Business is Hotter than a Firecracker!

Happy Fourth of July; and a wish that it is hotter than hell wherever you are on our country’s birthday!

This particular day of the year seems to bring with it not only a celebration of our country’s history and freedoms, but reminders of our livelihood. If you happen to be a gentleman farmer in your spare time, you know that “knee-high by the Fourth of July” is not a corny line from a nursery rhyme. No doubt, too, the HVAC industry looks longingly for the dog days of summer that are typically ushered in with Independence Day.

Though weather is one of those things that everyone likes to talk about at parties, around the coffee pot, and certainly at outdoor picnics, HVAC people really do like to see other people sweating profusely about this time of year - it makes for good business opportunities.

So, how hot is it? Well, hot is relative. The hot dogs may be sizzling in your backyard before they even reach the grille, while someone else may be sporting a sweater vest in his kitchen. Because all business - and weather - is really localized, perhaps a look at the overall HVAC shipments might be even more revealing.

SALES ARE UP . . .

According to 300 member companies of the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) that represent more than 90 percent of the residential and commercial air conditioning, heating, water heating, and commercial refrigeration equipment made in North America, business is heating up. Well, at least the cooling business is heating up. Unfortunately, gas and electric storage water heaters, and gas and oil furnaces are a little under the weather. But, hey, it’s summertime; what do you expect from a bunch of heating products?

From the most recent reporting available from AHRI, U.S. shipments of central air conditioners and air-source heat pumps totaled 561,248 units in April 2011, up 7 percent from a revised total of 523,107 units shipped in April 2010. U.S. shipments of air conditioners increased 11 percent, to 389,655 units, up from a revised total of 352,452 units shipped in April 2010. U.S. shipments of air-source heat pumps increased 0.5 percent, to 171,593 units, up from a revised total of 170,655 units shipped in April 2010.

Year-to-date combined shipments of residential central air conditioners and air-source heat pumps increased 14 percent, to 1,764,188 units, up from a revised total of 1,554,281 units shipped in April 2010. Year-to-date shipments of central air conditioners increased 14 percent, to 1,140,498 units, up from a revised total of 997,911 units shipped during the same period in 2010. The year-to-date total for heat pump shipments increased 12 percent, to 623,690 units, up from a revised total of 556,370 units shipped during the same period in 2010.

. . . AND, SALES ARE DOWN

Last year, about this time, it appeared that the only good news regarding industry shipments was coming from the heat pump category. It now looks as though air conditioning unit sales are coming back, as well.

So, at least from the manufacturer point of sale, units are moving out the door. However, at the distributor level, April was a flat month according to the Heating, Airconditioning and Refrigeration Distributors International (HARDI) association. Just like the weather around the country, sales can be hot and cold at the same time. The good news is that inventory levels at the distributor level are higher than at this time last year - manufacturers have evidently pushed product out their doors and into HARDI distributors’ warehouses, even though contractors may have been a little slow to pick up on the hint. It must have been raining a lot during April, huh?

WHAT'S REALLY HOT

Whether the weather is having much of an effect on your business this summer, here is one thing that should remain hot regardless of the temperature.

Replacement business should grow from the levels of recent years. Consumers are still apt to repair rather than replace, as economic times are still very tight for most. However, those aging, decrepit, condensing units can only limp by for so long. If my prayers are answered, a bunch of your customers’ systems are going to break this summer.

Also, some people are beginning to equate savings with long-term earnings. In other words, people have been forced to save rather than spend, and saving on energy expenditures probably makes a lot more sense to them in this recovering economy.

Hope you have a great summer!

Publication date: 07/04/2011