NEWS September 6, 2010 : Page 1

FOCUS THE HVACR CONTRACTOR’S WEEKLY NEWSMAGAZINE SINCE 1926 SEPTEMBER 6, 2010 ■ $5.00 ■ VISIT US ONLINE AT WWW.ACHRNEWS.COM ■ fyi ■ AtmosAir Solutions (Fairfield, Conn.) named Rex P. Boynton to its advisory board. Contractors ■ Home-Tech (Fort Myers, Fla.) was included in the Lee County Economic Development Office’s list of the largest 100 employers for the second half of 2010. ■ Arzel Zoning Technology Inc. (Cleveland) expanded its training facility and re-leased dates for its Comfort College ses-sions: Sept. 9-10, Oct. 7-8, Nov. 11-12, and Dec. 9-10. Manufacturers ■ Southern Stainless Equipment (Waynes-boro, Va.) acquired and reopened W.A. Brown and Son (Salisbury, N.C.), a manu-facturer of walk-in coolers and freezers. ■ Hart and Cooley Inc. (Grand Rapids, Mich.) announced its Smart EAC1000 electronic air cleaner is now available ■ Upstate Systems (Rochester, N.Y.) was named the 2009 Northern Region Distribu-tor of the Year by Source 1 (Norman, Okla.). Distributors ■ The American Society of Heating, Refrig-erating, Organizations and Air-Conditioning Engineers (ASHRAE) is calling for papers for its 2011 annual conference on alternative tech-nologies, net-zero buildings, and HVACR fundamentals; the deadline is Sept. 17. For submittal requirements, visit www. ashrae.org/montreal. ■ The Refrigeration Service Engineers Society (RSES) became an authorized delivery partner for the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI) SkillTech Academy’s Residential Mechani-calVentilation Installation trainingprogram. —compiled byKimberly Schwartz INSIDE THENEWS… A High-Efficiency Summer Camp Install Owner Ken Rex (left) and installation technician Dylan Skursky (right) of Ken Rex Heating and Cooling level a concrete pad for a condensing unit at a summer camp. See story on page 18. through Dependable Air Supply (Melbourne, Fla.). FMI Show Highlights Changing Technology By Peter Powell Of TheNEWSStaff conception of man-made refrigeration some 130 years ago.” That statement by piping manufac-L eBeo DIGITAL EDITION THIS ISSUE SPONSORED BY: turer Georg Fischer, an exhibitor at FMI 2010, was reinforced throughout the Mandalay Bay Convention Center show floor at the most recent every-other-year event sponsored by the Food Marketing Institute. The Georg Fischer statement also said, “The main drivers concern the environ-ment and compliance to local and global regulations to reduce refrigerant charges.” For a number of years, the supermar-ket sector has been responding to those ■ See FMI SHOWpage 16 Bes Co stCContractors Beat the Odds Go online to www.achrnews.com and enter TheNEWS’2010 “Best Contractor to Work For” contest. Deadline for entries is Nov. 15. AS VEGAS — “The design of refrigeration systems in super-markets is going through a state of flux not seen since the By Kimberly Schwartz Of TheNEWSStaff INDUSTRY BRIEFS The firm released its 2010 HVAC Review and Outlook report in early July with pre-dictions that both the residential and com-mercial sectors will improve. However, some in the industry have expressed con-Solid HVAC Growth Predicted A cern that the outlook is too optimistic. The first encouraging note is the report’s ccording to financial services firm J.P. Morgan, the outlook for the North American HVAC market is one of solid growth. statement that the HVACmarkethit bottom in 2009. The report said, “We believe the global HVAC industry is now beyond its collective bottom, hit in 2009 (residential and commercial). After four straight down years, residential HVAC is poised for solid double digit growth in 2010.” In addition, the commercial segment “is set to turn the corner in the next six to 12 months, with potential greater upside than residential.” SUPERMARKET & RESTAURANT REFRIGERATION BEGINS ON PAGE 1 According to Talbot Gee, vice president of the Heating, Airconditioning & Refrig-eration Distributors International (HARDI), the J.P. Morgan report is one of the most comprehensive reviews of the HVAC indus-try. However, he noted that HARDI and its members have some reservations about the 2010 report’s forecast, which he acknowl-edged is based primarily on data from a handful of companies that may not be entirely reflective of the industry as a whole. ■ See GROWTH PREDICTED page 6

