April 14, 2026 • 30 mins
Energy prices swing, grids strain under electrification, and the old habit of oversizing HVAC “just in case” is getting expensive. Trevor Schick, CEO of AIIR Intelligent HVAC, unpacks what a modern HVAC strategy looks like when comfort, resiliency, and life-cycle cost matter as much as first cost, especially in commercial modular construction.
In this episode, Trevor explains how HVAC decisions can give developers back rentable square footage, reduce mechanical closets, keep ceilings higher, and even free up rooftops for amenities instead of equipment. Trevor also talks about “physical AI” for buildings: sensors that understand occupancy, humidity, and outdoor conditions, variable-speed compressors and fans that run more smoothly, and edge computing that learns the needs of each individual space instead of guessing at a whole-building average. Along the way, he connects the dots between indoor air quality, noise, demand flexibility, and the reality that refrigerants and regulations will keep changing.
Listen to all episodes of MBI's Inside Modular podcast at https://www.modular.org/inside-modular-the-podcast-of-commercial-modular-construction/
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Episode Transcript
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SPEAKER_00 (00:00):
Hello and welcome to Inside Modular, the podcast of
commercial modular constructionbrought to you by the Modular
Building Industry.
Welcome everyone.
My name is John McMullen.
I'm the marketing director hereat MBI.
Today I'm joined by TrevorSchick, CEO of Air Intelligent
HVAC.
Trevor is here to talk aboutenergy efficiency and resiliency
(00:22):
in modular systems and howmodular builders can optimize
their HVAC strategy.
Trevor, welcome.
SPEAKER_01 (00:29):
Welcome, John.
Thanks for uh thanks for havingme.
Looking forward to thediscussion.
SPEAKER_00 (00:32):
No, I appreciate you being here.
Tell me about yourself, Trevor.
What's your background and whatled you to focus on HVAC and
energy strategy in the builtenvironment?
SPEAKER_01 (00:41):
Like most, it's a long road that got me here.
Um, you know, I look back uh tomy history.
My first 20 years in businesswas all in high-tech.
So I was at companies like AppleComputer, Motorola,
Hewlett-Packard, spending a lotof time on global supply chain
in those industries.
And similar to what was seen inHVAC, you know, in those days,
the, you know, the hardware'sreally come and commoditized,
(01:03):
right?
You think of an Apple versus aDell, most of the components
inside those systems are thesame.
Most of the companies that buildthose systems for them are the
same.
What started to differentiatethem was really kind of the
customer experience that yougave them and the software that
you could put in those to makethat better customer experience.
And then as I started to pivotand somebody pulled me into the
real estate and constructionworld, um, it became evident to
(01:26):
me that kind of that trend wesaw in the in the electronics
industry was what we reallyneeded to move into in the HVAC
industry and be able to give abetter product with the same
type of hardware put togetherbetter, but then really build
that software layer on top of itthat can bring you know a better
cost, better environment for thedeveloper and the builder, but
also give a better end userexperience to the uh the person
(01:48):
that's using the space.
And that's what got me excitedabout it.
And been in construction for 10years now, and I'm still excited
every day to come and uh pushsome of the products that we'll
build in.
SPEAKER_00 (01:57):
Considering your background and you know, from
where you're sitting today asCEO of AIR, how has the
conversation around HVAC andbuilding performance changed
over the past decade or so?
SPEAKER_01 (02:08):
Yeah, I think you know, if you look at the past,
right, people designed thebuilding, then they'd kind of
think about the HVAC and they'dlook at different systems put in
there.
And I don't want to say it wasan afterthought, but it was it
was much further down in thebuild and design cycle for the
buildings.
You know, what we're seeingtoday is it's really had to
become a core driver of the waythat that building design is
done.
And that's because we we canreally save a lot of money for
(02:30):
that developer based on, youknow, that upfront design.
You know, simple things like ifI don't need a VTAC in the
corner that takes a three bythree closet, I'm suddenly
saving that that developer notonly the nine square feet in the
corner, but I'm selling them thespace that now they can push and
use all of that, call it 24 feetof space because the whole width
of the room, and get a lot moreusable and rentable space in the
(02:52):
uh in the unit.
And so, you know, historically,people in our area looked at
PTACs and VTAX and VRF systems,you know, but what we really
wanted to do was introduce thisintelligence layer with a better
product that can then bringvalue to those developers and
the uh the people that arebuilding these spaces.
SPEAKER_00 (03:09):
So, one question I wanted to ask you, and it's
seems very topical at the at themoment, energy volatility uh is
a big topic now, especially forbuilding owners, that like you
mentioned.
Uh, how is uncertainty aroundenergy prices influencing uh
HVAC design and investmentdecisions from developers today?
SPEAKER_01 (03:28):
Yeah, I think, you know, in the past, most of this
was looked at as kind of what doI do with the first cost, right?
How much is it going to cost meto build in this specific type
of HVAC system into the product?
And most of those systems wereeither fixed systems where, you
know, they had one set pointthat was that was managed, or
some of them had some variableto them, but but no real
intelligence built into thesystem.
(03:48):
And what that did was it led tonot getting the energy
efficiencies on the back end.
So you might get a better firstcost savings, but over the
30-year cycle of that product,you weren't getting the
operating efficiencies that youwant to get.
And to be fair, what most peoplehad end up doing was
over-specing the system becausethey needed to make sure that
they could hit that one high setpoint that was kind of at the
(04:09):
max.
The way we think about it ismuch different, right?
I need to be very competitive onthat upfront cost, give them a
simpler system from an installperspective that can help drive
down their upfront costs, butthen give them the 30 to 40%
efficiencies on the back end,which then allows them to not
only get the first cost savings,but when they're doing the
performer for the building,they're actually able to then
(04:31):
build in, especially if they'rethe operator, those long-term
cost savings from the energyefficiencies.
And this is how we startthinking about adaptive systems.
It's it's interesting because Ithink about it as, and you'll
hear this term more and morethese days, is physical AI,
right?
You know, everyone knows AI,right?
You use your chat GPT, you useyour anthropic.
It's really just a software toolthat, you know, you ask it a
(04:52):
question, it generates an answerand gives you some predictions
of what uh what your answermight want to be.
Physical AI is a little bitdifferent.
It's the idea of you you usesensors to kind of understand
the environment that you'rebuilding in, right?
So once you get that product inthere, it understands what's
happening inside with occupancy,temperature, humidity.
It understands what's happeningoutside with humidity, where's
(05:13):
the light coming from?
Is it a sunny day or a cloudyday?
And it senses all these things.
It then optimizes them to thesystem by using variable speed,
compressors, and fans.
And then at the end of the day,it learns from it.
So, did it do the best thing togive a good user experience, but
at the same time be able to savemoney on the efficiency side or
save benefits on the efficiencyside?
(05:34):
And then it learns and then itcontinues to build.
And that's what Air has reallydone is we we've said, let's
simplify the system down, butgive them that same or better
experience that a complex umfull building system would give
them.
And that's where physical AI isnow moved from other spaces and
into this HVAC space, which iswhat we're pretty excited about,
and then brings those energyefficiencies to the uh the owner
(05:56):
operator.
SPEAKER_00 (05:57):
Well, that's that's that's fascinating.
I I'll be honest, I hadn'treally considered such a thing
as physical AI, but it makescomplete sense when you when you
describe it that way.
Um climate policy now is pushinguh many regions towards
electrification.
What uh practical challenges arebuilding owners running into as
they move away from traditionalsystems and and more toward
(06:18):
these intelligent systems thatyou've described?
SPEAKER_01 (06:20):
Yeah.
Well, I mean, at the end of theday, as electrification happens,
the grid constraints become areal problem, right?
They become a problem for, youknow, no matter what industry
you're in, but the builder.
Um, and if you think about it,you know, in the residential
space, and I'll use that term alittle loosely, think student,
single family, multifamilyhospitality, right?
Kind of that that whole space,you know, 30 to 50 plus percent
(06:43):
of your energy is being used foryour heating and cooling.
