This is a pretty good time to be an HVAC contractor… at least compared to the recent past. After years of digging out of the Great Recession, homeowners are finally replacing rather than repairing their HVAC equipment. Combine that with a solid commercial sector, and you will find a lot of happy contractors across the country.
One only has to look at the Air-Conditioning, Heating, & Refrigeration Institute (AHRI) shipment numbers to confirm that. When looking back at 2017, shipments of air conditioners, furnaces, and heat pumps look to be up around 7 percent from 2016. It is also important to point out that the 2016 numbers were about a 6 percent jump from 2015. Certainly a positive trend.
Not only that, but HVAC is becoming interesting to the consumer. Smart homes — an area where HVAC plays a vital role — have your industry on the homeowner’s radar more than it was 10 years ago.
And, if you look outside the HVAC bubble, the signs are solid as well. The U.S. Consumer Confidence Index is the highest it has been since November of 2000.
And while we do not know whether the recent tax cuts will be good or bad for the economy long term, most businesses should be able to keep Uncle Sam from grabbing as much of their profits as they have in the past.
What does this all mean? I don’t know. I am not a smart money guy… I am still hanging on to my Blockbuster Video stock.
But, one of the perks of this job is I get to travel and talk to some pretty smart people. While at the AHR Expo in January, more than a few people in the manufacturing world told me 2018 will be the year of the acquisition. Why? The thinking is the corporate tax cuts combined with the rolling economy will provide the money and the resources for corporations to take this action.
What is good for the beginning of the supply chain might be good for the local contractor. HVAC contractors should think about doubling down on their business this year. If you have a competitor in your market that is struggling, it might be time to make a move and see if they will sell. Same is true for a competitor that might be approaching retirement.
The Heating, Air-conditioning & Refrigeration Distributors International (HARDI) economist, Alan Beaulieu, was preaching this thinking at the HARDI Annual Conference last December.
“Pounce on their business,” Beaulieu said. “I know that doesn’t seem right to say or do that, but it’s legal; it’s called a target acquisition. Act on these things now, because if you build your business properly today, life is really going to be fun in the 2020s.”
Of course, your decision does not need to be so drastic. Maybe instead of an acquisition, you simply expand your business. If you have been thinking of adding another service, such as plumbing or electrical, 2018 just might be the year. Maybe the next 12 months are when you dive into home-performance contracting, geothermal, or ductless.
Now, I realize it is not all candy and nuts for the HVAC contractor. It is hard to find qualified people to bring into your company as the older generation retires. Online selling is disrupting the market as consumers want some contractors to just install products they already purchased. And customers want more from you while paying less.
But it is never the perfect time to make a big change. Now seems as good a time as any.