In any greenhouse using fans for cooling, the cost of running fans can be a major expense for business owners. They have also had to be aware of possible regulations on fan energy after the U.S. Department of Energy (DOE) announced it would regulate it in 2011.

Lee Buddrus, the president of ACME Engineering and Manufacturing Corporation, has watched fan regulation, and how it affects growers, over time. Buddrus has been involved with the horticulture market since starting at ACME in the 1970s and has since served on various committees that deal with energy regulation. In 2014-15, he was also part of the initial committee that negotiated with the Department of Energy about fan energy regulation. In 2018, he spoke at the NGMA Spring Meeting about fan regulation and what the greenhouse industry needs to know about it.

How to stay up to code

For growers concerned with fan energy, Buddrus says a major key for them to stay up to code is understanding what regulations they are actually subject to. Different states, and some municipalities, have their own regulations, and the DOE guidelines largely depend on what political party is in charge at the time. For instance: The switch from President Barack Obama’s DOE (first led by physicist Steven Chu, then by nuclear physicist Ernest Moniz) favored fan regulation. Under current President Donald Trump, and DOE head Rick Perry, there is less of a push for regulation.

Buddrus, however, says that whether fans are regulated or not, it’s better for the greenhouse industry to know what it’s dealing with rather than to sit in limbo. In 2017, when he was originally approached about speaking to NGMA members, Buddrus believed there would be some clarity by the time he spoke in spring 2018. That did not prove true, as federal fan regulation is still very much up in the air.

“I thought I’d be able to give greenhouse folks a good indication of where things were headed,” he says. “Right now, I can’t give anyone an indication of anything.”

Two regulation options

In his opinion, Buddrus sees two likely outcomes. The first is that regulations will require fan manufacturers to build more energy-efficient products in what is known as the Fan Efficiency Grade (FEG). That could mean taking a fan from 70 percent efficiency to 72 percent efficiency. While that doesn’t sound like a significant leap, Buddrus posits that it is. He adds that this is how other regulatory efforts (think car manufacturers moving to more efficient cars) have been approached.

“Fans aren’t all that efficient,” he says. “When you’re moving air, lots of turbulence is created no matter what you do. When you create turbulence, you lose efficiency.”

The other option Buddrus says is possible is the Fan Energy Index (FEI) model. In this case, the change would be more based on the use of purchased fans that are more efficient, and often bigger, than less-efficient fans. This market-driven model would essentially ask growers or greenhouse manufacturers who are purchasing fans to choose between prioritizing larger, more efficient fans that might be more expensive versus fans that are lower in cost, but less energy-efficient. This model, according to Buddrus, has not been used to regulate any other product or industry.

What’s to come

According to Buddrus, regulation has still changed. In 2015, the DOE issued its guidelines for the FEG model — only to swap it out for the FEI model in November 2016, a week before the 2016 presidential election. When President Trump defeated Hillary Clinton in the election, the new president’s DOE tabled fan regulation and has not addressed it in his year-plus in office.

“That’s where we stand with the DOE,” Buddrus says. “Again, I thought something would have happened by now, but it hasn’t.”

At the state level, however, there have been regulation efforts pushed through. On June 12, the California Energy Commission announced that it wants to implement the FEI model after considering the FEG model and is asking for comments from constituents on the matter. If the plan remains on schedule, new standards would go into effect on Jan. 1, 2020.

Buddrus, though, notes that there could be difficulty in enforcing these regulations. Many fans are put in other units before being shipped. So, in theory, a grower in California could purchase a cooling unit with a fan manufactured in another state, have it shipped to California and work around the regulation. At this time, this aspect of the regulations is still unclear.

“We’ll see how it turns out,” Buddrus says.

Photo: Adobe Stock

Pete Fowler, president of Pete Fowler Construction Services, specializes in risk management and liability on new construction projects. At the 2018 NGMA Spring Meeting, Fowler spoke to attendees about how to best manage risk and successfully complete a greenhouse build.

In this Q&A, Fowler talks about some of the main risks businesses face in construction, how contractors and end consumers can stay on the same page and more.

Greenhouse Management: When you are consulting with a new client, be it a greenhouse operator or a greenhouse manufacturer working with a business owner, what are some of the main risks they should be aware of when starting a new project?

Pete Fowler: The most common risk [for greenhouse manufacturers] is not charging enough and then going out of business — so it starts there. That’s what we could call speculative risk. And then there are other typical risks like floods and fires that you can generally have insurance for, but you have to make sure. And then there are indirect risks like defect allegations or somebody else’s employee coming to your property and getting hurt in or around your job site and blaming you. Lots of the NGMA guys — the actual greenhouse manufacturers themselves — are sometimes contracting for not only the physical components of the greenhouse, but they are also finding a contractor or local crews to erect those structures and they are selling a complete greenhouse. Naturally, the people you hire to erect [the greenhouse] have varying levels of sophistication, so I would call that one of the most direct risks in the whole process. If you hire a third party to erect the product you’ve manufactured — say a greenhouse — you’re guaranteeing their work, whether you like it not.

"All of this should happen before a hammer is swung on site. All of this is being built on paper before it’s done in the real world.” – Pete Fowler

Some of the documents that NGMA members are signing are signing away their lives. It’s all fine and dandy if it works out. But if it doesn’t work out great — because of the onerousness of the contracts they signed — all of the liability falls on the shoulders of the person that signed that contract, not the contractor who drew up the contract.