Solid HVAC Growth Predicted

Kimberly Schwartz

According to financial services firm J.P. Morgan, the outlook for the North American HVAC market is one of solid growth.The firm released its 2010 HVAC Review and Outlook report in early July with predictions that both the residential and commercial sectors will improve. However, some in the industry have expressed concern that the outlook is too optimistic. The first encouraging note is the report’s statement that the HVAC market hit bottom in 2009. The report said, “We believe the global HVAC industry is now beyond its collective bottom, hit in 2009 (residential and commercial). After four straight down years, residential HVAC is poised for solid double digit growth in 2010.” In addition, the commercial segment “is set to turn the corner in the next six to 12 months, with potential greater upside than residential.” According to Talbot Gee, vice president of the Heating, Airconditioning & Refrigeration Distributors International (HARDI), the J.P. Morgan report is one of the most comprehensive reviews of the HVAC industry.However, he noted that HARDI and its members have some reservations about the 2010 report’s forecast, which he acknowledged is based primarily on data from a handful of companies that may not be entirely reflective of the industry as a whole. In its predictions for the residential market, J.P. Morgan noted that key drivers for growth include a historical pattern of 5 percent growth in the installed base, a return in consumer confidence, and pent-up demand to replace systems that were repaired or deferred during the downturn. The report specifically noted that new housing is not considered to be a driver for the residential market, and assumed “f lat starts” for new housing. HARDI’s Gee agreed that new housing starts are not expected to rise, since they currently remain below historical levels. However, he expressed concern about relying on the theory that pent-up demand for replacement units will substantially boost the residential market. The report said that replacement demand will stem from both core demand and pent-up demand.It defined core demand as including “(1) growth in the replacement base and (2) the impact of improving consumer confidence.” Pent-up demand was estimated separately: “We continue to believe a pent-up replacement cycle exists as a result of the sales declines from 2007-2009.” Assuming that many residential consumers have chosen to repair their systems rather than replace them during the downturn, J.P. Morgan also conducted a survey to estimate how long repaired systems typically last. According to its survey, more than 70 percent of contractors “estimated that the repairs would only last 1-3 years, implying that there will be a significant number of units that will break again in the next few years and need to be replaced.” J. P. Morgan’s model for forecasting replacement demand predicted that repaired systems could start being replaced as soon as 2010. HARDI’s summary of the market outlook, however, stated, “Estimates of 6.91, 8.16, and 9.12 million residential units replaced in 2011, 2012, and 2013 respectively may be overly optimistic since the 2012 estimate would be the industry’s second largest unitary production in history, and 2013’s estimate would exceed the current peak of 2005’s 8.61 million units by nearly 6 percent. It is unclear what percentage of these replacements would be covered by warranties and therefore delivering little to no revenue growth to the industry.” Gee also noted that those previous peaks were strongly aided by unprecedented growth in residential new construction, which will not be the case over the next four years. COMMERCIAL OUTLOOK For the longer term outlook, the report stated that it prefers investing in residential HVAC.However, on the commercial side, the report favored near-term investment in commercial HVAC.According to the report, the commercial HVAC segment “is set to turn the corner in the next six to 12 months, with potential greater upside than residential.” Furthermore, the report added, “We expect commercial sales to turn positive in 2011, with growth potentially exceeding residential starting in late 2011 and into 2012, which should favor commercial players over residential.” Citing recent trends in commercial as more positive, the report said, “As of now, order trends are beginning to turn (less bad) in commercial; However, we expect sentiment to become significantly more favorable in coming quarters.” In contrast to this, Gee said that HARDI’s chief economist, Alan Beaulieu of the Institute for Trend Research (ITR), does not share this positive forecast for the commercial market. “Our commercial outlook is not aligned with this rosy picture,” Gee said, noting that he is concerned someone might skim the J.P. Morgan report and “think there’s going to be a broader commercial recovery sooner than we think.” Beaulieu said, “The differences between J.P. Morgan and ITR are most likely found in employment expectations and the related vacancy rates. We believe employment levels will only slowly improve, and thus vacancy rates will be problematic for longer than J.P. Morgan does. Overall, they must be expecting a stronger general economic recovery than we are.” Gee noted that HARDI solicited responses from its member distributor companies about the report, and no one reported feedback that correlated as positively with J.P. Morgan’s commercial forecast. When considering commercial vacancy and foreclosure rates, in addition to the tighter credit market, Gee said, it’s hard to see how commercial could turn around and make such positive gains so quickly. “In light commercial, where more of our members play, you run into even more commercial finance issues,” he said. “Just like the contractors are seeing today, small businesses are not getting access to capital credit for expansion. “Since our products are also disadvantaged in terms of tax depreciation, there’s just not a lot of incentive (outside of state or utility programs offering rebates) to do a whole system change-out in a commercial setting.” Gee added, “It is possible, however, that J.P. Morgan is basing their commercial projections on growth of the larger, applied systems which is not a large part of most HARDI distributors’ businesses.” POLICY OUTLOOK J. P. Morgan also noted that the continuing trend by government to focus on increasing energy efficiency is “good for the industry,” and it sees “several regulatory drivers that serve to drive demand” for HVAC equipment. This includes the switch to R410-A, which J.P. Morgan claims “should be a positive for mix (more full system sales) as should the new regional SEER regulations.” HARDI cautioned, “It remains To be seen how homeowners will accept full system replacements that will now be required and what long-term impacts that could have on unitary sales.” Gee added that the regional regulations have not been finalized or enacted yet, and there are many complex variables which could upset the positive outlook contained in the J.P. Morgan scenario.According to HARDI, “Increases in federal minimum efficiency standards in 2006 have proven to be a net negative in terms of unitary shipments, raising questions about JP Morgan’s rosy outlook if higher, regional standards are enacted. 2012 could see some furnace replacement pull through in advance of a new furnace standard(s) in 2013, but furnace sales could suffer after the new standards go into effect. “Changes in cooling standards wouldn’t take place earlier than 2015, so there should be no effect on 2011-2013 a/c and heat pump sales. “Further, HARDI has repeatedly expressed to the U.S. Department of Energy concerns over the longterm negative impact increased minimum standards could have on energy efficiency incentive programs, which have played a significant role at improving the mix of high-efficiency unitary sales. There are other factors at play regarding reasons for changes in minimum standards, but one of them should not be an expectation that such a change would boost unitary sales.” As a final note of restraint, Gee added that the 25C tax credits are set to expire at the end of this year. HARDI stated, “The outlook does not appear to take into account the potential dropoff of equipment sales and margins which could occur if the $1,500 25C residential tax credits are not extended beyond 2010.” Overall, Gee said, HARDI does forecast an industry recovery, but at a much slower pace. “We are in recovery, but it’s a modest one, not a record-breaking one,” he said. “We’ve had a very cautious optimism this year, and we’re easing off our expectations for 2011.” HARDI is promoting a three-year extension of the 25C tax credits and a reduction in the depreciation period for commercial HVAC systems as two essential measures needed to sustain growth in the HVAC industry. J. P. Morgan publishes its report annually with the intent to provide a guide for investors. As a disclaimer, the firm disclosed that it does and seeks to do business with the companies covered eProduct #40 at achrnews.com in its research.

