AAON Boilers

As part of the UK Government’s stated commitment to net-zero carbon emissions by 2050, gas boilers, along with other fossil-fuel burning boilers, are to be banned in newbuild homes from 2025 under the Future Homes Standard. Although the ban has received a widespread welcome in principle, there has been criticism. Environmental groups have criticized the ban for not going far enough in tacking the escalating climate crisis, and the construction and home-building industries have criticized it for the challenges it brings in achieving a viable home-heating alternative in such a short space of time. Placing significant demand Despite the criticism, the ban doesn’t go far enough; applying to newbuild homes only, with, as yet, no plans to phase out gas heating in existing homes. New heating technology has to be ready to roll out before 2025, whether it’s to 160,000 homes per year (the annual approximate figure of new homes built) or the UK’s entire housing stock of 29 million. Despite the criticism, the ban doesn’t go far enough; applying to newbuild homes only The Home Builders Federation, in reaction to the Future Homes Standard, has said, “It’s going to be a challenge and a huge area of work.” And it is widely acknowledged there is significant demand placed on the building and HVAC industries to produce a long-term, viable solution. Challenges include the creation of new, cost-effective designs of energy infrastructures, and implementation in time for the short deadline of less than four years away. Gas boiler heating systems From energy design engineers to developers, suppliers, and energy companies, everyone in the supply chain is affected in delivering a solution that UK homeowners can afford and that developers can supply. The communications challenge also cannot be underestimated, to bring along the public to the reality that homes cannot, ultimately, continue to be heated by the gas boilers they are so familiar with.   The most likely low-carbon alternative to gas boiler heating systems is generally acknowledged to be heat pumps and heat networks, powered by renewables. It has been estimated by the Committee on Climate Change that by 2030 there will be 2.5 million heat pumps in new homes. Heat pumps offer comparable heating power to gas boilers and are powered by low-carbon electricity. Heat pumps have great potential for saving carbon; approximately 25-85 tCO2 per home over an average lifetime, reducing carbon emissions by 90%. Existing gas system But hydrogen is expensive to produce and although the existing gas system could be readily used for supply But for heat pumps to provide the level of warmth, particular in winter, and summer, weather in the UK, their effectiveness relies on excellent insulation, including triple glazing and adaptations to walls, floors, and ceilings. And while there has been a drive to get our draughty homes better insulated in the UK in recent years, with various grants and funding, this will be particularly crucial for newbuilds going forward. Hydrogen boilers could be an alternative to gas boilers. Hydrogen produces no emissions when burnt, only water and heat. But hydrogen is expensive to produce and although the existing gas system could be readily used for supply, and by consumers already familiar with a boiler system, it is not yet seen as a full solution to the replacement of gas. Technically qualified workers Trials are due to be carried out in the north-east with hydrogen-ready boilers. But the impending deadline and challenge for production and systems to be ready and tested, for mass implementation is unrealistic. Even before the Future Homes Standard was announced, there was an acknowledged shortage of skills. Engineering UK, in a recent survey, found that an additional 1.8 million engineers and technically qualified workers would be needed by 2025 in order to meet demand. But the impending deadline and challenge for production and systems to be ready and tested Nearly a third of HVAC firms have declared a skills shortage, with many feeling there is a crisis in the sector of sufficient qualified workers who can satisfy the new regulations. Now the demand is set to rise with the ban, as well as Brexit. A large proportion of qualified HVAC workers are sourced from the EU, further compounding the crisis of the skills shortage already faced.    Zero-Carbon technologies From imagining life without a gas boiler to a young person seeing their future career in engineering and renewable energy, effective communications and campaigns could go a long way. Targeted lifestyle campaigns, with positive, compelling case studies of homes of the future being powered by green, zero-carbon technologies could help to drive the momentum for innovation from a domestic base. Talent strategies could also combat the reality of an ageing and diminishing workforce in HVAC and other sectors. It’s vital now, more than ever, that young people see a career in renewable and eco-living technology as, not only rewarding but futuristic, global, and sophisticated. Any alternative to gas heating has to be affordable for UK households, and therefore for housing developers to adopt. Fuel poverty is a real risk. Energy-Saving measures The right help needs to be in place to support the development and take-up of the alternative According to the Committee on Climate Change, it costs £4,800 to install low-carbon heating in a new home, but £26,300 in an existing house while there are various funding initiatives for households adopting energy-saving measures, the right help needs to be in place to support the development and take-up of the alternative. Not just for newbuild homeowners, but beyond 2025 when existing households are called upon to switch. The Home Builders Federation have said of the Future Homes Standard, “Ambitious deadlines pose enormous challenges for all parties involved including developers, suppliers, energy companies in terms of skills, design, energy infrastructure and the supply chain.” Low-Carbon heating technology But there is also a stated dedication to achieving what can be realistically achieved, proving that there is a genuine commitment to ensuring our brighter, cleaner future and planet with low-carbon heating technology. The ultimate challenge now will be in Government, agencies, and industry working together, in a dedicated way, to be realistic about, and tackle the challenges across the board so the right solution for our home-heating future can be achieved, in time, and ready for a rollout for the new homes we build from 2025.

