As we wind down 2021, we take stock in what a great year the HVAC industry experienced. In fact, it was the second great year in a row.

The shipment numbers that are reported by AHRI tell the story. When compared to 2020, their latest data had gas furnaces up 30% with central air conditioners and heat pumps up over 10%. And this was not a case of needing to throw out the East German judge, because air conditioners and heat pumps had grown 10% last year too.

That is not to say that the HVAC industry did not have challenges. Supply chain issues, workforce development problems, and navigating COVID procedures all made HVAC contracting a tough gig in 2021.

But now is as good a time as ever to look back on the year that was and see what we have learned:


1. Inventory is going to be an issue for a while

The HVAC contractor has been a little like Charlie Brown trying to kick the football from Lucy in regards to product availability. Every time I talk to someone in the know, I am told it will be a lot better in three to six months. We are now creeping up onto three years. It is not the fault of those in the supply chain; there are a lot of moving parts that they cannot control.

Contractors should view this as a new normal until it is not. Plan on stocking more product for a while. If you don’t have it, you can’t sell it.


2. If you are considering selling your HVAC business, now is the time

I recently had lunch with an HVAC contractor who was giddy (a term I normally do not use) about the price he was receiving for his business from a private equity firm. It exceeded even his high range expectations. During a breakout session at a recent industry event, the audience of contractors were asked to raise their hands if they had been contacted about selling their business. Every hand in the audience went up.

HVAC is hot. What is driving this consolidation? Well, there is a large amount of money available for investment. Smart investors are looking at the HVAC industry because it is fragmented … with no firm usually accounting for more than 5% of the market. Of course, it does not hurt that it is an industry with an aging ownership who might just be looking to cash in their chips.


3. Everything is getting more expensive … so should contractor prices

Gas, groceries, and real estate — everything is starting to cost more. HVAC is no different. Not a week goes by without this publication getting a press release from a manufacturer announcing a price increase.

HVAC contractors need to pass those costs to their customer. However, it should not stop there. Employees in every job are expecting more money as inflation continues to grow. They will not hesitate to move across town to a competitor who is offering higher compensation. HVAC contractors need to stay competitive in the workforce environment. Those are also costs that should be passed on to customers.

The silver lining is people are expecting items to cost more, so there should not be the sticker shock contractors would normally witness if they raised prices at a higher than normal percentage.


4. COVID is here to stay

The idea that this would be totally eliminated was probably foolish to begin with. It is just something that the country and your business are going to need to deal with for years to come.

What does this mean for the HVAC contractor? Get your COVID policies buttoned up. Figure out if a vaccine mandate is right for your business. If you don’t, come up with a plan for customers that expect one. Masks, social distancing, working from home. These are all items that were not on a contractor’s radar 18 months ago but now are.


There are probably no right or wrong answers here. Know your customers. Know your employees. Be consistent. That’s all I’ve got for you.

Here is hoping that the HVAC industry continues to see great growth as it has the last two years. People are finally realizing what an essential business it is.