Think of what a 30% savings to50% of your build adds up to,
right?
There's this this becomes a muchlarger benefit when you think
about how much that energycooling and uh and heating is
gonna do for you.
And the only thing that I knowabout what's gonna happen with
regulatory climates, you know,all the other things you listed
(07:03):
is it's not static, right?
It's gonna be different nextyear, it's gonna be different
five years, and it's gonna bedifferent 10 years.
And so you really need to designfor the resiliency.
And that's what our softwaresitting on our systems allows us
to do.
Number one is it understandswhat's happening in that
environment.
So if climate change ishappening in an area and it's
suddenly getting warmer there,my system's figuring out how to
maximize that benefit, right?
(07:24):
Being able to bring back themost cost savings of possible.
If people are, you know,humidity is changing because
there's more storms coming in.
I'm able to manage that betterthan anybody else because I'm
not a static set point system.
I'm really taking this from theperspective of understanding my
full environment, learning.
And as that changes, my systemcontinues to learn and does it.
So, in a world where thosethings are going to change,
(07:46):
price of electricity is going tobe changing up and down, the
exterior environment's going tobe different.
You need to make sure thatyou're building a system that
can be resilient to that.
So in five years, you're nothaving to replace it with a
different type system.
SPEAKER_00 (07:57):
You talked about uh resiliency, which is a huge
topic I know.
Um, and considering you know,related topics like you know,
peak demand and grid outages andenergy flexibility and all these
topics that are in the industryright now.
I was wondering if you couldshare an example of uh a project
where you know energy volatilityuh or grid limitations directly
(08:18):
influenced uh HVAC strategy.
SPEAKER_01 (08:20):
Yeah, so I would say, you know, I'll take it back
a little bit to the resiliencyof more of the operator side of
things, right?
At the end of the day, they'revery focused on needing to make
sure they have uptime, right?
What's my resiliency built intothe HVAC system that allows me,
let's say, as a hotel operator,to never have a room down?
Because every night that roomisn't being used, it's costing
(08:40):
me money, right?
It's a fixed cost that I'm gonnabe paying for that room to not
be used.
So resiliency to us is if youthink about some of these large,
you know, more complex systems,you know, you have one system
that might manage 20 rooms.
If that system goes down, youhave 20 rooms go down in that
building, right?
Normally you got to get somebodyout there, there's a lot of
piping that's happening exteriorto the system.
Somebody's needing to come inand manage all those pieces.
(09:03):
For us, because we have asimpler system and it's an
in-unit system.
If that room goes, you know, ifthat system goes down, one, it's
only one room that it happensto.
Number two, because it's athrough-wall system, I'm fully
packaged.
I literally can send somebody inthere and within an hour, I can
have that system replaced, thatroom back online.
Never interrupted my customerexperience because, well, maybe
(09:25):
for an hour I have to send themdownstairs to grab a bagel, but
beyond that, that room is goingto be up and running.
And number two, you know, I amthen not bringing down and
losing the money by having anempty room in there.
So resiliency for us looks veryheavily at how do I make sure
that system never comes down.
Now, to take that to theelectrification side of things,
you know, a lot of theseoperators and the grid owners
(09:46):
are starting to look at who'susing the most energy on that
system, right?
And if you're using the mostenergy on the system, they're
looking at ways to then managethat for you almost.
What we're being able to bringto the table is, you know, we
have an 18-seer rating rightnow.
So we're very efficient fromthat perspective.
So when somebody's looking atthe buildings that we're in,
they're going to see a muchbetter level of efficiencies
(10:06):
across that building.
SPEAKER_00 (10:07):
So when you're looking at uh a building's life
cycle, be it a hotel or anyother sort of uh of building 20
to 30 years out, how shouldowners be thinking differently
about HVAC planning in thisenergy environment we find
ourselves in today?
SPEAKER_01 (10:24):
And again, I think it goes back to is owners need
to make sure that you knowthey're not designing just for
today, right?
They need to be looking atsystems that can be out in the
future, right?
If you look at, I mean, usesomething very simple like the
refrigerant that's being usedtoday, right?
I've been in this businessprobably less than most people
that watch this podcast, butI've been in about 10 years,
right?
I think there's been three tofour different refrigerant
(10:45):
changes in that time frame,right?
And they're all driving towardsone, how do we become more
environmentally effective?
A lot of those old refrigerantswere bad for the environment.
But number two is, you know, howdo we then optimize using those
refrigerants to get betterefficiencies?
Right.
I can guarantee down the road,that's going to switch again.
But what we see happen withthose is that those new
refrigerants get introduced areusually more costly than the old
(11:08):
ones, right?
It's your classic supply-demand,right?
When there's a low volume of it,your costs are higher until you
get up to high volume and thenit gets lower.
What's great about systems thatare kind of compact, you know,
full systems like ours is I useso little of that refrigerant
that it avoids a lot of theproblems these guys might have
down the road, right?
I don't need detectors for myrefrigerant because the new A2L
(11:29):
is slightly flammable.
I don't want to over you know,overstate it, but you do need
sensors at a certain, you know,if you use a certain amount of
uh ounce of the refrigerant.
So we don't need those.
And then we're able to bringthat packaged system that if I
replace it, I don't need to gofigure out do I need different
piping in there for this newrefrigerant?
Is there a different setup?
Because I'm a fully packagedsystem.
So when they say 10 years downthe road, and maybe my system
(11:52):
lasts 15 because we're we'rerunning it more efficiently, but
you know, at some point you'regonna have to replace the
system, they just pop theirs outand put mine in.
They're not having to go up tothe roof, put in a different
compressor, run differentpiping.
There, there's a lot of thingsthat we're building into it that
allows them to kind of have thatupgradability without the cost
that a lot of them are gonnahave to pay for that
upgradability.
SPEAKER_00 (12:12):
What are some of the biggest uh mistakes or
misconceptions you seedevelopers making when when
planning HVAC systems today?
SPEAKER_01 (12:19):
I think for me it it's it's twofold, right?
One is a certain set of themjust really focus only on
first-time costs, right?
And and I get why, right?
If you're building a multifamilyapartment, you're building that
unit, it costs you a certainamount of capex to go build it.
And by the way, your operatingexpense is being handled by the
guy that's renting the unit.
And so it's a little bitdifficult in some spaces for
(12:41):
them to look at this and say,hey, why the operating expense,
I can't write that into my proforma because I'm not getting
those savings somebody else's.
So from our perspective, is youhave to have a system that's
competitive day one on the CapExside of things.
And when I say that, it's notonly from a cost perspective,
but again, I will go back to thenew systems that are coming out
with this physical AI built intothem, give a much better user
(13:03):
experience, right?
I don't talk about whattemperature I'm running at.
I'm saying what's my feels liketemperature in that building,
because really the end usercustomer is all about humidity.
It's all about what that setpoint temperature is, it's all
about whether the wind isblowing on me, right?
We've all been in the hotel roomwhere a PTAC's blowing cold air
at you, right?
And that that's that's a baduser experience.
(13:24):
The other piece of it that comesto play is you know, making sure
that we have enough fresh aircoming in, right?
Air quality has become such abig thing in a lot of these
buildings.
And so, you know, making surethat they think about, yes, I
need a good CapEx up front.
The cost has to be first costcompetitive.
But even in those spaces wherethey're not getting the cost
savings benefits, the end useris making sure they understand
(13:45):
that you know that that feelslike and that customer
experience can bring them a lotof benefits from both a customer
satisfaction perspective, butalso when they sell the
building, the value that they'regoing to get for the building.
So I think that's one thing.
And sorry, that got a little bitlong.
The second one is the designside of things, right?
When we can work with developersand help them out on the design
side, and this really applies tothe modular guys as well, which
(14:08):
I'm sure will get, you know, tieus a little bit tighter up as we
go forward here.
But, you know, being able to getdesign in those systems, as I
said, in a hotel room, and we'veworked with the big brands, you
know, if I can take that P-TACout, that PTAC sticks two feet
into the room, and I cannot puta piece of furniture against it.
