The three-day meeting at the Wigwam Resort was an opportunity for distributors and supplier members to network about regional issues and opportunities. But the event tackled various issues that are impacting HVAC wholesalers on a national level.

Bud Mingledorff, president of HARDI, of the Heating, Air-conditioning and Refrigeration Distributors International (HARDI), opened the regional meeting, and said “our membership is solid and we’ve set a new record for wholesaler membership.” But he also said that from a fiscal standpoint HARDI’s fiscal year which ends this June “will end in a deficit due to the combination of increased service demands and below normal annual conference revenues.”

The last annual conference in Maui was atypical in just about every way, including revenues, according to Mingledorff, but it received rave reviews in terms of content and location, and HARDI is expecting a “big bounce back with the Orlando conference” which is set for Oct. 6-9.

But despite any financial trepidation, Talbot Gee, executive vice president and COO of HARDI, also said the organization is ramping up its efforts to increase help and support for members.

Everything HARDI does is focused on helping our members be more successful,” he said. “So test and challenge us as staff to answer your questions and solve your problems, including training and developing your people.”

Gee introduced members to a new online learning system that will help distributors with educating employees and with helping them gain branch manager certification. He said that all of the online course work is tailored to an individual’s specific learning needs.

He also said that HARDI’s western region “has a lot on its plate,” which is why the organization brought in a number of speakers to guide distributors through various challenges, from energy efficiency, to human resources, to economics and politics.

Energy Rebates

The first educational session at the regional meeting was called “Opportunities and Expectations for Energy Efficiency in the HVAC Industry.” The March 12 session included a panel of experts in the energy industry, and according to Gee, it was a “golden opportunity to have three experts talk about energy efficiency rebates that are pouring billions of dollars into the HVACR industry.”

A consensus among the speakers is that energy rebates, and how they are offered, are changing.

John Taylor, senior program manager with the Consortium for Energy Efficiency (CEE), talked about the goals of CEE. One top priority of the organization is to “engage distributors and wholesalers better,” he said.

More specifically, CEE wants to know how it can work with distributors to create more effective energy efficiency programs.

Taylor said that utilities want to promote high-efficiency HVAC. It is easier and more financially feasible for a utility company to support the installation of more efficient air-conditioning units than it is to build more power plants.

However, utilities don’t want to just see contractors installing higher SEER equipment. They want to endorse whole building programs. Some utilities are moving towards bundled efficiency measures, which means that rebates are offered when an efficient HVAC system is installed along with better lights and windows. This is requiring contractors to evolve and know more about building science and have whole house building knowledge.

With the advent of smart homes, more Internet-based companies are getting in the game of energy efficiency. This includes such companies as Google and Comcast.

According to Taylor, distributors need to educate contractors on these emerging technologies. Taylor also explained the significant value and impact the HARDI Foundation’s recent research study “Optimizing Residential HVAC Efficiency Programs” is having on current and future design and implementation of HVAC rebate programs.

This message was also echoed by James Holbrook, head of HVAC programs at Arizona Public Services.

Holbrook took the time to explain how utility companies decided what kinds of rebates to offer. First, the rebate needs to be cost beneficial to the utility. It also needs to be valuable to the customer.

“A $100 rebate is not that exciting (for a customer) if they are buying a $7,000 piece of equipment,” he said.

Holbrook also added that utilities want to see more efficient installations. Instead of offering rebates purely for installing a 14 to 17 SEER a/c system, utilities are more interested in offering deals for 13 SEER units that pass a quality installation test. He said that higher SEER equipment is not beneficial if it is not installed correctly.

“Distributors are key to our program,” said Holbrook. “Training is the lynchpin. Working together will benefit us all.”

Allison Ten Cate of Resource Solutions Group wrapped up the panel discussion on energy rebates. Ten Cate’s group helps to implement the energy-efficiency programs that are used by the utility companies. She said that distributors play a key role in helping an energy program succeed.

For example, if a distributor knows the rebates that are available, this information can be funneled down to the dealers. Ten Cate said that Resource Solutions Group has rebate participation data that is submitted by consumers. The group can see what brands are being sold and which dealers are doing the most installs and taking advantage of the rebates. This information can be used to encourage top dealers to continue what they are doing or get underperforming dealers in the game.

“Engage contractors,” said Ten Cate. “Host and provide training and build awareness.”

HR Nightmares

The HARDI regional meeting offered more than just energy experts. The meeting also introduced the organization’s newest HR and organizational management consultant. Nancye Combs is the president of HR Enterprise Inc. in Louisville, Ky., and has been a human resources expert for the past 25 years. She was brought on board to help HARDI members deal with human resource issues, and according to Combs, she has seen some real nightmares.

During her March 12 presentation, Combs explained that business owners are always looking for “revenue savers,” but they rarely look in their HR department. But the HR department is where it is “very easy to lose it all,” said Combs.

