I asked some HVAC contractors a simple question the other day: “How is 2009 going for you?” The answers were from all over the country and from all over the spectrum from slow to busy. And geography did not necessarily have a big influence, although weather extremes (as usual) had something to do with business.

I divided up my response into various regions, including New England, Middle Atlantic, South, Florida, Great Lakes, Midwest, Upper Midwest, Texas, and Southwest. I didn’t hear from anyone from the West Coast – but I’d be happy to hear from them now!

New England

The news is mixed from this area but there are signs of hope. One contractor said that business has been improving from a “disastrous 2008.” He said he expected a flat year and possibly being a little down, adding, “Currently sales are behind 6.7%. Sales for the months of September through March were off 30% for the prior months.” He added that the company slashed overhead as much as possible earlier this year but, “We are digging out of a hole as a leaner more disciplined company with less staff.

“I, as well as my exhausted management team have not worked this hard in our lives! We brought the dispatcher back to relieve us and support the field better. I’m sure they would have all quit by now if they had a glimmer of hope getting hired anywhere. We are just starting to rebuild moral and are finally optimistic of the next 12 months.”

Another contractor said he was small but keeping “pretty busy.” He added, “My bank account isn’t puffing out but we have a small back log and we’re keeping the guys nice and busy.”
One contractor said he is paying the price for having a good 2008. “2009 so far has been very weak,” he said. “I do not expect it to improve at all and hope it doesn’t get worse than normal over the winter – which tends to be slower. A big spike in oil and gas prices would help get things going again.”

Mid-Atlantic

It is definitely a ‘Tale of Two Cities’ in this Jekyl and Hyde region. Optimism is very high for this contractor. “We are having a spectacular year, mostly due to the utility rebates in our state,” she said. “Our sales are up almost $600K from last year.” But the beginning of the year started out very slow for her company.

“November, December, January, and February were a major bummer; but after the rebates kicked in around April, we were rolling.” She added that a not-so-hot summer has cut down on the backlog of work and that September through December will be tough again. “After that, I think things will get back to normal again, or close to it,” she said.

Another contractor also started slow but has benefited from the tax credit. “We lost big money the first four months, but since then have experienced our best months ever,” he said. “A lot of it has to do with the 30% tax credit, our state credit, and manufacturer rebates. We have sold 50 systems year-to-date averaging $8-9000 per system. August looks good but in our business we are never more then 4-6 weeks out.”

One contractor has doubled his sales this year, crediting his switch to a new business “attitude” and improved systems for giving him such inflated revenues. But he is definitely the exception.

A couple of contractors might have had decent sales figures but the temperatures have cooled off quite a bit in their region. “We expect to be flat for the next five months, and the entire year,” one said. “We would have been up, but the temperature here never reached the 90’s. In fact the average high was barely in the 80’s. Our sales in July were 70% less than what we forecasted.”

One contractor probably wished his business was on the west coast or in the normally hot states of Florida or Texas.  “Sales figures appear to be different, depending on which region of the country you reside in,” he said. “Weather has been freakish, and that, coupled with the recession, has brought our industry to a virtual standstill in the Midwest.

“Some of my Mix Group members in Florida and Texas, however, seem to be quite busy. I also talked to a friend in Oregon two weeks ago, and he said they were out of control busy. I suspect the summer is a total wash out for us Midwesterners, even with the stimulus. I am hoping for a really cold winter, and an upswing in construction.”

Another contractor said he was doing okay but has empathy for others who are not. “We’ve had an “up” year, but it’s been harder with lots more effort on my part to make that happen,” he said. “Most plumbing and HVAC contractors in my area have had a lousy year. More than a few are teetering on the edge.”

South

It’s a mixed bag in the South where one contractor complained about the lack of work despite high temperatures – and others are having a good year. “It is shaping up to be a great year,” one said. “We are a large retail service and replacement business – and our top and bottom line is up 8%. And the outlook is good for strong third and fourth quarters.”