FMI Show Highlights Changing Technology

Peter Powell

LAS VEGAS — “The design of refrigeration systems in supermarkets is going through a state of f lux not seen since the conception of man-made refrigeration some 130 years ago.” That statement by piping manufacturer Georg Fischer, an exhibitor at FMI 2010, was reinforced throughout the Mandalay Bay Convention Center show floor at the most recent everyother- year event sponsored by the Food Marketing Institute. The Georg Fischer statement also said, “The main drivers concern the environment and compliance to local and global regulations to reduce refrigerant charges.” For a number of years, the supermarket sector has been responding to those Drivers with changes to direct expansion systems and the introduction of distributed and secondary loop technologies — to go along with efforts to increase energy efficiencies across the board. The latest Las Vegas show simply notched up the ante even higher. The established technologies underwent everything from tweaking to major overhaul, with everybody on the same page to reach Department of Energy (DOE) 2012 standards, and more than a few manufacturers proclaiming that their latest wave of new products have already met that standard. Here then by category are some of the featured refrigeration-related technologies on the show floor — with manufacturers listed alphabetically within each category. SYSTEMS SYSTEMS Georg Fischer LLC (www.Cool-fit.georgfischer.com) featured Cool-Fit®, a piping system for secondary and indirect refrigeration systems. The target is systems using CO2 in cascade with medium-temperature indirect glycol refrigeration or complete indirect systems with salt solutions for both low and medium temperature. Cool- Fit is said to be “a dedicated piping system designed to specifically to suit the specific needs of indirect refrigeration.” The piping is ABS (Acrylonitrile-Butadiene-Styrene). Hill Phoenix (www.hillphoenix. com) featured Second Nature Low Temperature Direct Expansion Cascade (SNLTX2) which the company said is “the next level in CO2 refrigeration.” The system uses CO2 as a direct expansion refrigerant. CO2 removes heat from the display case and walk-in freezers through copper piping smaller than what is typically found in an HFC direct expansion system. The HFC refrigerant is confined to the primary system located in the machine room, thus reducing the total HFC refrigerant charge. The system uses CO2 subcritical compressors. Hussmann (www.hussmann. com) showcased Protochill, a distributed secondary system. The company said, “Protochill utilizes the Protocol HE platform in conjunction with an integrated pump and heat exchanger package for a medium-temperature application.” It is said to be applicable for new stores and remodels.Energy sayings are realized “as a result of the proper load matching and pressure drop reduction due to proximity of the units to the refrigerated cases and coolers.” Structural Concepts’ (www.Structuralconcepts.com) Energy Wise refrigeration system was designed to reduce annual energy consumption by more than 50 percent, in part by allowing stores to run a warmer rack temperature (24-26°F) without compromising product temperature integrity in the case. According to a statement from the company, “Structural Concepts evaluated the entire case design — components, airflow, external inf luences — to be sure that EnergyWise offers a truly effective, energy-efficient design.” The EnergyWise refrigeration system “uses a high-efficiency evaporator coil that reduces the amount of energy required to cool it. The tubing in the evaporator coils has more surface area to allow more heat transfer. Therefore, the refrigerant running through the tubing doesn’t have to be as cold.” Test results, said the company, show that the system reduces daily energy consumption to a level that exceeds the DOE’s 2012 requirements for open refrigerated display cases. A honeycomb feature placed in front of and outside of the shelves directs and forces the cold air straight down to the air return, creating an air curtain that keeps cold air in and ambient air out. ECM fan motors and LED lighting are also used. CASES Corrigan (www.corriganmist. com) featured Ultramist™, a misting system for fresh food displays.The system, with several options, consists of a filtration pump for places where water hardness is low, a reverse osmosis unit when scale buildup on cases is a concern, a Controller that turns misting on and off automatically, a QueTwo audio warning controller that provides stereo sound or messages just prior to misting, and three types of cones — a 80-degree hollow cone for misting from the canopy of the produce case, fan style