Pete Fowler

Photo courtesy of Pete Fowler

GM: What are the most common mistakes people organizing construction projects make that are avoidable and cause issues later on?

PF: No. 1, [business owners] sign contracts they don’t understand and they should never do that. It’s a very, very dangerous game and if somebody is asking you to sign a contract you don’t understand and you don’t have the resources to hire someone to explain it to you, you don’t ask the person who wrote the contract to explain it to you. You have to get someone else who understands to know very clearly what is being bought and sold. If you are contracting or buying from another entity, you need to understand the risks and manage the risks with contracts and insurance. What they need to do is have a process to make sure whatever is being bought and sold is clearly defined and understood. Have a schedule, know what it’s going to cost. All of this should happen before a hammer is swung on site. All of this is being built on paper before it’s done in the real world.

GM: What advice would you give to a greenhouse grower hiring a contractor for a build?

PF: Normally what happens is someone says, “I’d like a greenhouse, please. I’d like it to be about 40 feet by 100 feet,”’ and it feels like there are 10,000 options. So you call three greenhouse manufacturers and say the same thing to all of them. One guy gives a proposal for a Bentley, the other guy gives you a proposal for a Yugo and the person in-between gives you a proposal for a Chevy. How are you supposed to choose?

Every project has people at varying levels of sophistication in every role. It’s best if everyone is very sophisticated and we don’t have a ton of litigation, or terrible problems. When everyone is very sophisticated in the contracting, the risk management and the procurement of insurance, when problems happen, they don’t cause grave harm to any of the entities. All of the risks are managed actively and proactively. It’s when you end up with folks in the stream of commerce that are not sophisticated that you have problems. Understand who you are going into business with.

GM: When you are looking at coordinating work between parties, and defining a schedule and a budget and all of these different factors, what can the greenhouse owner buying a new greenhouse and contractor do to make sure they are on the same page the entire time?

PF: I think virtually everything should be in the contract. If you’re going to spend $5,000, then you’re going to want to do some due diligence. If you’re going to spend $500,000 or $5 million, it’s very different. The appropriate amount of risk management depends on the potential risks and if the potential risk if $5,000, you don’t want to pay your lawyer and your insurance broker $10,000. If the potential downside is $500,000 or $5 million, then you need to be very explicit about engineering backward from a successful contract completion.

In 2018, more growers seem optimistic about the health of the green industry — and it shows in how they are looking to invest in their own businesses.

Through the responses Greenhouse Management has analyzed in our 10^th annual Structures Report survey, we have found that more growers across the entire spectrum are looking into building and/or improving their facilities. And with more growing space comes more plant production and, in some cases, a change in the crops being grown.

Compared to 2017’s results, the number of respondents growing bulbs doubled in 2018 to 12.4%. This year, 48.7% of respondents reported growing annuals/bedding plants — a 9.7% increase from 2017’s total. This edges out perennial production, which decreased about 3% from last year to 38.1% in 2018.

Additionally, the number of respondents growing finished stock increased from 11.4% last year to 17.7 this year. The number of respondents growing foliage/tropicals, however, dropped from to 16.8% in 2018 after 26.7% of growers reported growing foliage/tropicals in 2018.

Also of note: 5.4% of respondents indicated that they grow cannabis – a 4.4% increase from 2017 when cannabis was first listed as an option in the research.

As National Greenhouse Manufacturers Association’s President, I am proud to represent a great and growing industry. Our organization has taken a leading role in promoting best practices through education and networking. We also work diligently on behalf of not just our members, but the entire greenhouse manufacturing trade on building codes and standards.

Sharing knowledge and passion about their industry, NGMA members took every opportunity to listen and learn at the organization’s annual Spring Meeting held in April in San Diego, California. The meeting gave attendees the opportunity to assemble as a collective group to discuss, collaborate and educate ourselves on topics that directly affect our industry. We heard presentations on topics like: Construction Contracts, Risks and Insurance; Fan Energy Regulation; and State-of-the-Art Supplemental Lighting for Controlled Environments. There was also a session on the key aspects of greenhouse lighting from both a practical and technical perspective.

During the past few years, our Codes and Standards Committee has worked tirelessly updating the greenhouse definitions in the IBC Building Codes. It is exciting to see the NGMA code sponsored changes are now in use as the 2018 IBC gets adopted by different jurisdictions. Specifically, a reclassification of greenhouses in the code specific to its use, a 60 percent-plus increase in allowable square footage for a greenhouse before sprinklers and other fire protection systems are required. Additionally, and what should be considered a huge victory, a specific greenhouse definition and a section were added within the codes for future greenhouse regulatory clarifications.

As we move forward, our attention will turn to the Energy Codes changes being proposed and begin the 2021 structural review. Our influence in this area is vital to our industry. As an organization, we want to ensure that modifications to code guidelines will not have an adverse effect or place unrealistic demands on growers.

For 2018, our Communication Committee plans to roll out a new website that has improved functionality and easy user interface. It also plans to offer webinars featuring NGMA speakers, who will speak on a variety of industry topics, as well as promote the value of the NGMA and its members.

I want to personally thank the many volunteers who contribute to the success of NGMA. We have made progress with various initiatives, and I look forward to continuing to serve as President in 2018.

Mark Davis

President & CEO

Atlas Manufacturing, Inc.