Not much has changed on the economic front since we last looked at an overview of the radiant hydronics market in the January 2010 issue of Reeves Journal. The sluggish economy, coupled with changing consumer outlooks on various luxury-type goods and a reluctance to spend, are working to keep this segment moving slowly at the moment. The upside, however, is that observers say these new market conditions will go long way toward killing the undesirable "boom and bust" cycle so prevalent in emerging segments, allowing it to become more stable into the future. 
   Robert "Bo" DeAngelo is the owner of Automatic Solar, a plumbing, mechanical, and solar service and installation company based in Boulder Colo. He said radiant panels, be they floor, ceiling, walls or whatever, represent 95 percent of his company's heating business. Things in his region have slowed dramatically. 
   "That segment of our business, heating, year-to-date is down 66 percent," DeAngelo said, adding that the timing around a company decision to raise rates could account for some of that. 
   "We're certainly getting our butts kicked," he said. "We are surviving because, thanks to Ellen Rohr, I have a crispy-clean financial statement that I understand. If it weren't for her, I would probably already be gone. I'm confident of that. I've been in tough times before but I've never seen it like this. Consumers are buying differently." 
   Indeed. On one hand economic woes conspire to keep consumers nervous about spending large amounts of cash. On the other, money's hardly ever been cheaper to leverage considering the advantageous interest rates, and home improvement loans are relatively easy to get. But consumers are a different, cash-clutching animal post-meltdown. 
   "The subcontractors are scared to death," said Paul Pollets, owner of Advanced Radiant Technology, a designer/installer in Seattle. "If they don't get the job, they can't pay any bills, so they take the job at a loss. This has always been the case-it has never changed in my 40 years experience. I've never seen such low prices in my life. It's scary-I do feel sorry for the consumer, but the consumer is the client, if the consumer is seeing value in low prices, then so be it." 
   Indeed, Pollets said his Seattle market is trending right along with most of the rest of the country in that consumers who can spend are really into scoring The Deal these days. Home improvements continue, but instead of adding a mega-dollar wing onto their McMansion, homeowners are instead opting for relatively simple projects-the basic $15,000 kitchen or bath remodel, for example. That pricepoint all but excludes add-ons like radiant heating.
   "When it comes to the hydronic market, it really did drop off significantly over the past six to 12 months," said Marianne Szczech, product manager for circulators with ITT/Bell and Gossett. 
   "I think that right now it has plateaued. It's growing very conservatively. I think there's a big drive with new technologies and high-efficiency systems," Szczech said. "I think that's what's going to drive the change in the plumbing and contracting business. What we've heard when we talk to wholesalers and contractors is that those who are really knowledgeable about these systems will stay in business and will be successful in this market and those who don't know a lot about hydronics and how things work will not." 
   Some would say this downturn, even though it's amplified by global economic woes, could simply be part of the natural "boom-and-bust" cycle common in young, growing market segments, especially those working to introduce new-ish technologies and concepts to a mass audience. 
   "It's certainly a lot slower than anybody would like to see but we're still selling stuff-products are still going out the door," said Bob "Hot Rod" Rohr, a plumbing, radiant heat and solar contractor and installer for 30 years. Rohr is now training and education manager for hydronics product manufacturer Caleffi. 
   "It was a slow in Montana, Idaho, Utah and that area when I was out there," Rohr said. "There were little things dribbling in and some solar stuff going on. I don't know if it will ever be the way it was again and, on one hand I hope it isn't," he said, adding the "boom-and-bust" would have people running themselves ragged on jobs one week and then sitting fairly idle the next.
   "We went through that in Utah for almost 30 years," Rohr said. "It's really hard to run a business when it's like that. I'm thinking maybe this is a time when we will have all re-examined what we do and how we do it and gear for a slow, consistent business instead of a boom-and-bust. I think that's realistic to expect in any industry. The automotive industry is seeing that right now-Ford and Chevrolet are still selling cars, but they've closed dealerships. I think that's going to be the model and as far as I can see down the road."
   Things are still moving along in some areas, it's just not ripping along at the same pace it was five or six years ago. Ted Lowe, the executive director of the Radiant Panel Association, a Baldwinsville, N.Y.-based trade group representing the radiant heating and cooling industry, said the entire building industry was hit pretty hard by the latest major economic misadventure and the slower-than-expected recovery.
