Are We Destined to Become Greece??

Yesterday voters in HARDI's home state of Ohio voted to overturn a key piece of our governor's budget that had erased a staggering $8 billion state deficit created by massive overspending and erosion of the state's tax base over the last several years.  While the headlines will focus on yesterday's vote being a big win for big labor since the vote preserved collective bargaining rights for state employees, what I fear will be overlooked is the broader issue of exactly how committed ALL Ohioans are to fixing our financial woes.  Further, while the Constitutionally-questionable "Super Committee" deliberates in an attempt to trim less than a tenth of the absolutely obscene nearly $15 TRILLION federal deficit, the apparent lack of seriousness here in Ohio to address a state deficit that's less than what the federal government currently spends EVERY DAY hardly instills confidence that we will be able to prevent a Greece-like financial meltdown.  As representatives of a segment of our industry that perhaps relies on credit availability and affordability more so than anyone else, it is certainly troubling to watch our state choose short-term benefits (yet again) over long-term viability.  Keep an eye out, you may start seeing HARDI materials coming from more fiscally sound states like Texas or even our next-door neighbor Indiana...

NLRB delays posting requirement

The National Labor Relations Board has postponed the implementation date for its new notice-posting rule by more than two months in response to lawsuits from multiple trade associations questioning the authority of the NLRB to institute such a rule. The rule was scheduled to take effect on November 11, 2011, but has been delayed until Jan 31, 2012.

The rule requires employers to notify employees, via a poster in the workplace, of their right to organize under the National Labor Relations Act. In addition to the physical posting, employers may have be forced to communicate this information via email, internet or company intranet site. If more than 20% of a company's employees are non-English speaking, the company must make bi-lingual versions of the poster available.

HARDI has strongly opposed the NLRB's action and will continue to monitor the legal status of this rule.

HCFC Smuggling: Miami Man Sentenced to 18 Months in Prison

Today, U.S. District Court Judge Adalberto Jordan sentenced Brendan Clery, 34, to 18 months in prison and ordered him to pay a $10,000 criminal fine and forfeit illegal proceeds in the amount of $935,240. Clery pleaded guilty in April 2011 to knowingly importing approximately 278,256 kilograms of illegal hydrochlorofluorocarbon - 22 (HCFC-22, also known as R-22) into the United States.

"EPA takes seriously the smuggling of illegal substances that can harm the ozone layer, which protects us from harmful UVB radiation that can cause skin cancer and cataracts,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s sentencing is an example of EPA’s commitment to aggressively enforce U.S. laws and meet our international obligations."

This case was part of a larger criminal investigation known as Operation Catch-22. It was investigated by the Environmental Protection Agency, U.S. Immigration and Customs Enforcement, and the Florida Department of Environmental Protection, Criminal Investigation Bureau, and prosecuted by special assistant U. S. Attorney Jodi A. Mazer.

More information on EPA’s criminal enforcement program: http://www.epa.gov/compliance/criminal/index.html

LIFO Under Heavy Attack from Obama Administration

As the United States continues to move closer to its $14.3 Trillion debt ceiling in August, negotiations between Congressional leaders and the White House have broken down over the Obama Administration's insistence on increasing revenue through tax increases, including a repeal of LIFO and a tax on LIFO reserves. This proposal represents a devastating and unprecedented retroactive tax on businesses and could cause price increases and in some cases force businesses to shut their doors.

With just over a month left in debt limit negotiations, it is important for HARDI members to act now and let our leaders know how devastating the Obama Administration's proposed LIFO repeal would be to manufacturers, suppliers and distributors. All HARDI members are encouraged to take a few minutes and contact the leaders listed below and tell them how vital LIFO is to your business and our industry.

Urge These Elected Officials to Oppose a LIFO Repeal

President Obama : (202) 456-1111
Senator Max Baucus: (202) 224-2651
Rep. Chris Van Hollen: (202) 225-5341

Thank These Leaders for Standing up for LIFO
Speaker of the House John Boehner: (202) 225-0600
Senator Jon Kyl: (202) 224-4521
Majority Leader Eric Cantor: (202) 225-4000

NLRB & Dept. of Labor proposals are troublesome

In what can best be describes as Christmas in June for organized labor, the National Labor Relations Board and the Department of Labor issued, on consecutive days, proposals which could hamper businesses and will undoubtedly help unions.

The NLRB's proposal would pave the way for a shorter time frame in which union elections would be held. Rep. Joe Kline (R-MN), Chairman of the House Committee on Education and Workforce stated “Not only will this misguided proposal to expedite union elections undermine an employer’s lawful right to communicate with his or her employees, it will cripple a worker’s ability to make an informed decision.”

The Department of Labor's proposal would require companies to disclose those who assisted in preparing communications to employees regarding unions.

Both of these items represent major shifts in policy and HARDI will continue to advocate for policies that protect both employers and employees.