If I can make that flat againstthe wall, my blowers up at the
top, just like a VTAC, now I canpush furniture right up against
(14:31):
it.
Now I have the option of do Irent it with more usable space,
which probably works very goodin a multifamily because they
care about square footage more,or in hospitality, can I take 18
to 24 feet out of the size ofthat building?
And if you think of constructioncosts of$250,$275 per square
foot, which is, you know, plusor minuses.
Some people say it's$200, somewill say it's$300, but the math
(14:54):
works regardless, right?
Suddenly I take 18 feet with$250per square foot out of that
building cost.
That is massive from afirst-time cost saving.
So it's not just the cost of myunit, it's what are those other
incremental pieces that I canbring to that developer that
allows him to save money.
Even on things like I can nowgive him his roof back, right?
(15:14):
He doesn't need compressors upthere.
Put in your dog park, put in anoutdoor barbecue area.
Those are all things going toraise your amount of value you
can bring to the customers, butstill give them a better
experience because the systemI'm bringing in can beat them on
sound, it can beat them oncustomer um satisfaction from a
uh from an occupancyperspective.
So so that's the way we think ofit.
You can't just take it as asingle what's my capex, you got
(15:35):
to look at how it fits into thewhole picture.
SPEAKER_00 (15:38):
Well, you you mentioned modular, and I did
want to pivot a little bit moreuh to that audience.
From your perspective, how doesdesigning for factory-built
construction uh change theapproach compared to traditional
stick-built projects?
SPEAKER_01 (15:53):
Yeah, and it's fun.
I I I've lived both worlds,right?
I I kind of was on the the uhstick-built side of things, and
then I think I mentionedearlier, I might not have, I was
with Amherst Holdings, which isa single family rental group out
of uh here in Texas.
And and you know, one of thethings that I was at the
beginning of with them isstarting their studio-built
projects, which was, you know,they normally were I'll buy a
home, I'll renovate it, thenI'll lease it.
(16:15):
Then we kicked over to a projectwhere we started modular
building with some of the bigplayers out there all the way
through to now having their ownfactory.
And so I was able to startthinking about how does this
HVAC system get in, brought ineven before I became the CEO of
uh of Air Products.
So, you know, I kind of livethis world.
And what's really important toit is being able to do
everything in the factory,right?
(16:36):
The biggest savings you canbring in modular is being able
to take a product, the modularproduct, bring to the site, and
have to do as little amount ofwork on that site as possible.
And it's really for a couple ofreasons.
One is cost, factory labor is alot less expensive and more
efficient than field labor,number one.
But but number two is in thefield, you need to kind of get
all the trades working together.
(16:57):
And that's difficult to do,right?
You need to have your electricalguy there at the right time, you
have to have your plumbing guythere at the right time,
concrete to put your pads in,all those things need to come
together.
And that orientation usuallytakes schedule.
And and part of the problem witha lot of the modular is they've
always said we can build it muchfaster, and the answer is yes,
but if the subcontractors in thefield aren't available to do
that, you still end up withthese long schedules.
(17:18):
What we look at with thesepackaged systems is you don't
need any of that, right?
When our HVAC is put into amodular unit, or when you know
any package system is put inthere, it's done, right?
Literally they drop it down onthat site, they run power to it,
they'll probably have a drainagefor uh for condensation.
But besides hooking those twothings up on the site, which you
(17:38):
have to do regardless,everything else is in that
package system and you don'tneed to do it.
So all of that work is done,number one, in design.
So it goes back to theconversation earlier about
getting that integration ofdesign up front.
But then number two is makingsure that everything you can
possibly do in the factory,which for our system is all of
it, can be done and thendelivered to the site and not
have to be touched on the site.
(17:59):
I've now taken out themechanical trade for the the
HVAC.
I'm not having to run ducting,I'm not having to run piping.
All those things go away, right?
That just saves money for themon the back end.
And just as importantly, in manycases, it saves them schedule,
which means they can get thatbuilding up and running faster.
SPEAKER_00 (18:14):
So you mentioned the the benefit of package systems
going into factory-builtprojects.
Uh many modular projects servesectors like healthcare,
education, workforce, housing.
Do HVAC considerations differacross those different building
types?
SPEAKER_01 (18:30):
Yeah, I think they do.
Again, my my world's prettyfocused on residential, right?
Kind of the categories I talkedabout earlier.
But but obviously, just as aperson in the industry, I mean,
they they do there's there'sdifferent things that are
critical to those folks.
You know, healthcare, it's allabout reliability, right?
I mean, there is nothing morecritical in the healthcare side
except education, it's a lot ofscalability, right?
(18:50):
Schools usually come up fast,and then they need to be able to
scale them as time goes on andbe able to make sure they can
get it there.
Housing is very focused on costand comfort, right?
So I think they all now, if Iwent back to healthcare, do they
care about cost and comfort?
Of course they did.
But it's kind of what how youstack those priorities is
different, but the priors areprobably about the same.
The the thing that's the acrossall of them, the goal is the
(19:13):
same.
You got to deliver consistentperformance with minimal
complexity while improving thecustomer, you know, the acumen's
experience, right?
So they all have the same endgoal, although you might stack
rank those a little bitdifferent within them.
And so that's why you just yougot to get systems that you know
are built differently today thanthey have been in the past.
Now, now, what I would say is ifI look at healthcare and I look
(19:34):
at, you know, again, some of thebig, bigger buildings, right?
Factories and those types ofthings, there's been a lot of
work done on building in A intothose projects, moving much more
to the low speed because thatthat cost and the
electrification is so high forthem.
I think in the residentialspaces where it got left a
little bit behind, right?
You have a group of players outthere that are very large, very
(19:54):
established, high marketconcentration in their spaces,
and again, a little bit of theinnovator's dilemma, which is do
I go invest millions of dollarsto build a product where I
probably won't gain any moremarket share?
You know, and and it and ithappens.
And that's where startups likeAir come into play because we're
able to say, I'm gonna take ablank piece of paper, which is
exactly what we did.
Physically, I'm gonna design abetter system, right?
(20:16):
And and I can do it costeffectively because I'm just
able to really start with youknow the blank sheet.
And then you bring in guys likeme and some of the people I've
brought in that come from otherindustries.
You know, you you in the in thephone industry, right?
I work for Motorola in the cellphone business, Apple in the
cell phone business, right?
The goal there is bring out aproduct with two to three X the
amount of technology built intoit at a lower cost with every
(20:39):
product introduction you do.
That isn't something that kindof starts in the construction
industry, right?
You can look at it over the past50 years and you can go get your
data from McKinsey and everybodyelse.
But the the building efficiencyhas actually decreased over
time, right?
From a, you know, how quicklycan you build it?
How uh, you know, how good isthe building?
And that's, you know, part ofthat's regulatory.
I don't want to minimize that,but but we're trying to bring
(21:01):
some of that, you know,knowledge of using software and
hardware, being able to startfrom scratch and build out those
products to really go after thismarket for the residential side
and really get that caught up tosome of the things we're already
seeing in some of those othermarkets that you highlighted.
SPEAKER_00 (21:15):
So, how important is early collaboration between HVAC
engineers such as uh Air, uhmodular manufacturers and
developers when you're designingthese HVAC systems?
SPEAKER_01 (21:28):
Yeah, I mean, uh your true benefit comes with
that early early adopter.
I I talked about the spacesavings, right?
Because again, that that you'llonly get that if you you do the
the design piece up front.
And so, you know, I'd call thatkind of the the key to it.
But but even things like youknow, as you think about the um
you know, do you have to put acompressor on the roof, right?
Do you need to put it outside ona pad?
(21:49):
How much you know are youputting ducting in, right?
I mean, simplistically, when youuse these big complex systems,
you're ducting them through thebuildings.
Well, suddenly my ceilingheight's lower.
Well, not only is that cost.
More money because you haven'tto put you know the uh the
ducting in, but you're alsogiving the worst user
experience, right?
