HVACR BUSINESS NOV 2021 by HVACR Business

Branding Your Company Terry Tanker 5

Refrigerants: What You Need to Know John Sheff 14

The Ins & Outs of Running A Successful Business David Indursky 16

Identifying “The Gap” Keven Prather 19

The Road to Success Starts with Defining Core Values David Dombrowski 20

HVACRBUSINESS.COM NOVEMBER 2021 / VOL.16 / NO.11

THE ULTIMATE BUSINESS PLAN CHECKLIST: Get Rid of the Guesswork Page 8

ALSO INSIDE » Ruth King Don’t wait for a financial disaster before checking your books......................................... 6 Seven Service Behaviors To Boost The Bottom Line by Joe Takash.................................... 21 20 Questions with Brad Kivlan, President of Dynatemp International ........................22

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CONTENTS

NOVEMBER 2021 / VOL.16 / NO11

F E AT U R E S

A Business Plan Checklist

D E PA R T M E N T S

Without a solid business plan, your company lacks a rudder. Here is a comprehensive business plan checklist that you need to review for growth. By Wendell Bedell

A few essential tips and ideas to help you make sure that your brand image is working to convey the values and vision of your organization. By Terry Tanker

14 Don’t Get Caught in the Cold

Here’s a must read on impending changes affecting refrigerant rules and regulations. By John Sheff

Business Rules That Work Every HVACR contractor has rules for the business. The question is, how do they compare with rules from a successful business that’s proven them over generations? By David Indursky

Publisher’s Page

20 Questions with Brad Kivlan,

President of Dynatemp International

C O LU M N

Pay Attention Does it have to take a financial disaster before you start paying attention to your financials? By Ruth King

The Gap Analysis

The Road to Success Starts with Defining Core Values

Seven Service Behaviors To Boost The Bottom Lines

Ever wonder if your business is really worth what you think it is? Wonder no more. Implement the Gap Analysis. By Keven Prather Tried and proven remedies for establishing a solid organizational structure. By David Dombrowski Applied with passion and consistency, your business results will improve. By Joe Takash

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THE HVACR MANAGEMENT MAGAZINE

TERRY Tanker Publisher ttanker@hvacrbusiness.com MEGAN LaSalla Art Director mlasalla@hvacrbusiness.com BRUCE Sprague Circulation Manager bs200264@sbcglobal.net

BY TERRY TANKER

PUBLISHER’S PAGE

ADVERTISING STAFF ERIC Hagerman National Sales Manager Tel 216-409-3246 ehagerman@hvacrbusiness.com TERRY Tanker Publisher Tel 440-731-8600 ttanker@hvacrbusiness.com

BARBARA Kerr VP Operations bkerr@hvacrbusiness.com

HVACR Business, founded January 1981, is a monthly national trade magazine serving contractors, mechanical engineers, manufacturers, manufacturer representatives, wholesalers, distributors, trade associations, and others in the heating, ventilating, air conditioning and refrigeration (HVACR) industry primarily in the U.S. The editorial focus and mission of HVACR Business is to provide business owners and managers with the very best business management concepts available. Critical topics covered include leadership, management, strategy, finance, sales, marketing, training, education, staffing, operations, human resources, legal issues, customer service and more. We are dedicated to helping contractors master these key management skills and provide them with the resources necessary to build strong, profitable companies. Every effort is made to provide accurate information, however, the publisher assumes no responsibility for accuracy of submitted advertising and editorial information. Copyright©2021 by JFT Properties LLC. No part of this publication may be reproduced or retransmitted in any form or by any means, including, but not limited to, electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees. This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the authors nor the publisher may be held liable in any way for any interpretation or use of the information in this publication. The authors will make recommendations for solutions for you to explore. Any recommendation is always based on the authors’ research and experience. The information contained herein is accurate to the best of the publisher’s and authors’ knowledge; however, the publisher and authors can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. Subscription Rates: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: U.S. and possessions: 1 year $48; 2 years $75; 3 years $96; Canadian and foreign, 1-year $108 U.S. funds only. Single copies $8. Subscriptions are prepaid, and check or money orders only. Subscriber Services: To order a subscription or change your address, write to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039 or call (440) 731-8600; or visit our Web site at www.hvacrbusiness.com. For questions regarding your subscription, please contact bkerr@hvacrbusiness.com. HVACR Business (ISSN 2153-2877) Copyright ©2021 is published monthly by JFT Properties LLC,31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039, Phone: 440731-8600. Periodicals postage is paid at North Ridgeville, OH and additional mailing offices. (USPS 025-431) POSTMASTER: Send address changes to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039.

31674 Center Ridge Road, Suite 104 North Ridgeville, OH 44039 Tel: (440) 731-8600 Web site: www.hvacrbusiness.com (ISSN: 2153-2877)

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Branding Your Company

he most valuable asset a company can have is the tiny piece of real estate in the minds of its customers and prospects. It means they recognize who you are and what you stand for. Billions of dollars are spent every year positioning, building and creating brands for this reason. That’s why I’m always surprised when I hear an executive say they don’t believe in advertising, marketing and promotion. What do they know that American Standard, Geico, Carrier, Anheuser Busch, Apple, Ford, Coke, Lennox and others don’t? One thing is for sure, they rarely work for companies that have a brand preference, and if they do, it’s a sure bet their brand is on its way down. Developing a brand that truly represents your company and its products and services is not necessarily an easy task. But it is not an impossible one either. The point is that most highly successful companies develop brand strategies that create unique positions for themselves in the marketplace. The brand, to these organizations, is the customer relationship. It is the identity the company has in the marketplace with its customers. Strategic marketing communication programs have many different elements. Brand building is one of the most challenging. In the process of branding, we have to manage the customer’s perceptions and associations that are applied to the values that managers, employees, your product lines, and service carry out into the marketplace every day. From answering the phone to sending out the invoice and everything that comes in between, lay the foundation for your branding image. When a customer or prospect sees your ad or the logo on your truck, your brand is at work one way or another.

everyone understands the message and what you are trying to do. Don’t let the marketing department or advertising agency put their spin on the message. Creative development is one thing—spin is another.

2. Simple is Good. You’re in the people comfort business, and you can do a lot to build around that. Ever listen to some of the stuff that comes out of large software manufacturers? “Scalable enterprise database solutions in collaborative settings that expand seamlessly and free resources that amplify influence.” Excuse me?

3. Consistency is King. Bridge the gap between the promise of your product or service and the customer’s desire for it, do it often, and do it consistently.

4. Have a Clue. Do some research among past customers and find out what kind of brand position, brand identity, and brand equity you have—or don’t. Then, adjust accordingly.

