HVAC Comfortech 2012 at Mechanical Systems Week in Chicago, where we discussed the industry, the current business climate,

    Last month I met up with Editorial Director Mike Weil during HVAC Comfortech 2012 at Mechanical Systems Week in Chicago, where we discussed the industry, the current business climate, and where to get a good beer in Chicago. The following is a synopsis of the conversation (I left the beer part out). You can check out the entire interview here.

    Weil: The word on the street is the economy should break loose after the election — regardless of who wins — because the outcome will provide the market with certainty. How will the election impact the HVAC marketplace and a contractor’s ability to invest in training and certification?

    Guarino: I think the outcome of the election will affect our industry in several ways. If the incumbent wins, many energy programs will likely continue — which could have a positive short-term impact on efficiency initiatives, incentives, subsidized training, and demand-side energy management.

    On the other hand, the Obama administration would likely continue to have a negative impact on small businesses — including the HVAC contractor — with continued over-regulation and over-taxation to fund the very environmental and socioeconomic programs mentioned above.

    If Mitt Romney wins the election, it could have a very positive impact on small business, certainly reforming some of the entitlement programs. But the down side is that energy-related programs could be diminished, potentially reducing business for energy-oriented companies in our industry.

    So it’s a bit of a coin toss, but I always prefer the lesser of the evils — reduced government regulation and less interference with small business. In the long run that will make us, and all U.S. industry stronger.

    In terms of contractors investing in their companies and their people, that’s never a bad investment. Good training will pay for itself hundreds of times over. There’s an old industry truism, “What’s worse than investing in training your people and they leave? Not training them and they stay!”

    Weil: This interesting thing called social media is sweeping the world. How is it impacting your company’s ability to train and certify contractors in home and HVAC performance, balancing, combustion safety, and so on? Where do you see the role of social media in the mechanical systems industry? In your opinion, is this an important or a passing trend?

    Guarino: Social media is definitely not a passing trend. It’s part of a bigger generational picture. For example, these last two generations have grown up with computers, and are much more comfortable in front of a keyboard or smartphone than the last two, including ours. It’s part of their DNA.

    There are pros and cons to this. The pros include faster and more accurate access to information like we’ve never seen before. That’s a boon for a service technician looking up equipment data or a schematic, and should improve the way we invoice — especially the legibility of service tickets!

    The downside of the digital communications and social media boom is many younger Gen-Ys are less social when it comes to face-to-face interaction with our customers. Many lack the skills needed to build in-person trust and rapport with customers, which will present a growing challenge in the years to come.

    The really exciting side of the digital communications phenomenon is when it comes to training: we can impart more and better information in a very precise way. While some hands-on skills can’t be taught virtually, web-based training can be an incredible adjunct to live face-to-face training.

    Weil: What about the regional efficiency standards that are apparently on hold right now. What’s your view on this issue?

    Guarino: As far as I know, regional standards aren’t really on hold. There are those who seek to repeal them, but the standards are still set to go full steam ahead in April, 2013. I personally believe these standards are a bad idea, and will only lead to more below-board activity, less permits pulled, and more business for fly-by-night contractors. Essentially we’ll see the usual unintended consequences of over-regulation and government interference with the free market. If regional standards do stick, it means utilities will have a harder time creating incentive programs around equipment replacement in some markets, as they will not be able to show much efficiency improvement to their State Public Utility Commissions.

    On the other hand, with a level playing field of equipment efficiencies, the industry will need to turn to delivered system efficiency and comfort improvements from system renovations as a differentiator. Therefore it stands to reason that delivered performance will become an even bigger driver for our industry going forward.

    Dominick Guarino is CEO of National Comfort Institute (NCI), the nation’s premier Performance-BasedTM training, certification, and membership organization, focused on helping contractors grow and become more profitable. His email is [email protected]. For more info on Performance-Based ContractingTM go to WhyPBC.com or call NCI at 800/633-7058.