Training positions propane to benefit from housing recovery

Bill Dionne has built many homes over the course of his career, but never one that was heated by propane.

With his construction business in a record slowdown, Dionne decided it was time to learn more about this fuel that, until now, he has only used for fireplaces in otherwise all-electric homes. The Murfreesboro, Tenn.-based town homebuilder took four online courses sponsored by the Propane Education & Research Council (PERC) to learn more about tankless water heaters, standby generators and energy code considerations.

“I just wanted to be more knowledgeable,” says Dionne, adding that he was interested to learn that propane-fueled tankless water heaters are more efficient than other types. “If people want to know about it, I’m ready now to answer their questions and go forward with them.”

Since 2008, more than 11,200 builders, architects and others in the construction and remodeling industry have taken advantage of courses offered by PERC to expand their understanding about propane. Today, building professionals can access 19 certified courses that help them remain current in their industry and prepare them to respond to customer concerns. PERC hopes this knowledge will compel them to recommend that their customers use propane heaters, appliances, generators and other technologies in their homes, since those customers rely on their expertise.

The courses are part of an overall strategy developed by PERC to capture more of the residential market and increase the number of gallons sold for this segment, which accounts for about 50 percent of the propane business overall.

In an effort to capitalize on this opportunity, the propane council has spent more than $17.5 million from 2006 to 2010 to increase the awareness of propane’s benefits among construction professionals and offer training in the installation and use of residential propane technologies.

The investment comes at a time when national new housing starts are among their lowest ever. According to the U.S. Commerce Department, builders broke ground on 587,600 homes in 2010, slightly more than the 554,000 begun in 2009. They are the two worst years for housing starts in the last half-century. By comparison, according to data provided by the National Association of Home Builders, builders started more than 1 million new houses every year since 1978 – and they started about 2 million new houses in 2005.

With fewer people buying homes, builders are challenged to find new ways to improve their profitability.

Tracy Burleson, PERC’s director of residential programs, says the struggling economy makes this an ideal time to reach out to builders: Because they aren’t busy with projects, they finally have time to take those continuing education courses and discover energy-efficient alternatives that will appeal to cost-conscious customers.

“We are getting in front of those key decision makers when they have more time, and frankly, they’re looking at their business and how to evolve in this economy,” Burleson says. “Those are the people who will be leading the rebound when new construction starts to increase.”

The Residential Training Program, to which PERC allocated another $4.9 million for 2011, targets four areas of the residential market: new home construction, appliance installations, furnace retrofits or new installations, and new technologies.

In 2010, total residential sector propane demand was about 4.8 billion gallons in a 11.4 billion gallon market. PERC is targeting growth of 107.6 million gallons by 2015.

New home construction
Customers who choose to heat their homes with propane tend to be more affluent and construct high-end custom houses “off the main,” Burleson says. Builders who work in large developments are more likely on a natural gas main or planning all-electric homes, she explains, so the program targets the nearly 91,000 builders around the country who construct fewer than 100 homes each year.

While the speculative housing market has fallen dramatically since 2005, those homes built by owner or under contract have seen a steady market share increase, from 19 percent to 31 percent since 2005, and, Burleson says, 33 percent of single-family new housing starts in 2010 were custom. Citing 2007 Survey of Construction data, PERC says 61.5 percent of new propane housing starts were custom homes.

“There’s still building going on,” she says. “They’re still building custom homes, and those are a lot of the homes propane will go into. Even in a declining market, there are still opportunities for propane.”

Appliance installation
The training program hopes to encourage builders, remodelers, plumbers and HVAC specialists to recommend propane appliances throughout the homes of current propane customers.

According to PERC, 4.4 million households already using propane for one or more appliances also have electric water heaters, which cost more to run than their propane counterparts. If all of those customers switched to propane water heaters, propane sales would increase by more than 500 million gallons a year, according to PERC market research.

If all existing propane homes were filled with propane appliances, sales could total 1.5 billion gallons a year, the report says. Some 8 million propane customers could add one or more additional applications.

By enlisting the support of construction professionals, the training program hopes to gain 3.2 million gallons in 2011 – and 18 million gallons by 2015.