5. Research. Conduct an internet search on “Branding.” There are many resources available to help you improve. Take advantage of the free ones. Survey your customers and prospects that did not use you. Consider hiring a professional to help you develop your brand. You are an expert with comfort systems, there are experts that can help you with your brand; don’t be afraid to make the investment.

6. You Can Change.

Here are a few essential tips and ideas to help you make sure that your brand image is working to convey the values and vision of your organization.

Did you listen and do some research? Is your brand in the basement? Like everything else, you can change it with some time, money, effort and strategy.

1. All Aboard.

7. High and Mighty.

Start with your board of advisers or executive committee and work your way through your organization. Make sure

It’s hard to build that great brand you have, and it may have taken several generations to do it. u

HVACR BUSINESS NOVEMBER 2021

FINANCE

BY RUTH KING

What Has to Happen for You to Pay Attention?

heft happens to everyone else. Of course. But when it happens to you … Here are two contractors’ stories:

I need your help. My manager has embezzled $220,000.

CONTRACTOR ONE: About 20 years ago, I gave a contractor the processes and tools to grow a great business. I saw him over the years at trade shows and he always said that he was doing well. As it turned out, he wasn’t.

5. Look at the bank account reconciliations every month. Every accounting software system gives you the ability to print out the reconciliation results. You do it and check the balances against what is showing on your balance sheet and your accounting software.

He had gotten complacent. He had stopped paying attention to the financial side of the business. He stopped paying attention to his managers. (He discovered that the manager who had stolen has a gambling problem). It took the embezzlement of almost a quarter of a million dollars for him to wake up again. Ouch!

CONTRACTOR TWO: I got an email from a contractor who had taken my Building Profit and Wealth class. On the second day of the course , I go over the procedures you need to put in place to keep honest people honest. This contractor hired a bookkeeper when the company was in trouble financially. She came in, cleaned up the books, and the owner could tell where the company was financially so he could make the decisions necessary to get the company profitable again. The bookkeeper was instrumental in getting clean financials. She befriended the owner’s wife. He stopped looking at financial statements every month because he trusted her. The embezzler had become

3. Never, ever totally trust any bookkeeper, even your mother. I’ve discovered contractors’ mothers who have stolen from businesses! 4. Bookkeepers should never have check signing authority. If they write a check to themselves, then it is ok because you gave them the ability to sign checks.

He called me, almost crying. “I need your help. My manager has embezzled $220,000.”

Assuming that his company nets 10%, it will take $2,200,000 in revenues to replace the $220,000 that was embezzled. Over $2 million because he stopped paying attention. This is a very difficult, painful lesson to learn.

what they are telling you. It is easier to learn what a P&L and balance sheet is than learning to read a wiring diagram!

the trusted bookkeeper. About a year ago, the company went to direct deposit for their payroll. This was the opportunity the embezzler was looking for. She would take a direct deposit check and then write one to herself, cash the check, and delete it from QuickBooks. The owner finally paid attention when he couldn’t understand why he was starting to have cash flow problems. When he called me about this situation, his comment was, “I sat in your class thinking that this would never happen to me … and it did.” She embezzled about $60,000 before she was caught. At a 10% net profit, this owner has to generate $600,000 in revenue to pay for this mistake. Ouch! My question to you: What is it going to take for you to pay attention?

HVACR BUSINESS NOVEMBER 2021

Do you think “This will never happen to me?” If you do, and if you ignore the financial side of your company, the likelihood is that someone will take money or materials from you at some point. Do you want this hurtful, expensive lesson? All of you will pay attention after someone steals from you. Unfortunately, it’s too late then. Hopefully, most of you will put the procedures in place so that doesn’t happen at all. So, what do you have to do? 1. Look at your bank account online every day. It takes less than 5 minutes. See what checks and ACH’s have cleared. Make sure everything makes sense.

6. Make sure accounts payable and accounts receivable balances on your balance sheet match the amount shown on your aged receivables and aged payables reports. If these don’t match, then start digging. I’ll bet that you find someone is stealing from you. 7. Never abdicate the financial side of your business. Always pay attention! These are just a few simple procedures to put in place (you can find more in my book, The Ugly Truth about Cash). What is it going to take for you to pay attention? u

Ruth King has more than 25 years of experience in the HVACR industry and has worked with contractors, distributors and manufacturers to help grow their companies and become more profitable. Contact Ruth at ruthking@ hvacchannel.tv or call 770-729-0258.

2. Understand and review your financial statements every month. It takes less than 30 minutes once you understand

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PURPOSE

& NEED FOR A 2022 BUSINESS PLAN

A Business Plan: The Difference Between Success & Failure BY WENDELL BEDELL

he purpose and need for creating a business plan consists of a process of documenting, establishing, and implementing business direction for each of your service offerings. We often refer to this effort of documentation as the strategic planning process. The resulting plan itself becomes a management tool that provides you and your staff with a step-by-step guide to better business performance and long-term success. Working with a plan will focus your efforts, unify your team in a single direction, and help guide you through tough business decisions. A business or strategic plan requires you to define your goals, and in defining them, enables you to achieve them, providing

A business or strategic plan requires you to define your goals, and in defining them, enables you to achieve them, providing your company with a huge competitive advantage your company with a huge competitive advantage. In this article, we’ll illustrate seven steps for creating a thorough and effective strategic plan to lead your business toward your goals:

1. Review the past year performance. 2. Clarify your vision and mission.

HVACR BUSINESS NOVEMBER 2021

3. Establish short-term goals. 4. Outline and prioritize your strategies. 5. Agree on accountability. 6. Implement Your Strategy. 7. Review and modify regularly.

STEP #1: REVIEW THE PAST YEAR PERFORMANCE. You begin this process by checking to see if you have any or all of these 14 common business process issues/problems categories that need strategies to resolve. The order illustrated is from greatest profit impact to least. However, all are strategic in nature to your immediate and longterm success.

1. Under-pricing as a primary closing mechanism: • Does not properly recover technician and installer nonchargeable billable hours. • Does not recover warranty labor and material support costs. www.hvacrbusiness.com

• Does not recover work delivery overhead costs.

2. Poor or no lead generation: • Does not get access to residential HVAC work via AdWords campaigns through Facebook, Google, Bing, and other social media platforms. • Does not have a residential or commercial customer-friendly website. • Does not use onsite opportunity assessment forms to identify all service opportunities on all service and sales calls. • Does not convert catastrophic repairs to replacements by helping consumers with the repair or replace decision. • Does not continue to harvest all known service opportunities post call via seasonally timed direct email and text campaigns to targeted customers.

