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September 30, 1996 02:00 AM

COOL PROFIT POTENTIAL: A/C SYSTEM RETROFIT IS THE NAME OF THE GAME: BIG-BUCK POTENTIAL: LEAST-COST RETROFIT: USE OF ALTERNATIVES? : NO `ONE-SIZE-FITS-ALL' : DEVISING THE PLAN : THE TIME WAS RIGHT : NO PROBLEMS : WHY RETROFIT NOW

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    ATLANTA-There's no denying the Clean Air Act has left its imprint on the nation's air quality and automotive service shops. Long gone are the days when a service tech could vent an air conditioning system into the atmosphere without giving it much thought-or fear of recrimination.

    Federal regulations governing the use and disposal of A/C refrigerants have cut the use of chlorofluorocarbons (CFCs)-said to harm the Earth's protective ozone layer-and have compelled technic-ians to employ more environment-ally friendly A/C repair methods.

    And while that has admittedly placed added burdens on shops in the way of purchasing refrigerant recycling and storage equipment, it has also created a new opportunity for some cool profits.

    A seminar at the recent convention and trade show of the National Tire Dealers & Retreaders Association, held in Atlanta Sept. 5-7, approached from different perspectives the question of whether or not to retrofit vehicle A/C systems to accept alternative refrigerants, specifically R-134a. Two experts whose business has helped set the industry standard for retrofits, and a government regulator who oversees Clean Air Act enforcement, discussed retrofitting's profit potential.

    All hands agreed: Retrofitting is an almost untapped market today.

    There are 180 million passenger and light truck vehicles on the nation's roads, and 90 million of them still have CFC-12, commonly known as ``Freon,'' in their A/C systems. Some 30 million of those are expected to need a retrofit within the next few years, said Susan Stendebach, branch chief for the Stratospheric Protection Division of the U.S. Environmental Protection Agency (EPA).

    An average retrofit costs about $200-some are higher, some lower-equating to $6 billion in work nationwide. ``That's a large market opportunity,'' she said.

    The Clean Air Act requires the EPA to review Freon substitutes for their ozone-depleting chemicals, global warming potential, flammability and toxicity, Ms. Stendebach said.

    The agency does not review them for compatibility with A/C system components, nor does it judge whether the refrigerant will cool adequately.

    She also acknowledged the EPA has 10 regional offices, and up to three investigators from each randomly visit auto service shops to inspect for correct A/C servicing equipment and procedures.

    Those visits are often prompted by tips the EPA receives from shop owners angered that they are operating legally, she said, while ``the guy down the street is venting refrigerant into the air.''

    For a least-cost retrofit, the EPA requires that the original refrigerant first be removed (no topping off); fittings unique to the substitute refrigerant-and either a PAG or POE oil-be installed; color-coded labels with specific data on the new refrigerant be displayed; and, if the replacement refrigerant contains R-22, barrier hoses be used.

    Ms. Stendebach said customers should also be advised to consider changing the accumulator or receiver/drier, especially if the system is opened to the atmosphere for any length of time, and have a high-pressure cutout switch installed if the system is not yet equipped with one.

    To eliminate cross-contamination, shops must use separate recovery equipment for each type of refrigerant purged from a system.

    Currently, the EPA lists these refrigerants as acceptable for retrofits:

    R-134a-ac-cepted by all vehicle manufac-turers, it is the most commonly used and widely available;

    FRIGC FR-12-its main ingredient is R-134a;

    Freezone-its main ingredient also is R-134a; and

    Ikon-12-not yet marketed, its composition is confidential.

    The EPA is in the process of reviewing or has proposed the following as acceptable:

    FREEZ-12, whose main ingredient is R-134a;

    R-406A/GHG/McCool;

    Autofrost/Chill-it;

    Hot Shot/Kar Kool; and

    GHG-HP.

    The last four have R-22 as their main ingredient.

    The agency has listed HC-12a, a flammable blend of hydrocarbons, as unacceptable because insufficient data has been presented to demonstrate its safety.

    There are a number of pros and cons to using alternative refrigerants other than R-134a, according to Ms. Stendebach.

    R-134a has a higher pressure than CFC-12, she said. It cools almost as well as Freon, though R-134a places more stress on an A/C system's components.

    She listed these drawbacks:

    Refrigerants other than R-134a are not currently available nationwide and have not been extensively tested by original equipment manufacturers;

    Using other refrigerants may void OEM warranties;

    Alternatives to R-134a cannot now be recycled on-site, and must be sent off-site for reclamation;

    The EPA requires separate recovery equipment for each refrigerant; and

    Most other refrigerants are currently more expensive than R-134a, which this summer was priced at about $3 per pound or less.

    A final ruling by the EPA on its regulations affecting R-134a and other alternative refrigerants is expected to be issued either in December or early January.

