Skilled Labor Series: Scott Arnold on HVAC and heat pumps
*This episode is part of our new Skilled Labor Series hosted by MCJ partner, Yin Lu. This series is focused on amplifying the voices of folks from the skilled labor workforce, including electricians, farmers, ranchers, HVAC installers, and others who are on the front lines of rewiring our infrastructure.
Today's guest is Scott Arnold, a HVAC technician and small business owner based out of New York.
With heating and cooling accounting for nearly 50% of home energy costs, upgrading outdated appliances can not only save homeowners money but also provide a cleaner environment to live in and a healthier planet overall. Scott’s company is working to help customers purchase and install heat pumps as an alternative to gas-powered furnaces. In his 22+ years of experience working in the space, Scott has built a business facilitating the transition not only with his customers, but also through his employee training and apprenticeship programs.
In this episode, Scott and Yin talk about the history of heating, what it takes to make his business run, the importance of getting more young people working in the trades, and how in his vocabulary the word cold doesn't exist. You'll have to keep listening to find out why.
Get connected:
Yin’s Twitter / LinkedIn
MCJ Podcast / Collective
*You can also reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded on September 15, 2022.
In this episode, we cover:
[2:30] Scott's background and HVAC expertise
[5:47] Path to becoming a HVAC technician
[9:54] Economic mobility working in the trades
[12:40] History of HVAC space and key milestones that have changed the trajectory
[19:30] An overview of heat pumps
[20:36] Technology innovations in the past 20 years
[23:27] An overview of Scott's company, Rycor
[27:33] Scott's vision for expanding
[31:36] Mitsubishi's heat pump product
[35:23] The customer's mentality and where climate change fits in
[37:37] Different refrigerants and how they're managed
[39:41] What keeps Scott optimistic
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Jason Jacobs (00:01):
Hello everyone, this is Jason Jacobs.
Cody Simms (00:04):
And I'm Cody Simms.
Jason Jacobs (00:05):
And welcome to My Climate Journey. This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:15):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs (00:26):
We appreciate you tuning in, sharing this episode and if you feel like it, leaving us a review to help more people find out about us so they can figure out where they fit in addressing the problem of climate change.
Yin Lu (00:40):
Today's guest is Scott Arnold, a New York State-based HVAC technician and small business owner. We met him and a few other guests you'll hear over the coming months as part of a miniseries within the MCJ podcast we're doing amplifying the voices of folks in the skilled labor workforce. We wanted to do the series to learn from the people on the front lines rewiring our infrastructure. They're helping us reconfigure how we consume electricity, how we sustain what we eat, how we stay cool on sweltering summer days.
(01:07):
Also, as you may notice, I'm not Jason or Cody, I'm Yin, their partner here at MCJ. Like the rest of our team, I'm curious to learn and break down knowledge silos across the new climate economy. A big swath of that economy are the electricians, the HVAC technicians, the mechanics, the farmers, the solar installers, and many other women and men on the ground rewiring us for the next century. These perspectives are important to amplify, especially at a time when, for example, we need over 400,000 installation jobs just to meet the electrification demands in the US alone.
(01:39):
In this episode, Scott and I talk about the history of heating, what it takes to make his business run, the importance of getting more young people into the trades, and how in his vocabulary the word cold doesn't exist. You'll have to keep listening to find out why. And with that, Scott, welcome to the show.
Scott Arnold (01:54):
Thanks, Yin. It's really awesome to be here. I really appreciate the opportunity to be here with you and your audience. I love what you do.
Yin Lu (02:00):
So we were connected through an MCJ community member, Paul Lambert. Shout out to Paul. And we were connected because we were looking for folks to speak to who are on the front lines of rewiring our infrastructure and you happen to own a business helping people swap out their old HVAC units for new ones. And so let's start from the beginning. Scott, tell us a bit more about yourself, where did you grow up? How did you gain this interest in the HVAC space? Just more about you.
Scott Arnold (02:30):
All right, cool. Long story, boring story. I'll try to keep it brief. Grew up in Queens, moved here when I was 11. Interestingly, I met my wife when I was 13, fell in love with her right away. We ended up marrying around 20 and I realized I had to do something better for a career. So I started looking and I dabbled in auto mechanics and I ultimately found HVAC. And the reason I loved HVAC is because the idea of being able to keep people warm and comfortable in the winter and from being uncomfortable in the summer, it really just seemed like a magical kind of a thing. I went to school nights while I was working at a gas station and learned about each HVAC, got my license and started my apprenticeship when I was about 22 years old. And that's kind of like the beginning of it.
(03:10):
From that point, 22 years old, I just got my license, I took an apprenticeship job for a couple of years before I realized that the market in New York was not ready for heat pumps. The climate really hadn't caught up with the technology yet and we were in the infancy of it, but out in Las Vegas it was a really great solution. So we packed up our kids at that point, our dogs, our cats, went to Las Vegas and we started working in the heat pump industry out there. And man, what an exciting thing. I mean, I was intoxicated with the technology, just loved the idea that we could recycle all of our heat from the air instead of burning fuel to make new heat, we just got really well versed in it and proficient. And then ultimately my kids had to go to school, so we moved back to New York where we started our company Rycor after our two children, Ryan and Corey.