Carrier Petition to EPA to Stop "Dry-Shipped" Stirring the Pot

The NEWS' story this week announcing Carrier Corps petition filed with the EPA to reclassify condensing units as "subsystems" and therefore make the manufacturer of "dry-shipped" R-22 condensing units illegal has really fired up some in the industry. Check out the comments posted in response to The NEWS article. Anyone who still thinks these "dry-shipped" units are going to be an insignificant percentage of total shipments is either selling R-410a or in the window-banger business. By the way, HARDI had been asked to provide comment for the article but we do not have a formal position yet on Carrier's petition.

Home Performance w/ ENERGY STAR Moving to DOE

The Home Performance with ENERGY STAR program for energy efficient whole-home residential retrofits that has resided at U.S. EPA since its inception is moving to U.S. DOE. As EPA funding come increasingly under attack by Congress, it is believed the move is being made so more resources will be available to the growing program. Home Performance with ENERGY STAR is hosting a stakeholder meeting on April 13 in Washington, DC to review the move and transition in more detail with stakeholders. For the formal release about the transition, click here.

Strong December Sales Reaffirm Tax Credits' Impact

HARDI announced North American average HVACR distributor sales for December closed out 2010 in line with the association's forecast, but fell short of most manufacturer and analyst projections going in to the year. HARDI's monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) report showed average growth for the month of 17% over December 2009, undoubtedly driven by the impending expiration of the full $1,500 residential tax credits. Click here for the full release.

President unveils energy efficiency plan

On Thursday President Obama laid out the first marker in his goal to increase energy efficiency in the Unites States. The plan, which he first discussed during the State of the Union speech focuses on making commercial buildings more efficient.

The Hill newpaper reported that "under the plan, the Small Business Administration will work to encourage lenders to give more financing for commercial retrofits. In addition, the administration will call on Congress to provide grants for local and state governments that streamline building codes and regulations as well as provide new tax credits for energy efficient buildings."

The Administration has not revealed the cost of this proposal, but did state that the cost would be offset by eliminating tax breaks to the oil and gas industry.

All About 2011 Forecasting

I couldn't be happier with our special January issue of HVACR Distribution Business which is entirely devoted to forecasting 2011. Forecasting features by HARDI's Chief Economist, Alan Beaulieu, JP Morgan's Stephen Tusa, Douglas Elmendorf, Director of the Congressional Budget Office, Jim Beecher of G.W. Berkheimer, and much more. Dare I say this is the finest issue the magazine has ever published so check it out now.

The NEWS Podcast on Latest Facing HVACR Distributors Now Available

Check out this podcast by The ACHR NEWS discussing issues and opportunities we see facing HARDI distributors this year. The NEWS' entire "Newsmakers" podcast series is great so be sure to check it out each week.

NLRB Now Going to Court to Defeat Secret Ballots

As reported in this NYT article, the National Labor Relations Board (NLRB) is threatening to sue four states that recently passed ballot measures requiring secret ballot votes by workforces when deciding to unionize. Raising the federal agency's activism to new heights, there can be no doubt to the intent of the NLRB to completely railroad overwhelming public sentiment in their efforts to force unions down every employers throat...even if the majority of those workforces aren't interested. Buckle up, 2011 is going to be a bumpy labor ride.

HARDI Expresses Concerns Over New Energy Star Furnace Specs

Just posted to HARDI's website, HARDI filed comments with U.S. Environmental Protection Agency (EPA) ENERGY STAR program on the latest draft of proposed specifications for the next generation of residential furnace's labeling program. Think regionalization and take a guess at the majority of our concerns.

The NEWS: DOE to Provide $7mil to 24 States to Update Energy Codes

If you've not seen this article from The NEWS, you need to. ARRA (the stimulus bill) provided the U.S. Department of Energy (DOE) with funds to use as a carrot and stick to states to adopt and enforce more stringent building energy codes (IECC for residential, ASHRAE 90.1 for commercial). For many states, and now 24 more, the time to debate whether the more stringent energy codes are reasonable, attainable, or justified has passed, and now it's up to our industry to figure out how to live with them (and not allow another California Title 24-ish disaster to occur). If you're not closely tied into your state(s)' energy offices, code officials, etc., you had better find a way to do so quickly...especially in these 24 states.

The Good, Bad, and Future of 25c Tax Credit Extension

It should not be minimized what a victory it was to have an extension of the 25c tax credit for residential energy efficiency improvements included in the tax bill that was signed into law last week. Just a few months ago most lawmakers knew little about 25c, and it was competing against a Rockefeller Center-sized Christmas tree of other tax provisions for inclusion in that bill. Congrats to HARDI's Manager of Government Affairs, Jon Melchi, ACCA's VP of Govt. Affairs, Charlie McCrudden, and Austin Primiano of Lennox International who tirelessly worked Washington and coordinated efforts over the last several months to secure this extension.

Unfortunately, an extension in today's political climate cost a reduction in the credit amount but I know HARDI will continue to work towards at return to the previous $1,500 credit level. As evidenced in this Columbus Dispatch article, the reduced level is causing a rush by many homeowners to get improvements and HVAC installations done before the full $1,500 credit expires next week. November and December are shaping up to be huge months for HVAC distributors and contractors, however we must look ahead to what could be a tough Q1 next year. 2011 will be about getting back to basics. A $500 credit is nice, but it won't create demand like $1,500 did so be prepared to use slow January and February to train and educate your people and put them in the best position possible for a grind-it-out 2011.