Anyone who walks into aneight-foot high ceiling versus a
nine-foot high ceiling justfeels a better space to go
(22:10):
after.
And so, you know, being able towork with them up front to give
them back those safe spacesavings, bring them the true
cost efficiencies in that designside of things is absolutely
what makes this so effective forthose uh those modular builders.
What's great about them and whya product like ours works so
well in their model is I am soeasily repetitive.
Every single unit of mine, we'rethrough all system, we fit
(22:32):
between the studs that theyalready have in that building.
They just pop in a sleeve andthen they put in the system.
I mean, literally, if I do iton-site, it's probably a
two-hour install, maybe an hourand a half.
If I do it in the factory, it'sprobably 15 minutes.
Think about the amount of workit takes when you're in the
field to bring in all thosedifferent trades, coordinate
them together, and get that HVACsystem put in.
(22:52):
So, you know, that's that's theway we think about it.
One on the design side, I canbring you the cost efficiencies
of optimizing the space better.
But then number two is justpurely that factory-built
mentality that the modular guysare so good at.
That's why I love them becauseit's my background.
They're able to understand thevalue it brings to being able to
have a very repeatable systemthat can go in.
And then, by the way, if there'san issue in the field, as I said
(23:14):
earlier, pop one out, put thenew one in, you're back online
within an hour.
SPEAKER_00 (23:18):
Earlier in this conversation, we were talking
about a lot of the newtechnologies that have come into
HVAC, how uh they're built inwith intelligence layers now.
So I wanted to go back to thatfor a minute.
As buildings electrify, um, doyou see technologies uh like
those we talked about earlier,like thermal storage, smart
controls, uh demand response?
(23:39):
Do you see those playing abigger role?
SPEAKER_01 (23:41):
Yeah, they they have to.
I mean, it's um, you know, ifyou think about the thermal
storage is a little bit of adifferent animal, right?
I it's uh, you know, being ableto make sure you have a can, you
know, conditioned space iscritically important, right?
Because at the end of the day,you know, we look at it from the
perspective of how do I makesure I'm bringing in fresh air,
but I'm conditioning that airbefore it goes in, right?
(24:02):
And so that I'm not, when I'msending new air, fresh air in,
I'm not sending cold air into awarm room and then having to
turn back on the system, whichobviously decreases your
frequencies.
You know, when you get into theum, you know, the sensors and
the controls, that's where allthe secret sauce is, right?
Number one, being able to havethe right sensors and the stuff
out there today is unbelievablewhat it can pick up, right?
(24:24):
My sensor knows whether that's acat walking across the room,
whether that's a dog or that's aperson, right?
How many people are in thatroom?
What does that number of peoplein that room drive from a
heating perspective in thatroom?
Because what the system's allabout, what our AI does and the
machine learning I talked aboutis it understands that and
starts predicting better what'sgoing to happen.
Because the best thing I can dois run my fans at a level two, a
(24:46):
level three, right?
We have nine levels in oursystem of different speeds with
the compressor and the fan.
And the most efficient way torun that is run it at a low, you
know, a low level, but that's abetter user experience too,
right?
Because they're not hearing thisbig system kick on, they're not
getting the wind blowing acrossthe room, they're getting this
great experience inside of theroom, but then I'm able to
condition all the air that'scoming in so they're getting the
(25:07):
fresh airpiece without having tokind of cycle a system up and
down.
What's become interesting to usabout it as well, is you kind of
think about the long-term effectof that, is from a warranty and
usage perspective, right?
It's it's like a car, right?
If every time you're in yourcar, you just go up to 100 miles
per hour and we slow down to 20and then go up to 100 miles per
hour, that car gets way too muchwear on it and doesn't last as
(25:27):
long.
Our systems kind of run at thisconstant speed.
You know, we'll kick it to highif you know for some reason the
homeowner wasn't home or youknow, hasn't predicted what's
gonna happen next happens.
But most of the time, especiallyafter a few months, as our
machine learning has gottenbetter and better, we're able to
predict exactly what's gonnahappen, right?
And that that allows us to get,again, it's a better user
(25:48):
experience.
Back to your point on thosecontrols, why they're so
important.
It drives those controls andgets the learnings for us.
And then every day our systemlearns and gets better.
So we're gonna do a better jobtoday than tomorrow.
The other piece that becomesinteresting with it is that when
you think about these bigsystems, they're trying to
condition five rooms, 10 rooms,20 rooms, right?
If that room's on an outsidewall to the south, it's much
(26:09):
different than an outside wallto the north, right?
The day the sun's up, when itcomes up, what's the weather
like at that point?
Our system continues to pullthat data and understand it and
get more efficient, veryspecific to every single space
that we condition, versus tryingto do that at kind of a building
level.
We do it at a space level, onesystem at a time.
It is your true edge computing.
Every one of our systems has amicroprocessor on it that can
(26:32):
figure out what's going tohappen, take the feeds from
those sensors, use our AI to getsmarter, and then give that
optimal customer experience atthe best efficiency somebody can
have.
SPEAKER_00 (26:42):
Well, that is fascinating.
Uh to be to be honest with you.
Um, what do you think thebiggest opportunities are for
modular manufacturersconsidering all these new
technologies, the sensors, themachine learning, what what are
the biggest opportunities forthem to innovate when it comes
to HVAC integration?
SPEAKER_01 (26:59):
I think I think a lot of it's on the design side,
right?
So being able to innovate betterdesigns by being able to use
these newer technologies cominginto play gives them a huge,
huge upsell, right?
You know, again, you think aboutthe modular space going into
hospitality, right?
Those guys can now come in andsay, you know, a Hilton product,
let's say, hey, yes, you saidyou need your room to be, you
(27:21):
know, 24 feet long.
You can make that 22 feet longbecause of the benefits of the
new system going in there andgive a better user experience.
The the other piece that we finda lot of and hospitality, it's
it's so critical, but I'd saymultifamily students are just
are right behind it is is noise,right?
I mean, you think about thosemodular guys, they they're able
(27:42):
in the factory to build a veryyou know tight system, which you
know, every time you have acracker, there's something in
that system, it allows moresound into it.
You know, we're able to give thesound performance of a complex
kind of building level system,but do it in a package system
that, you know, anybody who'sstayed in the hotels like I stay
in, right?
Those PTAX and VTACs, when theyturn on, they're waking me up,
(28:03):
right?
And it's just, you know, it'sallowed, it kicks on, you get
the wind blowing across theroom.
And and I tell people all thetime, it's the classic, you're
you're you're cold, but you havesweat on your arm, right?
It's because the humidity is notright.
You know, the modular guys cango into these developers, say,
one, I can save you money on onthe you know the physical size
of the rooms and the way youwant to set that up.
But number two, is being able togive that feels like temp and
(28:27):
using our AI then to give themthe better efficiencies.
I mean, I hate to say it's asimple, a simple solution.
It's all about simpler hardwarewith smarter controls versus
these complex systems.
And and I'd say the the biggestthing, and I think the modular
guys are a little better at itthan I'll call it the standard
guys, are it's a new technology,right?
And so historically, thisindustry has been built on
(28:50):
oversizing systems to theserooms.
Like we'll go into rooms andthey'll be like, we're putting a
two-ton system in here.
And I'll say, you need athree-quarter ton system, and
you'll have plenty to get thisroom right, as long as you have
the smarter controls and thesoftware that we're putting on
top of it.
And normally we look at us likewe have two heads, we get beyond
that, we we stimulate it, wemodel it, we show them that it's
true, and they're like, that'sgreat.
(29:12):
So now they've saved money ontheir upfront costs, and then
they're getting that 30, 40percent efficiency savings in
the back end.
It's it's just a change inmindset that we got to get them
to.
The mod builder guys are muchbetter at this because they're
manufacturing guys and they theyunderstand it.
But you know, I I it is gonna bethe wave in this area, and I'm
just proud of my team for beingable to bring to market the
(29:32):
first product to really takeadvantage of it.
SPEAKER_00 (29:35):
Well, Trevor, I I said earlier this has been
fascinating.
