A Time to Build

Oct. 1, 2009
Well, it's official. Sometime between August 13th and September 16th, 2009, the recession was declared officially over by U.S. and world leading economists.

Well, it's official. Sometime between August 13th and September 16th, 2009, the recession was declared officially over by U.S. and world leading economists. Well, maybe — if you believe everything you hear from economists. Even U.S. Federal Reserve Board chairman Ben Bernanke has stated the recession is “likely” over.

Whether it's actually over or not really doesn't matter. Remember, in today's media-hyped society, perception is reality. In this instance, it's a good thing. There are significant signs that we're heading towards an economic recovery, maybe even expansion. Great! Bring it on.

So how will this impact our industry? In new construction, we're not out of the woods yet. New home sales are still flat, many markets are still flooded with bank-owned houses, so it could be a while before we see an uptick in new construction.

Service and replacement should rebound nicely as there are several factors working in its favor right now:

Pent-up Demand

Over the past year many have learned to do without some things that are considered luxuries. Unfortunately for us, that meant their HVAC systems. Some put off maintenance, thinking, “well, it won't be so bad if I skip it this year.” Some even put off repair and/or replacement, especially this past summer because of cooler than normal temperatures in a large percentage of the country.

While this wasn't so good for the HVACR industry in 2009, it may be a boon for 2010 and beyond. Now that consumer confidence is rebounding, homeowners who put off fixing their systems or buying new ones will be in the market this coming winter and spring.

Add to that the “regular business” based on new breakdowns and homeowners realizing it's time to replace their system, and the numbers really jump. Top it off with the “deferred maintenance” approach people took this year, which could cause early equipment failure — and it could be really good news for HVAC companies, especially the ones who haven't cut to the bone and invested in keeping themselves strong and well staffed over the past 12 months.

Focus on Green and Energy Is Stronger Than Ever

With federal tax credits, along with state and utility incentives, and all the focus on Green from the current administration, we have the perfect storm for consumers to buy new systems and/or renovate existing ones several years earlier than they might have before. This proactive, planned replacement approach could be a real shot in the arm for our industry.

Bank-owned Homes Need Help

Many local markets are flooded with bank-owned homes, many of which have been neglected, even vandalized by former owners or trespassers. As these homes are bought and occupied, the new homeowners will really need your help! Opportunities will abound for replacements, service, even complete system tear-outs and re-installations. This might become a bit of a niche market, but I believe many mainstream contractors will be able to profit from it.

So Many Problem Homes, So Little Time

Then there is the existing stock of homes that on average have systems operating at 60% delivered efficiency or less. This is a huge market, one that will take our entire industry years, maybe decades to address. As money loosens, and financing becomes more readily available, opportunities will abound to provide value-added services like fixing long-time design and installation issues. There's a huge “inventory” of these homes across the U.S.

If You Build It, They Will Come

In order to capitalize on these opportunities you must be prepared. This means making sure your customer service representatives are well trained and capable of turning inbound calls into appointments.

It means your technicians must have the tools and knowledge to sell and renew service agreements. They must be trained in the latest diagnostic methods to verify true system performance and teach customers how your company can help them save money and be more comfortable.

It means your sales people must be equipped to go into customers' homes and teach them about their systems, and the comfort and efficiency they could be enjoying. It means sharpening your management team and implementing tools that enforce accountability and track your business' performance.

Many contractors will do well over the next several years with all the opportunities in front of us. Some will just pick the low hanging fruit, but the real winners will take these opportunities head on and build phenomenal businesses.

Dominick Guarino is chairman & CEO of National Comfort Institute (NCI), (nationalcomfortinstitute.com) a national training and membership organization focused on helping contractors grow and become more profitable. Email him at [email protected] or call NCI at 800/633-7058.

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