(03:57):
And very early on, before anyone else was adopting the technology in New York, because we still weren't quite there yet with the technology and the climate, we were still using heat pumps in New York as a secondary option, kind of shoulder seasons or over a fossil fuel burner for spring, fall, summer, but we weren't really able to collect heat at zero degrees or below in New York yet. So I was a little bit ahead of the curve that way, but as technology evolved over the next 10 years and we came out with inverters and hyper heat systems and we were able to proficiently collect heat from negative 20 degree air, it became more of a front and center type of technology. So because of that, we ended up being on the front of that curve and we now have the largest heat pump installer company for single zone heat pumps, ductless in, I think I hear in the Northeast actually, so it's pretty impressive.
Yin Lu (04:49):
You had mentioned the heat pump technology not being kind of its full force in New York when you first started this journey in this space. Why Las Vegas?
Scott Arnold (04:59):
It was an interesting thing. We actually had a friend who lived in New York that grew up with my wife that moved out to Las Vegas and he was working at casinos. And we were talking to him one night casually and he said, "Well, come stay with me. I'll help you find a job. You can find a house." So I did. I flew out there alone to stay with George, great guy. And George in that week helped me find, pointed me in the direction of three employers and I got hired by all three of them. And we actually bought a house in that one week's time, flew back home, packed up our entire life in the back of a 12-foot trailer hooked up to a trailblazer and went 55 hours straight with no stopping to get to our new home and our new adventure out in Las Vegas.
Yin Lu (05:41):
Very cool. Take us through the education path to become an HVAC technician.
Scott Arnold (05:47):
Yes. The education path is a lot different for everybody. I'll tell you what mine was, mine was very simple. I went back to a night school, it was an eight-week course, it was a couple hours a night on Tuesdays and Thursdays and I got certified in refrigerant handling. The refrigerant obviously is what the catalyst for the heat exchange is in every air conditioning and heat pump system. So once I was licensed in handling, I interviewed at a couple places for an apprentice position. I was hired as an apprentice, then two years later I started my own company. Now, in our company we have an apprenticeship program, we have a training room in our building.
(06:21):
So we hook up with all the local trade schools, high schools, military schools, every kind of state and federal-ran young empowerment program, disadvantaged community program, job placement. It could be, I hate saying but it could be people that are out of jail looking for a better path, it could be folks that just haven't had a really good opportunity put in front of them due to life circumstances. And we place these folks in our training program.
(06:46):
So our training program is about a three-month program. They come in as an apprentice, we train them on the job and in a classroom. And within three months they are a proficient member of the clean heat community as far as an installer goes. And the interesting part about the opportunity for electrification, decarbonization, and just the trades in general, in order to make this vision come true of getting off fossil fuels, we know now that there is going to be six jobs needed for every one replaced in the fossil fuel industry.
(07:20):
So for every oil tank driver that's out there, we're going to need six people to fill that place. Every oil technician that's out there, six people, because there's so much work to do. We have to work on the infrastructure, we have to work on manufacturing and installation, and then servicing all the stuff that we install, windmills and hydrostatic plans. And there's so much work to do. There's an enormous field. It's a wonderful, wonderful job opportunity for anybody thinking about getting into it.
Yin Lu (07:45):
What trends are you seeing in the folks that are coming through the apprenticeship program over the past decade? You bring up such a good point that we need more butts in seats on the front lines and I'm just curious, have you seen any changes in the volume of people coming in, the types of people that are coming in?
Scott Arnold (08:00):
I have. Historically, the folks that have gotten into the trades, it had a stigma kind of attached to it for a lot of years. If you were in the trades it's because you couldn't cut it as a lawyer, or doctor, or an executive, you couldn't fit into the corporate world, that box. So you ended up in the trades, you ended up fixing boilers, and doing plumbing, and plunging toilets, and you were that kind of lower class of person, that trades person that went home dirty and stinking at the end of every day for a minimum kind of pay. That has changed big time. I can tell you that there are folks in my company with not a lot of years of experience that are making six figures and some that are making double six figures. And it's an amazing opportunity because of the high aptitude and technical nature to the trades these days.
(08:43):
Working on an oil burner and working on a heat pump are two different creatures, it's a little more brain power and a little less grunt power than it used to be. So I think what's happening is schools, and trade schools, and parents, and community members, and people are starting to see that tomorrow's millionaires are tradespeople. That's just who it's going to be. If you're not going to make it on ETFs or Bitcoin, it's going to be trades. That's what's going to create the most millionaires in the future. And I think that instead of coaching young people or returning people looking to reeducate and repurpose their career into doing things like what we typically did, the corporate drone, we're seeing more and more entities, townships, and green energy coalitions, and pretty much is a big push towards the green energy field and the opportunity that's being created in it, this massive vacuum that exists in it right now. It's almost like people can come in, and after three to six months you could just name your price.
