The HVACR industry is recovering. Early 2013 statistics representing equipment sales and shipments are soaring, registering double-digit gains the industry hasn’t seen in years.
Contractors, distributors, and manufacturers are modestly monitoring these increases, acknowledging that perhaps this is proof that we’ve finally emerged from the clutches of the Great Recession.
The Air Conditioning Contractors of America’s (ACCA) Contractor Comfort Index, which measures short-term contracting growth, rose to 60 in January. This is a four-digit increase over January 2012’s ranking of 56.
The CCI is calculated based on a survey of the association’s contractor members, who are asked how positively they feel about new business prospects, existing business activity, and expected staffing decisions. Responses are weighed and averaged to reflect one number. A ranking of 50 or higher reflects anticipated growth.
“We are only one quarter in, but a lot of these gains can be attributed to a general uptick in the still-fragile economy,” said Paul Stalknecht, CEO and president, ACCA. “The multifamily housing sector is really hot right now and the commercial sector finally seems to be rebounding a bit. Homeowners are feeling more confident and appear ready to move on replacements.”
Stalknecht said the industry’s survivors are poised for great returns.
“The best contractors kept their marketing up and didn’t hunker down to wait out the storm,” said Stalknecht. “They are in the best position now that the economy is on its way back up. No doubt the last few years have been rough, and it’s sad that a lot of contractors closed their doors. But, the ones that remain are stronger than ever.”
The CCI numbers are being echoed from the field, as numerous contractors are reporting sensational starts to 2013. “We are in a heat pump market and our shipments we’re up more than 18.9 percent in January,” said Dave Hutchins, owner, Bay Area Air Conditioning, Crystal River, Fla. “February was also up, and November and December were up too. It looks like we’ve got a nice trend developing.”
Mikhail Solow, a senior instructor at Troubleshooters Academy, Miami, said, “It helps that Hurricane Sandy destroyed many homes and many heating units, but taking that aside, we’ve noticed a decline in new installation, but a very large increase in service and repair.”
Wayne Turchetta, vice president, HMC Service, Louisville, Ky., said growth registered at 10 percent in 2012, and he is confident that trend will continue in 2013. “We strongly feel this is due to quality of workmanship and fair and reasonable markups, but mostly relationships with customers who know we will do what we say we are going to do, with no surprises,” he said. “We are in the process of short-range and long-range planning, and growth is our primary objective.
“We never saw a Great Recession,” said Turchetta, past chairman of the Mechanical Service Contractors of America (MSCA). “We saw a slight slowdown, but never a decrease in revenue. The one major factor in any endeavor is attitude and to be successful, it can only be a positive attitude. You can believe there was a recession if you want, but we didn’t. We left all the negative thinking outside and plan to continue that movement going forward.”
Contractors aren’t the only ones reaping the benefits of rampant growth. The Air-Conditioning, Heating & Refrigeration Institute (AHRI) released its Heating and Cooling Equipment Shipping Data on March 15. The monthly statistical release compares year-over-year data estimates derived from figures supplied by a sample of AHRI member companies.
The document showed booming business in January with shipments of gas warm air furnaces increasing 35.6 percent; commercial gas storage water heater shipments, 35 percent; air-source heat pumps, 18.9 percent; central air conditioners and air-source heat pumps, 17.3 percent; and air conditioners, 16.3 percent.
“We are pleased to see signs of the industry recovering from the recession,” said Francis Dietz, vice president of public affairs, AHRI. “Our members employ tens of thousands of Americans — in positions that cannot be outsourced — to manufacture equipment that we rely on every day. We are continuing our efforts to work with the Department of Energy and other agencies to avoid unnecessary regulation that will only hurt the industry.”
Renaé L. Turnbaugh, regional sales manager, water heating division, Rheem, said the steady increase suggests that the economy is on the rise.
“The tankless gas water heaters in my territory are off to a strong start,” she said. “We are not seeing the large, one-time jobs that we had this time last year, but the overall increase has been steady.”
Richard Bluestone, sales, Alan Mfg., noted that sales have exceeded expectations thus far in 2013. “We are off to a good start and are above last year’s numbers,” he said. “Our wireless products are doing well.”
Heating, Air-conditioning, and Refrigeration Distributors International (HARDI) announced that U.S. HVACR average distributor monthly sales jumped 19.4 percent in January. The improvement was widespread, with six of seven reporting regions registering double-digit gains, and four of the regions producing gains that exceeded the overall average.
The January gains are the largest monthly increases on record since November 2010. “We expected some bounce back from a weak December and January did not disappoint,” said Andrew Duguay, economist, HARDI. “Now that the ‘fiscal cliff’ is behind us and tax rates are a little clearer, consumers and businesses are more comfortable to proceed with spending to repair or replace their aging HVACR equipment.”
Certain regions fared better than others, with the Mid-Atlantic region registering the grandest gains at 21.7 percent. “A 19.4 percent gain is great, but there is broad disparity between the regions,” said Brian Loftus, market research and benchmarking analyst, HARDI. “While confidence may be improving from depressed levels in the West and Southwest, the trailing 12-month revenue per employee has generally been declining for the past six months in the Northeast and Great Lakes regions. HARDI wants to see broader employment growth that will lead to more consistent and sustainable growth across all our regions.”
The American Institute of Architects said business conditions continue to strengthen, citing a growth in the firm’s Architecture Billings Index (ABI). The ABI climbed to 54.2 in January, signifying its strongest growth in 5 ½ years. Evidence of improving conditions can also be found in the general economy, as nonfarm payroll employment grew in January, with 157,000 positions added.
“Conditions have been strengthening in all regions and construction sectors for the last several months,” said Kermit Baker, chief economist, AIA. “Still, we also continue to hear a mix of business conditions in the marketplace as this hesitant recovery continues to unfold.”
A major contributor to this increase was construction hiring, as there have been steady gains in that sector for the last several months. Architecture services employment has also been on the rise recently, reaching 156,000 in December, which is the most recent data available.
Publication date: 4/15/2013