for misting along the back of the produce case to avoid overspray, and a 110- degree hollow cone for undershelf installation and when product is close to the mist bar. EconoFrost (www.econofrost. com) showed night covers for open refrigerated display cases. The manufacturer said the products are “engineered for performance and designed to integrate with store décor and merchandising.” Hill Phoenix said its newest display case technology, called Synerg-E™, combines patented evaporator technology with proprietary airflow management system. According to a statement from the company, “The first half of the design starts with the NRGcoil, an evaporator design that features increased primary and secondary cooling surface, which operates at higher suction temperatures and decreases the total energy required as a result. NRGcoil includes an integral liquid subcooler that increases system efficiencies by supply liquid subcooling and vapor-free liquid to expansion devices. The second half of the design is an airflow management system that combines an air scoop, rear baffle design, reengineered top canopy supports, and high-efficiency fans.” Hussmann showed a meat case called XtraLife that is said to reduce bacterial growth by providing a lower, more consistent product temperature, without freezing products. Also shown by the company were EcoVision doors for new or existing multideck dairy, deli, and beverage cases. The door design allows less heat into the case, the company said. Kysor/Warren (www.kysorwarren.com) highlighted a multi-deck refrigerated merchandiser in the Stratus product line. The Stratus models feature standard ECM fan motors, recycled/recyclable bumper and drain pan, and options for LED lighting using Kysor digital lights and night curtains. According to the company, the 9-W fan motors have dual-speed programming and automatically adjust to load differences while maintaining a set speed and efficiency range. Structural Concepts G Series display cases for deli, meat/ seafood, and bakery merchandising come in low-, medium-, or high-capacity configurations. They meet the DOE’s 2012 energy standards, it was reported. They have stainless steel tub and fan shrouds. The company also noted the CO Series of refrigerated air curtain grab ’n go cases and the CT Series of refrigerated and nonrefrigerated countertop cases that can sit on or drop into counters. Trade Fixtures (www.tradefixtures.com) noted that it has custom millwork for display cases. COMPONENTS Frost (www.frostrefrigeration.com) provides insulated panels for processing plants, cold storage facilities, supermarkets, and distribution centers. The company has panels for interiors, exteriors, liners, exterior roofs, and walk-in coolers and walk-in freezers. A humidification system for refrigerated warehouses was shown by MiaTech (www.miatech.org). “On average, when produce can be stored with added humidity to the amount of 90 percent rh or higher, the unpackaged product has reduced weight loss by more than 50 percent over produce that is stored in an environment without added humidity,” the company said. Muller Industries (www.mullerna.com) highlighted the 3C condenser SH09 Series. According to the company it “combines the absolute latest technology to achieve the performance expected from an environmentally focused heat rejection system.” It has aluminum construction including a micro-channel heat exchanger, Ziehl-Abegg Owlet fans, and an optional ETAvent technology. The condenser is designed to reduce water consumption, and increase energy efficiency. Randall (www.unifiedbrands.net) had a refrigerator/freezer system for use in refrigerated drawers, preparation worktop systems, and precision storage systems. Drawers operate independently, said the company, and users can switch from refrigerator to freezer. The technology, called FX Series, can also be used as a safety thaw system to thaw frozen food. LIGHTS EcoBrite (www.ecobriteledlights.com) promoted what it called Precision Optical Performance™ (POP) for lighting. “Using specially designed optics that accurately focus the high-intensity beam of our LED lights, POP Technology™ makes display cases more visually appealing. Hill Phoenix announced a proprietary brand of Clearvoyant™ light-emitting diode (LED) for refrigerated cases. The LEDs are said to use less energy than traditional f luorescent lamps with no mercury, phosphors, load, or UV rays. The company said they last an average of five to eight years. Promolux (www.promolux.com) had lighting for fresh food display cases at the show. The company described the product as a “reduced radiation lamp” capable of extending the shelf life of products being displayed under the lights.