Yin Lu (09:39):
That's a pretty incredible proposition that you just put out there for anyone who might be interested in figuring out, any of our listeners who are thinking about, "What do I want to do as a career path?" I think that's very good to hear that there's quite a bit of economic mobility by being in the trades.
Scott Arnold (09:54):
There is. There is, Yin. And I could tell you that there are some folks in my company that have been with me for two or three years now that to me, I just don't know how I can replace them. So they get $100,000 a year because they're worth it and they get another $40,000 a year just not to look anywhere else. It's just the fear of losing them. It's an amazing, amazing opportunity. I can't say it enough. I tell my children, I tell my friend's children, I tell everybody I can, "Get into green energy." If you were going to learn about green energy, probably one of the first things and you didn't know what field you wanted to get into because solar, solar you have cars, EV cars, you have heat pumps. There's so many fields in the green energy future, but they all kind of center and start around electricity.
(10:32):
So I would always encourage somebody who doesn't know what field they want to get into, maybe take some basic electrical classes if you have an opportunity in your high school to do that, like a vo-tech day or two days, a lot of high schools have that. If you're going to go to a trade school and you don't know what field you want to be into yet, but you know want to be in that green energy movement, electric is going to be the base of everything in the future, so you can't go wrong just by learning a little bit about basic electricity.
Yin Lu (10:55):
Thank you for double downing on the importance of that, of just pursuing this as a field. It's part of the genesis of this podcast is just having people's eyes open and not being so siloed on like well, trade schools. There's that stigma attached to it. Anyway, so thank you. Thank you for saying what you said. That was very beautifully worded.
Scott Arnold (11:14):
So one more thing on that, what I would say is, to kind of build on my last comment, is every trade has, you look at somebody pallets for example, we all know we need pallets because pallets are what move things around with forklifts and deliver products everywhere we go, but you never stop to think about the industry that creates pallets. Pallets are, there's the lumber that needs to be farmed for pallets and there's the manufacturing that have to manufacture the pallets and distribute them, then broken pallets have to go back for repair. There's a whole industry surrounding around pallets.
(11:41):
So think about solar. If you are interested in solar, you could get into engineering and engineer the next solar panels. There's hundreds of thousands of people that are working on just that right now. What are the next solar panels going to look like? Then distribution for solar panels, and installation of solar panels, and servicing them. Every industry has so many little nuances to it that I would recommend to anybody who's coming up and looking for an opportunity in green energy to just kind of explore mentally what they see excites them. Is it being in the office? Is it being out in the sun? There's an opportunity literally for everybody in this field.
Yin Lu (12:16):
All right, I want to take some time and I want to zoom out to learn about the evolution of the HVAC field and then I want to zoom in to talk about Rycor. So zooming out to just help people help me understand the HVAC space better, maybe give us some history on the evolution of this global need for heating and cooling and maybe some key milestones that have changed the trajectory of the field over the past 100 years.
Scott Arnold (12:40):
So the history of heating is kind of an interesting one. And when I try to think about this, I think back to times that we can't even look back to because we weren't able to record things back then, not even on cave walls. In the early days of our species in general, one of the first things we figured out was the need for heat. And if you think about the pictures you may have seen of cave men pointing at fire, we got fire is good, but we figured that out, it was one of our first little tricks was to set things on fire like cave people. And we needed it back then and we didn't know we were doing damage to the environment with it, we had no clue back then what was happening, we just needed to survive. And we needed heat to survive because our environment could be lacking heat and we needed to add heat to it to live. Our food, we needed to add heat to it so it would taste better and last longer, so we took the burning things.
(13:24):
And we would burn everything, manure, moss, wood, we deforest a whole area, consume like locust, pick up our village, move to a whole 'nother area and deforest that and consume, consume, consume. And then in the evolution of heat, we figured out some pretty cool things like fishermen figured out whale oil. And you could actually collect this oil and bring it somewhere else and that was the first way of traveling with energy. And we traded the oil and that was a big deal. Then it got kind of bleak from there. We figured out fossil fuel and then we figured out that we could frack the earth and get more fossil fuel. And then somebody said, "Hey, let's split an atom, let's burn some nuclear fuel." We've been on this quest to burn things from the beginning of days, we would burn a cinder block if we could get heat out of it. That's just what we do.
(14:05):
But what's so exciting about heat pumps is this, the change from burning things to recycling is always a promise for a brighter future. So when you're lighting a gallon of oil on fire like a cave person or a piece of wood to heat your home or to heat your house or whatever you're going to do with food, you're in the manufacturing business, you are literally taking that fuel source and manufacturing with it new heat that didn't exist before. The problem is once that piece of wood is gone and the new heat is here, that heat is just here, it doesn't ever turn into anything else, it doesn't turn back into wood, it doesn't disappear. And that's the global warming. We're just adding, adding, adding.
(14:42):
So if we have every house on this planet burning things in their basement just to keep their house warm, and burning things in their kitchen to cook food, and burning things in their car to get around, and airplanes, and industry, and you name it, the writing's on the wall. So what the major change has been when we realized that we can get out of the manufacturing business for heat and we can start recycling it. What a heat pump does is it takes the heat energy that's outside in the winter, even when it's negative 20 degrees out there, and it recycles that heat and brings it into your home.