I've learned an incredibleamount about HVAC in just this
conversation.
I really appreciate your timetoday.
I I can't wait to see uh airproducts and the World of
Modular exhibit hall uh in justa few weeks.
Uh, thank you again for yourtime.
I really appreciate it.
SPEAKER_01 (29:53):
You got it.
Thanks, Lan.
Talk to you soon.
SPEAKER_00 (29:56):
My name is John McMullen.
This has been another episode ofInside Modular, the podcast of
commercial modular construction.
Until next time.
Hello and welcome to Inside Modular, the podcast of
commercial modular constructionbrought to you by the Modular
Building Industry.
Welcome everyone.
My name is John McMullen.
I'm the marketing director hereat MBI.
Today I'm joined by TrevorSchick, CEO of Air Intelligent
HVAC.
Trevor is here to talk aboutenergy efficiency and resiliency
(00:22):
in modular systems and howmodular builders can optimize
their HVAC strategy.
Trevor, welcome.
SPEAKER_01 (00:29):
Welcome, John.
Thanks for uh thanks for havingme.
Looking forward to thediscussion.
SPEAKER_00 (00:32):
No, I appreciate you being here.
Tell me about yourself, Trevor.
What's your background and whatled you to focus on HVAC and
energy strategy in the builtenvironment?
SPEAKER_01 (00:41):
Like most, it's a long road that got me here.
Um, you know, I look back uh tomy history.
My first 20 years in businesswas all in high-tech.
So I was at companies like AppleComputer, Motorola,
Hewlett-Packard, spending a lotof time on global supply chain
in those industries.
And similar to what was seen inHVAC, you know, in those days,
the, you know, the hardware'sreally come and commoditized,
(01:03):
right?
You think of an Apple versus aDell, most of the components
inside those systems are thesame.
Most of the companies that buildthose systems for them are the
same.
What started to differentiatethem was really kind of the
customer experience that yougave them and the software that
you could put in those to makethat better customer experience.
And then as I started to pivotand somebody pulled me into the
real estate and constructionworld, um, it became evident to
(01:26):
me that kind of that trend wesaw in the in the electronics
industry was what we reallyneeded to move into in the HVAC
industry and be able to give abetter product with the same
type of hardware put togetherbetter, but then really build
that software layer on top of itthat can bring you know a better
cost, better environment for thedeveloper and the builder, but
also give a better end userexperience to the uh the person
(01:48):
that's using the space.
And that's what got me excitedabout it.
And been in construction for 10years now, and I'm still excited
every day to come and uh pushsome of the products that we'll
build in.
SPEAKER_00 (01:57):
Considering your background and you know, from
where you're sitting today asCEO of AIR, how has the
conversation around HVAC andbuilding performance changed
over the past decade or so?
SPEAKER_01 (02:08):
Yeah, I think you know, if you look at the past,
right, people designed thebuilding, then they'd kind of
think about the HVAC and they'dlook at different systems put in
there.
And I don't want to say it wasan afterthought, but it was it
was much further down in thebuild and design cycle for the
buildings.
You know, what we're seeingtoday is it's really had to
become a core driver of the waythat that building design is
done.
And that's because we we canreally save a lot of money for
(02:30):
that developer based on, youknow, that upfront design.
You know, simple things like ifI don't need a VTAC in the
corner that takes a three bythree closet, I'm suddenly
saving that that developer notonly the nine square feet in the
corner, but I'm selling them thespace that now they can push and
use all of that, call it 24 feetof space because the whole width
of the room, and get a lot moreusable and rentable space in the
(02:52):
uh in the unit.
And so, you know, historically,people in our area looked at
PTACs and VTAX and VRF systems,you know, but what we really
wanted to do was introduce thisintelligence layer with a better
product that can then bringvalue to those developers and
the uh the people that arebuilding these spaces.
SPEAKER_00 (03:09):
So, one question I wanted to ask you, and it's
seems very topical at the at themoment, energy volatility uh is
a big topic now, especially forbuilding owners, that like you
mentioned.
Uh, how is uncertainty aroundenergy prices influencing uh
HVAC design and investmentdecisions from developers today?
SPEAKER_01 (03:28):
Yeah, I think, you know, in the past, most of this
was looked at as kind of what doI do with the first cost, right?
How much is it going to cost meto build in this specific type
of HVAC system into the product?
And most of those systems wereeither fixed systems where, you
know, they had one set pointthat was that was managed, or
some of them had some variableto them, but but no real
intelligence built into thesystem.
(03:48):
And what that did was it led tonot getting the energy
efficiencies on the back end.
So you might get a better firstcost savings, but over the
30-year cycle of that product,you weren't getting the
operating efficiencies that youwant to get.
And to be fair, what most peoplehad end up doing was
over-specing the system becausethey needed to make sure that
they could hit that one high setpoint that was kind of at the
(04:09):
max.
The way we think about it ismuch different, right?
I need to be very competitive onthat upfront cost, give them a
simpler system from an installperspective that can help drive
down their upfront costs, butthen give them the 30 to 40%
efficiencies on the back end,which then allows them to not
only get the first cost savings,but when they're doing the
performer for the building,they're actually able to then
(04:31):
build in, especially if they'rethe operator, those long-term
cost savings from the energyefficiencies.
And this is how we startthinking about adaptive systems.
It's it's interesting because Ithink about it as, and you'll
hear this term more and morethese days, is physical AI,
right?
You know, everyone knows AI,right?
You use your chat GPT, you useyour anthropic.
It's really just a software toolthat, you know, you ask it a
(04:52):
question, it generates an answerand gives you some predictions
of what uh what your answermight want to be.
Physical AI is a little bitdifferent.
It's the idea of you you usesensors to kind of understand
the environment that you'rebuilding in, right?
So once you get that product inthere, it understands what's
happening inside with occupancy,temperature, humidity.
It understands what's happeningoutside with humidity, where's
(05:13):
the light coming from?
Is it a sunny day or a cloudyday?
And it senses all these things.
It then optimizes them to thesystem by using variable speed,
compressors, and fans.
And then at the end of the day,it learns from it.
So, did it do the best thing togive a good user experience, but
at the same time be able to savemoney on the efficiency side or
save benefits on the efficiencyside?
(05:34):
And then it learns and then itcontinues to build.
And that's what Air has reallydone is we we've said, let's
simplify the system down, butgive them that same or better
experience that a complex umfull building system would give
them.
And that's where physical AI isnow moved from other spaces and
into this HVAC space, which iswhat we're pretty excited about,
and then brings those energyefficiencies to the uh the owner
(05:56):
operator.
SPEAKER_00 (05:57):
Well, that's that's that's fascinating.
I I'll be honest, I hadn'treally considered such a thing
as physical AI, but it makescomplete sense when you when you
describe it that way.
Um climate policy now is pushinguh many regions towards
electrification.
What uh practical challenges arebuilding owners running into as
they move away from traditionalsystems and and more toward
(06:18):
these intelligent systems thatyou've described?
SPEAKER_01 (06:20):
Yeah.
Well, I mean, at the end of theday, as electrification happens,
the grid constraints become areal problem, right?
They become a problem for, youknow, no matter what industry
you're in, but the builder.
Um, and if you think about it,you know, in the residential
space, and I'll use that term alittle loosely, think student,
single family, multifamilyhospitality, right?
Kind of that that whole space,you know, 30 to 50 plus percent
(06:43):
of your energy is being used foryour heating and cooling.
Think of what a 30% savings to50% of your build adds up to,
right?
There's this this becomes a muchlarger benefit when you think
about how much that energycooling and uh and heating is
gonna do for you.
And the only thing that I knowabout what's gonna happen with
regulatory climates, you know,all the other things you listed
(07:03):
is it's not static, right?
It's gonna be different nextyear, it's gonna be different
five years, and it's gonna bedifferent 10 years.
And so you really need to designfor the resiliency.
And that's what our softwaresitting on our systems allows us
to do.
Number one is it understandswhat's happening in that
environment.
