We knew 2021 was going to be a good year for the heating, ventilation and air conditioning industry. We had been forewarned by Matt Michel, in April of 2020, just as the pandemic was starting, that aging systems would need to be replaced by the thousands, even with the COVID-19 lockdowns (paradoxically, people spending more time at home helped). The government’s classifying HVACR as an “essential” business helped to keep trucks rolling, and provided opportunities for contractors to offer indoor air quality solutions. Michel urged contractors to keep the pedal to the metal, and they took that advice to heart.
In November of 2021, AHRI reported 2021 year-to-date combined shipments of central air conditioners and air-source heat pumps increased 9.2 percent, to 9,569,242 units, up from 8,764,619 units shipped during the same period in 2020. Year-to-date shipments of central air conditioners increased 6.1 percent, to 5,930,089 units, up from 5,588,393 units shipped during the same period in 2020. The year-to-date total for heat pump shipments increased 14.6 percent, to 3,639,153, up from 3,176,226 units shipped during the same period in 2020.
Also reported by AHRI, in November, 2021, year-to-date U.S. shipments of gas warm air furnaces increased 22.9 percent, to 3,685,889 units, compared with 2,998,085 units shipped during the same period in 2020. Year-to-date U.S. shipments of oil warm air furnaces increased 10.9 percent, to 35,303 units, compared with 31,832 units shipped during the same period in 2020.
“The one thing I’ve noticed in terms of finalizing our annual report here, is that there is a ton of variance. Ductless trends are out of control in every region, and commercial construction has been down in every region. And possibly with the exception of one or two regions next year, we’re not anticipating anything beyond flat or downward growth in commercial construction.”
WEST
Furnace sales took a hit in California, possibly as a continued lingering effect of the state’s ongoing Low NOx (nitrous oxide) regulations in effect in much of the state. As of October 1, 2019, all gas furnaces installed in some regions of the state had to meet the new ultra-low 65 percent lower NOx emission requirement. Furnaces offered for sale, supplied, sold, or installed must emit less than 14 nanograms per Joule of NOx.
But generally, Fisher said, furnace sales have finally started to rebound in the Western region (California, Oregon, Washington, Idaho, some of Montana) and an overwhelming majority of sales are going to California. “That’s something at least right now that we see continuing. An upward trajectory is not too much of a reach,” he said.
The majority of Western region distributor sales are attributed to ducted air conditioning units.
Western region sales of HVAC equipment overall as reported by HARDI members as of January 27 showed a 23 percent increase in 2021 sales over 2020.
The majority of Western region distributor sales are attributed to ducted air conditioning units.
“Furnaces comprise a good chunk of the overall pie, and a rebound in furnace sales is definitely a positive, but the lion’s share is coming from ducted AC units,” Fisher said.
Ductless HVAC's Great Growth
Ductless HVAC system sales have increased over 2020 in just about every region of the U.S.
“In general this is something we’ve seen since the start of COVID,” Fisher shared. “Heat pump sales have been up, but ductless has really started to boom. There’s potentially something here, where there’s a little extra liquidity floating around, households have more spending power, and are spending more time at home. I think the ductless boom also has something to do with home remodeling activity, given the increased amount of time people have been spending at home. Maybe someone wants to air condition a detached garage, or a new sunroom that doesn’t have ductwork running into it. There’s a lot of speculation there, but I think that’s a big chunk of it,” Fisher offered. Fisher said the Southeast region -- North and South Carolina, Virginia -- is more interesting to analyze, because the overall breakdown of equipment shipments is a little more balanced.
Southeast
“The North-Central part of the country uses more furnace systems, and then you’ll have air conditioning units for summer, but in the Southeast it’s a pretty even split between ducted heat pump sales and ducted air conditioning sales. Furnace sales in the Southeast over last couple of years has been an increasingly smaller component of that overall breakdown. We’re still waiting on fourth quarter data from our equipment sales report, but through the end of the third quarter 2021, furnace sales were down year-over-year in the Southeast. We’ve been watching the furnace market closely for the past couple of years. What had been a reliable market has seen a steady decline, and the question is, does this have to do with heat pumps taking share from furnace sales? I think the answer is mixed.
"This is kind of a broad national commentary, but in general there are still so many households nationally that rely on natural gas as a fuel source and it’s so much easier for existing homes to replace an old gas furnace with a new one rather than switch to a heat pump system," Fisher offered.
Fisher said ducted heat pump sales are significant drivers of distributor revenue in the Southeast. And overall, the southeast has performed better during “the COVID experience” than the Northeast and mid-Atlantic.
“There have been some setbacks here and there as COVID outbreaks popped up, but existing home sales in the Southeast year-over-year are up 10 percent, and that’s something you see pretty much across the board nationally. The national trend is an eight percent increase. Existing home sales is a good leading indicator of replacement activity. That’s been a positive.”
In the commercial HVAC segment, Fisher said, the Southeast has struggled along with other regions in terms of commercial construction over last two years, as a lot of developers have worked through backlogs that existed, and there has been a reticence to invest broadly in new projects.
“The residential market’s solid performance has helped offset some of that decline in commercial construction. If you’re a large mechanical contractor who is only doing commercial project, it hurts, but if you’re a distributor who is generally more biased to residential sales, it’s been a good offset for the struggles the commercial market has had.”
Central and Great Lakes
Fisher said there is usually minimal variation between sales activity in the Central (plain states) and Great Lakes (Michigan, Indiana, Illinois, Ohio, Kentucky, West Virginia regions.
Existing home sales in the Central region is a positive force driving increased HVAC system replacement activity.
Existing home sales in the Central region is a positive force driving increased HVAC system replacement activity.