3. Lack of service brand differentiation: • Does not create a name, symbol or design for service repairs, maintenance agreements, or replacements that is easily identifiable as belonging to the company. • Does not use branding services to better help customers to identify them from competitor products and services.

4. Lack of value-added selling process: • Does not use proactive selling vs. using reactionary selling. • Does not interview customers about the system and customer needs for resolving their comfort, health, safety, property and/or financial requirements.

5. Absence of defined operating and work delivery processes: • Does not motivate staff to perform at higher levels by using 100% customer satisfaction, 100% company profitability and 100% employee friendly written work delivery processes. • Does not use work delivery standard procedures to provide staff with the “How-to-do-Book” job training guides. www.hvacrbusiness.com

• Does not make sure job descriptions match position.

Regardless of how valuable planning is, it is useless if you don’t implement. • Does not have the ability to reduce mobilization and human errors, missed tasking and business risk. • Does not have the ability to eliminate call-backs via quality control start-up, test & verification forms.

6. Improper payment and liability protection terms and conditions: • Does not use proper transaction terms and conditions in their proposals to prevent serious disruptions in cash flows and job costs overruns. • Does not have proper proposals or invoices that adequately define scope of work, protect payment, and eliminate job risk liabilities for all work categories.

7. Lack of labor management controls: • Does not use written step-by-step work delivery standards to enable managing people to process. • Does not use job descriptions with clear job expectations and establish behavior with customer, company, and fellow employees.

• Does not have a competitive benefits package.

• Does not have a professional looking website.

• Does not use employee networks to recruit.

• Does not use social media like Facebook to advertise position.

• Does not educate technicians and installers on typical repair and replacement call handling results.

• Does not create recruiting handouts and flyers.

continued on page 10

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• Does not use performance pay for management, office, and field staff to influence work behaviors to achieve specific sales goals and for meeting or beating the budgeted labor hours on a repair ticket or on a job budgeted labor hour. • Does not track and compare to industry typical conversion rates, each individual technician, selling tech, and/or comfort adviser, sales opportunity conversion rates for system fixes, enhancements, accessories, or replacements. • Does not track billable efficiency of each individual field staff member.

8. Lack of year-round labor recruiting and retention strategies: • Does not continuously recruit to find the best people.

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HVACR BUSINESS NOVEMBER 2021

continued from page 9

• Does not train technicians on soft skill communication or does not provide scheduled manufacturers with product training or NATE certification, or conduct in-house technical cross training.

A business or strategic plan requires you to define your goals, and in defining them, enables you to achieve them, providing your company with a huge competitive advantage.

9. Organizing the business for growth:

11. Forecasting manpower and expense budgets:

• Does not logically organize and group the office administration delivery function.

• Does not create a monthly spend plan for labor and equipment material.

• Does not logically organize and group the sale, service, system replacement and/or construction work delivery functions.

10. Organize the customer care and dispatch function: • Does not properly organize customer care inbound call center function. • Does not properly organize customer data for easy access by receptionist and the dispatch function.

cost-of-goods-sold, overhead, and net profit before taxes in positive profit directions.

• Does not identify a break-even monthly revenue to cover operating expenses, just to keep the lights on.

12. Recruiting and retaining top performers: • Does not continuously recruit. • Does not use upfront pricing with customer. • Does not price in their work the ability to hire and retain the best. • Does not use performance incentive

• Does not have the ability to connect the office with field, in order to schedule more jobs and get paid faster.

pay for personal contributions to company profitability. • Does not use customer and/or employee friendly work delivery standards. • Does not use job descriptions to clearly communicate employee job and work behavior expectations.

13. Lack of financial management skills and business mix tracking software: • Does not use key performance indicators for driving per call opportunity conversions rates. • Does not use key performance indicators for driving business revenues,

• Does not harvest post-call opportunities via obtained email or text. • Does not allow technicians or installers to capture customer’s signature authorization to proceed with work directly on their smartphone or tablet. • Does not auto record individual staff payroll clock in/clock out for timebased payroll reports and more. • Does not use proper customer call handling to inform when the service technician or installation crew is headed their way, so that customer is better prepared when they arrive. • Does not integrate estimates with emails to allow sending customers estimates, job confirmations or invoices right from the office or field handheld and smartphones.

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• Does not get business performance snapshot of total calls, inbounds, outbounds and no-answer calls. • Does not see what channel leads came in from, why the customer called and whether it converted into a job or an estimate. • Does not easily access customer’s contact information, establish customer’s personal communication preferences. • Does not have the ability to obtain work updates, make deposits, send invoices, take payments automatically, and seamlessly update QuickBooks for you. • Does not have immediate access to the customer contacts and equipment information to enable the job to be done right the first time.

14. Lack of leadership training education: • Does not have an operating manual to

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When people know what is expected of them and what their priorities are, they can work steadily toward achieving goals. properly guide management tasking functions. • Does not use proven staff motivation techniques. • Does not understand leadership characteristics.

the

four

• Does not have a continuous leadership skill self-development plan. If you seek answers to any of these common issues, tap into an outside HVAC business expert organization like ours, or register to hear a HVAC business podcast like HVACPro™ podcast to obtain proven residential HVAC business marketing, operating processes, methodologies, governances, and associated work delivery forms within their service and replacement businesses.

STEP #2: CLARIFY YOUR VISION AND MISSION. INFUSE YOUR CULTURE. Values should be at the core of all the decisions employees make. They show what your company stands for. Envision Your Future. When you create a clear vision, it expands the collective thinking of your organization to encompass greater possibility and influence. Below is an example of a Vision and Mission Statement: 1. Our Commitment: We are committed to providing the highest quality and performance in all aspects of the equipment replacement industry, utilizing our core strengths to ensure

the continued success of our employees and our customers. 2. Core Services: Design, fabrication, installation, and service of heating, air conditioning, indoor air quality, and ventilation systems, as well as electrical, temperature and humidity controls. 3. Core Strengths: Experienced leadership, excellence, trustworthiness, loyalty, and pride in our reputation for quality workmanship and teamwork, our multitrade capabilities, and our knowledge of and commitment to innovation.

STEP #3: ESTABLISH SHORT-TERM GOALS. Try to align your short-term goals so they ultimately contribute to your longterm goals. These building blocks will help you immensely. Typical examples include: • 100% customer satisfaction via proper call handling, pricing and selling standards. continued on page 12

HVACR BUSINESS NOVEMBER 2021

continued from page 11

• 100% customer retention via work delivery and safety standards. • 100% employee retention via proper work delivery and safety standards, and performance incentives standards. • 25% customer referrals via proper call handling, pricing and selling standards. • 100% profitability and sustainability via flat rate pricing standards. • 65%+ increase in service repair tickets via call handling standards. • 65%+ increase in quoted system fixes and system enhancement via call handling standards. • 85%+ service agreements with close rates to lock in your customer base via call handling and pricing standards. • 400%+ increase in system replacements on catastrophic repairs via call handling standards. • 1% call-backs via proper start-up, test and verification procedures.

plan for management, office and field staff.