So if climate change ishappening in an area and it's
suddenly getting warmer there,my system's figuring out how to
maximize that benefit, right?
(07:24):
Being able to bring back themost cost savings of possible.
If people are, you know,humidity is changing because
there's more storms coming in.
I'm able to manage that betterthan anybody else because I'm
not a static set point system.
I'm really taking this from theperspective of understanding my
full environment, learning.
And as that changes, my systemcontinues to learn and does it.
So, in a world where thosethings are going to change,
(07:46):
price of electricity is going tobe changing up and down, the
exterior environment's going tobe different.
You need to make sure thatyou're building a system that
can be resilient to that.
So in five years, you're nothaving to replace it with a
different type system.
SPEAKER_00 (07:57):
You talked about uh resiliency, which is a huge
topic I know.
Um, and considering you know,related topics like you know,
peak demand and grid outages andenergy flexibility and all these
topics that are in the industryright now.
I was wondering if you couldshare an example of uh a project
where you know energy volatilityuh or grid limitations directly
(08:18):
influenced uh HVAC strategy.
SPEAKER_01 (08:20):
Yeah, so I would say, you know, I'll take it back
a little bit to the resiliencyof more of the operator side of
things, right?
At the end of the day, they'revery focused on needing to make
sure they have uptime, right?
What's my resiliency built intothe HVAC system that allows me,
let's say, as a hotel operator,to never have a room down?
Because every night that roomisn't being used, it's costing
(08:40):
me money, right?
It's a fixed cost that I'm gonnabe paying for that room to not
be used.
So resiliency to us is if youthink about some of these large,
you know, more complex systems,you know, you have one system
that might manage 20 rooms.
If that system goes down, youhave 20 rooms go down in that
building, right?
Normally you got to get somebodyout there, there's a lot of
piping that's happening exteriorto the system.
Somebody's needing to come inand manage all those pieces.
(09:03):
For us, because we have asimpler system and it's an
in-unit system.
If that room goes, you know, ifthat system goes down, one, it's
only one room that it happensto.
Number two, because it's athrough-wall system, I'm fully
packaged.
I literally can send somebody inthere and within an hour, I can
have that system replaced, thatroom back online.
Never interrupted my customerexperience because, well, maybe
(09:25):
for an hour I have to send themdownstairs to grab a bagel, but
beyond that, that room is goingto be up and running.
And number two, you know, I amthen not bringing down and
losing the money by having anempty room in there.
So resiliency for us looks veryheavily at how do I make sure
that system never comes down.
Now, to take that to theelectrification side of things,
you know, a lot of theseoperators and the grid owners
(09:46):
are starting to look at who'susing the most energy on that
system, right?
And if you're using the mostenergy on the system, they're
looking at ways to then managethat for you almost.
What we're being able to bringto the table is, you know, we
have an 18-seer rating rightnow.
So we're very efficient fromthat perspective.
So when somebody's looking atthe buildings that we're in,
they're going to see a muchbetter level of efficiencies
(10:06):
across that building.
SPEAKER_00 (10:07):
So when you're looking at uh a building's life
cycle, be it a hotel or anyother sort of uh of building 20
to 30 years out, how shouldowners be thinking differently
about HVAC planning in thisenergy environment we find
ourselves in today?
SPEAKER_01 (10:24):
And again, I think it goes back to is owners need
to make sure that you knowthey're not designing just for
today, right?
They need to be looking atsystems that can be out in the
future, right?
If you look at, I mean, usesomething very simple like the
refrigerant that's being usedtoday, right?
I've been in this businessprobably less than most people
that watch this podcast, butI've been in about 10 years,
right?
I think there's been three tofour different refrigerant
(10:45):
changes in that time frame,right?
And they're all driving towardsone, how do we become more
environmentally effective?
A lot of those old refrigerantswere bad for the environment.
But number two is, you know, howdo we then optimize using those
refrigerants to get betterefficiencies?
Right.
I can guarantee down the road,that's going to switch again.
But what we see happen withthose is that those new
refrigerants get introduced areusually more costly than the old
(11:08):
ones, right?
It's your classic supply-demand,right?
When there's a low volume of it,your costs are higher until you
get up to high volume and thenit gets lower.
What's great about systems thatare kind of compact, you know,
full systems like ours is I useso little of that refrigerant
that it avoids a lot of theproblems these guys might have
down the road, right?
I don't need detectors for myrefrigerant because the new A2L
(11:29):
is slightly flammable.
I don't want to over you know,overstate it, but you do need
sensors at a certain, you know,if you use a certain amount of
uh ounce of the refrigerant.
So we don't need those.
And then we're able to bringthat packaged system that if I
replace it, I don't need to gofigure out do I need different
piping in there for this newrefrigerant?
Is there a different setup?
Because I'm a fully packagedsystem.
So when they say 10 years downthe road, and maybe my system
(11:52):
lasts 15 because we're we'rerunning it more efficiently, but
you know, at some point you'regonna have to replace the
system, they just pop theirs outand put mine in.
They're not having to go up tothe roof, put in a different
compressor, run differentpiping.
There, there's a lot of thingsthat we're building into it that
allows them to kind of have thatupgradability without the cost
that a lot of them are gonnahave to pay for that
upgradability.
SPEAKER_00 (12:12):
What are some of the biggest uh mistakes or
misconceptions you seedevelopers making when when
planning HVAC systems today?
SPEAKER_01 (12:19):
I think for me it it's it's twofold, right?
One is a certain set of themjust really focus only on
first-time costs, right?
And and I get why, right?
If you're building a multifamilyapartment, you're building that
unit, it costs you a certainamount of capex to go build it.
And by the way, your operatingexpense is being handled by the
guy that's renting the unit.
And so it's a little bitdifficult in some spaces for
(12:41):
them to look at this and say,hey, why the operating expense,
I can't write that into my proforma because I'm not getting
those savings somebody else's.
So from our perspective, is youhave to have a system that's
competitive day one on the CapExside of things.
And when I say that, it's notonly from a cost perspective,
but again, I will go back to thenew systems that are coming out
with this physical AI built intothem, give a much better user
(13:03):
experience, right?
I don't talk about whattemperature I'm running at.
I'm saying what's my feels liketemperature in that building,
because really the end usercustomer is all about humidity.
It's all about what that setpoint temperature is, it's all
about whether the wind isblowing on me, right?
We've all been in the hotel roomwhere a PTAC's blowing cold air
at you, right?
And that that's that's a baduser experience.
(13:24):
The other piece of it that comesto play is you know, making sure
that we have enough fresh aircoming in, right?
Air quality has become such abig thing in a lot of these
buildings.
And so, you know, making surethat they think about, yes, I
need a good CapEx up front.
The cost has to be first costcompetitive.
But even in those spaces wherethey're not getting the cost
savings benefits, the end useris making sure they understand
(13:45):
that you know that that feelslike and that customer
experience can bring them a lotof benefits from both a customer
satisfaction perspective, butalso when they sell the
building, the value that they'regoing to get for the building.
So I think that's one thing.
And sorry, that got a little bitlong.
The second one is the designside of things, right?
When we can work with developersand help them out on the design
side, and this really applies tothe modular guys as well, which
(14:08):
I'm sure will get, you know, tieus a little bit tighter up as we
go forward here.
But, you know, being able to getdesign in those systems, as I
said, in a hotel room, and we'veworked with the big brands, you
know, if I can take that P-TACout, that PTAC sticks two feet
into the room, and I cannot puta piece of furniture against it.
If I can make that flat againstthe wall, my blowers up at the
top, just like a VTAC, now I canpush furniture right up against
(14:31):
it.
Now I have the option of do Irent it with more usable space,
which probably works very goodin a multifamily because they
care about square footage more,or in hospitality, can I take 18
to 24 feet out of the size ofthat building?
And if you think of constructioncosts of$250,$275 per square
foot, which is, you know, plusor minuses.
Some people say it's$200, somewill say it's$300, but the math
(14:54):
works regardless, right?
