Articles

by Jim Hinshaw

Just spent some time with a client over in California.  Would tell you their name, but they might not want you to know, cause they are doing things different.  Not everything, but lots.  So my son Jon developed a website for them years ago, and it rocks.  He has done the typical SEO stuff (which I have no clue how that works, but he is a certified SEO guy, so he does), FaceBook, Linkedin, Twitter, doing it all.  Their website is updated and enhanced for search engines, they have secured their Google map locations, they are on Google +, it all works together.  They are spending some money on those applications, but they are getting lots of business from that investment.  It’s all about the payback.

Recently they were talking to Jon about the next steps.  You know, what can we do that is new, exciting, and profitable.  Jon said they needed to add a live chat feature.  You have seen that in many big business websites, United Airlines has a live chat feature.  Well, it is not exactly a live chat as it’s automated.  Not the same at all.  But Chevrolet has a live chat.  So Jon proceeded to add a live chat plugin.  The live chat works like this.  First of all, it rings up several phones in a sequence, so if one person is busy it rolls over to number two.   They also rotate names for the live chat person.  When someone rings in, they answer and ask how they can help, what questions the customer has.  You have choices, do you want to do live phone or message, either is possible.

So the first day, in fact in just a little over an hour, they got the first customer using the live chat feature.  And they had questions, and they got answers, and they sold them a new system after sending out a representative.  That fast.  So Jon had an answer to that question, what more can we do?  Even better, it had immediate results.

Now, I got a call as well last month from this same company.  Asking if I would help them walk through the company financial data.  They actually sent me over their financial statements, had me go through them on a conference call.  So we looked at the numbers, compared them to some benchmarks.  There were some questions, and they had answers up to the last number we looked at, the net profit.  I won’t say exactly, but the first digit was a 2.  And there was another digit on the left side of the decimal point.  Yes, they are running a multi-million dollar company with a 20% net profit.  Very nice.

Now, go with me to the Midwest this last week.  Met with several dealers, all sizes, all types.  At breakfast, the distributor rep and I had a meeting with a dealer who was involved in a large group that he pays substantial money to for business and marketing help.  He has also hired a consultant to help him with upper level business concerns: marketing, HR, compensation for all employees, succession plan, all kinds of things.

Hear me out, there is a parallel here.  Both of these companies have been in business for years, they are not new starts.  Both owners worked for someone else before hanging out their own shingle.  Both are putting together a foundation that will pay dividends, systems in place to succeed even if they are not there 60 hours a week.  In fact, both admitted they would like to work smarter, not harder.  And the most telling fact, both have retained outside council (OK, so that is a big word for consultant) to help them with this new work environment, new economy.  One other item of interest, both were successful and profitable the last few years, they just want to do better.

One element that runs through our industry all across the nation is this: if they have been in business for a while, they believe they know the business.  This is a new market, and it is not taking any prisoners.   Old ways of doing business will not work in this economy.  It is hard to get them to sit down for a two hour presentation, and many will not do that even if they have the time.  You absolutely have to be on your game today, the consumer is sharper than ever, has less time, and wants value in everything they purchase.

So do what these dealers did, question everything.  This life is not a dress rehearsal, this is live, and we only get one take.  Look at every part of your business, see what you can improve.  Make sure you are as efficient as possible, yet do what needs to be done and what you said you were going to do each and every time.  Trust me, it will not be easier next year, this is the new normal.  Thanks for listening, we’ll talk later.

A major change to the water heater market is on the way, creating both challenges and opportunities for plumbing, heating and HVAC contractors, designers and engineers.

New energy efficiency mandates from the U.S. Department of Energy (DOE) will take effect on April 16, 2015. They require higher energy factor (EF) ratings on virtually all residential water heating products including gas-fired, oil-fired, electric, tabletop, instantaneous gas-fired and instantaneous electric.  Tankless systems already exceed these EF requirements, and all other water heating products manufactured before the DOE mandates take effect can still be bought and installed after the changeover date.

“It’s important for contractors to become familiar with the new rules and the technology options,” said Ralph Perez, director of product management, A.O. Smith, in an interview with Perspective Media. “There are products available that comply with the 2015 regulations, but they are generally not yet in the mass market.”

While all affected models will see an increase in the EF requirement, the most dramatic changes are in larger capacity models (see accompanying chart).  That’s because the only technologies that now meet the EF requirements over 55 gallons are electric heat pump water heaters and high-efficiency condensing gas water heaters.

