Unpacking the Stimulus

The $788 billion stimulus package — known officially as the American Recovery and Reinvestment Act of 2009 (ARRA) — provides a classic good news/bad news scenario for HVAC contractors. The bill provides glimmers of hope for residential contractors, but less concrete benefits for commercial HVAC sector. Whichever market you serve, the best strategy will be to pick and choose what provides the biggest boost to your business, and stay focused on the basics of service and lead generation.

Residential Tax Credit a Big Perk

Much like the Energy Policy Act of 2005 passed by President Bush, ARRA offers significant breaks for homeowners, and good opportunities for contractors to sell new comfort systems. Specifically, ARRA includes a $1,500 aggregate tax credit for qualified, energy-efficient home improvements, and credits for solar and wind-based power.

Fast-acting residential HVAC contractors are on the move to spread the news. Almost 60% of residential HVAC contractors responding to a ContractingBusiness.com survey said they expect the package to help generate new business, and 80% have already started to implement the news in marketing materials.

One of those — Mark E. Meacham, Inc., Charlton, MA — had a new marketing message ready to go when the stimulus news was announced, just in time for March home shows. The message tells customers to, “customize your own stimulus package, because there's no better way to put tax-free money in your pocket.” They've closed on more than $50,000 in business as a result of the home show outreach. The Meachams are thinking outside the box when it comes to alternative energy, too. To capitalize on credits for solar and wind-based power, they're having technicians attend certification classes to become experts in those technologies.

“Now, we can tie the energy efficiency message in with saving the earth, saving money, and reducing carbon emissions. Hopefully, we can hit a hot button with everyone, depending on what's important to them,” says General Manager/Co-owner Sue Meacham, who founded the company with husband Mark in 1986.

Ray Isaac, president of Isaac Heating & Air Conditioning, Rochester, NY — and the immediate past chairman of the Air Conditioning Contractors of America (ACCA) — revised existing promotional materials.

“We're differentiating Isaac Heating & Air Conditioning by being an authority on the subject,” Isaac says, whose company was the ContractingBusiness.com's Residential Contractor of the Year in 2002. “We're using the tax credit as a kicker on our spring promotion, and have re-written our promo flyers and company newsletter to incorporate the details, which sweetens our offer even more.”

Dewey Jenkins, president, Morris Jenkins, the 2009 ContractingBusiness.com Residential Contractor of the Year, believes this is the best opportunity HVAC contractors have ever had to position themselves as energy consultants.

“The tax credits are keyed around energy savings and we'll be perceived as the ‘experts’ if we're prepared to take on that role,” Jenkins says. About 15% of Morris Jenkins new prospects have expressed interest in Hybrid systems.

Consumers Need to Know

Brett Knox, president, GreenHomes America — an HVAC service/installation company in the final stages of becoming a national franchisor — agrees that it's the contractors' duty to explain tax credits to consumers.

“Most Americans aren't familiar with the Federal tax credits, and it's very rare that anyone calls specifically asking about them. We need to educate through our marketing,” Knox says, and adds that tax credits can bring more credibility to contractor overtures. “When the government puts dollars behind reduced homeowner energy use, we use it to build credibility into our recommendations,” he says.

Knox says tax incentives often cause consumers to buy more quickly. “They realize that nothing lasts forever. The stimulus package is supposed to last for two years. The dollars are short-term. Use them to get people to act sooner rather than later.”

Mark Swepston, president, Atlas Butler Heating & Cooling, Columbus, OH, says his company — the ContractingBusiness.com 2007 Residential Contractor of the Year — has prepared new advertising that draws attention to the tax credits. “When we help customers see that they can save money in ways that they weren't aware of, it always puts us in more of a consultant's role,” Swepston says. He adds that since ARRA was signed, replacement business in the first four months of the year has increased.

Industry Image Enhanced

HVAC industry associations had lobbied lawmakers to include ways to help to consumers and contractors. Stephen Yurek, president of the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), Arlington, VA, says the stimulus bill will provide meaningful incentives for consumers, municipalities, and building owners to move forward with improvements.