by Edward W. Dooley
Shipments of residential and light commercial central air conditioners and heat pumps rebounded to record levels in 2002. Spurred by historically low mortgage rates, the hotter-than-normal summer and droughts that affected more than half of America, the improvement in unitary equipment installations could portend slow improvement next year in the commercial and industrial markets, too.
By early October, shipments were on track to achieve 6.7 million units, with units below five tons showing marked improvement despite the less-than-robust economy. However, shipments of large unitary and centrifugal chillers have not fared as well and will need a revitalized economy next year, with a boost in employment, to spur new office and industrial plant construction.
The downturn over the past 12 months in large unitary shipments will result in an aging equipment base because building owners have delayed replacements. The result could be an increase in service calls and a growing inventory of units earmarked for replacement as the U.S. economy gains strength.
Meanwhile, there are pockets of strength that should continue improving. Health care construction — from hospitals and special care facilities to drug stores and medical buildings — is achieving double digit growth. Public school districts will spend $108 billion and colleges and universities will spend $61 billion on construction projects over the next three years.
A brightening employment market would improve the momentum already evident in the small unitary market where replacements play a key role. Indeed, combined shipments of large and small central air conditioners and heat pumps are on a pace to meet or exceed the record 6.7 million units achieved in 2000. Heat pumps could edge past the record 1,442,355 units shipped last year.
New home construction remains vibrant, and single-family and existing home sales are bumping into record territory, although there are signs that fast-rising home prices could slow sales. Before- and after-sale “home fix ups,” coupled with a huge surge in mortgage refinancings, are driving heating, air conditioning, ventilation/filtration upgrades, a trend that should continue into 2003.
The market for building remediation to cope with indoor air quality problems is beginning to boom. Contractors are flocking to seminars and training programs designed to open up new revenue streams that will likely include a greater use of ultraviolet light, sophisticated controls, dehumidification devices and air filtration systems, for example.
Looming over all of the HVACR marketplace is the impending 2010 deadline in the United States for the phase out of HCFC-22 in new air conditioning and refrigeration equipment. Under government regulations, HCFC-22 will continue to be produced until 2020 to service existing equipment. For decades, it has been the refrigerant for residential and light commercial central systems, with close to 70 million units now in service in the U.S.
HCFCs were designated by the U.S. Environmental Protection Agency (EPA) to serve as one of the alternatives for the replacement of chlorofluorocarbon (CFC) refrigerants that were banned from production effective Dec. 31, 1995. CFC-12 was widely used in commercial refrigeration and air conditioning, automobile air conditioning, and residential refrigerators, but not in residential central air conditioning.
For some products, the change from CFCs has been transparent to consumers. For example, CFC-12 was replaced by HFC-134a in residential refrigerators and automobiles, which have been produced with HFC-134a air conditioners for a decade. Commercial building occupants are mostly unaware that large tonnage liquid chillers that previously relied on CFCs are being replaced or converted to chillers using HFC 134a, HCFC-123, HFC 410A, HFC-407C, and HCFC-22.
Unlike their tenants, building owners with CFC units have been the target of considerable effort to inform them about conversion and replacement options. However, the recession in 2001 and the failure of the economy to show vibrant strength in 2002 has slowed the process. By the end of the year, there will still be an estimated 38,281 CFC large tonnage liquid chillers in use, ensuring manufacturers and contractors steady business for the rest of the decade.
Educating equipment owners about refrigerant options takes on new importance when choices are available. Manufacturers and contractors have produced sales and marketing materials that explain how HFCs, which have been officially accepted for use by the EPA, are being used in a growing number of air conditioner and commercial refrigeration product lines.
Seven years from now, when HCFC-22 is no longer available in the U.S. for use in new equipment, this industry will look back at this prelude period as a quiet time before the big change-out. The industry has prepared well by developing many alternative refrigerant products for its customers. If the past is prologue, and the CFC transition is a good example, the transition will go smoothly.
Ed Dooley is vice president of communications and education at the Air Conditioning and Refrigeration Institute (ARI), Arlington, VA. 22203. He can be reached at 703/524-8800, or by e-mail
at [email protected].