Provide immediate feedback: Your team will hit potholes and they will continually need input from their manager to stay on course. STEP #4: OUTLINE & PRIORITIZE YOUR STRATEGIES: TYPICAL EXAMPLES INCLUDE: 1. Implement upfront flat rate pricing guides for service, system replacement and ductless minisplit installations. 2. Implement proper opportunity assessment forms on all service and sales calls. 3. Post call, continue to harvest all known opportunities by sending seasonally timed internet SEM/direct mail campaigns to targeted opportunities. 4. Implement proper terms and conditions for all transaction documents

11. Implement a professional residential or commercial website presence. 12. Implement individual staff development training plans.

and customer provided pricing on handheld devices. 5. Implement job descriptions for all staff positions. 6. Implement written standard work delivery processes for demand service. 7. Implement written standard work delivery processes for system replacements. 8. Implement written standard work delivery processes for ductless minisplit installations. 9. Implement written standard work delivery processes for design-build services. 10. Implement

performance

incentive

skill

13. Restructure and organize the business for growth and by work delivery tasking functions. 14. Implement a manager self-development plan.

STEP # 5: AGREE ON ACCOUNTABILITY: SET EMPLOYEES UP FOR SUCCESS AND VERIFY ASSIGNED STAFF HAS THE CAPABILITY AND AVAILABILITY. Make sure to discuss all of the rules and expectations at the outset. When people know what is expected of them and what their priorities are, they can work steadily toward achieving goals. • Establish clear goals: Establishing clear goals is like getting an alignment for

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Business plans should be reviewed and possibly updated at least once a year, especially for younger companies. Updating your business plan is more focused and fun than writing the original one. your car. You pull out onto the street, and your car drives beautifully. But just like at work, the road is not always smooth.

• Updating your business plan regularly can help ensure that you and your partners or co-owners are on the same page.

• Provide immediate feedback: Your team will hit potholes and they will continually need input from their manager to stay on course.

• When major changes occur at your company or in your industry, this is also a good time to update your business plan.

• Enroll everyone at the organization: Our team lives the value of “hold and be held accountable.”

• Tracking all key metrics can help you keep your finger on the pulse of your business plan.

STEP #6: IMPLEMENT YOUR STRATEGY: REGARDLESS OF HOW VALUABLE PLANNING IS, IT IS USELESS IF YOU DON’T IMPLEMENT. This lack of action is undoubtedly one of the major culprits that prevent the carrying out of thoughtful planning. This typically includes: • Define metrics and success criteria for each action item. • Set deadlines for all team members, to guarantee speedy implementation and fast turnaround of additional status information requests. • Allocate time for the project in team members’ schedules.

• Doing so can also help you monitor how well the objectives, goals, and strategies outlined in your plan are working. • If sales are falling short of expectations, monitor your marketing plan more closely. u

Wendell Bedell is CEO of GrowMyHVAC. com and President of HVACPro podcast companies. For detailed information about GrowMyHVAC.com’s or HVACPro podcast’s many high impact HVAC Business Operating Manual’s based best-of-the-best practices as well as, upfront price guides to help you “harvest” more on each call, simply call 800.240.2823 or visit them at www. GrowMyHVAC.com.

• Assign ownership of specific goals and their corresponding reports to the appropriate team member.

STEP #7: REVIEW AND MODIFY REGULARLY: THE BODY THRIVES ON REGULARITY. So do business plans. Make it a point to review regularly. Business plans should be reviewed and possibly updated at least once a year, especially for younger companies. Updating your business plan is more focused and fun than writing the original one.

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HVACR BUSINESS NOVEMBER 2021

REFRIGERANTS: WHAT YOU NEED TO KNOW The Clock Is Ticking BY JOHN SHEFF

s the U.S. EPA begins implementing the American Innovation and Manufacturing (AIM) Act, the refrigerant transition in the United States is officially underway. The AIM Act’s phasedown schedule mirrors Kigali Amendment’s and will phase down HFC use in the U.S. by 85% in 15 years based on a 2011-13 baseline. Currently, the EPA is building its refrigerant baseline and determining refrigerant allocations for the first step of the phasedown, which could begin for some sectors as early as next year. And, while we still need to nail down many details, it’s worth exploring some of the key issues that will affect HVAC contractors in the next several years.

One of the major issues yet to be resolved with the transition to A2L refrigerants is incorporating new safety codes and standards in state and local building codes. A2L REFRIGERANTS A2Ls, as categorized by ASHRAE, are the new class of low-GWP refrigerants we expect to replace the phased down HFCs in most applications. Globally, A2Ls have been used safely for years: More than 8 million mini-split systems using R-32 and more than 68 million automobile air

HVACR BUSINESS NOVEMBER 2021

conditioners using A2Ls have been installed. However, since A2Ls are new to the United States, and these replacement refrigerants are mildly flammable, safety and training are significant issues. A2Ls are not likely to start a fire on their own, but regulators have safety concerns regarding a fire started elsewhere that could come into contact with the refrigerant.

In spring, 2021, the Air Conditioning, Heating and Refrigeration Institute (AHRI) and the Underwriters Laboratory (UL) conducted a series of tests to determine the flammability and safety of A2Ls relative to currently used HFCs like R-410A. These tests found that A2Ls did not produce fire flashes or noticeably increase the flame size when exposed to open fire sources such as candles or burning furniture. Thus, while some consider A2Ls mildly flammable tests showed they are not more likely to ignite a fire than HFCs. AHRI also formed the Safe Transition Task Force to provide contractors, firefighters, and policymakers with resources such as articles, webinars, videos, and

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guides to support the safe transition to this new class of refrigerants.

BUILDING CODES One of the major issues yet to be resolved with the transition to A2L refrigerants is incorporating new safety codes and standards in state and local building codes. States and local jurisdictions typically use either the Uniform Mechanical Code (UMC) or the International Construction Code (ICC) as the model for their building codes. While [? Who] updates these model codes every four years, states and localities need to incorporate them into their codes — a less certain process. Currently, both the UMC and ICC model codes incorporate the standards for the safe production and installation of equipment using A2Ls and should be available for state and local building codes to use ahead of the scheduled 2024 code cycle. Some states are pre-emptively forcing the issue because they recognize a potential problem. For example, Washington, Oregon and Texas have recently passed legislation that bars state and local building codes from prohibiting any EPAapproved refrigerant after 2023. This type of legislation forces states and local jurisdictions to update their building codes to allow R-32 and R-454B, the two most likely A2L candidates to replace R-410A in residential and light commercial air-conditioning applications. AHRI is lobbying other states to adopt similar legislation ahead of the transition to avoid situations in which HFC refrigerants are no longer available but building codes do not allow for their A2L replacements.