This outreach is showing some success. According to Harris Interactive, in 2009, PERC programs increased the number of construction professionals who used a propane appliance by 5 percentage points. That’s 4,550 more builders who used a propane appliance than in previous years. “Overall consideration of propane by this group as an energy source for all appliances trended upward in 2009,” the PERC report states. “This is further reinforced by the findings that there is a significant increase in the number of construction professionals saying they are recommending more propane appliances than they have in the past.”

Furnace retrofits
With the number of homes heated by oil declining by about 130,000 each year due to environmental concerns and market conditions, Burleson senses an opportunity to convert those customers to propane.

The program aims to increase the number of propane furnaces installed by 1 percent to 1.5 percent – or 4,550 households – each year. By 2015, that would amount to 20 million more gallons sold for heating homes.

Although this aspect of the program applies mostly to the Northeast region, the potential volume holds national significance, Burleson says. The goal for 2011 is 2.9 million additional gallons, with 9,000 households added per year. By 2015, incremental propane sales for this 7.5 billion gallon segment could equal 20 million gallons.

New technology
The fourth leg of the training program encourages the development and use of new products coming out of the research and development program and available to contractors.

These new products are highlighted through the development of online courses and advertising, and those products are featured at the PERC booth at builders’ trade shows.

For example, the Generac Premium Genset was featured in January in PERC’s booth at the International Builders’ Show. For other trade shows, including the JLC Live residential construction show in March in Providence, R.I., PERC has developed a Propane Innovation Pavilion, with such sponsors as Kohler and Rinnai, to display new technologies and offer training.

ace=”8″ hspace=”8″ height=”267″ border=”0″ align=”top” alt=”” src=”/files/lpgas/nodes/2011/2226/gen_0.jpg” />

The shows give PERC a chance to connect builders, architects, HVAC installers, plumbers and other construction professionals with manufacturers of propane equipment. Burleson says about 40 people attended a course on outdoor living technologies at the recent builders’ show, and many of them stayed behind to ask more questions about their projects. More than 5,800 people visited the PERC booths last year, according to Burleson’s report.

PERC estimates that the outreach in this area could result in sales of another 650,000 gallons in 2011, with a total of 14.64 million gallons sold by 2015.

Courses offered
Although PERC’s buildwithpropane.com website offers information about the advantages of using propane and helps calculate cost differences among the fuels, PERC has added a new site that takes visitors directly to its courses.

At www.propanetrainingacademy.com, visitors may register and view all of the courses available, including those that have been certified by four construction-related associations as meeting requirements for continuing education units.

Courses are developed by a team that includes Burleson and other PERC employees, in partnership with Hanley Wood, a provider of certified training courses to professionals in a variety of industries.

The courses have been increasingly popular, growing from 800 registrations in 2008 to 3,380 in 2009 and 3,919 in 2010, Burleson says.

Al Battista, a semi-retired builder working with the city of Plymouth, Mass., to redevelop vacant parcels of land into Cape Cod-style homes for lower- and middle-income families, says he took four courses to become more familiar with propane.

Having decided that oil is expensive and messy, Battista opted to use propane to build three houses last year where natural gas was not available. “It was easy to use,” he says. “It’s worked out very well for the owners.”

Battista, who works as a consultant with the city’s community development office, says the courses helped him remain current with the building industry and made him more comfortable working on the redevelopment project. “I think propane is great. It’s a great fuel,” he says. “I would not hesitate in any way to use it again for any of the houses that we’re doing.”

After years of coping with a depressed building market, Burleson says builders are cautiously hopeful that a slow recovery has begun. “We won’t be back at those 2006 or 2007 numbers right away, but the feeling there [at the show] was optimistic,” she says. “At the same time, they’ve been hit very hard. But overall, everyone was optimistic about a recovery in 2011.”

With the courses and other training aids, construction professionals will have one more tool in their pockets to help them as that recovery takes shape. “This is a market that goes up and down, and you have to stay in the market and in front of these professionals, because at the end of the day they have influence over the [customer’s] energy decision and which energy source goes into the home,” Burleson says. “Staying in front of them in their downtime gives us an opportunity to give them information. Then we can take advantage of the upswing.”

Photos courtesy of the Propane Education & Research Council