EXTON, PA — After the Sept. 11, 2001 terrorist attacks, Neutronics, an environmental and safety manufacturing company that has been in business since 1976, saw a spike in interest in its Biomarine division, which makes breathing protection products for the domestic homeland security market and others.

The company is now experiencing another surge in interest. This time it’s in its Automotive division, due to the critical R-134a supply and demand issues currently impacting the mobile A/C industry.

Join us as Gary Halpern, vice president of product development for Neutronics, provides an insider’s perspective on the current R-134a issues and shares with us the message he’s been trying to get out to repair shops for a decade.

For our readers who may not be familiar with the Neutronics name, can you give us some basic background on the company and more specifically, the Automotive division?

Neutronics, Inc. is a safety and environmental manufacturing company. Everything we design or manufacture is either for safety/process-related or environmentally based applications.

We are comprised of three divisions: Automotive, Biomarine and Ntron, which makes oxygen analysis and ambient gas detection systems.

Our automotive business is an offshoot of our oxygen analyzer business and our main automotive product is a refrigerant identifier. We started making it in 1994 after people approached us from GM and SAE. They were aware of our Halon gas identifier and asked if we could make one that technicians could use on automotive refrigerants.

We initially built our business with Ford, Saturn and Snap-on Tools, and then later added GM. Today, we are pretty much the only automotive refrigerant identification technology provider in the industry. Our competitors either buy our technology or have fallen by the wayside.

Recently we’ve been hearing a lot about the supply and demand issues related to R-134a and the impacts on the mobile A/C industry. What are your thoughts on all of this? How is this impacting your business?

We are actually shocked by the whole thing.

In the ‘90s, I was very close with Simon Oulouhojian, senior president emeritus of the Mobile Air Conditioning Society, who has since passed away. Back then it was through Simon that I first learned about the difficult problems of converting from R-12 to R-134a. The situation today is worse. At least back in the ‘90s, we had something called the SNAP rule – Significant New Alternatives Policy – through which Congress empowered the EPA to tell us what we could and could not use as substitutes for R-12.

Now, we are looking for substitutes for R-134a because the price has gone from about $80 a jug to $300 a jug. Also, 10 years ago you had to be a technician with a license to buy refrigerant and now you don’t. Now there is no SNAP rule. There are no federal guidelines. As you and I sit here today, you, any technician in the country or I can put whatever we want into our R-134a systems. The EPA is not empowered to control R-134a substitutes; therefore they can do nothing other than make recommendations.

Are you anticipating that a lot of technicians are looking for substitutes for R-134a?

I can tell you what kinds of calls we’ve been getting up through this morning. A shop owner from Cleveland, Ohio, called and said a supplier was trying to sell him a new A/C refrigerant. While on the phone with him, I looked up the product on the Internet and easily found it. It’s out of Canada. It’s a “natural, organic refrigerant” – like propane. It says its “HC – hydrocarbon.” They don’t come out and tell you that it’s highly flammable.

The SNAP rule said that if you are going to sell a refrigerant as a substitute for R-12 it had to pass two criteria: It couldn’t hurt the technician and it couldn’t hurt the environment. A propane product, originally called HC-12a, was outlawed by the EPA for use in R-12 systems because it failed this test. However, the manufacturer simply changed the name of the product and began marketing it as an R-134a substitute, not an R-12 substitute, and by doing so they completely bypassed all federal laws.

There are 19 or so states that outlaw the use of hydrocarbon refrigerants but a majority of states don’t. There also used to be a fittings and labels requirement when you change refrigerants on an R-12 system. Today, there is no fittings and labels requirement for R-134a substitutes.

So, what are some of the dangers of using substitutes?

First of all, mixed refrigerants don’t work. Secondly, R-134a is now liquid gold. It is expensive and if you mix it with substitutes, you ruin it.