22 Building Trades Leaders Make Late Push for 25c Extension

HARDI and 21 other leading organizations representing manufacturers, distributors, contractors, small businessess, state officials, and energy efficiency interests sent a letter today to Senate leadership urging the full extension of the "25c" tax credit set to expire at the end of the month. 25c provides homeowners with access to a credit up to $1,500 for qualifying energy efficiency improvements, and has been essential to HARDI distributors' modest growth in 2010.

Currently the Senate is debating a tax bill which includes only a one-year extension after a slashing of the credit amount, and HARDI has concerns that the severely paired down extension will provide just extremely limited sales and employment benefit to the HVAC industry. We have little time left to try to get a full extension passed by the Senate. Go to www.savehvacjobs.com today to do your part to help!

Missing the Forest Through the "Dry-Shipped" Trees

Yesterday HARDI filed comments with the U.S. Dept. of Energy (DOE) on their proposed guidance for certifying newly-produced R-22 residential condensing units. DOE proposed two paths that would essentially pave the way for the installation of mis-matched condensing units, and it was this apparent reversal in decades of precedent that is the point; a point that I fear most in our industry may be missing. While the recent reintroduction of "dry-shipped" R-22 condensing units (due to the way EPA's 2010 HCFC Phaseout Regulations were written which I still consider a loophole) is the talk of the HVAC community right now, DOE's proposed certification procedures for these units is the real story. If unchanged, DOE's guidance is essentially signaling knowing consent that these condensing units will be installed with unmatched indoor coils. This is drastically different than DOE's matched system certifications for any other newly-produced split system based on the assumption that both the indoor and outdoor equipment will be installed at the same time. Instead DOE is proposing a blatant gaming of the test procedure system far detached from reality.

While our industry has invested resources to promote, support, and advocate the value of properly matched system installations, this one DOE ruling could undermine all of it with one bureacratic swoop. Either our industry is based on matched, split-system cooling or it isn't. Either our industry delivers the performance listed on hang tags or it doesn't. This isn't a refrigerant issue, this is a glimpse into our future. Either we support and defend our current matched system certification process or we abandon it because there is no way we can have it both ways for long. R-22, R-410a, or whatever the next refrigerant coursing through our split systems is isn't the point. Ensuring those split systems are properly matched and running as advertised is, which is why HARDI cannot support DOE's proposed endorsement of improper installations.

Perhaps the Least-Known, but Most Important Election Result

California's statewide ballot initiative Proposition 23 to delay and curb implementation of the 2006-passed AB 32, California carbon emission cap-and-trade mandate failed last night by nearly a 2-1 margin. Early polling had many believing the prop had a chance to pass driving over $30 mil in environmentalist funds for ads and an opposition campaign into the state. Prop 23's failure greenlights the continued advancement of the California Air Resources Board's implementation of the state's cap-and-trade system and early action measures such as the recently completed Refrigerant Management Regulations, and the pursuit of California-specific commercial refrigeration standards.

It remains to be seen how this will play out, but California- with its ailing economy- may become the country's petri dish to definitively determine the economic impact of economy-wide caps on carbon emissions.

2010 Annual Conference: Distributors Stepping Up

Last year's HARDI Annual Fall Conference was dominated by the AHRI-ACEEE regional standards consensus agreement. This year's Conference was hijacked by "dry-shipped" R-22 residential condensing units. Many in-depth discussions were had and it became obvious how important HARDI's position and role in this issue will be to determining how long this practice might continue.

Attendance mirrored our industry's performance this year by far exceeding 2009, but falling just short of 2008. With 1,100 of the the HVACR industry's finest, this conference also featured the most participation by equipment manufacturers to date with Nordyne, Rheem, Trane, Goodman, Mitsubishi, Daikin, Sanyo, LG, and even more. Allied Air was especially recognized for a whopping 50 years of participation in our Conference Booth Program.

HARDI's Board of Directors added over 50 new wholesale distributor members, with many being part of a new strategic partnership with Johnstone Supply. Mingledorff's Inc. won this year's NATE testing award for providing the most NATE tests as an organization, and helping HARDI's distributor membership maintain its standing as the #1 provider of NATE testing.

Just about every Committee and Council meeting and session was packed or over capacity as distributors attempt to grow their competitive advantages by being the most informed and most efficient. Check out #hardiconf on Twitter for play-by-play from Houston.

Thank you to our special guests and presenters from AHRI, ACCA, NATE, HRAI, Consortium for Energy Efficiency, US EPA ENERGY STAR, Food Marketing Institute, Alliance for Responsible Atmospheric Policy, and JP Morgan Equity Research. And as always HARDI's economists from the Institute for Trend Research were outstanding.

The Urgency of 25c Extension

Check out our column in the Sept. 20 issue of The News detailing three huge reasons why every HVAC businesses should be on www.savehvacjobs.com at least once a day, everyday.