   "However, the good news is that mortgages are at 30-year lows right now and refinancing is up. I'm hoping that will mean, or will translate into, jobs," Lowe said, adding the current slowdown may be a blessing in disguise in that it may kill the boom-and-bust cycle and provide a market that moves along at a more even pace.
   "That's a reasonable assumption-I wouldn't take issue with that," Lowe said. "With things being tough right now I think there's actually an increased awareness of and emphasis on streamlining and restructuring. Part of the problem the hydronic industry had is that it was very fragmented. It's been my experience that, with things being as tough as they are, people are much more amenable to talking about cooperative efforts they wouldn't have had time for if everything was booming. I see this as a great chance for the industry to take stock of where it is, evaluate business-as-usual, and, hopefully, come to the conclusion that business-as-usual is a long, slow death."
   Earlier this year great hopes were pinned on a convergence of the radiant hydronic and the solar markets. It doesn't take an advanced degree from a world-class university to see the obvious synergies between the two. And solar has seen quite a little boomlet of its own recently, what with various incentive programs and consumer awareness encouraging market penetration.
   "I'm using that to stimulate conversations with various people in the solar industry. I've had dialogue with people in the Solar Energy Industries Association, again, in the interest of understanding what our common interests are and figuring out ways to work together," Lowe said.
   SEIA is a 36-year-old trade association representing nearly 900 member companies in the photovoltaic, solar water heating, concentrating solar power and solar hybrid lighting industries. 
   "We should have a natural alliance," Lowe said. "Hydronics are the glue that holds all these various new alternative technologies together. I'm trying to leverage that into some cooperation. They get the benefit of our knowledge and we get the benefit of their youth and enthusiasm."
   The training a plumber can bring to the table in such a partnership is, of course, wide-ranging and extensive, simply because of the sheer number of outlets providing hydronic and solar information. 
   One such institution is ITT's Little Red Schoolhouse, a completely equipped learning center that has trained more than 50,000 engineers, contractors and installers in the proper design, installation and maintenance of hydronic and steam systems since opening for business in 1954. Larry Konopacz, manager of training and education, said increased solar training is on the Schoolhouse's radar screen.
   "We are actually in the process of developing a training manual for solar heating," Konopacz said. "We are hoping to have that out by the end of the year. Once we've gotten that developed, we want to put together a seminar on solar heating. That will probably be sometime next year. I would say [contractors are] showing more interest in both solar and a geothermal. I'm actually seeing probably more interest in the ground source heating."
   ITT/Bell and Gossett's Szczech said the reasoning behind heightened interest in geothermal training follows economic lines-particularly when talking about incentives and rebates: "The solar market is really spotty and it's dependent on how much money is out there. We get a lot of inquiries about solar, but geothermal heat pumps have been more consistent," she said. "Payback can be shorter with geothermal than it is with solar, especially if you get solar without taking advantage of a rebate."
   All things considered, the radiant hydronic market is seeing some challenging times at the moment. But challenging times always provide the opportunity to devise work-arounds, new technologies and develop new business models. It's the old "sharpen the axe" clich‚.
   "In the market itself I think there's a big drive with new technologies-high-efficiency systems," Szczech said. "I think that's what's going to drive the change in the plumbing and contracting business. There are contractors out there who know how to upsell and there are contractors out there who only know how to replace. I think the market is going to go toward high-efficiency when it comes to boilers, circulators and controls."
   Other trends are looming for the well-trained contractor looking for opportunities, and radiant cooling is just one. Cooling has always been a drawback of hydronics in that hydronic heating works just fine but people in warmer climates still needed to have air ducting for air conditioning systems. Then there can be problems with humidity-if you don't know what you're doing.
   "We're seeing more chillers, more chilled beams, more valance systems and radiant ceilings," Lowe said. "The contractor is going to have to get smarter and is going to have to expand his repertoire. They're going to have to understand the mechanical and the building from a more holistic point of view."
   As for the contractor, perhaps the best advice comes from DeAngelo: use the slower times to make sure your business' processes are as efficient as the systems it sells. 
   "Again, thanks to some good coaching and mentoring, my partner and me are blessed with the gift of knowing. We look at our numbers and we kind of know what we need to do," DeAngelo said. 
   "My bit of advice is for contractors to get down and dirty and use the down time to clean house and get their financial house in order, get their operational act in order and have a plan to work from so they don't starve while it's flattening out. We're awake, we have our eyes open; we're taking it seriously and were doing what it takes to keep the cash rolling in."