(15:10):
So again, the first thing people will say to me is, "Well how do you heat your house with cold air?" Well, you can't heat your house with cold air. It's an impossible thing for your head to get around and you'll never understand a heat pump if you think cold is real. Cold is not real, cold is something that does not exist. It's like the tooth fairy. So what is actually happening outside when it's negative 20 degrees is that it's very hot out. In fact, scientists will refer to, I think it's 449 degrees below zero is absolute zero. So at 449 degrees below zero there's no heat present, but when I say we're in deep space where it's 150 below zero, that's very, very hot, at 150 below zero. On earth, where it's negative 60 in Alaska, it's even hotter. Here in New York it's negative 20 in the winter, very hot.
(15:56):
And as we go to 90 degrees and then the temperature of the sun, there's just different levels of heat. So the first thing we got to do is stop thinking that cold is real. In my house, we don't even use that word. My faucets don't say hot and cold on them. I have a hot faucet and the cold faucet has a sticker on it that says, "Less hot," because it's not cold. But when we realize that negative 20 degrees outside is actually very hot because it could be less heat like 400 below, then we realize we can actually collect that negative 20 degree heat and bring it in the house. And that was really the big change in the industry.
(16:26):
So air conditioning doesn't make cold air because cold doesn't exist. Air conditioning takes heat from in your home and moves it outside. A heat pump just spins in reverse, it takes heat from outside and moves it inside. And the very easiest way to make a heat pump is to take your window air conditioning unit out of your window and turn it around and put it back in your window, because instead of it blowing that cold air out of the front and the hot air out of the back, if you turned it around, you'd be blowing hot air into the house and cold air outside. That's a heat pump. You're just spinning it backwards. So that was really the big change.
(16:57):
Other countries have been doing this for a long time because they've had climates that were conducive to it. If you look at, some countries have been doing that out of necessity, look at European countries, they've been using heat pumps well before us and it's not because they're smarter or better, we're all the same. It's because their energy prices have been super high for a long, long time. They've been paying four times more than what we pay for fuel, substantially more than what we pay for electricity. In the US, we've kind of been on the gravy train and we have cheap energy and we've abused it, frankly. And we're learning now, we're learning. And we're not going to have an excuse anymore because we used to have, our parents could say, "Well, we didn't know." If we asked them, "Mom, dad, why did you do this to our world?" They could say, "Well, we didn't know."
(17:38):
But we can't say that. We know, we know. It's kind of like smoking. If you're going to smoke a cigarette today, you know it's going to cause cancer. 50 years ago people didn't know it was going to cause cancer, so they kind of had an excuse. But now we know, we what's going to happen if we keep burning fuel, we've got to stop, we've got to be better custodians of the earth.
Yin Lu (17:56):
We're going to take a quick break so you can hear me talk more about the MCJ membership option. Hey folks, Yin here, a partner at MCJ Collective. I want to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing, that goes beyond just listening to the podcast. We started in 2019 and have since then grown to 2,000 members globally. Each week we're inspired by people who join with different backgrounds and perspectives. And while those perspectives are different, what we all share in common is a deep curiosity to learn and bias to action around ways to accelerate solutions to climate change.
(18:31):
Some awesome initiatives have come out of the community. A number of founding teams have met, nonprofits have been established, a bunch of hiring has been done, many early stage investments have been made as well as ongoing events and programming like monthly Women in Climate meetups, idea jam sessions for early stage founders, climate book club, art workshops, and more. So whether you've been in climate for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and then click on the Members tab at the top. Thanks and enjoy the rest of the show.
(19:04):
All right, let's get back to the show. When people say that they want to electrify their homes, one of the things is always, "I got to get a heat pump, I got to get a heat pump." What is a heat pump replacing today in many households and what are the kind of different types of heat pumps that people can put in their homes today and what's the difference between a heat pump and A mini-split? These are all kind of terms that you hear thrown around, but I want to hear from the expert.
Scott Arnold (19:30):
A heat pump in principle is just a system that takes heat from one place and moves it to another. It's a heat exchange system. So just like an air conditioning is, an air conditioning takes heat from in your home and moves it outside. A heat pump does the opposite, it takes heat from outside and moves it inside. But there are different kinds of heat pumps, there are heat pumps that take heat from the ground and bring it into your house, that's a geothermal heat pump. Geo, ground. So air source heat pumps take it from the air outside and bring it into your house. There are pond-source heat pumps. If you have a big pond on your property, you could take the heat from the bottom of the pond and bring that into your house.
(20:03):
All heat pump is, it's not magical, it doesn't do magic, it doesn't make heat, it just takes heat like as if you were going to pick your phone up and bring it from one room to the other, that's what a heat pump does, it takes heat from one location and brings it to a different location. It doesn't make new heat, which is really the exciting part about it.
Yin Lu (20:20):
You mentioned that 20 years ago the heat pump technology just wasn't good enough for servicing a place like the Hudson Valley. And it was decent enough to service a place like Las Vegas where there was more sun, etc. What have been the major kind of innovative steps on heat pump technology over the past 20 years?
