Survival of the Fittest

“Most distributors entered 2006 with a heavy inventory loaded with 10, 12, and 13 SEER models,” said Kent Kendrick, CEO of Dale Supply, Nashville, Tenn. “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.”

As the year wound down, the supply of 10, 11 and 12 SEER units became less and less, with most units being gone. Some contractors stocked up in 2005 while others stuck with the higher end systems even though customers were still experiencing mild sticker shock.

One contractor summed it up in his response to a survey conducted by The NEWS, this past summer. “The challenge has been dealing with the inventory-availability side of the phase-in, as well as the physical size of the new products. It has taken longer to quote jobs because we need to check if the new equipment will fit and then, if it fits, are there any available.”

Publication date: 12/25/2006

The aftermath of the 13 SEER deadline brought many challenges in 2006. Some were expected and others were surprising. The beginning of the year witnessed a record-breaking spike in combined unitary shipments, according to the Air-Conditioning and Refrigeration Institute.

Shortly after that, however, the decline began, and compared to the ramp up shipments of last year, the totals continued to drop significantly. Most expected installation, storage, and transporting issues, but many were surprised how difficult the mismatch challenge was. Each manufacturer dealt with this differently and so did each contractor. Some required coil replacement while others simply added a thermostatic expansion valve. This brought the questions of waivers, actual efficiency ratings, and contractor responsibility and integrity to the forefront. The solution to warranty issues were just as diverse - each contractor referring to their specific manufacturers.

Inventory supply presented a challenge as enough of the new 13 SEER units weren’t available. Spot shortages caused frustration as contractors worked on their new marketing strategies, trying to make a smooth 13 SEER transition. The supply chain experienced a switch as the once overburdened distributors found themselves able to return to business as normal. Manufacturers, however, slowly began to feel the same crunch as distributors did in 2005.

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