FYI

Contractors AtmosAir Solutions (Fairfield, Conn.) Named Rex P. Boynton to its advisory board. ¦ Home-Tech (Fort Myers, Fla.) Was included in the Lee County Economic Development Office’s list of the largest 100 employers for the second half of 2010. Manufacturers Arzel Zoning Technology Inc. (Cleveland) expanded its training facility and released dates for its Comfort College sessions: Sept. 9-10, Oct. 7-8, Nov. 11-12, and Dec. 9-10. ¦ Southern Stainless Equipment (Waynesboro, Va.) Acquired and reopened W.A. Brown and Son (Salisbury, N.C.), a manufacturer of walk-in coolers and freezers. ¦ Hart and Cooley Inc. (Grand Rapids, Mich.) Announced its Smart EAC1000 electronic air cleaner is now available through Dependable Air Supply (Melbourne, Fla.). Distributors Upstate Systems (Rochester, N.Y.) was named the 2009 Northern Region Distributor of the Year by Source 1 (Norman, Okla.). Organizations The American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) is calling for papers for its 2011 annual conference on alternative technologies, net-zero buildings, and HVACR fundamentals; the deadline is Sept. 17.For submittal requirements, visit www. Ashrae.org/montreal. ¦ The Refrigeration Service Engineers Society (RSES) became an authorized delivery partner for the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI) SkillTech Academy’s Residential Mechanical Ventilation Installation training program. — compiled by Kimberly Schwartz

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