Scott Arnold (20:36):
So what's changed in the last 20 years that have made heat pumps more of a global solution, I would say has to be the technology component behind it, because the components inside of it, the functioning components, the mechanical components have all remained the same. So the control boards and the circuitry that controls the system has really been the big change. So historically, heat pumps when they first started happening were timed on timers like a time clock like your wristwatch. It would turn on and off based on a cycle, time cycle. So we collect heat from outside when it's negative 20 degrees for 45 minutes and then we defrost for 15 minutes. Obviously if we're collecting heat from outside to get... Well, I shouldn't say obviously, but in order to get heat from negative 20 degree air, the machine outside has to be operating at say negative 60 because the negative 60 has less heat than the negative 20, the negative 20 hot air would collect to the negative 60 degree unit. Then we take that heat into the house and blow it in the house.
(21:31):
Well, guess what happens to a unit outside when it's negative 60 degrees in operation and it's raining or it's snowing? Everything freezes too, it becomes a block of ice. So what we used to do in the early days of heat pumps where they're not very effective is we used to let it heat up with a heater for 15 minutes every 45 minutes. And that consumed a lot of electricity that for that 15 minutes you had no heat in your house. Now what we have is computer boards. Your heat pump is like your personal computer, it has just the same stuff in it your laptop has, it's always monitoring to many different touchpoints, outgoing temperatures with the compressor, outgoing air temperatures, incoming air temperatures, potentiometers, and thermistors.
(22:05):
And I can bore you all day long with what's in there, but it's basically a super computer inside your heat pump and it's telling the machine when to defrost. If it could do a limited, a short-term defrost, if it could skip this defrost, if it could modulate up and down in the RPMs of the compressor to collect more or less heat right now, they're super intelligent making multiple decisions a second on how to keep efficiency in all types of ambient conditions. And that has, in my opinion, been the major change in the technology. The bones are the same, everything that heat or cools with a heat pump or an air conditioner is the same, whether it's just a slushie machine at the 7-Eleven, if it's an ice-skating rink that you're going to see Disney on Ice at, if it's your air conditioning system in your house, everything, a window unit, all has the same basic four components. Compressor, evaporator, connector, TXV. What changes is the computers.
Yin Lu (22:55):
Now when I go take my kid to go see Frozen Disney on Ice in February, I will be thinking about the heat pump system that is powering that rink.
Scott Arnold (23:04):
Yeah, basically all that's doing is taking the heat from the rink and putting it outside, making the water freeze.
Yin Lu (23:09):
Very cool. Let's zoom in and talk about Rycor. I had no idea why Rycor is called Rycor. Now I know it's named after your kids. I think it would be just really cool if we can get an inside peak on what are the different working parts of the business, what are the different teams that you have? How many people work there? Just tell us how the team functions.
Scott Arnold (23:27):
Sure, absolutely. So what we've done at Rycor is we've basically streamlined the ductless installation process. It's all we do is ductless, we don't get involved in anything central anymore, anything that burns fuel, it's not the future, it's 50-year-old technology, it had come and go like everything does. And I'm sure one day we'll have something better than ductless, but that's what we do. We've made a rinse repeat system where we could remove the legacy system from people's homes, whether it's natural gas burning products, oil burning products, propane, liquid propane burning products, wood stoves, all that stuff we take out and we put this clean heat solution in there.
(23:59):
In order to do that, the process is this. So folks will give us a call and say, "Hey, my boiler cracked and it's leaking water on the floor." And we'll let them know over the phone that there might be a better solution, maybe we should have a comfort specialist come out to your house and talk to you. If they're agreeable, we send out a comfort specialist, i.e. salesperson, we evaluate the home, we educate the customer and we let them know what's available in the industry. A lot of people don't know about heat pumps and what they are, how they can cut their bills in half. Especially, with fuel prices rising, if you didn't know that information, but now you do, it's very intriguing. So cutting your heating costs and cooling costs in half is the biggest expense in your home besides your mortgage maybe, but it's huge.
(24:35):
So we have the comfort specialists go out and they'll size and educate the homeowner. We spend about two hours with the homeowner, building owner to let them know what their options are. Once we leave that meeting, we'll send them a proposal within 24 hours and they'll get back to us if they want to do it, so that's the sales division. So we have about 45 people in our company right now, so we have five sales people. In the office, we have 10 people that we call admin and they're working with New York State to capture all the incentives that New York State has now with This Inflation Reduction Act, there's even more money we could help capture for homeowners. The average $25,000 job for a homeowner three years ago is now costing them about $8,000. And the state and government is picking up the rest of the tab.
(25:17):
I mean, we're putting these green energy solutions in homes for less than a boiler now. It's amazing to me, but it is a lot of paperwork involved in that and a lot of red tape. We've gotten very proficient at completing all of that for our clients, so they have to do nothing. All they have to do is say they want to do it and write us a check for that $8,000 on a $25,000 job at the end of the day. So that takes about 10 people in the office to do that piece. 25 to 30 installers in the field. And that pretty much is comprised of about seven project managers because that's about how many homes we'll convert a day. And then below the project managers, those are the guys that have been here for six months or more because in about six months of training from knowing nothing, I can build a project manager out of somebody.