Suddenly I take 18 feet with$250per square foot out of that
building cost.
That is massive from afirst-time cost saving.
So it's not just the cost of myunit, it's what are those other
incremental pieces that I canbring to that developer that
allows him to save money.
Even on things like I can nowgive him his roof back, right?
(15:14):
He doesn't need compressors upthere.
Put in your dog park, put in anoutdoor barbecue area.
Those are all things going toraise your amount of value you
can bring to the customers, butstill give them a better
experience because the systemI'm bringing in can beat them on
sound, it can beat them oncustomer um satisfaction from a
uh from an occupancyperspective.
So so that's the way we think ofit.
You can't just take it as asingle what's my capex, you got
(15:35):
to look at how it fits into thewhole picture.
SPEAKER_00 (15:38):
Well, you you mentioned modular, and I did
want to pivot a little bit moreuh to that audience.
From your perspective, how doesdesigning for factory-built
construction uh change theapproach compared to traditional
stick-built projects?
SPEAKER_01 (15:53):
Yeah, and it's fun.
I I I've lived both worlds,right?
I I kind of was on the the uhstick-built side of things, and
then I think I mentionedearlier, I might not have, I was
with Amherst Holdings, which isa single family rental group out
of uh here in Texas.
And and you know, one of thethings that I was at the
beginning of with them isstarting their studio-built
projects, which was, you know,they normally were I'll buy a
home, I'll renovate it, thenI'll lease it.
(16:15):
Then we kicked over to a projectwhere we started modular
building with some of the bigplayers out there all the way
through to now having their ownfactory.
And so I was able to startthinking about how does this
HVAC system get in, brought ineven before I became the CEO of
uh of Air Products.
So, you know, I kind of livethis world.
And what's really important toit is being able to do
everything in the factory,right?
(16:36):
The biggest savings you canbring in modular is being able
to take a product, the modularproduct, bring to the site, and
have to do as little amount ofwork on that site as possible.
And it's really for a couple ofreasons.
One is cost, factory labor is alot less expensive and more
efficient than field labor,number one.
But but number two is in thefield, you need to kind of get
all the trades working together.
(16:57):
And that's difficult to do,right?
You need to have your electricalguy there at the right time, you
have to have your plumbing guythere at the right time,
concrete to put your pads in,all those things need to come
together.
And that orientation usuallytakes schedule.
And and part of the problem witha lot of the modular is they've
always said we can build it muchfaster, and the answer is yes,
but if the subcontractors in thefield aren't available to do
that, you still end up withthese long schedules.
(17:18):
What we look at with thesepackaged systems is you don't
need any of that, right?
When our HVAC is put into amodular unit, or when you know
any package system is put inthere, it's done, right?
Literally they drop it down onthat site, they run power to it,
they'll probably have a drainagefor uh for condensation.
But besides hooking those twothings up on the site, which you
(17:38):
have to do regardless,everything else is in that
package system and you don'tneed to do it.
So all of that work is done,number one, in design.
So it goes back to theconversation earlier about
getting that integration ofdesign up front.
But then number two is makingsure that everything you can
possibly do in the factory,which for our system is all of
it, can be done and thendelivered to the site and not
have to be touched on the site.
(17:59):
I've now taken out themechanical trade for the the
HVAC.
I'm not having to run ducting,I'm not having to run piping.
All those things go away, right?
That just saves money for themon the back end.
And just as importantly, in manycases, it saves them schedule,
which means they can get thatbuilding up and running faster.
SPEAKER_00 (18:14):
So you mentioned the the benefit of package systems
going into factory-builtprojects.
Uh many modular projects servesectors like healthcare,
education, workforce, housing.
Do HVAC considerations differacross those different building
types?
SPEAKER_01 (18:30):
Yeah, I think they do.
Again, my my world's prettyfocused on residential, right?
Kind of the categories I talkedabout earlier.
But but obviously, just as aperson in the industry, I mean,
they they do there's there'sdifferent things that are
critical to those folks.
You know, healthcare, it's allabout reliability, right?
I mean, there is nothing morecritical in the healthcare side
except education, it's a lot ofscalability, right?
(18:50):
Schools usually come up fast,and then they need to be able to
scale them as time goes on andbe able to make sure they can
get it there.
Housing is very focused on costand comfort, right?
So I think they all now, if Iwent back to healthcare, do they
care about cost and comfort?
Of course they did.
But it's kind of what how youstack those priorities is
different, but the priors areprobably about the same.
The the thing that's the acrossall of them, the goal is the
(19:13):
same.
You got to deliver consistentperformance with minimal
complexity while improving thecustomer, you know, the acumen's
experience, right?
So they all have the same endgoal, although you might stack
rank those a little bitdifferent within them.
And so that's why you just yougot to get systems that you know
are built differently today thanthey have been in the past.
Now, now, what I would say is ifI look at healthcare and I look
(19:34):
at, you know, again, some of thebig, bigger buildings, right?
Factories and those types ofthings, there's been a lot of
work done on building in A intothose projects, moving much more
to the low speed because thatthat cost and the
electrification is so high forthem.
I think in the residentialspaces where it got left a
little bit behind, right?
You have a group of players outthere that are very large, very
(19:54):
established, high marketconcentration in their spaces,
and again, a little bit of theinnovator's dilemma, which is do
I go invest millions of dollarsto build a product where I
probably won't gain any moremarket share?
You know, and and it and ithappens.
And that's where startups likeAir come into play because we're
able to say, I'm gonna take ablank piece of paper, which is
exactly what we did.
Physically, I'm gonna design abetter system, right?
(20:16):
And and I can do it costeffectively because I'm just
able to really start with youknow the blank sheet.
And then you bring in guys likeme and some of the people I've
brought in that come from otherindustries.
You know, you you in the in thephone industry, right?
I work for Motorola in the cellphone business, Apple in the
cell phone business, right?
The goal there is bring out aproduct with two to three X the
amount of technology built intoit at a lower cost with every
(20:39):
product introduction you do.
That isn't something that kindof starts in the construction
industry, right?
You can look at it over the past50 years and you can go get your
data from McKinsey and everybodyelse.
But the the building efficiencyhas actually decreased over
time, right?
From a, you know, how quicklycan you build it?
How uh, you know, how good isthe building?
And that's, you know, part ofthat's regulatory.
I don't want to minimize that,but but we're trying to bring
(21:01):
some of that, you know,knowledge of using software and
hardware, being able to startfrom scratch and build out those
products to really go after thismarket for the residential side
and really get that caught up tosome of the things we're already
seeing in some of those othermarkets that you highlighted.
SPEAKER_00 (21:15):
So, how important is early collaboration between HVAC
engineers such as uh Air, uhmodular manufacturers and
developers when you're designingthese HVAC systems?
SPEAKER_01 (21:28):
Yeah, I mean, uh your true benefit comes with
that early early adopter.
I I talked about the spacesavings, right?
Because again, that that you'llonly get that if you you do the
the design piece up front.
And so, you know, I'd call thatkind of the the key to it.
But but even things like youknow, as you think about the um
you know, do you have to put acompressor on the roof, right?
Do you need to put it outside ona pad?
(21:49):
How much you know are youputting ducting in, right?
I mean, simplistically, when youuse these big complex systems,
you're ducting them through thebuildings.
Well, suddenly my ceilingheight's lower.
Well, not only is that cost.
More money because you haven'tto put you know the uh the
ducting in, but you're alsogiving the worst user
experience, right?
Anyone who walks into aneight-foot high ceiling versus a
nine-foot high ceiling justfeels a better space to go
(22:10):
after.
And so, you know, being able towork with them up front to give
them back those safe spacesavings, bring them the true
cost efficiencies in that designside of things is absolutely
what makes this so effective forthose uh those modular builders.
What's great about them and whya product like ours works so
well in their model is I am soeasily repetitive.
Every single unit of mine, we'rethrough all system, we fit
(22:32):
between the studs that theyalready have in that building.
They just pop in a sleeve andthen they put in the system.