The impact of COVID-19 has hit all areas of industry in a variety of different ways; with mass redundancies, restructures and the need for diversification now dominating the headlines. It has also made a lot of people question their own careers and what is important to them; in fact, Google searches for the term ‘career change’ are up more than 500% on this time last year. With more than half of the heating and plumbing industry’s workforce due to retire in the next decade, and so many people considering a career change (either through choice or necessity), is there a window of opportunity for the heating engineering and plumbing industry to attract men and women to the industry? Why is there a need for recruitment in the industry? In 2017, the Gas Safe Register’s ‘Decade in Review’ found that the average age of heating installers was 55, with over half of respondents being this age or older. The report also found that over 50 per cent of engineers are concerned about keeping up with advancing and unfamiliar technology. Over the next decade, this aging With more than half of the heating and plumbing industry’s workforce due to retire in the next decade, and so many people considering a career changeworkforce will begin to reduce their working hours or retire completely. With fewer young people deciding to train as a heating installer, the industry will quickly lose valuable experience as the workforce diminishes. In addition, a survey by the Centre for Ageing Better found that, of 500 employers, only 20% have considered how they will tackle an aging workforce, and 24% have no strategies in place. How can heating installers promote their career path? As of October 2020, the UK unemployment rate has risen to its highest level (4.5%) in over three years. According to the ONS, an estimated 1.5 million people were unemployed between June and August, while redundancies stood at 227,000. Of those now facing unemployment, about 300,000 are aged 16-24. With so many young people out of work, and plenty of adults looking to make the move from an office-based role to one that’s ‘more rewarding’, a career in the trade could be an attractive option. But, how can heating installers market themselves as a prosperous career path to these people? Be positive on social media Social media platforms like Twitter, Facebook, Instagram, and LinkedIn have provided installers with a way to market themselves to customers, share their successes, and connect with others in the industry. This is all great, but often heating installers use social media to vent their frustrations, complain about long hours and feeling tired, or even complaining about customer behaviour. While this is absolutely understandable (we all need to let off steam from time to time), this kind of content should be shared on private accounts only seen by family and friends. It may be worth setting up a second account which can be seen by the public and only share positive content there. This will show followers (who are potential recruits and customers) the more positive aspects of the career. Talk about benefits and progression opportunities When attracting young people to any profession, you need to emphasize the opportunities it offers in terms of progression, potential earnings, and other benefits such as being self-employed and therefore being able to manage your own hours and holidays. Offer an apprenticeship scheme By offering a paid apprenticeship scheme you can attract both young people and older career changers who have financial responsibilities to meet. You know better than any that it takes time to train as a heating installer, as well as a lot of on the job experience, and a paid apprenticeship could make the career a viable option for people with financial commitments. Make it clear to new recruits that they will be supported and mentored throughout their training. Will the Green Homes Grants scheme help the heating industry? Finally, it is important to address the government’s Green Homes Grants scheme which began accepting applications in September and will be open until 31st March 2021. The scheme offers £5,000 vouchers to homeowners in England to cover two-thirds of the cost of energy-saving improvements such as improving insulation and installing renewable heating systems like heat pumps, biomass boilers, and solar thermal panels. In addition to encouraging homeowners to reduce their carbon emissions in line with the government’s target of reaching net-zero emissions by 2050, the scheme Google searches for the term ‘career change’ are up more than 500% on this time last yearis also intended to boost employment. The increased interest and investment in the renewable energy sector could indeed open up more opportunities for the unemployed, but as the scheme is only open until March 2021, this does not seem to be a particularly long-term approach. Homeowners cannot use the grant to install a more efficient gas or oil boiler, so it is unlikely to help the heating industry to attract recruits who will become traditional boiler installers, but it may kickstart the renewable heating industry and encourage existing heating professionals to diversify their skillset. Of course, there is always the possibility that increased awareness of the need to reduce carbon emissions and make our homes more efficient will have a knock-on effect for the boiler installation industry, but only time will tell. Use digital advertising When people are looking for a job, or even when they are just passing the time at home during lockdown, they will usually be online. When you have a job opening or an apprenticeship on offer, be sure to advertize on digital platforms including job posting websites, LinkedIn, search engine and social media advertising. Be open to diversity If the industry is only open to attracting men of a certain age from a certain background, the number of potential recruits reduces rapidly. The heating industry is one of the least diverse, particularly in terms of gender as only 0.4 per cent of Gas Safe registered engineers are female. Heating installers and employers not only need to be willing to hire a more diverse workforce, but they also need to be proactive in their efforts to attract candidates to ensure everyone feels welcome and supported in the industry.

