CHICAGO — Already it is mid-year, April 16, 2015, has come and gone, and the landscape of residential water heaters has been altered, due to the U.S. Dept. of Energy (DOE) regulations that took effect that day. Now that this is a reality, what does this mean for contractors’ businesses? And where can a contractor find resources regarding the efficiency requirements, if they still have questions?
For the past two years, CONTRACTOR has been reporting on the NAECA requirements and how the efficiency mandates require higher Energy Factor (EF) ratings on residential gas, electric, oil and tankless gas water heaters.
For the past few years, the PHCC — National Association has been working with water heater manufacturers in order to understand how the efficiency standards will affect contractors in order to prepare contractor members.
PHCC also held presentations during CONNECT 2013 and 2014, Comfortech, and various state chapter conventions and at local chapter meetings. PHCC presented webinars on the subject, and used social media, member communications, a custom publication about the NAECA requirements, and direct mail as a way to get the word out to its members.
The majority of professional contractors should be ready — thanks to all the training and education that has occurred in the industry the past couple years — to install the new water heaters in customers’ homes.
According to Chuck White, PHCC—National Association’s vice president of Technical and Code Services, many contractors voiced their questions and concerns over the course of the last year and had opportunities to find answers.
“On the whole, I would say the industry, PHCC included, has done an excellent job of informing contractors of the coming changes,” said White. “Resources have been devoted to creating handouts and flyers, involving the distribution chain, providing both in-person and online presentations. PHCC maintains this information and is available to answer any questions that may persist post-implementation of the rule. The industry planning and preparation seems to have paid off; informed contractors have planned and prepared for this and are settling into the new reality.”
Information & training resources
Bradford White’s sales force started talking about the water heater regulations back in 2012. Sales representatives talked with customers face-to-face and at industry conventions. Also offered were hands-on training classes at Bradford White’s iTEC facility located in Middleville, Mich. And Bradford White also discussed the standards during seminars at industry trade shows.
Rheem also armed its sales force and wholesalers with presentations and other helpful materials that they could share with contractors.
“We have a good number of resources available,” said Stacey Gearhart, director of product and channel marketing, Rheem Water Heating Division. “Prior to the NAECA changeover, we developed a public-facing website, Rheem.com/ReadyWithRheem, and we updated it with information about the regulation, including charts with the new EF information, brochures and a list of existing Rheem products that met the NAECA standard. We also had dedicated page on our secure contractor portal, MyRheem, with additional information.”
To prepare contractors, many manufacturers have offered training courses in a variety of different formats. For example, A.O. Smith has been preparing for these changes several years in advance, and offered live training at A.O. Smith University about the NAECA requirements and residential electric and gas water heaters. To view these recent monthly live shows, go to http://university.hotwater.com/live-show/.
According to Henry James, manager of technical training for A. O. Smith, the company created training materials about the EF requirements more than a year ago.
“At the moment, the training offered via A.O. Smith University is very detailed since the products are available to train contractors on,” said James. “Around the regulation date we offered a class on gas and electric.”
Navien also offers contractor training. According to Eric Ashley, product marketing supervisor, the contractor is the key decision maker as to what tankless product is installed, which is why contractor training is so important.
Contractors often need a different mindset to give the customer different options on an install, according to James York, vice president of engineering at Rinnai America Corp.
In order for contractors to know how to troubleshoot and give their customers options, it is important for them to have the appropriate knowledge, which is why training is so beneficial.
Rinnai has a training facility at the Rinnai headquarters in Peachtree City, Ga. Contractors can take seminars on installation, troubleshooting, and hands-on product tear down. There is also an online university training program helping to bring education to installers nationwide.
Bosch Thermotechnology also offers professional training classes for installing, servicing and maintaining condensing tankless water heaters. And, Eternal offers professional training classes via various distributors throughout the country.
An increase in business
The good news is that PHCC and manufacturers did an excellent job preparing contractors, and companies will continue to be resourceful when any questions come up. And more good news for contractors is with the regulations in place, more homeowners will rely on contractors to install water heaters, instead of tackling the installs themselves.
“We believe there will be an increase in business for contractors, particularly in more complicated installations,” said White. “Space-constrained installations may necessitate relocation of the heater or reconfiguration of the installed equipment’s space. These new standards may also trigger consumers to give more consideration to higher efficiency products that have become available. In all of our communications, we are emphasizing that consumers should turn to a professional plumbing contractor to install and repair these products.”
“We anticipate that Rheem contractors’ businesses will likely grow as a result of the changeover,” explained Gearhart. “New technologies and installation requirements could lead to more consumers relying on contractors’ expertise when it comes to choosing, installing and maintaining new water heaters. Not to mention, since market rates for water heaters have changed, there are smaller price gaps between standard products and existing high-efficiency models. This could make it easier for contractors to up-sell to a higher-end product.”
Even Home Depot is up to speed on the regulations. According to Gina Perry, merchant – water heaters at The Home Depot, training was held for all in-store associates, during which the new regulations were reviewed.
“Our in-store plumbing and Pro desk associates are great resources for in-depth knowledge on the new water heaters and always able to provide contractors with installation tips and product insight,” said Perry.
“First and foremost, units compliant with the new standards will be 25 to 30 percent more expensive,” said Perry. “Contractors need to be prepared not only for those higher upfront costs, but also for conversations with clients who want to know why their new water heater is so much more expensive than their last one.”
“With an increase in physical dimensions, issues will arise when units need to be replaced in existing locations such as carting through doorways, down stairwells and fitting through attic accesses,” said Ashley. “With larger gas-fired and electric storage water heaters containing volumes greater than 55 gallons, adding insulation isn’t going to get these tanks to the new efficiency guidelines. Larger gas-fired units will require new advanced combustion systems and controls that will now require power venting, and electricity to operate. Everything mentioned above will increase the physical size and installations costs perhaps making the larger gas-fired tanks cost prohibitive to most that desire a higher volume of hot water.”
According to Jason Fleming, marketing and customer care manager at Noritz, water heater sales will remain constant in light of the new regulations.
“People need to replace water heating systems as they fail,” said Fleming. “The change will be in what they purchase to upgrade their existing system. After the old style tank heaters are no longer available, tankless becomes an even better option than it is today. Contractors who have taken the time to learn about the benefits of tankless will have a big advantage over those who are just now getting onboard.
“We work with contractors through face-to-face trainings, on-line trainings, newsletters, social media, and other mediums to help contractors understand and market the advantages of tankless,” said Fleming.
According to Jerry Callahan, CEO of Heatworks, the new requirements impact a contractor’s business in a variety of ways.
“Homeowners that want to keep a tank type unit will find that the new storage units will not fit in the existing space,” said Callahan. “The new requirements will necessitate physical changes to the home, such as enlarging the doorway, building out the room (if the previous tank was in a closet), installing a condensate line, and providing exhaust for the fan that sits on top of the heat pump unit. Since consumers aren’t aware of the new regulations, the contractor may be on the receiving end of the consumer’s frustration with the added hassle and expense.”