SECTOR-BASED CONTROLS The AIM Act allows stakeholders to petition the EPA for sector-based controls, which place GWP limits and implementation dates on specific applications. AHRI has submitted petitions asking for these controls for residential and light commercial air-conditioning and comfort chillers; they also submitted two petitions for commercial refrigeration applications. The GWP limits and implementation dates for air-conditioning and comfort chillers are similar to those put in place by the California Air Resources Board, or CARB. AHRI asked that both air-conditioning and comfort chillers receive a

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To prepare for the new refrigerants, contractors should review the resources AHRI has provided on the safe transition.

In addition, to accommodate building codes, AHRI is petitioning the EPA to begin enforcement of GWP limits for residential and light commercial air-conditioning, by far the industry’s largest consumer of HFC’s, on Jan. 1, 2025. This dynamic creates the environment for a potential HFC supply shortage in 2024 as the EPA begins its phasedown in earnest before the industry is ready to transition to A2Ls. To avoid this scenario, AHRI, through its comments to the EPA’s proposed allocation rule, is asking the agency to allocate HFCs to producers and importers in 2022 and 2023 and then re-evaluate the situation in 2024. The industry, meanwhile, is making plans to ramp up its available supply of reclaimed refrigerant to help compensate for any shortfall.

CONCLUSION

GWP limit of 750, with that enforcement beginning Jan. 1, 2024, for chillers and precisely one year later for air conditioning. The petition for commercial refrigeration, however, deviated from the controls CARB plans to implement. CARB’s overall greenhouse gas reduction targets are ambitious and, to meet those goals, the agency must reduce emissions from refrigerants already in use. To do so, CARB collaborated with food retailers to develop a weighted-average GWP approach whereby grocers can focus on reducing GWP (down to 1,400) across their entire portfolio rather than seeking a reduction in every individual store. This allows food retailers to upgrade stores with new lowGWP systems that will pay back the initial investment while managing less profitable locations with existing equipment. For newly built stores or systems, CARB is mandating a GWP of 150 or less, essentially pushing new systems with natural refrigerants like CO2 or very low-GWP HFOs. Unlike CARB, the EPA is only interested in using sector-based controls to

regulate new commercial refrigeration systems. The EPA has already approved nonflammable A1 refrigerants R-448A, R-449A, and R-449B as acceptable substitutes in commercial refrigeration applications. These refrigerants, with GWP’s around 1,400, are viewed as transitionary, allowing lower-GWP refrigerants before building codes are fully updated to allow for very low-GWP A2Ls and HFOs. As a first step, AHRI submitted a petition asking the EPA to impose SNAP Rules 20 and 21, which several states have already implemented, and prohibit certain HFCs and limit GWP’s to 1,500 or 2,200 by 2022 or 2023, depending on the application. In step two, AHRI will likely petition the EPA to limit GWP’s in most commercial refrigeration applications to 300 by 2026 to allow for building codes to update.

A POTENTIAL HFC SHORTAGE

Just a year ago, the refrigerant transition in the U.S. seemed precarious, at best. States were going their own way, and the AIM Act looked like a long shot. The industry was preparing for a fragmented regulatory landscape and a transition that was anything but smooth. Now, that same transition is looking a lot smoother. Challenges, however, remain. For example, building codes must be updated to allow for A2Ls, and, should an HFC shortage occur in 2024, it might force some in the industry to transition to new refrigerants faster than they expected. However, these challenges are manageable, and, with a little harder work, a safe transition is within reach. To prepare for the new refrigerants, contractors should review the resources AHRI has provided on the safe transition. They should also engage in the proper training for transporting, handling and installing A2L refrigerants. u

John Sheff is director of Public & Industry Affairs, Danfoss. For additional questions email John at john.sheff@danfoss.com

While the AIM’s HFC phasedown schedule begins in 2022, the first significant drop in production and consumption comes in 2024, when the EPA will reduce available supply by 40% from its baseline.

HVACR BUSINESS NOVEMBER 2021

THE INS

& OUTS

OF RUNNING A SUCCESSFUL BUSINESS RULES THAT WORK

BY DAVID INDURSKY

grew up in a multigenerational family HVAC business. Since taking the helm as president in 1999, I’ve found that knowing what you’re selling is as important as knowing all of the ins and outs of running your business. Of course, you need to have technical competency and be the expert on what you’re selling. However, I’ve found it’s not always so obvious to understand the inner workings of running a company successfully. When you’re starting your career, you need to focus on the business side as much as you are on the technical side. A common misstep among entrepreneurs is thinking that it’s easy to start and run a business. To set your company up for success, it’s essential to understand the risks involved with running a business. As a business owner, there’s an inherent

As a business owner, there’s an inherent necessity to become the master of every aspect of your company, from HR and accounting to sales. necessity to become the master of every aspect of your company, from HR and accounting to sales. Unfortunately, it takes time to get through the ups and downs to learn how to do it all effectively. I knew it was essential to understand our actual costs to perform our services, and I analyzed our internal processes to identify areas for improvement. Whether you’re a business of one or 100 employees, you cannot survive if you don’t understand where your costs and resources are going.

HVACR BUSINESS NOVEMBER 2021

WHY SYSTEMS MATTER If you don’t have the suitable systems in place to manage your material and costs, it doesn’t matter if you are the best mechanic because your business will not survive. It took time and commitment; however, we improved and implemented effective processes to systemize critical aspects of our business in my first few years to set us up for success. Essentially, it’s challenging, takes time, and you need to be mentally committed to the long haul. However,

once those systems are in place, your company is poised for meaningful growth. Being the expert on properly succeeding with the front of the house of your business while seamlessly managing the back of the house is one of the keys to owning a long-term, successful company. In addition, knowing your company’s financial nuts and bolts is as – if not more - essential as knowing how to repair or install a system. Because when it comes to running a business, learning how to write a proposal, accurately price a job, and ensure you get paid on time can be even more important than ensuring that you can do the work. Whenever you price a job, there must be a budget to clearly define what you’re budgeting for material and labor costs.

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Having a business plan is essential to ensure your mark-up structure can support your overhead. It is not a sustainable business model if you undervalue your work and do a great job but don’t have enough money to pay your suppliers.