As a shop owner, by mixing R-134a, you are causing yourself financial hardship. However, that’s only if you knew you did it. Remember, we in the automotive industry live in a recycling community where we exchange each other’s refrigerant and mix them together. If I take one contaminated car in and contaminate my one 30-pound cylinder on my recovery machine, then turn around and charge 20 other cars with it, I have now turned one contaminated car into 20.

In the old days with R-12, some blends with R-22 in them would actually damage the rubber parts in an A/C system. With R-134a, rubber components in the systems are less likely to see damage from other refrigerants. Still, if you are not using the approved refrigerant, it is going to be a problem.

Last year the problem was not the price of R-134a. The problem was that large retail chains were selling to consumers little cans of R-134a for DIYers, and it was legal and still is. The problem is most of those cans also had A/C sealant in them. A/C sealant is an epoxy-like substance that does not cure until exposed to moisture. The theory is, you put the A/C sealant in the R-134a, and install it into the car. If there is a slow leak in the A/C system, as it leaks out, it will encounter moisture either through humidity or condensation, and it will seal the leak. It’s quite smart, actually. The problem is, we are a recovery society. What happens when a technician recovers this refrigerant with sealant into a recovery machine and it has moisture in it? His machine can be completely ruined.

We have a web site set up just for technicians — http://refrigerantid.com. On that page is a plethora of resources, including online videos about what happens when A/C sealant gets into a car; what happens when propane is put in a car, etc.

I’m stunned that the market has come full circle again. You would think we would have learned from the R-12 transition, but apparently not. Having been involved in this industry as long as I have, I really thought we were at the very end of these types of problems as we phased out R-12. I assumed wrongly that there would be plenty of R-134a. Until this new supply crisis, there was much less of a concern about contaminated systems because R-134a was plentiful and cheap. That is no longer the case.

Warnings about contamination and illegal blends are something we have been saying for 10 years. Back then it was easy to say, “Here’s the horrible problem and here’s the good news. The EPA has put out these rules and regulations. Stay within these walls, you are fine.” Now, unfortunately, you can do whatever you want. It’s virtually a lawless industry.

While it’s an unfortunate situation for the industry, it means good business for you. What are the solutions you offer?

We have two key products for shop owners, our new Ultima ID refrigerant identifier and our Quick Detect A/C Sealant Detection kit.

The Ultima ID protects the shop owner against contaminated refrigerant and illegal blends. The unit is battery powered, does all the SNAP-approved refrigerants, and is available with an optional on-board printer. We built in the printer because we want to give the shop owner a mechanism to get paid for this service. It’s easier to bill the customer when you can attach the test results to the service order.

Our Quick Detect A/C Sealant Detection kit immediately lets you know if there is sealant in the vehicle’s A/C system so you can avoid damage to your refrigerant recovery machine and refrigerant identifier and possible loss of warranty. We gave it a disposable, low-cost design that works on both R-134A and R-12 systems.

We tell technicians that to protect themselves and their equipment, every A/C job should start with refrigerant identification and sealant detection.

Are you now changing your marketing tactics given the increased risk for use of alternative refrigerants in R-134a systems?

Absolutely. We have created a whole new clinic to train shop owners and distributors on these issues.

We received a lot of tips from the field when we first heard that prices of R-134a were rising. We know of two people who are in China right now doing deals to import it. Now, this begs a lot of questions. Should we trust what’s coming in from China or not? Is it legal? Is it real? The penalties for dealing in illegal refrigerant are nothing compared to dealing in drugs. This makes it a very attractive market for criminals.

From a consumer standpoint, A/C is one of the more expensive repairs. How will this impact them?

In this industry, price drives specification, rather than specification driving price. People come up with a dollar figure they are willing to pay and that’s the limit. We’re now seeing this as it relates to A/C.

The consumer always wonders, “How can A/C service cost so much?” So he goes to a shop and they give him estimate of $180. And he says: “I was just at Wal-Mart and for $12 I can put my own refrigerant in my car.” And then he tells the shop he’ll think about it and call them back. Meanwhile he buys the stuff at Wal-Mart and does it himself. But what if he bought a different refrigerant and it still didn’t work? Then he brings it back to the shop. Does he tell the shop owner that he put in sealant or the wrong refrigerant? Probably not.

