Mark Franzoso describes himself as being “pumped” when the Home Star, or “Cash for Caulkers,” bill was introduced in Congress last year. After all, the American Recovery and Reinvestment Act (ARRA) of February 2009 helped Franzoso Contracting, in Croton-on-Hudson, N.Y., sell more doors and windows than it had ever sold before.
Home Star, Franzoso figured, would be even better. Fast forward a year, and Home Star is gone, though not forgotten. Having passed by a House vote, the bill — touted as a jobs-creation measure — slowed, stalled, and died in the Senate.
WHERE IT GOES FRO M HERE Home Star may be dead, but that's not the end of home improvement companies' interest in weatherization. Far from abandoning the idea, an increasing number of companies, including Franzoso Contracting, are remaking themselves as “energy contractors.”
Franzoso, for instance, created a separate division within his company called Franzoso Energy Solutions, which offers air sealing and insulation to homeowners as part of a “home performance” package that begins with a home assessment by company employees, two of whom are certified by the Building Performance Institute (BPI).
It's not as if consumers are clamoring for the products and services that energy retrofit companies sell. How a house works remains a mystery to most people. “If you walked down the street and asked 100 people what ‘air sealing' is, you'd be lucky if one of them had any idea,” says Joe Talmon, president of Larmco Windows, a home improvement company in Columbus, Ohio. That said, Larmco now offers air sealing, insulation, radiant barrier, and energy assessments, also through s separate energy division.
Home improvement companies have gravitated toward energy retrofits for several reasons. Companies are looking for products and services they can use to extend the sale, generate additional revenue, and grow their average job cost. They count on the idea that consumers demand for a more energy-efficient house will grow as, inevitably, the cost of heating and cooling that house escalates. But although the need exists, the awareness largely doesn't. Still, there's a competitive advantage. Those companies already in the energy retrofit market tend to be single-product players — selling insulation or HVAC systems — and installing a single product isn't efficient when the whole house is tested as a system. “That's where the insulation companies fall down,” says Terry Ferrero, president and CEO of Pro Materials Direct, in Atlanta. “Most of them don't do air sealing.”
Ferrero, a manufacturer and distributor, entered the energy retrofit field as a supplier and subcontractor a few years ago. Since then he has built a network of 61 home improvement companies offering retrofits.
His own company does much of the installation. The timing is excellent: According to the most recent survey by the U.S. Energy Information Administration, conducted in 2009 and released in March this year, 58% of U.S. homes have energy-efficient double- or triple-pane windows, compared with 36% in the agency's 1993 survey. Companies that sell replacement windows need additional products or services to extend the product sale.
Many are also savvy marketing companies, able to reach out and identify prospects, make the appointment, and sell. “What those guys do is get people to move forward on projects,” Ferrero says. Homeowners may not be clamoring for energy retrofits, but they do need them and some will buy if the marketing and selling component is in place. Ferrero says that home improvement companies are uniquely positioned to create or “make” a market where only a limited market now exists.
HOW IT WORKS If you're thinking about energy retrofits, here are a few things to consider.