Winning the HVAC Battle: 3 Industry Trends and Solutions
Jun. 2, 2022
Guest Post by Rick Yelley
Today, I’m here to talk about three trends for mechanical contractors and answer some questions in our industry.
My name is Rick Yelley. I’ve been in the construction HVAC industry in project management, and service management, and worked in the field. I have about 15 years of experience combined. I received OEM, OSHA, EPA, and PM certifications.
Currently, I am a Director of Operations for a large HVAC franchise across North America. I help with operational processes, the development of new technology, and ideas to help them grow their mechanical contract base.
A lot of things have changed in our industry and will continue to change and that’s what I’m discussing in regards to the general industry.
Complacency Slowed Down Improvements
Over the years as contractors, we get very complacent. We get caught saying you know your business because that’s how we’ve always done it. And a lot of contractors will do that. They have a successful business and continue to push through, but change is always a good thing, not a bad thing.
We have to go outside of the box to grow. What I’ve been seeing in the industry is that you can’t take old ideas and new ideas and try to make them work together.
We have to go where the industry is taking us, and that’s in a lot of directions. And we have to get out of that old mindset and evolve. What we’ve done in the past may not be what can be done today. And what’s super important in any industry, specifically the HVAC industry, is how many changes are coming up the road.
There are a lot of things in our day-to-day business that we can put out there as struggles or pain points. But I want to talk about three that we have seen in the industry over the years.
Saying Goodbye to Paperwork
One is the paper process. Everything starts with paperwork. Field service reports that technicians fill out in the field are on paper, and then the office processes that.
And now everything is really going digital, and we’ll talk about why that happened. Paper processes are going away because there are a lot of inefficiencies with them.
Going back to “that’s how we’ve always done it.” You may be running a great business, but there are ways to make it more efficient so that we can get more done.
Paper processes take up a lot of time, especially during the pandemic and labor shortages. It is a process that can be easily resolved with new technologies coming out in our industry.
The second big industry trend is the labor shortage. Over the last couple of years, it has been increasing, and that’s a problem for the trades. It’s always been a struggle of mine. I sit on a few school boards in my hometown, and you see a difference between a four-year education and a trade school.
Trade schools seem like a lesser of the two, but that’s not the case. What we’re dealing with right now is our industry doesn’t have enough technicians, and some are actually getting out of the trade. They’re going to do something else and that’s not a good thing for us.
Over the last two years during COVID, trade enrollment decreased, especially in HVAC. Other trades like diesel mechanics, electricians, and more, have also seen a decrease.
Luckily in 2022, that is increasing. Some good news coming into our industry is younger generations, and even some older, are getting into the trades. But that poses a good point about why we need to adopt more technology in the trade industry.
If we have less physical labor, we need to find ways to make our jobs and our business more efficient. And we need to use our existing employees to their fullest potential.
There’s a term that kind of gets thrown around there a lot called workforce optimization. That’s exactly what we have to do. Leveraging different technologies and more process efficiencies to optimize all the work we’re doing. We can fight the labor shortage, but workforce optimization isn’t the silver bullet. You still need more people getting into the trade.
There is also the problem with tradespeople aging out of the industry, but technology can potentially keep them in the business longer. They have the knowledge and it’s all stored in their brains, but we need to teach the newer technicians that hire. The skilled trades gap is also a concern when new technicians start.
We can leverage technology to help with all of that, and hopefully, over the next year or two, we can climb out.
The third trend is time management. Paper processes and the labor shortage timed this last one: time is money. If our people are very inefficient with their time, that makes a more complicated business. We are not being effective, we are not working to our fullest potential, and sometimes that can be measured with money and return on investment.
Time management is very important. How fast we get information from the field to the office is important. When I was talking about paper processes, that has a lot of time invested into it. Cash flow management that relies on paper processes takes longer to get into the business and then sent to the customer.
But you’ll see that time management is a very big problem in our industry because sometimes we’re stuck in those older processes and what we’ve always done.