I mean, literally, if I do iton-site, it's probably a
two-hour install, maybe an hourand a half.
If I do it in the factory, it'sprobably 15 minutes.
Think about the amount of workit takes when you're in the
field to bring in all thosedifferent trades, coordinate
them together, and get that HVACsystem put in.
(22:52):
So, you know, that's that's theway we think about it.
One on the design side, I canbring you the cost efficiencies
of optimizing the space better.
But then number two is justpurely that factory-built
mentality that the modular guysare so good at.
That's why I love them becauseit's my background.
They're able to understand thevalue it brings to being able to
have a very repeatable systemthat can go in.
And then, by the way, if there'san issue in the field, as I said
(23:14):
earlier, pop one out, put thenew one in, you're back online
within an hour.
SPEAKER_00 (23:18):
Earlier in this conversation, we were talking
about a lot of the newtechnologies that have come into
HVAC, how uh they're built inwith intelligence layers now.
So I wanted to go back to thatfor a minute.
As buildings electrify, um, doyou see technologies uh like
those we talked about earlier,like thermal storage, smart
controls, uh demand response?
(23:39):
Do you see those playing abigger role?
SPEAKER_01 (23:41):
Yeah, they they have to.
I mean, it's um, you know, ifyou think about the thermal
storage is a little bit of adifferent animal, right?
I it's uh, you know, being ableto make sure you have a can, you
know, conditioned space iscritically important, right?
Because at the end of the day,you know, we look at it from the
perspective of how do I makesure I'm bringing in fresh air,
but I'm conditioning that airbefore it goes in, right?
(24:02):
And so that I'm not, when I'msending new air, fresh air in,
I'm not sending cold air into awarm room and then having to
turn back on the system, whichobviously decreases your
frequencies.
You know, when you get into theum, you know, the sensors and
the controls, that's where allthe secret sauce is, right?
Number one, being able to havethe right sensors and the stuff
out there today is unbelievablewhat it can pick up, right?
(24:24):
My sensor knows whether that's acat walking across the room,
whether that's a dog or that's aperson, right?
How many people are in thatroom?
What does that number of peoplein that room drive from a
heating perspective in thatroom?
Because what the system's allabout, what our AI does and the
machine learning I talked aboutis it understands that and
starts predicting better what'sgoing to happen.
Because the best thing I can dois run my fans at a level two, a
(24:46):
level three, right?
We have nine levels in oursystem of different speeds with
the compressor and the fan.
And the most efficient way torun that is run it at a low, you
know, a low level, but that's abetter user experience too,
right?
Because they're not hearing thisbig system kick on, they're not
getting the wind blowing acrossthe room, they're getting this
great experience inside of theroom, but then I'm able to
condition all the air that'scoming in so they're getting the
(25:07):
fresh airpiece without having tokind of cycle a system up and
down.
What's become interesting to usabout it as well, is you kind of
think about the long-term effectof that, is from a warranty and
usage perspective, right?
It's it's like a car, right?
If every time you're in yourcar, you just go up to 100 miles
per hour and we slow down to 20and then go up to 100 miles per
hour, that car gets way too muchwear on it and doesn't last as
(25:27):
long.
Our systems kind of run at thisconstant speed.
You know, we'll kick it to highif you know for some reason the
homeowner wasn't home or youknow, hasn't predicted what's
gonna happen next happens.
But most of the time, especiallyafter a few months, as our
machine learning has gottenbetter and better, we're able to
predict exactly what's gonnahappen, right?
And that that allows us to get,again, it's a better user
(25:48):
experience.
Back to your point on thosecontrols, why they're so
important.
It drives those controls andgets the learnings for us.
And then every day our systemlearns and gets better.
So we're gonna do a better jobtoday than tomorrow.
The other piece that becomesinteresting with it is that when
you think about these bigsystems, they're trying to
condition five rooms, 10 rooms,20 rooms, right?
If that room's on an outsidewall to the south, it's much
(26:09):
different than an outside wallto the north, right?
The day the sun's up, when itcomes up, what's the weather
like at that point?
Our system continues to pullthat data and understand it and
get more efficient, veryspecific to every single space
that we condition, versus tryingto do that at kind of a building
level.
We do it at a space level, onesystem at a time.
It is your true edge computing.
Every one of our systems has amicroprocessor on it that can
(26:32):
figure out what's going tohappen, take the feeds from
those sensors, use our AI to getsmarter, and then give that
optimal customer experience atthe best efficiency somebody can
have.
SPEAKER_00 (26:42):
Well, that is fascinating.
Uh to be to be honest with you.
Um, what do you think thebiggest opportunities are for
modular manufacturersconsidering all these new
technologies, the sensors, themachine learning, what what are
the biggest opportunities forthem to innovate when it comes
to HVAC integration?
SPEAKER_01 (26:59):
I think I think a lot of it's on the design side,
right?
So being able to innovate betterdesigns by being able to use
these newer technologies cominginto play gives them a huge,
huge upsell, right?
You know, again, you think aboutthe modular space going into
hospitality, right?
Those guys can now come in andsay, you know, a Hilton product,
let's say, hey, yes, you saidyou need your room to be, you
(27:21):
know, 24 feet long.
You can make that 22 feet longbecause of the benefits of the
new system going in there andgive a better user experience.
The the other piece that we finda lot of and hospitality, it's
it's so critical, but I'd saymultifamily students are just
are right behind it is is noise,right?
I mean, you think about thosemodular guys, they they're able
(27:42):
in the factory to build a veryyou know tight system, which you
know, every time you have acracker, there's something in
that system, it allows moresound into it.
You know, we're able to give thesound performance of a complex
kind of building level system,but do it in a package system
that, you know, anybody who'sstayed in the hotels like I stay
in, right?
Those PTAX and VTACs, when theyturn on, they're waking me up,
(28:03):
right?
And it's just, you know, it'sallowed, it kicks on, you get
the wind blowing across theroom.
And and I tell people all thetime, it's the classic, you're
you're you're cold, but you havesweat on your arm, right?
It's because the humidity is notright.
You know, the modular guys cango into these developers, say,
one, I can save you money on onthe you know the physical size
of the rooms and the way youwant to set that up.
But number two, is being able togive that feels like temp and
(28:27):
using our AI then to give themthe better efficiencies.
I mean, I hate to say it's asimple, a simple solution.
It's all about simpler hardwarewith smarter controls versus
these complex systems.
And and I'd say the the biggestthing, and I think the modular
guys are a little better at itthan I'll call it the standard
guys, are it's a new technology,right?
And so historically, thisindustry has been built on
(28:50):
oversizing systems to theserooms.
Like we'll go into rooms andthey'll be like, we're putting a
two-ton system in here.
And I'll say, you need athree-quarter ton system, and
you'll have plenty to get thisroom right, as long as you have
the smarter controls and thesoftware that we're putting on
top of it.
And normally we look at us likewe have two heads, we get beyond
that, we we stimulate it, wemodel it, we show them that it's
true, and they're like, that'sgreat.
(29:12):
So now they've saved money ontheir upfront costs, and then
they're getting that 30, 40percent efficiency savings in
the back end.
It's it's just a change inmindset that we got to get them
to.
The mod builder guys are muchbetter at this because they're
manufacturing guys and they theyunderstand it.
But you know, I I it is gonna bethe wave in this area, and I'm
just proud of my team for beingable to bring to market the
(29:32):
first product to really takeadvantage of it.
SPEAKER_00 (29:35):
Well, Trevor, I I said earlier this has been
fascinating.
I've learned an incredibleamount about HVAC in just this
conversation.
I really appreciate your timetoday.
I I can't wait to see uh airproducts and the World of
Modular exhibit hall uh in justa few weeks.
Uh, thank you again for yourtime.
I really appreciate it.
SPEAKER_01 (29:53):
You got it.
Thanks, Lan.
Talk to you soon.
SPEAKER_00 (29:56):
My name is John McMullen.
This has been another episode ofInside Modular, the podcast of
commercial modular construction.
Until next time.
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