Hmm, might you be detecting a veiled note of sarcasm? Perhaps a tiny little bit; I do that on rare occasions. But, I have been somewhat surprised as many people I meet do expect the heating and cooling industry to fair well in the coming year.
Admittedly, until a short while ago, I was beginning to wonder about the upcoming business year. However, having a unique opportunity in this industry to visit with varied sorts of people and identify trends, here is what I have pieced together about business in the past year: Commercial contractors have seen increased pockets of activity especially in data centers, health care, and education; residential contractors have been flat to slightly up; most small manufacturers have had a couple of good years, larger manufacturers are flat to slightly up; and Tom, the donut guy, thinks business is good for HVACR, and will continue to be so in the coming year.
You will learn more about Tom later.
Recession Woes Dissipating
The recent recession that began in December 2007 officially ended in June of 2009. Yes, people are still feeling pain and too many people are out of work, so business is not “as usual” just yet. However, the recent reports of record-setting sales on Black Friday and Cyber Monday made me realize that Tom is on to something. More about Tom later.
Those two critical buying days won’t make for an entire business year, but they are somewhat predictive of consumer behavior. Consumers (of which I am one about two hours each day in between work, meals, child parenting, dog parenting, and sleeping) seem to be loosening up their wallets. Not only did the two big buying days start to cement that in my mind, but other indications throughout the year.
Each year during the MechanicalXchange, large mechanical contractors gather to discuss business strategies with key manufacturing companies. Though slight in some markets, there are encouraging pockets of increased activity according to these key industry leaders. Not everyone at the event was predicting increased sales for 2012, but enough to call it a trend.
During my travels, residential contractors indicated the variations that come with different demographics. One market may be up while another is down. All business is local.
Generally, repair work has been on the upswing for a couple of years, while new installations have lagged in some places. Many suggested increased sales have been focusing on the smaller add-on ancillary items that often come with repair opportunities — humidification, filtration, zoning, not to mention air distribution corrections as a result of diagnostic testing procedures.
Many of those same successful contractors suggested there is a lot of pent up demand for larger replacement items down the road. Sounds like another trend in the making.
Tom Said Business Is Good
That interesting trend brings me back to Tom, who was serving donuts with me on a recent Sunday morning. Well, more appropriately said, Tom was mostly eating the donuts. He is a recently retired Caterpillar salesman who knows a lot about heavy equipment, construction, and related subtrades. When Tom asked, “What do you do for a living?” I was able to give him the real answer instead of the one I usually fabricate about working for Playboy magazine in the editorial department. (People always wonder if I get involved in the photography, but I tell them I just write the stories.)
Tom actually understood the whole HVACR thing, and gleefully said, “Man, that’s got to be a really good business to be in right now,” to which I asked, “Really, why do you think so?” Tom told me that regardless of the economy people were always going to spend money on the creature comforts of home — staying warm when it’s cold, and staying cool when it’s hot. I asked Tom if he was planning to spend any money on his HVAC system this year. He said, “Sure, if I need to.”
Tom and your customers have a little money to spend on things they need. I predict they are going to need you a little more often in 2012.
Murphy’s Law: Have a donut. Be happy next year.
Publication date: 12/12/2011