“The Central region is primarily driven by sales of ducted air conditioning units, and it’s been a huge furnace market over the last year. Ductless sales have also been astronomically high. Again, it’s been so interesting to see what’s happening in the ductless market. When we start getting past COVID, the growth should decline. It can’t sustain 30 percent growth forever,” Fisher suggested.
Northeast and mid-Atlantic
The Northeastern was struggling for a long time during COVID, but things have started to ease.
"The Southwest and Southeast are still performing better than the Northeast or mid-Atlantic, but the differences are not as pronounced as they had been," Fisher shared.
"The biggest difference you might hear in what I’m saying is that there are differences in product mix, due to the variation in building types. Many buildings in the Northeast are older and there is a much greater reliance on oil as a fuel source, and a heavier reliance on boiler systems and furnaces. The outlook for the boiler and furnace markets in the Northeast will be dramatically different from what you’d be expecting in the Western or Central states. But on a macro level, talking about the broader economy, things are tightening, in that there is a convergence among regions."
Distributors Awarded for Eliminating Mercury Thermostats
New York, NY — Thermostat Recycling Corp. (TRC) recently announced the leading distributors in its 2021 "Banish Mercury Off the Planet" initiative.
The annual competition among Heating Air-conditioning and Refrigeration Distributors International (HARDI) members recovered 239 pounds of mercury from 70 member companies, increasing more than 16 pounds from last year. More than 380 branch locations returned collection bins during the contest period, from May 1 to Oct. 31.
"Our distributor partners never stopped collecting and safely recycling mercury-containing thermostats despite all the difficulties during the coronavirus pandemic, said Danielle Myers, operations and compliance manager, for TRC. “They have demonstrated good business awareness and sound environmental practices year after year. In the collection of mercury-containing thermostat recovery, there is no equal to HARDI distributors.”
Winners were announced during HARDI's Annual Conference, Dec. 6.
Distributor Prize Winners are:
- Johnstone Supply recycled the most pounds of mercury at 87.8
- Famous Supply recycled the highest average pounds of mercury per branch, with 3.0 pounds.
- Geary Pacific had the highest participation rate of 34%.
TopThree Branches for Recycling
Geary Pacific, Riverside, CA 8.816 pounds
G. W. Berkheimer Co., Aurora, IL 8.525 pounds
R.E. Michel, Norristown, PA 7.948 pounds
Thermostat Recycling Corporation (TRC) is a nonprofit stewardship organization that facilitates and manages the collection and proper disposal of mercury-containing thermostats. Originally founded in 1998 by Honeywell, White-Rodgers, and General Electric as a voluntary venture, it was established to promote the safe collection and proper disposal of mercury-containing thermostats.
Daikin Acquires Two
MINNEAPOLIS - Daikin Applied Americas in January that it has made majority investments in two of its current equipment, services and parts representatives —Detroit-based ThermalNetics and TriState HVAC Equipment, which serves customers in Philadelphia and the surrounding tri-state area.
Combining the proven track record and expertise that both firms bring with the backing of Daikin, the global HVAC leader, gives engineers, contractors, and facility owners the comprehensive solutions and assistance they require to improve comfort, air quality and sustainability.
"Our mission is to deliver innovative solutions and an exceptional customer experience," said Mike Schwartz, president and CEO of Daikin Applied. "That means solving today's challenges with speed and agility, and having a long-term roadmap to continue to support customers throughout the lifecycle of their equipment and buildings. With ThermalNetics and TriState as part of the Daikin Group, we have the people, technology and structure to evolve with our customers."
In the heating and cooling business for 50 years, ThermalNetics is an authorized Daikin Applied and VRV representative across eastern Michigan. ThermalNetics also services and repairs a range of HVAC equipment. To bolster those capabilities, the regional Daikin Applied factory service team will join the firm to bring holistic support to customers.
"Aligning our teams allows us to better achieve our core focus of creating more comfortable and healthy indoor environments through innovative HVAC solutions," said ThermalNetics president Rick Sutkiewicz, who will continue to lead the business. "With the region's top engineering and technical talent under one flag, we can provide even greater coordination, responsiveness and results."
TriState HVAC Equipment is a multi-manufacturer representative in the Philadelphia market. It delivers technology and support to organizations across the eastern portion of Pennsylvania, as well as southern New Jersey. The firm has represented Daikin and its predecessor for over 30 years, now selling applied and VRV solutions, and handled equipment startup and service since the late 90s.
"As we've continued to grow so have the demands on our customers," said Tony Greener, managing partner at TriState HVAC Equipment.
"Digital connectivity, IAQ, ecological stewardship — these are all pressing needs and concerns. The close connection and collaboration with Daikin further fuel our ability to innovate and meet these and future needs."
Greener and co-managing partner Joe Callahan will remain and run the firm.
"These are ultimately investments in our customers," said Taka Inoue, executive vice president and chief sales and marketing officer, Daikin North America, LLC, the Daikin division that produces VRV systems, and other products for light-commercial and residential use.
"Whether for a commercial building owner or residential homeowner, the focus is the same. We're always looking for opportunities to improve the customer experience and deliver an ideal environment to grow together."
Along with Daikin, ThermalNetics and TriState represent a broad range of other leading HVAC equipment manufacturers.
About the Author
Terry McIver
Content Director - CB
As director of content for Contracting Business, he produces daily content and feature articles for CB's 38,000 print subscribers and many more Internet visitors. He has written hundreds, if not two or three, pieces of news, features and contractor profile articles for CB's audience of quality HVACR contractors. He can also be found covering HVACR industry events or visiting with manufacturers and contractors. He also has significant experience in trade show planning.