Manufacturers Optimistic About the Future of the Refrigeration Market
Still, concerns remain over refrigerant regulations
The U.S. economy is looking more robust, with many economists predicting the gross domestic product (GDP) will grow between 2.5 and 3 percent this year. That is slightly higher than last year’s GDP, which the Bureau of Economic Analysis reported as increasing 2.3 percent, but much higher than the increase of only 1.5 percent in 2016.
Other economic indicators are looking positive as well, including modest inflation, higher wages, increased consumer spending, and low unemployment. All these factors are leading manufacturers to believe 2018 will be a good year for the refrigeration market.
A growing economy and high levels of consumer confidence have helped to get 2018 off to a good start, which is why Danfoss is optimistic about the remainder of the year, according to Chris Nitz, marketing manager of commercial refrigeration —North America, Danfoss.
“Our business in the refrigeration segments last year was quite strong, and the marketplace was active and vibrant, especially in the area of foodservice,” he said. “We anticipate this growth will continue throughout 2018, impacted by favorable economic conditions in the United States influencing consumer behavior.”
The growth seen last year in the foodservice segment should continue, predicts Nitz, including the trend toward hydrocarbon (HC) refrigerants, which drive efficient and safe refrigeration system designs.
“One of the enabling components — the microchannel heat exchanger — is particularly well suited for these designs, as it is capable of either improving efficiency within the same footprint or reducing footprint while maintaining efficiency, compared to more traditional heat exchangers,” he said.
Cold rooms, including the walk-in cooler and freezer applications found in many venues, such as convenience stores and supermarkets, also remain an important area of focus for the industry because of the ongoing demand for tighter temperature control and monitoring in order to ensure food safety and quality.
“As a result, Danfoss is seeing growing interest in electronic thermostat and controller products, which are popular because of the options and flexibility they offer refrigeration applications,” Nitz added.
Emerson saw positive sales in 2017, and the company anticipates 2018 will be even stronger, said Don Newlon, vice president and general manager, food retail, Emerson.
“We see foodservice showing solid growth, and we expect food retail, transportation, and industrial will be even stronger,” he said. “Since 2014, we’ve placed significant development emphasis on helping our customers be ready for refrigerant and energy advancements, and those products are growing nicely individually and inside higher value engineered solutions with controls and other components.”
The Hussmann Corp. believes this year’s growth in food retail will come from the convenience store segment as it continues to grow in square footage to compete with supermarkets and quick-service restaurants (QSRs) for the consumer-away-from-home food dollars, said Cheryl Beach, manager of marketing communications, Hussmann.
“We see more convenience stores focusing on retail foodservice programs that include commissary prepared foods or on-premise prepared foods with the goal to provide their customers with fast, healthy, fresh alternatives throughout the day,” she said.
While manufacturers are optimistic about growth this year, there are lingering concerns over the current and future state of regulations and refrigerants.
“In 2017 we definitely were dealing with DOE [U.S. Department of Energy] regulations that impacted all the OEM refrigeration equipment manufacturers for display cases and walk-in coolers to ensure that our product portfolio was completely compliant with the new regulations,” noted Beach. “In 2018, we continue to hear conversations and see EPA [U.S. Environmental Protection Agency] guidelines around HFC and natural refrigerants. The industry is spending a lot of research and development on refrigerants, compressors, and systems to find the best product mix to meet food retailers’ needs.”
She added that food retail customers have a lot of questions and concerns as to how to balance their currently installed R-134a and R-404A refrigeration equipment while making decisions about new HFC blends and natural refrigerants for their new store projects.
“They are also being asked to consider business sustainability goals for carbon footprint, GWP, and ozone depletion while still maintaining the operating performance they need from their refrigeration equipment,” Beach said.
Adding to the confusion is the recent decision by the D.C. Circuit Court of Appeals to deny a petition to rehear its prior case that ruled the EPA does not have the authority to regulate HFC refrigerants.
“This is creating some uncertainty regarding the transition of equipment to low-GWP refrigerants,” said Nitz. “We believe this is only temporary, since large investments in resources and capital have already been made and some manufacturers are proceeding along the transition path.
“Additionally, some states, including California, are driving ahead to regulate HFCs using the U.S. EPA SNAP [Significant New Alternatives Policy] rules as a key part of their framework,” he continued.
That said, careful consideration needs to be given to any proposed regulation in order to allow manufacturers to effectively respond to potentially different state-by-state regulations, added Nitz.
“We believe that it is important that the United States. ratify the Kigali Agreement to the Montreal Protocol so that the U.S. can continue to be seen as a leader in refrigeration technology innovation,” he said.
The recent SNAP ruling is a concern, said Newlon, as some end users and manufacturers are faced with questions about how to proceed.
“We are working with our customers to help determine their approach moving forward,” he explained. “Refrigeration is dealing with extraordinary dynamics right now, bringing both a challenge and an opportunity. We see our role as engineering simple and sustainable solutions to meet these challenges.”
The transition to natural and alternative refrigerants will likely continue, according to Nitz.
“In addition to natural refrigerant deployment, there are a number of low-GWP refrigerants being developed that will jointly stimulate sustainable equipment sales,” he said. “Manufacturers that have invested heavily in their infrastructure in order to participate in the transition will benefit. However, it is also critically important for the industry to invest in training for contractors in order to ensure the successful and safe shift to hydrocarbon refrigerants, such as propane and isobutane.”
This last point is particularly important because without properly trained techs, refrigeration equipment cannot be installed and/or main-
As manufacturers shift to new refrigerants, the industry will need to provide additional training to ensure contractors are able to install and service the next generation of equipment being offered.
Publication date: 4/2/2018