Some of the technology I’ll talk about will help optimize our workforce to its fullest potential. Work with what we got, and maximize time and effort without thinking like it’s a marathon. Having ways to utilize different tools and processes to make everyone more efficient that will go a long way in the industry.
I can go on and on about these three big trends and challenges. But there are three big common questions that we are facing or getting asked in this industry. The first one really is – what’s changing the industry right now.
What’s Changing the Industry
There are a lot of things changing just day to day in our business, not just technology. Look at the last couple of years in our business with COVID.
We had to drastically change how we did business with people closing down their buildings. We’re not allowed to go in there because we needed vaccinations.
It changed from being face-to-face to not being face-to-face. Luckily HVAC was critical during the pandemic. But I think changing the way we do business is going to be a permanent change.
It’s going to be an ever-evolving relationship that’s maybe not face to face anymore. So, that has definitely been changing in our industry right now. And utilizing that technology to keep the customer informed, showing their building performance, and how their equipment is performing is critical. And having real-time data gets that information faster to the customer.
Customer Service Evolution
So, all of that plays into this new customer service role that we’re playing. In the actual world of HVAC, we’re going to go through a lot of things in 2023. There are a lot of things coming out like new SEER ratings for energy-efficient equipment. New equipment manufacturers are going to come out making different types of equipment in regards to those regulation changes for the energy efficiency side.
Also, new refrigerants are coming out, and they’re not really new, right. Europe and Japan have been using these for a long time and now the A2L refrigerant change is coming to the United States.
We’ll change how we do business with regards to regulations, specs, equipment manufacturers, a little intricacy of equipment, and price. The supply chain is an industry challenge right now too, and that’s going to become more expensive.
We have to make sure we’re pricing it in projects, also track this equipment, and deal with the same challenges we are today. But just have more regulation built into it.
Those changes are coming and it’s documented. The government said it’s coming. ASHRAE’s put statements out. In January 2023, we’re going to start seeing some changes.
Electrification and decarbonization are other big pushes changing our industry right now. There are a lot of things that they’re trying to get to meet electrification and from the decarbonization side, and obviously less carbon producing equipment to help the ozone and the environment is good. Those things are also going to change. More things are changing like alternative fuels and alternative refrigerants, and we all need to change with it.
Changing Your Mindset
Education is key to this industry change. We can never stop learning because if you stop, you get stuck in the “this is how we’ve always done it” mindset. It’s changing regardless if you want to change or not. We all need to change.
Going back to the labor shortage, we have to adapt to that. If we can’t hire the people we need, we need to find different ways to be efficient and get the work done. Instead of just saying we need more people to get all this done, we need to find alternative ways to make our business successful and keep up with all the work.
What’s Helping My Business
That leads to the next question – what’s coming out in the marketplace that can help my business? There’s a lot of stuff and now there are a lot of technologies for HVAC businesses.
Field service management software can speed up processes and make them more efficient. That doesn’t only affect the office and the field, but positively affects your customers. That’s very important.
And in the field, you’re seeing a lot of technology that interacts and connects with field service software. Predictive maintenance and equipment sensors to track when equipment breaks down. You can have eyes and ears, having a 24/7 approach to see when equipment breaks down. We get alerted. We can be proactive. Less downtime for the customer.
You can have a piece of equipment running 13 states away, and you can see how it’s running right now with real-time data. That’s very important not only from the equipment side but from the contractor side.
We’re seeing that with the indoor air quality. Again, with the pandemic. Having our equipment running fine and downtime, that’s all-good uptime for the customer. But now it’s becoming more important in indoor spaces, right.
A Proactive Customer Relationship
Lead certification was the thing for energy years ago, and that’s great. You’re starting to see a shift and customers want to get their building up to snuff in purification technologies, filters, or ventilation to help with the indoor environment. We always think the equipment’s running well until we take care of the equipment. Now we’re going to be providers for indoor air quality and other things in the building.
There are a lot of different things coming out that can interact with our day-to-day. And asset technology, keeping track of equipment, making sure all of those things are being taken care of, and then reporting, energy savings, and capital planning out to our customers helps our overall business. Be those solutions providers and give them guidance on what’s coming.