Pete Mills, Commercial Technical Operations Manager at Bosch Commercial & Industrial outlines how cities are using heat networks to achieve UK carbon emission targets. Heat networks, or district heating, are becoming an ever-greater part of our industry’s involvement in larger scale schemes. The ability to help the decarbonization of heat both now and in the future has made them an attractive solution to the new-build sector, as well as those undergoing deep renovation works. Net zero 2050 The UK’s net zero 2050 target may seem like a long way off. But steps need to be made now in order to reach this, something that our leading cities have recognized. Many have set their own carbon targets to ensure they stay on track. This is why heat networks’ ability to provide efficient heat and hot water to multiple buildings (and as the name suggests, whole districts) is a particular reason why many cities up and down the country are turning to them as a solution. What are heat networks? Generally, heat networks are defined as a system of supply pipes with a centralized heat generator (Energy Centre) that serves multiple domestic or non-domestic dwellings. These are usually in different buildings, but sometimes within a single large building like an apartment block or a university campus.District heating is often used to describe larger scale systems District heating is often used to describe larger scale systems of this sort, where there will be many buildings connected over a larger geographic area. In these systems, although the heat is provided ‘off-dwelling’, it is also common to have more than one energy centre. The principle is that energy for heating (and sometimes cooling) is supplied through the system of pipes, with each individual user being metered for the energy they use. Minimize pipe lengths Heat networks offer a number of advantages but are best suited to areas where there is high heat density, that is to say where there are multiple ‘households’ close together in order to minimize the length of pipes within the network. One of the key advantages for heat networks is their adaptability to use any form of heat generation. A key advantage from an environmental perspective is that they make use of waste heat, from sources such as electricity generation, waste incineration and industry. Heat networks are defined as a system of supply pipes with a centralized heat generator that serves multiple domestic or non-domestic dwellings The scale of the combined heat requirements of all these dwellings also helps the inclusion of renewable energy sources, which may be more difficult and costly to achieve at the individual dwelling level. Overall, their flexibility to use whatever heat source is available, makes them easier to decarbonize in the future.Other key benefits for Local Authorities and Housing Associations have been the elimination of individual gas appliances within dwellings. This has significant cost savings reductions for Local Authorities and Housing Associations where gas landlord checks are eliminated, along with the issues associated with access. City developments Today City Councils and developers are opting for heat networks to provide the heating and hot water for new redevelopment projects. The largest of these is the ambitious Leeds Heat Network, which once completed is set to be one of the UK’s largest new heat networks, connecting 1,983 council homes and numerous businesses in Leeds. The first scheme under the City Region’s District Heating program, the green initiative looks to reduce carbon emissions for the area as well as energy bills for the residents living there.The green initiative looks to reduce carbon emissions for the area Even more innovative is how the network will connect to the Leeds Recycling and Energy Recovery Facility, which burns black bin bag waste to generate heat. In theory this would make the network fully sustainable. There will be back-up support from efficient Bosch Commercial & Industrial boilers, which will only be switched on when required, say the colder months where the need for heat is higher. Climate change targets An hour’s drive away from Leeds is the city with one of the most ambitious climate targets in the UK. Manchester intends to be carbon-neutral, climate resilient and zero waste by 2038 – 12 years before the overall UK net zero 2050 target needs to be hit.To help achieve its ambitions, work has been taking place on the Manchester Civic Quarter Heat Network (CQHN). Manchester hasshown the versatility of heat networks due to the number of commercial buildings it will support The project will generate low-carbon power, heat and hot water for initially six council buildings and some residential properties with the possibility for the network to grow and connect further buildings across the city centre. Some see district heating as a solution solely for residential purposes, however Manchester have shown the versatility of heat networks due to the number of commercial buildings it will support. The project itself has also given Manchester a new landmark, the impressive ‘Tower of Light’, which incorporates the five flues from the technology powering the network. This beacon not only represents the city’s commitment to reducing its carbon footprint but also the innovative nature of district heating. Heating Battersea Power Station The final example lies in the Capital and may be one of the most famous developments in the UK at the moment. Battersea Power Station is not only one of the most iconic landmarks in London, but also the center piece of one of the most high-profile, large scale mixed-use redevelopment projects ever undertaken in the Capital.Battersea Power Station is a high-profile, large scale mixed-use redevelopment project The project involves the development of a district heating and cooling network, with a two-level underground energy centre – one of the largest of its kind. This complex heat, cooling and electricity network will continue to expand as the project continues to undergo its development stages. Looking ahead These are just a few examples of cities taking advantage of district heating and its many benefits, but near all cities in the UK have multiple heat network projects underway. Like with most innovations, smaller urban areas should then follow suit. The importance of district heating will no doubt become more and more prominent. Its ability to power whole areas and multiple buildings can already help efficiency levels, however its potential may be even greater in the future. One key energy transformation that is looking more and more likely is the decarbonization of the gas grid to hydrogen blends and ultimately 100% hydrogen. If these can be utilized in heat networks then the benefits will definitely put us and UK cities in a good place as we continue our journey towards net zero.