Chad Sanborn, product marketing manager, Bradford White Water Heaters, says contractors should start preparing now so that they are familiar with the water heating options, including the features, benefits and installation requirements of these products.  “Employees will need to come up to speed on the new technologies,” he said. “Training on the new products will be critical, and this obviously comes at the sacrifice of revenue generating production from the employee.”

Key issues for designers and contractors

Designers and contractors should be thinking about a number of issues when preparing for the changes in the residential market. For example, achieving a higher EF rating often means adding more insulation to the tank, making it larger and thicker, and more insulation may be required for piping and fittings.  Therefore, a larger post April 2015 water heater might not fit into the same space as the current model, posing a challenge when a replacement is necessary.

Condensing gas water heaters are usually significantly heavier than standard models. They may also require flue dampers or electronic ignition. Oil-fired products may also need extra insulation, as well as flue dampers or new combustion systems.

“Many installations that were once a one-person job may now require two people,” Sanborn added. “As water heaters get larger and heavier, they prove to be too awkward to handle by one person. This is especially true when talking about those models over 55 gallons. Service trucks may also need to change to accommodate transporting the taller, wider and heavier equipment.”

Because gas water heaters also have electronic control systems and require 120-volt service, contractors may need to purchase multi-meters for smooth installations as well as trouble-shooting.  They may also need to price in the additional time and components, including venting materials and condensate pumps when pricing new or replacement jobs.

Designers, engineers and contractors must also adjust their plans for gas-fired models to include a venting system and a drainage system for disposing of condensate.  That means the prior location of a water heater may not be the best site for a new model, which typically requires a large room or a duct to an adjoining room. With electronic cycling, the new EF models are also likely to produce more noise than standard models.

“Architects, along with plumbing engineers, will need to be aware of the change to allow for adequate floor space in their new and upcoming designs,” said Sanborn. “As the complexity of water heaters increase in 2015 to achieve these higher efficiencies, plumbing engineers should also begin to incorporate adequate service clearances around the water heaters.”

The impact on homeowners

One result of the new EF mandate is that homeowners will likely face increased product and installation costs for a replacement water heater that complies with the 2015 efficiency standards. “How much more will depend on the type and size of water heater they require to meet their needs,” Perez said.  “In some cases, homeowners may incur additional expense for the installation of equipment that is physically larger or uses a different technology than the old unit they are replacing.”

For example, a homeowner might decide to purchase a heat pump water heater or one of the highly efficient gas water heaters. Homeowners might face additional expenses related changes to the venting for gas, adding a 120-volt outlet or making provisions for the disposal of condensate.

“In some cases, the water heater may have to be relocated to operate properly or to mitigate noise,” said Sanborn. “While the operating cost of the new water heaters will be less because of their increased energy efficiency, it is likely that the maintenance costs will increase because of a more sophisticated design, and the integration of electronics, blowers, fans, condensers, or other components.”

Another drawback is that a new water heater is likely to have lower hot water deliverability than prior models. “For example, a model with less input may be required to achieve the higher efficiency, which will ultimately result in less hot water delivered,” Sanborn said.

On the positive side, homeowners the energy savings from the new technology can help offset some of the product and installation costs.  “The savings realized will depend on the type of product sold,” said Perez. “Talk to your manufacturer’s reps and distributors. Know the advantages and how you can help your customers get past the sticker shock and look at the energy savings. These are good ‘green’ products.”

Homeowners who purchase highly efficient condensing gas or heat pump electric water heaters can anticipate average savings ranging from $60 for natural gas and more than $300 for electric, Perez said.  “Electric heat pump water heaters may also provide some welcome supplemental cooling and dehumidification resulting from the heat pump system,” he added. “Of course actual savings realized vary depending on actual hot water use and local energy costs.”

Perez added that homeowners can make additional lifestyle changes that will further impact their water use and utility bills.  For example, they can install low-flow water saving fixtures and upgrade appliances like dishwashers and clothes washers to ENERGY STAR qualified products.  Most water heater manufacturers now offer products that meet or exceed the ENERGY STAR guidelines.

The commercial market

Sanford says the upcoming EF mandate will have little effect on most of the commercial market.  “The change only affects water heaters with inputs of 75,000 BTU/hr or less, which are typically installed in residential applications,” he said. “However, some light duty commercial applications, such as small office buildings or small apartment complexes, will fall under this category.”

