HVAC Residential Market / HVAC Commercial Market

Cool Summer Weather Impacting Supply Chain

Cool Weather Eases Strain in Some Regions, Replacement Is a Mixed Bag

August 18, 2014
Trans

Many contractors are reporting issues with parts and equipment availability in their local regions this summer, attributing cooler seasonal temperatures and unpredictable consumer behavior as the likely causes.

Supply Chain Reports

In mid-July, as much of the U.S. experienced an unexpected cold snap that many referred to as the summer version of the polar vortex, the cool weather was also cooling demand for HVAC parts and equipment.

“We have not had a hot summer here in St. Louis this year. As a result, there has not really been a strain on the supply chain,” said Butch Welsch, president, Welsch Heating & Cooling Co., St. Louis.

However, Welsch continued, “We continually monitor the 10-day weather forecast and will stock up on the more commonly used parts, such as capacitors, contactors, motors, etc., if we see the extreme weather on the horizon.”

Russ Donnici, president, Mechanical Air Service Inc., San Jose, California, also reported that he had no complaints with the supply chain this summer.

“My vendors appear to have adequate stock of equipment,” Donnici said, adding that he was not aware of any difficulty in obtaining specific parts or equipment.

When asked if he was happy with the supply chain this summer, Greg Crumpton, president and founder, AirTight Mechanical, Charlotte, North Carolina, responded, “We really are.”

Crumpton explained that his approach is to build strong relationships with a limited number of suppliers who truly understand his business, which makes a huge difference when he has an urgent need for a product or part.

Unlike his peers, Paul Sammataro, president, Samm’s Heating and Air Conditioning, Plano, Texas, has had some struggles with the supply chain this summer.

“We have had problems with various equipment and OEM parts through our manufacturer,” he explained, adding that he recently had to buy a high-SEER condenser in place of a part that was unavailable. “It’s very frustrating when you have to resort to that to satisfy a customer, but we do whatever’s necessary to provide the service our customers expect and deserve.”

Rich Imfeld, president, I.C. Refrigeration, Ceres, California, also expressed concerns with the 2014 supply chain. “Equipment is hard to get, and the damage rate is unacceptable,” he said.

Imfeld believes such damage, likely caused by shipping issues, is difficult to explain to customers.

“Equipment damage from shipping is a real problem, and it tends to be worse the farther away [you are] from the factory. I have spoken numerous times [to our suppliers], and while the problem is acknowledged, I feel little is being done about it,” he said.

Imfeld added that a quarter of the light commercial units he has received have been flat on refrigerant due to the gas leaking out. In response, he’s established a policy of checking all units before they’re sent out into the field.

“It takes time to check a unit to see if something didn’t vibrate off. You really shouldn’t have to do the extra work, but the extra time spent in the field to repair it and the customer’s perception that perhaps their new unit is defective is a greater risk,” he said.

Finally, in contrast to the cooler weather that descended on many regions of the country, Travis Smith, president and owner of Sky Heating & AC, Portland, Oregon, said the Northwest is experiencing higher-than-expected temperatures. “I don’t think many suppliers in our area planned for it being this hot,” Smith said. “They planned for a small increase in business due to the economy, but not as much as we are seeing.”

Smith reported he was having trouble getting his hands on base-model air conditioners and electronic air cleaners. “We have had air conditioners run out, air cleaners run out, and parts that are just not available due to the bump-up in business,” he said.

The reason behind the reduced availability of these products is due not just to the weather, but also to other positive economic factors, claimed Smith. “New construction is picking up so much, many suppliers are running out [of base model air conditioners],” he said. “This is a good sign because I think that means customers are spending more of their disposable income on non-necessary items like electric air cleaners.”

No matter the problems he encounters in the supply chain, Smith said he is committed to keeping customers satisfied.

“We’ve tried to order up to a week in advance, but sometimes, when parts are out up to a month, it doesn’t matter when it is ordered. In a few cases, we’ve had to switch a customer up to a better unit because the base unit was unavailable. These customers are usually pretty happy to receive a free upgrade,” he said.

Consumer Trends

As contractors deal with hiccups in their local supply chain, they are paying close attention to consumer trends to help them with their business projections. Where the consumer mantra was once “repair over replace,” purchases are now more of a mixed bag.

“Repairs-versus-replacement answers vary,” Welsch said. “The customer’s financial means, age of equipment, and cost of repair are all major factors. In general, we are seeing a greater tendency to replace equipment this year than in the last couple of years.”

Smith said he is also noticing an upward trend toward replacement.

“R-22 is getting harder to find parts for,” he said, adding, “We have seen a huge increase in the number of variable-capacity systems we sell.”

In Texas, however, Sammataro has been surprised to see a trend toward repair work. When customers do choose to replace, he said, the most popular systems are 16-plus-SEER units with variable-speed indoor systems.

Donnici, whose company performs both commercial and residential work, said the question of repair or replace depends on the specific client and their financial situation. “If they are one of our high-end clients, then they will almost always upgrade.”

Speaking strictly from the commercial side, Crumpton said, at press time, “Over the last six weeks, we have definitely seen an uptick in the replacement market. We do not do residential, so our sale cycles seem longer, but the pent-up demand seems to be weeping now.”

While the slow trickle of replacements is a positive sign, he added, optimistically, “We are hoping for a tsunami.”

Publication date: 8/18/2014

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