Act as if you care. Act as if you have pride in your work. Act as if you are the customer. u

David Indursky is president of ENCON, an award-winning, second-generation family-owned mechanical company in Ocean, NJ. For additional information, please visit enconmech.com.

The word profit is not a bad word. Profits lead to reinvesting in the business. Profits lead to being able to sustain a warranty call. Profit means when a customer doesn’t pay you, you’re still able to afford to stay in business.

It is not a sustainable business model if you undervalue your work and do a great job but don’t have enough money to pay your suppliers. PEER STRENGTH One other key to success is to surround yourself with a solid group of peers to help lessen the valleys. I’ve found it helps to hang out with other smart, dynamic business owners and ask them questions about which pitfalls to avoid. The people you associate with can drive your business – and life - in a positive manner. Finally, my No. 1 principle is simple: Do the right thing. This mantra translates to all aspects of the way I run my business, and it extends to our staff, too. It means we take care of our internal team and our customers. If it doesn’t look right and feel right, then we probably shouldn’t do it. Simply put, if we under-delivered on a job or made a mistake, we own our error, have an honest conversation with the customer, and remedy it. Ultimately, we strive to do the right thing. My favorite life lesson quote is “Act as if…” – Ben Affleck in Boiler Room. You can fill in the blank after “Act as if….” For example, there are days I need to act as if I’m the business owner, and on other days I need to act as if I’m a tech installing a unit for a new client. As a leader, I’ve found you need to act as if whatever the day calls for.

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HVACR BUSINESS NOVEMBER 2021

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Think of all the things you need to know on a daily basis just to keep your business afloat. Questions about cash management, marketing, human resources, pricing, leadership, strategy, training and more. The real question is…will you find the answers before its too late? Only HVACR Business can give you the solid business foundation you’ll need to keep your head above water. We’re all business content because that’s what will help you succeed. Put your head in the right place… HVACR Business. SUBSCRIBE NOW.

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EXIT PLANNING

Identifying “The Gap”

usiness owners have a lot of information at their fingertips. Calculators and assessments are available for just about every aspect of your business and personal situation. As a result, many business owners think they have an accurate idea about the value of their business. They may even think they have an idea of where the business value should be at their departure from the company. And retirement needs calculators are abundant, claiming they’ll give business owners a good idea about what they’ll need if or when they step away from their businesses. However, it can be difficult and somewhat complex to measure the value of a company today accurately and then what it needs to be worth when the owner is ready to leave. Owners may be surprised to find that “the gap” between the current value of their company and where the company value should be when they are ready to move on is much different from what they predict.

It can be difficult and somewhat complex to measure the value of a company today accurately and then what it needs to be worth when the owner is ready to leave.

Taking these steps to understand where your company stands, where you need to go, and what you need to reach your goals is a great way to effectively include your business in your more extensive plans for the future. Building business value might be the most important action a business owner can take whether they are ready to leave their business or not. u

Keven P. Prather is a registered representative

START YOUR GAP ANALYSIS A Gap Analysis is the process you can use to establish a few important benchmarks in your plans for the future, whether you intend to hold your business interest forever, transition ownership over time, or sell out completely in the next few years. Step One – Quantify the money you will need to reach your personal financial goals. Step Two – Determine the value your business can contribute toward meeting your financial targets today. Step Three – Given your expectations for the future of your assets outside the business, try to predict what your business will need to be worth in the future for you to reach your financial goals. Keep in mind that self-assessment and guesswork can only get you so far. You’ll ultimately want to work through this

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3. Repeat your gap analysis. Your gap analysis is the foundation for your value-building decisions: the tools and processes you will use, the support you will need, and the intensity of your efforts. You may need a course correction.

of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. Call (216)-592-7314, send an email to kprather@financialguide.com or

analysis with an experienced professional. The size of the gap can help you set your priorities and timeline, highlighting your need for building business.

DO YOU NEED TO CREATE A VALUE BUILDING PLAN? Once you understand the gap between current business value and where you need to be, you can start developing action steps for the future. Building business value can be an essential factor in closing that gap. Many owners know they have to increase business value and want to grow their

companies. But owners don’t always know how to do so. You can start by setting the scope of the value-building project.

visit transitionextadvisors.com for additional information.

1. Reorient yourself from working in the business to working on the business. This means that as difficult as it might be, set aside your day-to-day activity and focus on the bigger picture and how you’ll increase value. 2. You will need to determine how much the company needs to grow each year to reach your ultimate goals. Create monthly, quarterly, and annual cash flow projections. Then, focus your energy on reaching short-term goals that build toward longer-term targets.

HVACR BUSINESS NOVEMBER 2021

MANAGEMENT

BY DAVID DOMBROWSKI

The Road to Success Starts with Defining Core Values

ook in the mirror. The biggest issues that we as managers and owners of contracting companies face are not the changes always swirling about us. We are all full of good intentions and want to rise to every challenge. But when it comes to actual accomplishments, we get buried in the minutia. We handle the upset customer rather than plan for the future. We technically troubleshoot a wiring issue rather than develop a basic script for answering the phone. The key word here is rather. We need to accomplish both, but we tend to choose the task that is most familiar. We keep putting out fires and often the same ones over and over again. We get good at it and pretty soon putting out the fires becomes our comfort zone. We stay in our comfort zone and our company has little forward progress. The theme of this series of articles is to help you move from reading articles about changing your company to actually giving you a set of guidelines to finally do something about it. I will outline a logical, specific set of actions you can use to combat the inertia that keeps so many small business from reaching their potential. The steps outlined in this series are all tried and proven remedies for establishing a sound organizational structure. The first step in this process is identifying and establishing the core values that will drive your company. Core values are not policies and procedures. They are the set of basic moral beliefs that are the foundation of your business. It is by adhering to these core values that we continue to develop and identify the company culture. Established core values give the coworkers confidence in their decisions even when they don’t know the specific policy. These values may differ by company but they typically share (but not always — there are organizations with negative core values) a moral base such as honesty,

you apologize for your initial failure even though the customer has not complained (customers often are the least qualified group to recognize HVAC problems) and, at no cost to the customer, make all repairs needed including a new, properly designed duct system to bring the system to your standards?