Instead of saying it’s broken. Let’s be a solution that can say, “three months from now, this is coming.” Let’s plan for it. It’s very important in our industry, and your use of technology is important.
How Tech Can Grow Your Business
The last question is – how can technology grow my business? That goes back to efficiency gains. Having software that can help streamline your business processes.
Let’s take the paper example. If your fuel technicians work from Monday to Friday, they have all their paperwork. They turn everything in on Friday and chances are that that paperwork is not going to be reviewed, entered, and billed until the following week.
This can make businesses two weeks behind on billings. But if you have the technology, like a mobile app, with real-time data that technicians are entering that goes straight to the office right away, you can speed up your processes. And when you get those bills out faster, you can bring that cash in quicker.
That’s just one example of purchase orders, timesheets, ordering parts, planning your maintenance, and planning your work orders. That can all be an efficiency gain by using the power of technology, especially from the field service management front.
All those efficiency gains give us more time to do other things. If our technicians are more efficient in the field by utilizing certain technologies, it gives them more hours in a day to do something else. So, you can do more with less.
Gaining Time with Software-driven Efficiency
Now I know it’s a big and sometimes hard concept to grasp, but my technician can be much more efficient. Let’s say three work orders get done in 6 hours. I have two extra hours a day for my technician to do something else. They can either take another service call, do another maintenance call, or go to another project. It just helps that whole overall impact of the business of being everyone more efficient.
Same thing in the office. If someone in the office can go through work orders and get them out to the customer quicker, then they have more time to do something. Maybe put together a safety program for their office or do something else that we’ve always been planning. That’s where you get those kinds of returns on being able to do other things in your business.
That’s just from the standpoint of having efficiency gains. When you have efficiency gains, then, your customers are happy. Taking all the data and looking at it and then giving solutions back to the customer as overall customer satisfaction.
Make the Intangible Service into a Tangible Experience
We perform an intangible service, right. We go out, we fix equipment, we do maintenance, that’s very intangible, right. The customer pays for something that they virtually can’t see. If I’m selling a cellphone to you, I’d say, ‘this is a great cellphone.’ You buy it, you can play with it. But in our industry, it’s, okay, we’re going to go out and do the work and everything should be up and good.
But now with the power of technology, the reporting and information we can share with the customer make our business tangible and our customers want to stay with us longer because we actually show them something. We show that we care, and we want them to succeed in their business too. It’s more of a partnership than a contractual agreement with our customers.
So, a lot of the technology that you can use in today’s world can help your business grow in many different assets. You’re probably thinking right now that you have a lot of pain points in certain areas, and technology can fit right in to help with those pain points from getting field service management software, from getting this other technology I talked about.
Overall, it can really help your business and make your team more efficient. Technology can help your customers make the intangible into something tangible.
But how can technology grow the business? Well, it kind of goes to the industry trends we talked about – time management and communication from the office and the field.
Field and Office Communication is a Foundational Business Strategy
Now if you’re working in a service industry, sometimes it’s difficult to keep that two-way communication. Technology can bridge that gap and give field technicians all the information they need from the office without having so many touchpoints.
Having that information, and if I’m in the field right now, I go to the site and I see what quotes are on my mobile device and all the customer information.
Here’s the last time we were here. Here’s all the asset information. That’s super powerful without continuously calling the office. The office gets the technician’s information back in real-time. You have better communication between that office and the field. It’s always being communicated.
It helps make everyone’s time more efficient. And real-time data is helpful with the financial picture. If we’re getting information into our office, looking at it, and we’re doing everything timely, you get a better picture of your business in real-time.
With paper processes, it may be harder to see the business and how it’s doing financially because that stuff may not have been entered into the system yet. But with real-time data, it’s in there, we look at it, we review it, then we get a really good picture of how our business is performing.
So, if there are issues or things that we can correct, we can steer the business a little bit quicker with that real-time data rather than having to wait and see how it pans out.
We can make better business decisions faster with the power of technology and the data in the business. Real-time data can have a good kind of picture on that.