Since the beginning of the COVID-19 pandemic, HVAC systems have been at the center of concerns such as indoor air quality and the need to minimize potential exposure. At the local level, HVAC installers have increased their efforts to keep equipment and supplies clean, and technicians are wearing gloves and masks as protection to keep customers safe. Many HVAC companies have also sought to give back to local communities hard-hit by the pandemic. As an industry, HVAC has remained committed to maximizing service to communities, and to each individual customer. Pandemic response For example, Johnson Controls has been part of the pandemic response from the beginning. The company first responded to the developing crisis in Wuhan, China, where local personnel worked to fulfill urgent needs for new hospitals. Local personnel worked to fulfill urgent needs for new hospitals As the pandemic evolved, Johnson Controls also implemented local and regional contingency plans across the globe to ensure employee safety and customer support. “As a global company, we have been addressing this crisis from the very start and are proud of our frontline leadership responding in every corner of the world,” says George Oliver, Johnson Controls Chairman and CEO. He pledged the company will do whatever is needed to keep essential products, services and personnel up and running. Helping Hospitals Johnson Controls’ products and services in the HVAC category are essential to hospitals and operating rooms and are a necessary component for operation of almost all the Critical Infrastructure Sectors recognized by the U.S. Department of Homeland Security. Properly ventilated buildings are critical to improve air quality and prevent the spread of disease and secondary infection. According to Johnson Controls, it is essential to maintain systems and keep them in service where people continue to live and work. Industrial refrigeration is also vital in markets ranging from food and beverage processing to the petrochemical industry. Here is another example of the HVAC community’s involvement in responding to the COVID-19 crisis: AAON, a semi-custom commercial HVAC equipment manufacturer, provided 50-ton customized HVAC units for the Stony Brook Temporary Hospital on Long Island, just east of New York City. The Tulsa, Okla., company provides 44 of the units, totaling 2,200 tons of HVAC apparatus, which equates to the cooling capacity of more than 700 single-family homes. Aiding the pandemic AAON worked around the clock to make the equipment and ensure the units arrived in New York City on a tight timeline. AAON’S New York sales office had called President Gary Fields to inquire about the company’s ability to meet the hospital’s need. A 1,038-bed temporary hospital to treat non-COVID-19 patients during the pandemic was constructed A 1,038-bed temporary hospital to treat non-COVID-19 patients during the pandemic was constructed at Stony Brook University. The Army Corps erected four temporary tent-like structures near the university’s athletic fields as part of the New York State initiative to relieve local hospitals during a spike in patients due to the pandemic. Ultimately, like many temporary facilities built in response to the pandemic, the hospital was not used. However, the facility will be ready in case it is needed for a second wave of the pandemic.

Aaon, Inc., announced that its Board of Directors has authorized the company to make up purchases of shares of the company’s common stock. This is in accordance with a pre-arranged stock repurchase plan adopted by the company and also in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, as well as from time to time in the open market or through privately negotiated transactions at prevailing market prices, depending on market conditions. Repurchases of stock Repurchases under the company’s 10b5-1 plan will be administered through an independent broker and will cover the repurchase of shares commencing April 5, 2019 and expiring March 4, 2020. Repurchases are subject to SEC regulations as well as certain market volume, price and timing limitations as set forth in the 10b5-1 plan. All shares repurchased, whether through the 10b5-1 plan, open market or privately negotiated transactions, will be restored to the status of authorized but unissued stock. Norman H. Asbjornson, CEO, stated, “We are pleased our strong capital position allows us to provide value to our stockholders through the stock buyback program.” Gary Fields, President, stated, “We believe our current financial strength and expectation of accelerated growth in the future support the stock buyback program at this time. We also believe that the stock buyback program provides a meaningful way to continue delivering value to our stockholders.”