How many of these situations have to happen for the shop owner to be seriously hurt financially? This is what we’ve been trying to teach shop owners since the ‘90s. The last three years we backed off of this approach as the transition to R-134a seemed complete. But now we don’t have to reach out to educate people, everyone is coming to us.

Do you think the problem with the diminishing supply of R-134a is going to continue?

According to our sources, it’s not that the supply has changed; it’s the demand. Knowing that the European Union and other countries that have signed the Kyoto Protocol are going to have to move away from R-134a, manufacturers have no incentive to increase capacity. That is the core of the issue. In addition, R-134a demand has increased in the stationary air conditioning market because it’s replacing R-22 and other refrigerants that are now on their way out. So, shortages will probably worsen.

The implications of this supply and demand issue for the aftermarket are obvious, but what are the implications for the OEMs?

The OEMs have their own problems. In the USA there is no legislation forcing the phase out of R-134a but in other parts of the world there is. In a global economy this presents problems for car design and production planning. The European carmakers have to consider the same issue if they change to a new refrigerant and try to export to the United States. In addition, changing to a new A/C system may increase costs, something no car company really wants to hear right about now.

CO2 and R-152a are the leading contenders to ultimately replace R-134a. CO2 is widely accepted in Europe. R-152a, which is a slightly flammable refrigerant, could almost be used as a drop-in replacement for R-134a. You would have to add a safety vent system so that in the event that the car crashed, the refrigerant would not vent into the car. For now, OEMs are putting their time and money into enhanced R-134a systems that use less refrigerant and leak less over time. The other problem for the OEMs is the used cars they are taking back from leases that are out of warranty. Who knows who has worked on them?

Back in the mid-‘90s I was saying all we need is for a car to explode because of propane-based refrigerants in order for people to hear what we’ve been saying. Well, the odds of that happening now, versus 10 years ago, are dramatically higher because there is much more that can go wrong and there is a lot less legislation controlling the industry.

Do you think parts stores and retail outlets are prepared to educate consumers on these risks?

They have no idea. We suspect that the major chain buyers have no idea what they are putting on the shelves; otherwise they would not have stocked this product. So, the answer is no. I think they are going to go with the money. If they can make money off the product, they will go with it.

The EPA and the U.S. government are always going to avoid over-legalization of things. They don’t want to put too many laws in place. That’s why the EPA said, “Here’s our guidelines for R-12 substitutes, if it can’t hurt you or can’t hurt the environment its OK to use.” But there were no rules for performance. With that rule in place, you could have gotten orange juice approved as an R-12 substitute.

You stress the fact that government intervention is needed but you also say that it is unlikely they would legislate. What’s the solution then?

Right now there isn’t one. It’s the AIDS solution – protect yourself. Shop owners need to take a step back and look at what they need to do to protect themselves. This is the AIDS of A/C.

My ultimate recommendation: There is legislation in California that should be embraced by the rest of the country and it should be embraced by independent organizations.

(Editor’s note: On December 20, 2000, the California Bureau of Automotive Repair passed a new law requiring that every shop, which performs mobile A/C service, have a minimum set of diagnostic tools and equipment. This law became effective on January 19, 2001.)

This law levels the playing field for A/C service. As a consumer, when I ask for your price for A/C service I know that at minimum your shop has been approved with this equipment, and at minimum you are going to do services A, B and C because that is the law. Every state other than California is unlegislated. The only thing those shop owners can do now is protect themselves.

To read more articles about the current R-134a supply and demand issues, click on the links below: Group Issues PSA Alerting Consumers About the Risks of Hydrocarbon Refrigerants

R. L. Polk & Co.’s Ask the Industry Looks at Supply and Demand Issues of R-134a

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