(25:55):
Then below that, we have outside managers that are going to manage the outdoor portion of the work where the heat pumps will be installed outside of the home. It takes about three months for them to get to a management level in that field. And then we have what we call just apprentices, which are, I don't want to say minions, we joke around and we call them minions, but at the same time they are a lot of times really young, 17 to 20 years old. And believe it or not, our project manager and our general manager of his whole company is 23 and came to me from a trade school when he was 17. Not even a trade school, high school that had a trade school component inside of it. And he's in charge of this whole company now.
(26:29):
And I came to that same program myself, so the apprentices usually have little to no experience, never held a screwdriver or drill in their life. And we teach them on the job and they move up the ranks and become project managers, and field managers, and maybe even sales people. We've even had three of the trade school folks that were in the field starting as apprentices are now three of the 10 that are working in our office, so there's other places that can move within the company if they see an opportunity. That's basically how our company's made up, roughly 45 people consisting of office, sales, and installation.
Yin Lu (27:00):
How big of an area do you guys cover?
Scott Arnold (27:03):
So about an hour and a half in every direction. So geographically it's hard because if we're going towards Westchester, you're sit in the traffic, most of that hour and a half you cover half the distance. If we're going up north towards Albany, it's highway driving and you could get quite a bit of distance behind you in an hour and a half, 70 or 80 miles, but we are currently looking at five new locations to expand into and we're hoping that in the next five years we have 50 locations. That's our goal.
Yin Lu (27:26):
Did you say 50? 50 locations?
Scott Arnold (27:29):
50, yep.
Yin Lu (27:30):
Wow.
Scott Arnold (27:30):
That's our goal [inaudible 00:27:31].
Yin Lu (27:31):
Tell us more about that, the expansion vision.
Scott Arnold (27:33):
So we got really fortunate and we attracted the attention of a company called HOP Energy. They're a great partner, they have a vision. They actually started, I believe with their expansion run five years ago and they had six locations at that point. Now they have a little over 50 as well. They have a proven track record to be able to do this, so we kind of got hooked up with them and they're catapulting us into that expansion model. I mean, I think about the good we do in this one location converting six to eight homes a day, that if you added up every one of those houses since we've been doing this, that'll never burn fuel again once we leave.
(28:08):
And the carbon reduction that that makes over the course of that year and then those homes from the last year plus the homes this year and two last year, plus this year, three last year plus this year. And it just keeps rolling forward, all the oil that's not being burned because of basically the efforts of our clients and our company in one location. So I think about 50 locations or maybe national, having the Rycor brand, have it be like Sears. When people think about heat pumps, they think about Rycor. That's our vision.
Yin Lu (28:35):
That's awesome. Wow. In terms of the geographic expansion, are you thinking about staying in the northeast or... This is kind of agnostic.
Scott Arnold (28:44):
It is agnostic. What's interesting about heat pumps, unlike oil products, I'll give you Las Vegas as an example, I could speak to that because I lived there. Nobody burns oil in Las Vegas, there's no oil in Las Vegas and you're not going to truck oil into Las Vegas. It doesn't make sense to go across the high desert with a tank full of oil for no reason. There's plenty of heat there. The oil industry doesn't thrive out there, but what does thrive is air conditioning and heat pumps because you still need heat, those days lacking the most heat, notice I didn't say cold, the days lacking the most heat in the winter are 40 degrees. You still need to add heat to a home on those days to survive and be comfortable, but you don't need to burn fuel to do it. So this product can go everywhere in the world. There's nowhere in the world that doesn't need heating or air conditioning of some form.
Yin Lu (29:25):
Earlier you'd mentioned that you have these comfort specialists or your sales team go out to clients that call you and say, "My boiler's broken, can I get a new one?" With HVAC and heat pumps, I feel like, and correct to me if I'm wrong, the urgency of getting replacement is much higher than say getting solar panels, because you need a way to heat up your water, you need a way to cool down your air. And from my personal experience and just hearing from friends wanting to install heat pumps, and granted it was California centric perspective, people complain that, "Well, it's going to take X number of days, X number of weeks for the system to replace, so why don't I just get a replacement of my existing system? I'm not incentivized to get a heat pump because of the time lag." Talk to us about that.
Scott Arnold (30:08):
That's a big problem. If there are folks out there that are in need of a product acutely and they're making a decision based on that and reverting back to the 50-year-old technology of burning fuel, I feel really bad for them. And that's a problem that I want to solve because in our company, the turnaround time is from the time we have a comfort specialist in the home to the time we have an approval. The only thing that slows us down on doing the job is getting a permit from the township. And yet, it usually takes a day or two. In our custody, we have in our building $2 million of equipment here. And in an offsite building, $4.6 million worth of equipment. So $6.5 million worth of equipment in our custody, so we don't have to wait for supply chain or wait for... We're forward thinking, we order what we need.