AAON, Inc. announced that Norman H. Asbjornson, Chief Executive Officer and Founder of AAON, Inc. (the “Company”), will transition to the role of Executive Chairman, effective May 12, 2020. The Company also announced that Gary D. Fields, President, will assume the role of Chief Executive Officer (in addition to his current position of President), also to be effective May 12, 2020. As Executive Chairman, Mr. Asbjornson will lead the Board and continue to provide the full benefit of his vast experience, knowledge, leadership and guidance to support Mr. Fields as he expands his role at the Company. Mr. Asbjornson said, “Our Company has many accomplishments to be extremely proud of over the course of its nearly 32-year history. Of the many notable achievements, however, one that ranks near the top of my list is how we have been able to successfully create and maintain a meaningful ownership mentality among all levels of employees at our organization. This was something that I set out to accomplish from the earliest days of the Company’s existence, and I firmly believe a significant amount of the success we have experienced can be traced back directly to our unwavering commitment to this philosophy.” Leadership team at AAON Mr. Asbjornson continued, “I could not be more pleased with the leadership team we have assembled at AAON. During the course of Gary’s tenure as President of the Company, he has demonstrated exceptional leadership talents and the unique qualifications necessary to propel the Company to new heights well into the future. I have very much enjoyed working alongside Gary since he became President in November 2016, and I look forward to continuing to do so as he assumes this new role and leads AAON into its next chapter of continued success.” Gary’s knowledge of the HVAC marketplace and outstanding leadership skills make him the perfect choice as AAON’s next CEO." Mr. Fields said, “It is truly an honor to assume the role of CEO of this amazing organization. As the Company’s Founder and visionary who set the stage for the Company’s success, Norm Asbjornson molded AAON into one of the most respected, innovative and successful manufacturers in the HVAC industry through his intellect, business acumen, sheer will and determination. I welcome the opportunity to guide AAON and our tremendously talented, loyal and hard-working employees as we continue to build on the solid foundation and strategic vision set by Norm.” Ken Lackey, independent Board member and Chair of AAON’s Governance Committee, said, “The Board has been engaged in succession planning for several years and this transition is truly a win-win for the Company and its stockholders. Having served on AAON’s Board since 2007, I have witnessed on many occasions the immense value that Norm’s experience and entrepreneurial intuition provide the Company. His transition to Executive Chairman will enable the Company to continue to leverage this tremendous resource, while also helping Gary as he charts his own course as the second CEO in AAON’s history. Gary’s knowledge of the HVAC marketplace and outstanding leadership skills make him the perfect choice as AAON’s next CEO. We believe Gary’s leadership and ability to execute on the Company’s strategic plans will enable AAON to continue creating meaningful value for our stockholders for many years to come.” Lowering the average age of the Company’s management team Mr. Fields will report to the Board of Directors. Mr. Asbjornson, as Executive Chairman, will also report to the Board Mr. Asbjornson said, “The leadership changes which have been taking place at AAON over the past few years are now essentially complete for the present time, with transitions occurring at many management positions across various levels of the Company. These leadership transitions have occurred through elevating individuals from within our existing ranks, which has allowed these individuals to bring several years of experience at AAON to their current roles, while simultaneously significantly lowering the average age of the Company’s management team. The experience and tireless efforts of this talented group of managers has already provided tangible results. In the first quarter of 2020, AAON recorded the highest levels of net income and revenue ever achieved in its nearly 32-year history. These are extremely positive developments for the Company’s long-term success which I believe should instill great confidence concerning the Company’s ability to continue producing results that meet or exceed its past performance.” Mr. Asbjornson concluded, “To the stockholders, dedicated employees, sales representatives, customers and countless others who have supported AAON every step of the way since 1988, please know that you have my deepest gratitude for all that you have helped us accomplish to date. I have extreme confidence that with your continued trust and support, AAON’s future will continue to be marked by clear skies and an unlimited ceiling.” In his new role as President and CEO, Mr. Fields will report to the Board of Directors. Mr. Asbjornson, as Executive Chairman, will also report to the Board of Directors. Since November 2016, Mr. Fields has served as President of AAON and was elected as a member of the Board of Directors in 2015. Mr. Fields has over 35 years of experience in the HVAC industry. Before joining the Company, Mr. Fields was an HVAC equipment sales representative at (and from 2002 to 2012, a member of the ownership group of) Texas AirSystems, the independent HVAC equipment and solutions provider in the state of Texas.