The theme of this series of articles is to help you move from reading articles about changing your company to actually giving you a set of guidelines to finally do something about it. integrity, professionalism and personal respect, and dignity in an environment of non compromising standards. Allow me to put this into real world practice through the following hypothetical questions: 1. A service tech’s invoice accidentally has a math error that is $100 in your favor. The customer is very happy with the service and will never know that he overpaid the bill. Do you keep the money to make up for others that you will miss or do you simply send back the refund because it is ethically correct? Almost everyone states that they will refund the money and in fact feel pretty good about themselves. But reinforcement of the true value of honesty insists that you have a formal review program for each ticket that will prevent this from occurring AND a formal written policy to compensate the customer for this problem. This extra compensation will be discussed as the concept of “lagniappe” in a later article. 2. You are asked to provide a second opinion on a replacement AC unit. The customer tells you up front that they have $2,500 budgeted and that they are ready to give you the money right now if you can handle the replacement.

HVACR BUSINESS NOVEMBER 2021

You discover the unit could be repaired for less than $100. Again, do you take the $2500 and put in the replacement unit that the customer requests, tell them the facts about the repair but still take the $2500, or properly educate the customer with the details of the repairs, the costs and benefits of both repairing or replacing the unit, and provide them with the honest standard price regardless of the budget number that they have provided? Even if you have chosen correctly, your commitment to the core value, professionalism and personal respect, is dependent not only on the outcome but also are based upon what formal processes are in place to assure this happens 100% of the time. 3. You run an out-of-warranty service call on a system that you installed 10-years ago. You discover that the duct design on the house is wrong. The customer has not complained about the system but you discover significant air flow problems and temperature differentials throughout the house. Do you ignore everything and perform the service call, mention the problem and offer some discounts to help fix the situation, or do

Your commitment to the core value of integrity must transcend the short term gross profit mindset of a single job. 4. Your best technician is caught drinking beer in the service truck after hours. Do you let him slide since he is the best or do you hold him accountable to the same standards as the rest of the company even if he may get upset and leave the company? Do you have a written HR policy to avoid favoritism? If we live the message of dignity and personal respect in a non-compromising environment, our choice is clear. Your coworkers will feel empowered knowing that they are part of a team that supports their decisions when their decisions are rooted in honesty, integrity and the other ethical standards we hold true. u

David Dombrowski is a NC State licensed HVAC contractor. He has held multiple Management positions over the past 30 years with a $40,000,000 HVAC/plumbing company in Raleigh NC. He was a founding member in the consulting team with Service America in the mid 1980s where he worked side by side with many of the icons in our industry.

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SALES

BY JOE TAKASH

Seven Service Behaviors To Boost The Bottom Line

athryn walked into a prospective customer’s home with low expectations of winning. Knowing the homeowners were calling around for quotes and she was the third in line, she already assumed the homeowners had made up their minds and were just keeping the appointment to be nice. When the homeowners greeted her, Kathryn was pleasant but her enthusiasm and confidence level could be aptly described as “low voltage.” The meeting wasn’t terrible, but Kathryn was correct, it wasn’t going to win her company the contract. And it didn’t. Poor Kathryn.

Applied with passion and consistency, your business results will improve. Embarrassingly bad?” I’m still amazed that more than 90% check off B or C. Fact: Names mean money in business. They create a comfortable atmosphere and make people feel great. Oh, and they are a competitive advantage.

Answer: You have no control over either.

Winning Behaviors: Ask people’s names. When you forget immediately, which we all do, ask again. Then create associations like “Donna from Detroit” or “Stan the man.” Write names down. Use them while speaking to people. Most of all, practice the name-game everywhere. You’ll get in great name shape.

Question: What are some things you CAN control?

3. Be A Fantastic Listener: Most people are lousy listeners.

Answer: Every winning service behavior you’re about to read. If you apply them with passion and consistency, your business results will unequivocally improve, and swiftly.

Sound negative? Sorry, but it’s true. Think of three exceptional listeners and I’ll bet it takes a while. Yet, listening is at the top for qualities that make up great leaders, sales people, coaches, teachers and business owners.

Question: What do the weather and how old you are have in common?

1. Make A Great First Impression: It sounds academic, but start paying attention to how people greet you. Do they smile at you? Do they convey warmth and enthusiasm? Do they ask questions and show interest in you? ABC in sales means “Always Be Closing.” Bunk! Try ABO: “Always Be Opening.” This is what sets the tone for profitable relationships. Winning Behaviors: Smile, firm friendly handshake, direct and pleasant eye contact. Motivational pioneer Earl Nightingale said, “Treat every person you meet like he or she is the most important person on earth, because to that person they are.” Right on, Earl. 2. Be A Name-Learning Machine: When I ask seminar participants, “How are you at remembering peoples’ names: A) Fantastic? B) Not-so-hot? C)

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relationships are not built. They are rebuilt.

Winning Behaviors: Ask openended questions. Practice silence. Do not interrupt or finish peoples’ sentences. Show nonverbal attentiveness. Paraphrase what others said to show respect and gain accurate understanding. Show emotional support and empathy by trying to understand their perspective. Most of all, be fully engaged. Excellent listening is not just smart business, it says a lot about your character. 4. Create Common Ground: This is when you and others can relate to each other because of a shared interest or experience. When people have things in common, seeds of trust are planted, friendliness and comfort are accelerated, and all this opens the floodgate for many business opportunities.

Winning Behaviors: Get great at asking questions that lead to sharing information like, “So, John, where are you from originally?” “Did you do anything fun last weekend?” “Anything exciting you’re looking forward to?” By learning about people beyond the workplace, you discover a whole world that they are passionate about, much of which you can relate to or make a link. Make these questions habits and you’ll soon be standing tall on common ground. 5. Show Constant Appreciation: The Godfather of psychology, William James, said, “The deepest principle in human nature is the craving to be appreciated.” We all love to be recognized. It feeds our spirit and soul. It motivates us to perform better and show loyalty to those who pay us kudos. Winning Behaviors: Send thank you cards every week. Fact: If you don’t send handwritten thank you notes to customers or clients who give you business, you are losing money. Taking time to show gratitude is about class on a personal level and it creates a bonding that shows concern on a professional level. Whether you appreciate by pen, by phone or in person, make it a habit. People like to do business with people they like. 6. Apologize And Admit Fault: Every long-term relationship is challenged during times of conflict and tension. Yet, the identifying marker of how those relationships progress depends on how you respond to that adversity. Winning Behaviors: Be willing to say, “I’m sorry that I spoke to you like that” or “Team, before we start this meeting, I need to admit fault over how I handled a client situation.” Remember, your best

7. Be Positively Contagious: Why is it that you can be wide awake, but when you see someone yawn, you yawn? Just writing “yawn” right now makes me want to yawn. You’re probably yawning too, stop it. Human actions are contagious, so why not be positively contagious? This attracts co-workers and builds morale; it connects with clients and builds business. Winning behaviors: Use positive words, choose to look for the best in others, walk with confidence, speak with a genuine passion and treat people with dignity. If Kathryn viewed her company as every bit as powerful as her larger competitors and if she opted to see herself and the benefits she could bring any prospect as breakthrough value, how do you think her in-home visit would have turned out? Realistically, one never knows, but perhaps she should have remembered: “People do not judge you by what you think or feel, only by what you say and do.” Your behaviors are what count most. Play to win. u