(30:52):
I have my orders projected for the next year with 50% run rate of growth. We get two tractor trail loads, half a million dollars each a month easily. And it's just replenishing, we're never waiting for delivery. So business owners really have to kind of think that way, they have to see the future and position themselves in a way to service their clients, so clients aren't stuck in a situation like that where their professional tells them, "All right, great, I'm glad you decided to make a responsible choice and cut your energy bills in half and help the environment. We can't get your appointment for three months." That doesn't work.
Yin Lu (31:23):
On that note, tell us more about how you figure out which types of units to sell, what OEMs you work with, and maybe what are the forces that come to play that may not be obvious to the consumer on the supply chain side?
Scott Arnold (31:36):
Well look, there's only one. It's like I tell my wife, Yin, I tell my wife, "There's two kinds of women in this world. There's you and then all the rest." And I'm married 25 years. I met my wife when I was 13, she's my best friend, I couldn't be more lucky. But it's like that with the equipment, there's Mitsubishi and then all the rest. There is no other choice. I've been doing this for a long time, over 20 years. I was a service technician before I started my company and I know what worked. I know because I worked on everything out there, I know what stayed fixed when I fixed it, I know what broke due to manufacturer's problems or due to gross installation error on the installer's part, so you can't hold that against the manufacturer.
(32:14):
But what I did see in the industry is that Mitsubishi has a bulletproof product, it delivers, it lasts past the 12 year warranty. They give 12 years, they give 12 years. Most manufacturers are like one year, three year, five year, if you read the fine print. They give 12 years, no questions asked. Talk about putting your money where your mouth is. So they have a bulletproof product that overdelivers, I stick with them, I'm completely faithful to them because their efficiencies are high, their installation is practical, it's reliable, my clients have a great client experience with it. There is no other manufacturer in my mind, it's just Mitsubishi.
Yin Lu (32:48):
What insights do you have on why Mitsubishi manufactures such high quality heat pumps versus others?
Scott Arnold (32:54):
They're the ones that have been doing it from the beginning. I kind of look at it like this, since I've gotten into this business and now with the New York State programs, everybody's doing heat pumps. Your electrician's doing them, your plumber's doing them, your neighbor's doing them, your landscaper, he'll put a heat pump in for you. All the money that's flying around in this industry right now with the incentives, it's tracked in a lot of attention. Not from just installers and homeowners, but manufacturers. So I've seen in the last 10 years, more and more manufacturers of heat pumps pop up than I ever have because they're all looking to get in on the gold rush. Still, even though there are other options on in the industry today, I'd like to look at who is first, who's on the cutting edge, who remains fresh in the industry.
(33:33):
I'm going to give you an example. If you look at Fortune 500 companies from just 10 years ago or 20 years ago, a lot of them, Fortune 500 companies are out of business, they're gone while their industries still thrive. Think about Kodak. I'm old enough to remember taking pictures with Kodak. Ask a kid what Kodak is today. They were everything color and everything film, everything pictures. They didn't want to stream, they didn't want to go digital, they didn't want to change with the time, so they're gone. People still take pictures every day, but they're gone. When's the last time you watched a Blockbuster video? They didn't want to join up with Netflix. Again, they didn't want to stream, they didn't want to change. Mitsubishi's constantly changing. In fact, I work very closely with a gentleman named Dool. He's in Suwanee, Georgia, he heads up the US development market, every country has their own development team for products that could be specific to that country because Mitsubishi's a global manufacturer.
(34:25):
I love that they do that, I love that they develop products based on a lot on my input, and their other contractors' inputs, and the need in the market in the US. In addition to their global products, they're trying to stay on the cutting edge all the time, they continue to make changes. If I give them feedback because I install 6,000 or 7,000 unit systems a year from this location, if I let them know, "Hey, Dool, I see this happening with this particular piece. I've seen it three times in the last year." "Wow, I haven't seen that anywhere else." Well, we do so many of them, they'll say, "Okay, we're going to make an adjustment on that." They're a really, really proactive company, great people, great product. That's why I'm true to them.
Yin Lu (35:01):
Very nice. And I want to double click a bit on your customers, the people that are wanting to get new units into their homes. So with your customers, what percentage of them would you say site climate change and global warming as a reason for wanting to get heat pumps installed? In other words, maybe tell me about their mentality.
Scott Arnold (35:21):
That's a tough part.
Yin Lu (35:22):
And their motivations.
Scott Arnold (35:23):
It's funny how you almost feel like you can't have that conversation without it being political. The world we live in these days. But there is a wide variety of folks that see the value in the product that we offer, the heat pumps. And it's for different reasons and they're wildly different. The three main reasons we see folks buying these are either cost savings and they're cost of living and their heating, cooling costs, comfort because they offer way superior comfort because you have a room-by-room solution, you could control the temperature in each room independently, or environmental, carbon reduction, global warming. Sometimes you'll see somebody who's environmental that wants to have cost and comfort and environmental. Sometimes you'll see somebody who's looking just for the savings that's happy to do something good for the environment, but those are the three main baskets of reasons that will sell a system. It's going to be to fix a comfort problem, a cost problem, or an environmental concern. And these systems solve all those problems, so it's really a wonderful thing.
