BY ROBERT P. MADER Of CONTRACTOR’s staff
MILWAUKEE — Approximately 250 mechanical contractors who see a green future ahead of them gathered here for the first Mechanical Contractors Association of America Green Opportunities Conference. The attendees know that somebody is going to be making money building and servicing energy efficient sustainable buildings and it might as well be them.
Some may think that global warming is a political ploy, or it’s just for California, or it’s a topic dear to the heart of Al Gore and other tree huggers. One of the best responses of the conference to that was, who cares?
“If people don’t believe it, it doesn’t matter,” said Tom Hicks, vice president of Leadership in Energy and Environmental Design for the U.S. Green Building Council. “Action is being taken.”
And it’s being taken by customers, contractors’ competitors and the government.
Hicks had plenty of global warming statistics — carbon dioxide emissions are up 30-fold; if India and China used proportionately as much energy as the U.S. uses, it would take another planet each to support them — but the important message is that it’s time for contractors to prosper in the green building market.
According to McGraw-Hill Construction, Hicks said, green building will total $60 billion a year by 2010, and account for 10% of building starts.
Companies that are involved in green building that are publicly traded are performing better than the broader market indices, he said.
Customers care because it’s good public relations. There are tax incentives, such as the Energy Policy Act that allows a tax deduction of $1.80/sq.ft. if energy use in an existing building is cut by 50%. Some cities, such as Chicago, give developers fast-track permitting for green buildings. Other cities give increased density bonuses. All of these add up to increased asset value of the buildings.
Mechanical contractors have relationships with the owners and property managers, Hicks said, and they should not wait for them to ask.
Mechanical contractors should own the sustainability brand, said David Allen, executive vice president of Seattle mechanical giant McKinstry Co.
“Nobody owns the space yet, but we fit,” Allen said. “If GCs end up owning green, it’s because we let them.”
There’s lot of “low hanging fruit,” Allen said, made up of the type of work that mechanical contractors are already doing.
Allen has seen projections that 40% of our future energy capacity can come from conservation. “That’s our business,” he noted.
All mechanicals should do energy service work, he said. Half of customers are no longer asking for financial guarantees, so contractors don’t have to give the work to deep-pocketed companies like Honeywell or Johnson Controls.
The money is huge. Allen said McKinstry is now performing $100 million in energy work at 27% margin. He quoted venture capitalist John Doerr, a financier of Compaq, Amazon and Google, who said, “Sustainable technologies are the next big thing ... the mother of all markets.”
Green building is also a way to attract young people to your firm, Allen said.
“The young people that we hire will want to be working for companies that do the right thing,” he said.
Mechanical contractors should position themselves as experts in green, sustainability and LEED, Allen said. It’s not difficult because so much of it is work with which contractors are already familiar.
Contractors have to learn everything that they can from the U.S. Green Building Council, new requirements from the American Society of Heating, Refrigerating and Air-Conditioning Engineers, and codes and standards, said Tim Wentz, a professor of construction management at the University of Nebraska, who previously spent 20 years at his family’s mechanical contracting firm.
One attendee asked how contractors could establish their bona fides and Wentz noted that it would not be too difficult for a contractor to get its own building LEED-Existing Building Certified or LEED-EB Silver. The contractor could do it just for the experience.
Allen noted that McKinstry got work because it has positioned itself as a green expert, even if it wasn’t 100% certain how to do the work when it started. Allen recounted that the firm stumbled into an $80 million bio-diesel plant where the client asked McKinstry to act as the construction manager. Most of the work turned out to be mechanical anyway and they subcontracted the rest.
Green building is all about the cost of ownership, explained Wentz. Wentz noted that a federal government study of government buildings over a 30-year period found that 95% of the cost of a building was cost of ownership – items such as fuel, maintenance and financing. Only 5% was the cost to build it.
The green building boom is an opportunity for mechanical contractors to create a new brand for themselves and for the industry as a whole, Wentz said.