Shipments Reach High Level

September 4, 2006
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The heat index isn't the only thing reaching new heights in 2006. The June 2006 combined unitary shipments realized its highest level this year, totaling 921,281 units, according to the Air-Conditioning and Refrigeration Institute (ARI). Despite the 26 percent increase over May 2006, the number of combined units shipped in June 2006 is down 16 percent as compared to June of 2005.

"For the third year in a row, combined unitary air conditioning and heat pump unit shipments reached their peak in June, indicating that summer is often the time of year when many people face replacement of their indoor comfort systems," said Dave Martz, ARI's vice president of administration and statistics. "We strive to educate consumers to check their systems prior to the cooling season to avoid a system failure when they need it most and when cooling system technicians are overburdened with increased service calls."

In light of last year's record breaking total of 8.6 million units shipped, current industry totals, year-to-date, are just under half way to another record at 4.1 million units. The total, however, is down 2 percent from the first six months of 2005. Looking at last year's trends reveals that the industry ramped up about the same time last year, and never looked back. This was primarily due to the 13 SEER mandate that went into effect January 2006.

With the absence of the 13 SEER drive, questions are rising as to what the rest of 2006 will hold for manufacturers and distributors. Factory stocks, distributor shipments, and distributor inventories were down as compared to May 2006. Factory stocks dropped 88,970 units and distributor inventories dropped 57,315 units. Distributor shipments were down 2 percent in June 2006 as compared to June 2005.

Kent Kendrick, CEO of Dale Supply, Nashville, Tenn., predicted that many distributors will spend the rest of this year trying to rebalance their inventories.

"Most distributors entered 2006 with a heavy inventory loaded with 10, 12, and 13 SEER models," said Kendrick. "Trying to pull inventory levels down now will most likely cause a slowdown in units ordered.

"We [distributors] felt the pain early as our inventories grew and now manufacturers are going to feel the pain as orders slow down while product moves through the supply chain."

Air-source heat pump numbers have been somewhat of a phenomenon. Natural gas prices have helped cause a shift in the market.

"Air-source heat pump shipments for June 2006 reached their second highest level for the year; only March had higher shipments," said Martz. "In fact, throughout 2006, heat pump shipments have outpaced 2004 and 2005 monthly totals."

The continued increase in heat pump shipments totaled 245,482 for June, up 2 percent over June 2005. Year-to-date, heat pump shipments total 1.19 million units in 2006. The upward trend continues when comparing the numbers to last year. The six-month totals are up 17 percent as compared to the first six months of 2005.

According to Martz, heat pumps are experiencing a resurgence in popularity for several reasons, including increased fuel costs for oil furnaces and gas products and improved minimum efficiencies of heat pumps. These two factors have made the product a heating source of choice for many consumers, he said.

"Heat pumps make sense to many homeowners because they are a clean, efficient, and a cost effective heating alternative that can also be used to cool homes during summer months," commented Martz. "For many consumers considering the installation of a central air conditioning system, the option to include an efficient heating alternative that can be more cost effective throughout most heating months in most geographic areas of the United States is an alternative worth considering."

In Tennessee, Kendrick is having a hard time keeping heat pumps in stock. The preseason heat pump orders he placed, based on his business' historical numbers, ran out by the end of March.

"The electric utility market is currently more stable than the gas utility market," noted Kendrick. "It has caused a significant shift in our market area. People are even starting to look into dual fuel."

Another factor affecting heat pump shipments is the expansion of new construction projects into increasingly rural areas where building has outpaced the ability of communities to establish a gas supply.

Martz noted that, "The electricity needed to power a heat pump is readily available throughout most rural communities."

Publication date: 09/04/2006

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