More specifically, if a company does not have policies and procedures clearly spelled out, they could lose money over lawsuits or other employee conflicts. Combs recommended that every company update their employee handbook at least once a year. The handbook should include technology policies and harassment policies.

She also said that if an employee handbook does not have guidelines on social media, it is time to get on board.

If an employee writes negative or disparaging remarks about your company on a site like Twitter or Facebook, do you have any legal recourse? According to Combs, the answer is “no.” Employees have the right to voice their opinion. However, she says there is a fine line. What the employee writes cannot be in “the voice of the company.”

For example, the employee cannot write “we believe the company is terrible.” This makes it sound like someone is taking on the role of the voice of the company or other employees. Combs said that if this is in your employee handbook, you can take action against that employee.

Combs also said hiring and firing are very important areas to watch out for. When it comes to hiring, she says every potential hire should fill out and sign an application, not just turn in a resume. The application ensures that an employee has signed a legal document that says their work history is true. If an employee finds out later that the claims were not true, they can easily have them fired because they signed a legal document.

When it comes to firing, Combs says to remember that in many cases you will end up paying unemployment. The payments for unemployment can get out of control because company owners must pay taxes on the unemployment funds. Combs recommends one way to avoid paying unemployment.

“Never fire people who quit,” she said. “Take them off your payroll, but don’t fire them.”

Combs explained that if a person doesn’t show up for work or quits, mark that employee down as abandoning the job. When this happens, it is the responsibility of the former employee to prove to the state that they did not resign in order to receive unemployment.

Another important area of human resources to consider is injuries on the job. Combs said that every injury must be reported immediately to someone in the HR department. These reports must then go directly to the insurance company. This ensures that dates, times, and other specific information are recorded if an injury happens. Combs said you don’t want an employee coming several months later to claim an injury. If injuries are not properly documented it can lead to painful OSHA visits.

There is no better time to take care of inadequate HR departments, according to Combs. Since the economy started spiraling downward, more and more employees have started suing their employers.

“The number of DOL (Department of Labor) claims have gone up 250 percent because the economy is bad,” she said. “People are looking for money.”

Economics and Politics

The poor economic outlook won’t be lasting much longer, at least according to Andrew Duguay, senior economist with the Institute of Trend Research. Duguay addressed HARDI members on March 12 to give them a regional and national report on the economy.

Duguay said that the last HARDI TRENDS report, which covered the entire year of 2011, saw a 2.9 percent increase in sales on a national scale. HARDI’s western region saw a 2.7 percent increase in sales.

“The future is brighter,” said Duguay. “The market is not getting worse.”

The Institute of Trend Research is predicting that the economy will continue to grow through 2012 and 2013 with a possible recession in 2014.

Clues to the economic recovery, according to Duguay, include stabilizing home prices and growth in the housing market. The institute found that the housing market grew 11.4 percent in 2011. Private sector employment is also rising and “that’s the trend we want to watch,” said Duguay.

He also said the economy is going in the right direction and will continue to do so unless a “wild card is pulled.” These wild cards include global unrest, including possible wars or the unstable economies of other countries. But this seems unlikely.

“Europe has never led the U.S. into a recession. It’s always the other way around,” Duguay said.

While economic woes are lightening up for some distributors, governmental mandates are becoming another story. Jon Melchi, HARDI’s director of government affairs, filled in members on the legal issues on the horizon. He said “it has been an interesting year so far” in regards to government affairs.

Melchi said that “bureaucrats don’t trust business,” and that is why there are several workplace regulations being developed. He said there are currently 4,000 workplace regulations in the pipeline waiting to be passed and mandated to business owners.

A regulation that HARDI is keeping a very close eye on is the new regional HVAC efficiency standards set by the Department of Energy (DOE). The DOE wants to set minimum SEER ratings for different parts of the country. The southwest and the south would have a 14 SEER minimum, and the north would have a 13 SEER minimum.

The regional standards are set to go into effect on May 1, 2013. Melchi said that HARDI is fighting the regional standards, but he told HARDI members to “plan as if these regions will be established.”

The regional standards would have an impact on distributors because of enforcement issues. Melchi said the DOE has proposed ways to enforce that the SEER ratings are to be followed in each region. One proposal would force distributors to collect signatures from every customer when they purchase a unit. They might also be forced to track serial numbers on each unit and provide the information to the DOE.

Melchi said this would mean distributors would have to “police contractors. It’s a complete break in precedence.”

The year ahead will present a number of political issues that will impact distributors, according to Melchi. This includes advocating for the repeal of the estate tax and extension of the current tax rates, which are set to increase at the end of the year.

All of these political issues, according to Melchi, will have a huge effect on businesses. That is why Melchi encouraged all of the regional members to attend HARDI’s Congressional Fly In June 4-5. The event in Washington, D.C., will provide HARDI members with an opportunity to meet with members of Congress and discuss issues that are important to them. Melchi said that a face-to-face meeting with a local representative can go a long way towards change.

“Educate your representatives,” he said. “You can have a lot of impact.”

Publication date: 04/16/2012