ACHRNEWS

HVAC Contractors Are Bullish on 2011

January 31, 2011

The HVAC trade has sounded off on its 2011 predictions - and it is overwhelmingly good. That is, according to 140 respondents to a recent poll at Linkedin.com, who were asked what they saw in their crystal ball for 2011.

Their choices in the multiple-answer online poll included:

• Record Year;

• Better than 2010;

• Flat;

• Worse than 2010;

• Looking for new career.

The answers might be surprising to some people, in light of the slow emergence from an economic slump in many of the construction business sectors. Although a weakening economy was bolstered by a good Christmas retail season, there are still signs that the United States has not pulled out of its 2009 recession - at least not fast enough.

But the HVAC trade - in particular, contractors - are very keen on a business uptick in 2011. Matt Michel, the president and CEO of Service Roundtable, an online HVAC contractor member group, said he is “very bullish on 2011.” His opinion is obviously shared by others who participated in this poll.

A total of 27 people (19 percent) replied that 2011 would be a record year for their business. The most popular answer - better than 2010 - garnered 89 replies (64 percent). That means that 83 percent of the respondents believe that 2011 will be an up year for business.

But not everyone was as optimistic. There were 14 people (10 percent) who said business would be flat and five people (3 percent) who said business would be worse in 2011. And five people (3 percent) said they would be looking for a new career in 2011.

RESPONDENTS ADD COMMENTS

Here is what some of the respondents to the poll had to say about 2011.

• “The circles I travel in say 2011 should be good for those who have been the “general,” i.e., knowing when to advance and when to retreat, and keeping their powder dry,” said Tom Templeton, Aire Serv of Nashville. “We need to keep the Feds out, and extend the tax credits.”

• “I think we are optimistic about the future at the beginning of each year because of our make-up,” said Dan Bergstrom, Bergstrom-Elder Consulting Group, Northville, Mich., and former contractor. “It’s the way we are wired. The key is being prepared to take on the year - to diss the bad news and work on the business.”

• “Here in Louisiana business is good and I look for the trend to continue,” said Joey Rouse, Star Service Inc., Baton Rouge, La. “We don’t have enough people to do the work we have now and hopefully that trend continues. I know from earlier last year that I’ve heard the Northern states are getting hit pretty hard. In one month I had three different vendors call me to make a purchase. I may get a vendor call like that once every six months. This is in the building automation market.”

• “The record winter and summer temperatures coupled with the tax credits provided a record 2010,” said Matthew Stewart, 72 Degrees/ACC Systems LLC, Hickory, N.C. “We experienced a 45 percent sales increase with double digit profits compared to 2009. I’m budgeting for a 30 percent increase in 2011. However, the shaky economy and tax credit expiration may require an adjustment mid-year if my projections are off. There will always be a market for companies that provide world-class service. The real question is: Can we consistently provide that level of service? When we are successful in providing world-class service, growth and profits will abound.”

• “We have worked very hard, managed our cash, and thankfully we don’t need no stinking loans,” said Carolyn Christensen, DUCTZ Indoor Air Professionals of Greater Atlanta. “Our company continues to grow. More companies are spending money on IAQ than new construction, so that has helped our company tremendously - even was able to get in on some stimulus money. Hey, it was my tax dollars, so I’m all for getting some of it back if they are going to spend it. Now my concern is what Washington is going to do the next two years.”

• “Our company has almost doubled in size from 2008 to 2010,” said Wesley Holm, Thompson Plumbing, Heating & Cooling, Cincinnati. “Our profit margins are up substantially as well. We see 2011 as a huge year.”

• “I would be lying if I said I was not scared of what 2011 will bring,” said Corey Hickmann, Comfort Matters Heating & Cooling, Minneapolis. “But I think that by increasing the advertising budget as others shrink theirs will allow myself growth for 2011.”

• “I feel 2011 has an even chance of being better than 2010 if Congress does not become deadlocked on tax reform and getting banks back to loaning money to small businesses,” said G. Andrew Smith, Aire Serv of Southeast Texas, Beaumont, Texas. “This will help restore the consumer’s confidence in the market place.”

• “We’re aggressively optimistic; upgrading products, services and delivery channels for 2011 and 2012,” said Barry Kindt, SECCO Inc., Harrisburg, Pa.

Two contractors cited progressions over the past three years as a reason to be optimistic about 2011. “The year 2008 was not a good year, 2009 was better, 2010 was great,” said Russ Donnici, Mechanical Air Service, San Jose, Calif. “We expect 2011 to be even better.”

There is a concern that the 2010 tax credits will not have a carryover effect into 2011. “I find that the tax credit helped sell higher SEER equipment, but I am uncertain about 2011,” said James Beard, Family Air, Tucson, Ariz.

Another HVAC contractor gave his “view from the Rust Belt.” “I am concerned that the economy is still shaky and will remain so until the jobs issue improves (and that appears to be a long pull),” said Paul Wadsworth, PK Wads-worth Heating & Cooling, Cleveland. “We will have political grid lock until the presidential election in 2012, and with the cessation of federal energy tax credits we will have a hangover on replacement sales. I believe service will be there but people are only investing in what they absolutely need. We had a hot summer last year and to hope that we have a similar pattern or better in 2011 doesn’t happen that often - at least statistically.

“I don’t see a lot of drivers for 2011.”

FEEDBACK REQUESTED: Do you see any drivers in 2011? What does your crystal ball say? Comment on this story below.

Publication date: 01/31/2011