Since plumbing engineers typically specify commercially rated products on their projects, the impact will be minimal for them, added Perez.  “Some small businesses with low hot water demands elect to use a small residential water heater to save on equipment costs, but they will still be able to choose between commercial and residential products in the future, just as they do today,” he said.

Large apartment and condo developments will be affected by the new rules if the design calls for individual water heaters for each unit.  Developers of these projects will have to work with their designers and architects to make sure that future projects are designed to accommodate the equipment available when it comes time to install the water heaters, said Perez. “Manufacturers will work through their customer relationships and industry trade groups to help educate the industry,” he added.

Looking ahead to 2015

Although the new rules won’t take effect for another year and a half, contractors who do new construction work should start discussing these changes with their clients, said Perez. “That way everyone is thinking about how future projects and planning budgets are designed and funded to accommodate the 2015 product choices,” he said. “In most cases the equipment choices are easy decisions and only minor adjustments, will be required to the layout and design of future projects.”

Residential designers should also be sure they understand the new requirements, Perez added. “That will be even more critical as we get closer to 2015,” he said. For example, a home that requires an 80-gallon water heater that will be built after 2015 will need the new technology.

Contractors who have a service department should be learning all they can about maintaining this equipment, said Perez.  “This will prepare them to offer their customers the best solutions for their lifestyle and avoid having customers who are dissatisfied with their replacement water heater after the fact.”

As Perez said, “Like it or not, the changes are coming.  Builders and contractors should view these changes as an opportunity to educate their customers on the higher efficiency options available in the market thus helping them make choices that they will feel good about every time they turn on the hot water.”

Note:

According to The Energy Efficiency Standards group, the energy factor (EF) indicates a water heater’s overall energy efficiency based on the amount of hot water produced per unit of fuel consumed over a typical day. The EF accounts for recovery efficiency (how efficiently the heat from the energy source is transferred to the water; standby losses); the percentage of heat loss per hour from the stored water compared to the heat content of the water (for water heaters with storage tanks); and cycling losses (the loss of heat as the water circulates through a water heater tank, and/or inlet and outlet pipes.

by Rich Grimes

You have covered Pressure Vacuum Breakers. What is the difference between an Atmospheric Vacuum Breaker and a Pressure Vacuum Breaker?

A pressure vacuum breaker (PVB) is designed to be under constant pressure. An atmospheric vacuum breaker (AVB) is NOT designed to be under constant water pressure. Both devices are designed to relieve backflow but the AVB opens when the pressure drops to atmospheric pressure.. This breaks the vacuum and opens the poppet. This allows air to enter and water in the spout to drain out. A hose bibb vacuum breaker works similarly. Most failures of AVB’s occur because they are exposed to constant pressure on mop/utility sink faucets. Pressure backflow should be handled a PVB, a testable device that is designed for pressure backflow relief.

How are AVB’s exposed to constant pressure on a mop/utility sink faucet?

Many maintenance personnel will attach a hose-end type shut off valve on the faucet spout. They tend to leave the faucet valves (hot & cold) open on the faucet but shut off at the end of the spout. This puts the AVB under continuous pressure and eventually the poppet cartridge fails. There are also chemical stations that utilize the same set up which pressurizes the chemical station but also expose the AVB to constant pressure.

What other issues can arise with mop/utility sink faucets?

Open, Two-handle faucets will put an AVB under continuous pressure. A 3-Handle faucet (One on the spout – mixing hot & cold water) will also apply constant pressure. Many installations of these faucets do not have check valves (internal or external) to prevent bleeding of hot and cold water. If check valves are not employed, a cross connection has been made and it creates hot water supply and recirculation issues. The cold water can mix with the hot water return which causes the recirculation pump and aquastat to remain on. This uses a lot of fuel and puts a lot of stress on the water heater. This can be very expensive to operate a tank-type water heater this way and even worse on a flow-activated tankless heater. It is critical to make sure that check valves are pre-installed on the faucet or installed externally.

Where else are AVB’s used besides on mop/utility faucets?

They can be used in a variety of applications that require gravity drainage and backflow. Sprinkler systems and Lab Faucets use AVB’s for drainage and backflow prevention. Steam-fired heat exchangers and commercial dishwashers use AVB’s as well. AVB’s prevent siphoning and backflow by allowing air to enter and break the vacuum. Note that systems under constant pressure should use a PVB.

I have been seeing newer residential gas heaters that do not have an FVIR (flammable vapor ignition resistant) screen in the combustion box yet they are not required to be mounted on an 18” high stand. Please explain this technology and how this is possible.