Another HVAC contractor reported a promising double whammy – record sales and profits. “2009 is going well,” he said.”2006 was our personal best, 2007 was down 10% in revenue and a modest profit. 2008 down another 10%. We are getting back to 2006 levels on revenue and twice the profits! Operations are leaner and more productive; marketing is more focused and executed on time with intent. As much as I hate to admit it, the energy tax stimulus is getting folks to jump.”

But another contractor was less than enthusiastic, albeit not ready to jump off a building. “Although it feels like it is down, in reality we are just flat,” he said. “It’s 93 degrees this week and everyone is sending technicians home. We don’t do new construction so that has not hurt us. However, even the commercial and institutional work is slow coming out this year and when you sell a job you have to wait forever to get the equipment as the manufacturers are holding down production for actual sales.

“I don’t look for much improvement until at least the third or fourth quarter of 2010.”

Unlike blaming the weather for business fluctuations, one contractor blames the price of gas as the impetus for making the telephone ring. “The amount of business I do varies with the price of gasoline,” he said. “When the price of gasoline drops to $1.50 like it did in February, I have a two week backlog. When it’s at $2.40, I am doing good to run four or five calls in an entire week. I do a month by month comparison and there is a direct correlation.”

Florida

There is optimism – for the time being – in Florida as the weather has heated up recently. But it hasn’t always been good for one contractor, who has been riding a rollercoaster. “This year was going okay – not great – until July,” he said. “Then we got slammed and ran out of work, including no new construction in the area. We had to lay off some guys.”

But the news has gotten better. “We have picked up a $1 million dollar project and several small ones,” he added. “Florida has been very hot for a couple of weeks and we’ve been working overtime and weekends to keep up. “We are not sure if it will revert back to a slowdown but right now things look pretty good for the next quarter.”

One contractor refuses to believe everything he hears in the media, adding, “the bottom line is: in my life all is perfect and will always be that way regardless of what the world is telling me.” He noted that most of his business “fronts’ are up from last year and noted, “We experienced a period of uncertainty in 2008 but indicators and attitudes are seeing a much better horizon.”

Great Lakes

This region has been hard hit with job losses and declining property values and that has had a spillover effect on the HVAC trade. Yet in spite of the negative news, there are still signs of hope and recovery – even higher profits.

“The year started off great, actually more like overwhelming with the cold and almost too many service calls,” said one contractor. “The tax credit stuff carried us through until May and the heat in June helped. But it’s been a challenge most of the summer. I have worked extremely hard at keeping everyone busy, taking anything I could, except the complete bottom feeder customers. They still get kicked to the curb.”

He is optimistic that he will have enough work for all of his workers. “Everyone has never worked less than 35 hours, and now it's picking up steam rather fast, almost too fast. I now work harder than ever, it pays off big time, I see an extremely busy fall season ahead.”

Another contractor spoke very candidly about the year her company is having. “We expect to have the best total sales year in about a decade,” she said.
One contractor said his sales have been down about 10% this year but he is optimistic because of the new business model he is developing. “With the new utility rebates we will soon be offering home energy and comfort audits. We expect this to help our closing ratios along with driving different business to us. We consider this our next step in evolution. 

“Even with all this our sales are still down and it is tough to get the customer to focus on long term costs versus the immediate price. The economy is tough people don’t always care about their bills for the next 15 years when they’re struggling today.”

Two other contractors were not optimistic about the rest of the year – probably because the beginning has been down for them. “We are down about 30% from last year, which was not a record year by any stretch,” one said. “We are taking jobs further from home, types of jobs we would normally pass on.”

The other added, “I expect to be about 20% below last years numbers and about even with the year end 2007. We are currently offering a free furnace with the purchase of a 14 SEER air conditioner/heat pump. Currently this seems to be helping; however, we have not had summer-like temperatures here.”