Joe Takash is the president and founder of Victory Consulting, a learning and development firm that helps improve business results through the performance of your people. Victory Consulting clients include many Fortune 500 companies. Joe is an executive facilitator and keynote speaker for sales meetings, management meetings, and all-company events. His keynote and facilitated programs integrate strategic insight, client knowledge, with audience interaction and liberal doses of humor. Topics include Team Alignment and Performance, Leadership Communication, Customer Service, Employee Motivation and much more. To learn more visit www.victoryconsulting.com

HVACR BUSINESS NOVEMBER 2021

20QUESTIONS >>

with BRAD KIVLAN

Terry Tanker met with Brad Kivlan, president of Dynatemp International. The two discussed car racing, managing a company through the pandemic and the pending refrigeration transition. 1. Do you have a favorite hobby?

Occasionally, you may find me tossing a car around the Virginia International Raceway or other road courses in the Southeast.

2. What type of cars do you drive?

I’ll drive anything. I’ve been a fan of German cars for as long as I can remember, but my current track car is a stripped-down ’17 Ford Mustang GT350R. Ford built this track car to compete with the German heavyweights, and I can say that it is more than capable.

3. How did you get interested in racing? I got a speeding ticket in Ohio for doing 101 mph in a 55. That experience made me realize that the only way I could safely and legally explore the limits of a car was to take it to a track. I started driving full road courses about five years ago but I still have a lot to learn.

4. What’s your hidden talent?

I make some pretty good bacon infused bourbon. Don’t knock it till you try it.

5. How did you get into the HVACR industry?

The pandemic has created supply chain disruptions with our component suppliers and shipping partners. In most cases, we’ve had to increase lead times in our procurement and production schedule.

11. What has been the most significant challenge managing the company the last 18 months?

We changed the operating principles of Dynatemp International. We recognized the industry and our competitors were making bold moves, and we had to adapt quickly. We challenged our fundamental beliefs and company culture that had brought 30 years of success all so we could evolve and be poised to succeed over the next 30 years.

12. What steps did you take to change?

We built a better supply chain that lowered our component costs and increased supply continuity, even during the pandemic. Additionally, all of Dynatemp’s packaged refrigerant blends are manufactured in Clayton, North Carolina. And we built DynaCycle, a best-in-class reclamation program for our wholesale partners.

My family. My great grandfather, grandfather, father, uncle, and aunt all worked in the industry. At the start, I worked at my grandfather’s rep agency, the Hal Kivlan Sales Agency. Throughout school and college, I worked in the warehouse, accounting, customer service, and shipping & receiving. After graduating college in 1999, I joined the company as a salesman.

13. Do you feel the industry is ready for the refrigerant transition?

6. How was Dynatemp started?

14. What do you think are the biggest risks?

My father started Dynatemp in the early ‘80s as a supplier of small equipment installation parts, supplies, and tools to complement the product lines that the rep agency was promoting.

7. When did Dynatemp become a stand-alone company?

Dynatemp became a stand-alone company in 1983. And, within a few years, Dynatemp grew into a 17,000 squarefoot warehouse in Carlisle, Pennsylvania.

8. In business what do you find most rewarding?

Creating something from nothing and having industry stakeholders adopt that creation.

9. What’s your motivation?

Reducing the environmental impact of comfort cooling and refrigeration used in U.S. households, businesses, and institutions.

10. How has the pandemic impacted Dynatemp’s ability to secure refrigerant?

HVACR BUSINESS NOVEMBER 2021

Fortunately, our industry has a lot of smart contractors and engineers with a history of quickly adapting to change. The biggest roadblock to our transition to nextgeneration HFO/HFC blend refrigerants is the lack of U.S. residential building codes.

I’m worried that there will be a shortage of HFC’s needed to charge new equipment and for aftermarket repair. Without broad national adoption of residential building codes and standards by 2024, we face another 30% reduction in HFC production and consumption without replacement refrigerants and equipment that adhere to U.S. residential building codes.

15. How are you helping your customers prepare for it? Through reclamation, we can ensure that there is enough supply of HFC refrigerants going into 2024 when

consumption and production are reduced to 60% of the 2011-2013 baseline.

16. What are you forecasting for 2022? We expect supply chain disruptions to impact the production and movement of refrigerants into the first half of 2022. One of the biggest challenges facing refrigerant suppliers is a shortage of U.S. manufactured disposable cylinders. This year, Worthington Industries petitioned the Department of Commerce for antidumping duties on Chinese-made disposable steel refrigerant cylinders. Worthington prevailed, and antidumping duties have been established. Worthington is the only U.S. manufacturer of these cylinders, and demand has spiked well above production capacity. Even for existing customers prior to this decision, lead times from Worthington are currently one year.

17. What regulations are impacting you most?

Since 2015, DOC antidumping proceedings and EPA regulations have thrown normal supply, demand, and pricing curves out the window and created price volatility and supply chain disruptions for U.S. suppliers. Over the next two to three years, the EPA’s HFC phasedown will tighten the supply and availability of HFC refrigerants until HFO/HFC blends and natural refrigerant alternatives see widespread adoption.

18. How are you addressing that?

Reclamation. To reduce the overall GWP and ODP impact and boost the sustainability of HCFC-22 and HFC blends, we are offering quick cylinder exchanges and competitive buyback rates for most recovered refrigerants.

19. What do you want contractors to be aware of?

When the HCFC-22 phaseout started in 2010, HFC410A was EPA SNAP approved and readily available. Additionally, several HCFC-22 retrofit alternatives were available as substitutes if the demand for HCFC-22 ever became greater than the supply. There has been little to no adoption of HFC-410A retrofit alternatives, or residential HVAC equipment that contains refrigerant that replaces HFC-410A and conforms to U.S. building codes. Instead of a 14-year learning curve on how to safely handle new refrigerants and troubleshoot new system technology, contractors now have two.

20. What other options do contractors have?

Recovered refrigerants can be very valuable if contractors are careful not to mix them. Keep R-22, HFC-410A, and any other recovered refrigerants in their own recovery cylinders. Do not top off HCFC-22 systems with an HFC alternative. It’s illegal, and the higher the purity of a single recovered refrigerant, the more you can get paid for it. www.hvacrbusiness.com

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HVACR BUSINESS NOV 2021

Articles inside

David Dombrowski

Keven Prather

John Sheff