Rising efficiency standards inspire new designs. These new designs must meet all of the efficiency standards and also meet the requirements of FVIR design. The design you refer to uses an elevated air intake, or “snorkel”. The air intake is located higher than 18” from the bottom of the heater, above the floor. This negates the need for an FVIR screen and stand. It also provides a more robust air intake for cleaner combustion.

There are other new designs for high efficiency residential gas that employ a draft inducer (fan-assisted exhaust) and electronic controls. The new Federal efficiency standards that come into effect in 2015 will bring about new designs as well as major changes to some products.

I have heard of tankless heaters (up to 199,000 BTU’s) that claim to be able to operate on a ½” gas supply line up to 24 Feet. How is this possible?

Common sense says that you can only flow a given amount of air, water or gas through a given pipe size. In terms of gas piping, higher pressures allow more BTU’s to be carried through a smaller pipe.

This claim is made on low pressure operation (5” to 13.5” WC). The part that is not advertised is that to operate on a reduced gas input, you must reduce burner input and thus reduce hot water GPM output. You simply cannot burn 199,000 BTU’s on a ½” low pressure gas supply. However, a 199,000 BTU heater that has been modulated down to 50% firing is only burning 100,000 BTU per hour. Measured percentage of modulation, GPM flow rate and temperature rise would be indicators of a unit’s true performance.

by Jim Hinshaw

 Question for this month is…

If my company decides to “fire” one of my customers, what do you recommend as the best approach in letting them know??

Great question!  First let’s talk just for a moment about the whole concept of firing a customer.  Some people are just hard to please.  And I read recently that 10-15% of the population buy strictly on price.  It can be hard to be the lowest price in town.  That title doesn’t stay with one company long.  As soon as you roll out a cheap price, say $1200 for a tankless water heater.  Not installed, but still a low price, it gets all over town.  And amazing as it may sound, there will be someone who looks at that and says, I can beat that price.  If you Google tankless water heater you will find them for $1127, even $395.  The competition tries to get the customer hooked, then make it up in extras.

I digress.  So you cannot be the low price leader for long.  And if 15% are buying on price, some of those will not pay you for the training you provide for the techs, the response time you give to those with a problem on the week-end, that sort of thing.  I just saw a post on a discussion board about a customer that told the salesman not to try to meet with them face to face.  She just wanted his best price, she would compare on her terms.  It may be that you are wasting your time trying to sell someone who buys strictly on price.

So, let’s go with the concept that it is not only a good idea, it is an absolute necessity to fire a customer from time to time.  How do you do that, and should you be gentle, or is it OK to take off the boxing gloves.  You see, when a boxer wants to really fight, he takes off the gloves.  I saw that in a Rocky movie.

I believe that you must be polite, as much as it may hurt.  We may want to say, “why don’t you and your little problem go down the street and talk to someone who cares?”  but that may not be in your best interest.  If you irritate a price shopper, they may take pleasure in spreading stories about your company.  In fact, they may even tell a lie!

So I would have a polite way to separate yourself.  Try this: Is the pricing the most important consideration in making this decision?  If so, we will not be the lowest price.  There are other companies that operate differently, and work on different principles than ours.

I believe it helps to blame it on someone else.  In this case, try using this logic.  Our customers tell us they want more than the lowest price.  They want techs that are trained, up to date on codes and regulations, have the ability to respond after hours, that sort of thing.  Not saying anything negative, but we have built a company that operates at a higher plane than most, and our customers enjoy that.

So we are not trying to be the low cost provider.  Other companies have the ability to respond to pricing levels that we do not offer, it may be that they can help you with your budget needs.

See, don’t say that it is stupid to buy this sort of product on price, using the word stupid in a sentence with a customer is never a good idea.  Just let them know you have a system in place to meet customer needs, and your company is set up to respond whenever the problem occurs, solving the problem fast and with accuracy.  The low price leaders cannot do what you can do, you choose not to do what they do.

Here is a final thought, and why I don’t want to burn a bridge.  They may try the cheap guy, then find out he is a jerk.  And a dumb jerk at that.  He may get into trouble on their job, they may actually come back to you to ask for help.  Help them, I made a lot of money in the day fixing others mistakes.  If you want to see dumb jerk type jobs, go to http://failblog.cheezburger.com/thereifixedit , it is stunning.  Some people will really go the extra mile to cut corners.  Thanks for listening, we’ll talk later.