Change is the operative word as we head into the fall heating season. Market forces are at work. Supply chain issues continue to disrupt our industry two-plus years into the COVID-19 pandemic. Inflation is at a 40-year high. Interest rates are rising to stem inflation. Material prices continue to rise and gas prices are at an all-time high. This is a challenging time to be in the PHC business.

The good news? Heating, cooling, potable water and hot water are necessities, not discretionary items. You need heat. Our services will always be in demand. I have been doing this long enough to remember the economic dip in the early 1990s, the tech crash in 2000 and the housing crunch in 2007. The economy will rebound as it always has but not without some heartache and challenges. Prepare yourself and your company to offset the tougher economic environment we are currently in. 

Supply Chain Issues

Supply chain issues and shortages continue to be an issue and may be for the foreseeable future. Stock-outs and back-orders are still an everyday occurrence. I ordered a commercial power burner in November 2021. I received it in May 2022. Why? A circuit board in the control panel of the burner was back-ordered from the OEM. Luckily, we were able to patch up the existing burner on the boiler to get them through the heating season.

In early December 2021, my lead tech went on a service call for a no-heat call in a 45-unit apartment building in Washington, D.C. He found a 20-year-old steam boiler with a cracked section. It needed to be replaced. After checking with several suppliers, the lead time for commercial cast iron was 12-16 weeks. Heating season would be over before we could source a replacement. We lost the six-figure replacement job to a commercial boiler contractor who stocked cast-iron sections. Good on them for being prepared. 

I see this trend continuing. Not only are manufacturers affected, but the transportation industry is having its own problems with workforce issues and high fuel prices. We have tried to mitigate the impact by stocking critical parts and materials. Of course, this increase in inventory raises expenses, which must be passed on to the end-user. 

Mike McDonnell, vice president of special projects at PB Heat (Peerless), is more optimistic about their supply chain issues. “I see it getting better,” he says. “We are learning how to deal with this. We have added additional sources for components to minimize shortages. We are better positioned to be ready for the fall heating season than previous years.” 

Refrigerants

Those contractors who do refrigeration and air-conditioning work have already seen the impact of transitioning refrigerants on their businesses. R-22 equipment has not been manufactured for more than 10 years and the price of R-22 refrigerant is through the roof. We are recommending replacement to our clients with R-22 equipment rather than repair for all but the most minor repairs. 

Transition refrigerants R-410A, R407C and R-134A are on the way out. Equipment using these refrigerants are currently scheduled for phase-out in 2024 due to their high global-warming potential (GWP). 

The replacement A2L refrigerants have a low GWP but have other issues such as flammability and/or toxicity. Industry-wide training and education is a must to handle and service equipment using the A2L refrigerants. The Air Conditioning Contractors of America (ACCA) is a great resource for more information regarding the new
refrigerants. 

In-Person Events and Training

I attended AHR in Las Vegas in January. This was the first in-person industry event I have attended in two years due to COVID-19. I also attended the ACCA conference in St. Louis in March. Both were well-attended although not back to pre-COVID levels but it was good to get out and see friends and industry colleagues I had not seen in a couple of years. Virtual is great and will always have its place but it cannot replace face-to-face interaction.

Industry legend John Barba, director of training for Taco Comfort Solutions, recently re-opened his training center at the factory headquarters in Cranston, R.I. He held his first class in May; it was the first in-person training he has done since October 2019. Classes are already sold out through September, with just a few openings for the October class. 

“It is great to be open again for in-person training,” he says. “Online training is great. We learned how to do it better over the course of the past two years. We reached a lot more people who may not have come to our factory training. But nothing can replace the one-on-one nature of in-person instruction. It is a different dynamic. You can see the light bulb go off as a student begins to understand a new concept. It is hard to get that with virtual training.” 

Other manufacturers have also opened their training centers and have hit the road with local training as well. It is good to see that again and hopefully this trend will continue and expand. McDonnell has indicated Peerless plans to re-start its factory-training program in late July/early August. 

Indoor Air Quality

Since COVID-19 hit two years ago, there has been a strong demand from consumers for indoor air quality (IAQ) products such as UV air purifiers, high-efficiency filtration, HEPA filtration, energy recovery ventilators/heat recovery ventilators, and humidification/de-humidification products. My clients are increasingly requesting these products and we can’t keep them on the shelf.

I spoke with Jeff Riley, co-owner of Coredron, a Mid-Atlantic manufacturers’ rep who specializes in hydronic and IAQ lines. 

“Due to COVID, I see a renewed interest by consumers in UV air purifiers, filtration and HEPA systems,” he says. “There is a demand for better air quality and healthy air in homes and buildings. One challenge I see is the unregulated nature of the IAQ market, with unsubstantiated claims by some products. There is no third-party unbiased testing of IAQ products like we see with boilers and HVAC
equipment.” 

I see the market demand for these products continue to rise and consumers place a high priority of their health and clean indoor air. 

Electrification

Politics aside, this is a coming trend. Several jurisdictions have already banned fossil fuels from new construction. More are on the way. Can the electrical grid handle electrification? Can current building electrical infrastructure handle additional electrical load? I’ll let those far smarter than me handle the macro and political questions that arise from the trend to electrification. 

At the micro level, it is coming. I have already had clients contact me about converting to all-electric. I see air-to-water heat pumps increasingly making inroads into the hydronic market. We have installed geothermal-based water-to-water heat pumps for years. The air-to-water heat pumps approach the efficiency of the geo units with the cost of the loop field. 

We have installed air-to-water systems by SpacePak and NorAire recently with good success. Taco recently unveiled its inverter drive air-source heat pump, which I look forward to trying on future projects. The key to these systems is tying them into low-temperature heat emitters that operate at supply water temperatures of 120 F or lower. Radiant floor heat is a perfect match for these systems. 

High Efficiency

We have embraced high efficiency for years. I installed high-efficiency condensing furnaces in the mid-1980s and my first condensing gas boiler in the early 1990s. It was always by choice. In the future, there may not be a choice as our elected officials may take that choice away as minimum efficiencies may be mandated. 

I am all for high efficiency and the conservation of precious resources, but efficiency mandates have some unforeseen consequences and unintended issues. Certain climates may not be suited to particular equipment. How much energy will a high-efficiency furnace save in southern climates? How much electricity will a high-efficiency air conditioner save in northern states? Will it be enough to offset the additional cost? 

There are installation issues particular to high-efficiency equipment as well. Condensing gas equipment cannot be vented into masonry or B-vent chimneys. They require PVC/CPVC/PPS venting direct to the outside. No installations lend themselves well to these venting requirements. 

Condensing equipment also requires a means of disposing acidic condensate. Is there a floor drain? If not, you will need to add a condensate pump with a discharge line to an interior drain. Don’t pump it outside in a cold climate or risk the discharge line freezing up. 

High-efficiency products such as condensing boilers contain more proprietary parts, are more complicated than standard efficiency boilers, and require additional training to be properly installed and serviced. This is not necessarily a bad thing, but you must be prepared to enter this market. We have chosen to specialize in one or two lines that we now know well and stock most operational parts so we can adequately serve our clients and support the installed systems. 

Moving Forward

There are many challenges moving forward as our industry evolves and changes. I try to look at this as an opportunity rather than an obstacle. This is easy to say but much harder to do. Like anything else, those who plan ahead, embrace the changes and challenges, and accept and prepare for the future have a leg up on their competition who pine for the past and complain about the current (and future) industry climate. I hope you aren’t in the latter category.