(36:17):
Historically, and if you think about it, when we're doing something good for the environment, we're challenging our budget. That's how it has always been. Or if you're doing something really good for your budget, you're probably trashing the environment. But these things have really broken that seesaw and the way that you could be really environmental and really budget conscience at the same time. Save a ton of money and do something great for the environment. I think about being a custodian of the environment and how we leave it when we leave here because, again, we're only here for a minute, we're here for a second in the scheme of it, in the scheme of this earth. How long are we here? It's like a blink and then we're gone. I wouldn't want to go to my friend's house and trash it and then leave, so why would I do that to the earth? So if I have an opportunity to save some money and do the right thing for the earth and leave it better than I found it, or at least the same, why not?
Yin Lu (37:00):
It sounds like part of the credo that you take your entire team through, anyone who joins the organization kind of has to believe that same vision too. It's beautiful.
Scott Arnold (37:07):
Well, our mission statement at Rycor is to build a greener, cleaner future.
Yin Lu (37:11):
That's great. I have a few more questions on the technology of heat pumps. Refrigerants, that is something that in climate tech and in investing, we hear that refrigerants are so bad. When they leak, then they put so much unnecessary heat into the atmosphere. How do you deal with refrigerants in the units that you swap out and just how does that ecosystem work?
Scott Arnold (37:37):
So refrigerators have gotten less and less environmentally hazardous over the years and we're getting better, so I always joke around and say smallpox is quick, we're slow. We're going to get there, though. I'm not like the sky's on kind of person. I believe in the better good, I believe that we're really working on it, and I do see the changes. The refrigerants that have changed just in the 25 years that I've been in this business have been crazy changes, huge improvements. When you think of refrigerants, I don't know how deep you want me to get into this, but there's hydrochlorofluorocarbons. And the hydrochlorofluorocarbons like the R-22s and the R-12s, the older refrigerants were really, really bad for the ozone because they would basically on a molecular level, connect to oxygen and create smog, and smog would deplete the ozone. And you'd see this big hole opening up in the atmosphere every year and a lot of publicity around that, a lot of attention on it.
(38:22):
But what they've done is they've gone to hydrofluorocarbons, we've taken the chlorine molecule out. That makes a very big difference. So the puron like 410-A is one of the better refrigerants. Still not great, the new refrigerants that they're coming out with in the future, they're saying are going to be even better. I know that there are some really good forward-thinking folks working on some really exciting stuff where we might even be thinking about using water for a catalyst of heat exchange in the future. It's kind of funny to think about that because when you think about the first forms of air conditioning way back, like in the Rockefeller days, what they would do is build a house over a stream bed. And the 50-degree stream water running through the house in the summer would suck the heat from the 90 degree air into the water and run it right out of the house. So to see us kind of circle back and think about those types of things in the future, it's amazing.
Yin Lu (39:14):
Wow, that's like the V1 of a swamp cooler. Just build a house over a stream.
Scott Arnold (39:18):
That's perfect. Simple solutions. I love it.
Yin Lu (39:21):
Any other innovations that are on the horizon that get you excited?
Scott Arnold (39:26):
So I do know of a few of them that I'm not allowed to share, but there are some very exciting things coming down the line.
Yin Lu (39:32):
Okay. As we wrap up, Scott, tell us a few things that keep you an optimist as we think about our role in fighting climate change.
Scott Arnold (39:41):
Look, 100% is education. I make it my point, I love being here with you for example, it's a blessing and there's many, many entities out there that are educating. Education is key, we cannot pretend to think that we're going to tell people to change, we don't do it that way. But if we educate somebody and we show them the value of making a different decision, then we are going to get somewhere. If we can actually get the word out to the masses, and that's the name of the game, and we can get everybody to do a little bit, just a little bit. Not everybody's going to be a visionary and change the world and make a better mouse trap, but if we could all partake and help a little bit, once we get there and we are getting closer every day, we're going to have something. And I'm really optimistic that that's where we're heading.
Yin Lu (40:20):
Scott, thank you so much for your time, sharing your wisdom with us. Really look forward to staying in touch and seeing all the incredible things that are going to happen in the space, the HVAC space, as well as with Rycor in the coming years.
Scott Arnold (40:31):
Well, definitely stay tuned because technology's changing, we're changing, the world is changing, good things are coming. The sky is not falling, it's going up. I appreciate what you do, Yin, and what your listeners are doing, and all the folks in the green energy community, just keep up the good work, keep up the good fight.
Jason Jacobs (40:47):
Thanks again for joining us on My Climate Journey Podcast.
Cody Simms (40:50):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity. To do this, we focus on three main pillars, content like this podcast and our weekly newsletter, capital to fund companies that are working to address climate change, and our member community to bring people together as Yin described earlier.
Jason Jacobs (41:12):
If you'd like to learn more about MCJ Collective, visit us at mcjcollective.com. And if you have guest suggestions, feel free to let us know on Twitter at mcjpod.
Cody Simms (41:27):
Thanks and see you next episode.