    Ms. Stendebach urged shops doing A/C service to become a part of this $6 billion opportunity by becoming an expert in retrofitting, then devising and implementing a marketing plan.

    However, there is no universal ``one-size-fits-all'' retrofit procedure for all vehicles.

    ``In order to minimize comebacks,'' she said, ``you will need to rely on your experience and judgment to determine the appropriate steps to achieve a successful retrofit in each vehicle.''

    Some of the conditions that may drive up the cost of a retrofit, Ms. Stendebach said, include problems caused by higher pressures of new refrigerants; worn hoses and O-rings; and existing condensing capacity which is insufficient with new higher pressures.

    ``Only wide-scale durability testing of thousands or millions of retrofitted vehicles will provide a full understanding of how retrofit affects the life of each A/C compon-ent,'' she explained, noting there currently are no Chilton's or Mitchell's manuals to ``give you all the answers.''

    But NAPA, the auto parts chain, as well as equipment maker Snap-On Tools, A/C specialists Four Seasons and Everco, and the Mobile Air Conditioning Society (MACS) and the International Mobile Air Conditioning Association (IMACA) offer retrofit training and materials.

    There are a number of factors a shop must consider before deciding to do retrofits, Ms. Stendebach said. How will you sell retrofit to customers? Will you retrofit any vehicle that comes in, do only those that are relatively easy to perform, or just provide least-cost alternatives? Are you going to offer the customer various options or warranties? Will you be able to service the vehicle and recycle the new refrigerant?

    ``The right time to retrofit is when a major repair is being performed on a vehicle,'' she said, ``because the incremental cost of the retrofit may be modest.

    ``But you must closely look at the `Three C's': Components, Climate and Cost.''

    Some technicians-unsure of and uncomfortable with new service procedures-may be afraid to make those decisions, she added, thus passing up an opportunity to tap into a growing, profitable market.

    In the winter of 1992, Arctic Auto Air Inc. in Ft. Lauderdale, Fla., began experimenting with retrofitting employees' vehicles.

    Christine Torres, vice president, said the company was determined to dispel ``scare'' reports in the media that a retrofit procedure could cost consumers between $1,000 and $3,000 per vehicle, while at the same time create a retrofit standard the industry could follow.

    ``It was unrealistic for consumers to spend thousands to retrofit their vehicles,'' Ms. Torres told her NTDRA audience of dealers and service technicians. ``Unless low-cost alternatives could be found, our service bays would be empty.''

    Arctic's first test was on the 1991 Chevy Blazer of its general manager, Richard Disney, who also addressed the NTDRA seminar.

    By the following summer, the company began promoting low-cost $195-per-vehicle retrofits to customers. At the same time it embarked on an effort to educate consumers, a ``key'' element to successful retrofitting, Ms. Torres added. Arctic explained problems with alternative refrigerants, showed customers retrofit and A/C materials, a video, and then let them observe an actual retrofit.

    It has since retrofitted more than 850 vehicles that have logged 15 million miles of virtually problem-free operation, she said.

    With the continual introduction of refrigerant blends into the marketplace, and no specific retrofit guidelines, Ms. Torres said her company has called for a single industry standard of refrigerant-the widely accepted R-134a-and a standard retrofitting method.

    The use of several refrigerant alternatives has created problems of higher costs, distribution and cross-contamination.

    And what happens if a customer's vehicle, retrofitted with something other than R-134a, breaks down miles from his preferred repair shop? Ms. Torres asked.

    ``What are his chances of finding a facility with recovery equipment for that refrigerant? We've already repaired several retrofits done by other shops where shortcuts were taken. This hurts our industry-there are no shortcuts!

    ``We must train the industry and service sector to adhere to standard retrofit procedures for a smoother transition from R-12 to R-134a.''

    Mr. Disney said Arctic Auto Air has dispelled claims that only late-model vehicles can be economically retrofitted. It has even performed its low-cost procedure on vehicles dating back to the 1960s.

    Unless an A/C system is contaminated, its mineral oil often does not have to be replaced, he said, advising technicians to use a calibrated charging guide rather than the unit's sight glass to determine if it's fully charged.

    Ms. Torres said her company makes periodic calls to customers to ensure they're satisfied that their vehicle's retrofit is performing up to par. Most are.

    The consensus: ``Most customers are environmentally concerned, and feel a retrofit is a small price to pay to save the environment.''

    She gave the following reasons for service shops to begin implementing retrofit programs:

    Environmental concerns;

    To prevent being victimized by Freon price gouging-last April, 30-pound cylinders of R-12 were selling for $650;

    R-12 currently costs 500 times more than R-134a;

    R-134a retrofits are simple and relatively inexpensive; and

    Higher profits are achievable.

    Letter
    to the
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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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