Midwest

Surprise, surprise – there are mixed reviews coming out of the Midwest, too. One contractor lamented about his sales. “I am down, down, down,” he said. “I am 35-40% off from last year.”

But another is feeling very good about 2009.

This contractor said he concentrates on retrofit HVAC residential systems, most of which are primarily 80-95% variable speed furnaces with 16 SEER two-stage heat pumps. “Since the Energy Tax Credit became available I have had a very good marketing message to deliver and it has created more business than any other year I can recall,” he said. “We have very little competition due to the fact most of my competitors just don’t have the full offerings we have and still do business with the customer like they have for the past 50 years.

“I expect we will be busier than normal for the rest of this year.”

One contractor said he owes a lot to the energy audits that are required by his state. “If not for doing energy audits I would be dead; and far more people would be doing less work,” he said.

Texas

Texas is like almost every other region – unpredictable. But there is room for optimism as long as the job market holds up, at least according to one contractor. “The first part of the year was slow,” he said. “I did a lot of advertising and then we were crazy busy, selling almost all two-stage variable speed heat pumps.” But then he had some employee problems and he had to fill in, costing the company some valuable estimating work. “I think we will break even this year unless I hire someone – but good people are impossible to find.”

Another HVAC contractor called 2009 “a strange and interesting year.” He said he is having a good year – staying busy and profitable – but he is not sure why. “Most everything is backwards from what I expected,” he said. “Where I expected to do well, we have struggled. Where we have struggled, I am doing well. I can’t explain it but I am grateful for more than one line of attack.”

Southwest

The news from this region is like a salesperson’s menu choices of “good, better, and best.” While one contractor struggles, another breaks even, and another has been having a great 2009.

“I think we are probably an exception for the industry,” said one happy contractor. “We are up about 15% this year and have grown 35% – 40% for the last 5 years, gaining a ton of market share. Overall, it’s been a pretty good year.”

Another contractor used a famous literary quote about “living in interesting times.” He said that everything looked good through fiscal 2006, adding that his company had its sights set on $10 million. Then things changed.

“With fiscal year 2008 ended we were still profitable but unable to replace our commercial backlog,’ he said. “The private investment money just disappeared. One general contractor friend and customer of mine put it in these words, “It was not a gradual decline, it was like driving off a cliff!”

“Our most recent fiscal year was a disaster. The whole year was spent plugging holes, reducing staff and taking back employee benefits we had all become accustomed to. The employees who stayed with us had seen this thing before and were remarkably resilient and cooperative. Morale never suffered. We went from a high of 44 employees down to a low of 28.” 
He said that things have been looking up lately, adding that his company made back all it had lost last year by the end of the first fiscal quarter of 2009-2010. “Though commercial private money new construction is down as a whole, our service department repair and preventive maintenance contract work has increased by 55% and 20% respectively. Residential add-on and replacement is down, but we’re still doing well compared to others in our market. 

Another HVAC contractor from the Southwest is way down – but not out. “We are down 40% from last year, but the people that we have kept have grown to care more about our customers,” he said. “I can see this in a positive direction for our future.”

The news is mixed throughout the country but HVAC contractors who have seen some success are those who are proactive rather than reactive. Below are some of the things that contractors are doing to keep the phones ringing:

• Networking with other businesses in the community
• Speaking with community groups about energy efficiency/rebates
• More church add-ons and energy audits
• Quality installation/inspection programs
• Whole house energy audits
• Writing editorials in local newspaper
• Proactive in legislative matters
• All office personnel book calls
• Rewards/incentives for employees
• Proactive advertising including using Google ad words
• Staying upbeat and avoiding negativity

As one contractor said, it is time to take his business more “personally.” “The battle is not yet won, and we could still lose this one if we’re not careful,” he said. “But I’m cautiously optimistic. Hard work and good networking does pay off. As I look around at the numbers of local contractors no longer with us I consider us very lucky.