February 2019 Today’s Word

Welcome to 2019: The Good, The Bad, and The Ugly

As I write this, the AHR Exposition is in the rear-view mirror, a massive cold snap is freezing out the upper mid-western U.S., and the federal government shutdown is on temporary hiatus. I like to call this troika of events The Good, The Bad, and the Ugly.

Like every year at the expo, you can’t help feeling the positive energy as the HVAC Industry gathers to talk about the future. Showcased were the latest technologies, equipment, and services designed to take this industry and its customers forward. This includes high attendance in all the educational sessions, crowds working the show floor, and the after-hours events where contractors, engineers, manufacturers, and distributors hobnob and lay the groundwork for the upcoming year.

The Good – Having an early year kick-off event like the AHR Expo really can set the stage with all its positive energy.

The manufacturers themselves seemed confident that 2019 would be a strong year. This was evidenced in the Economic Outlook Survey conducted by expo management late last year. HVACR manufacturers reported positive 2018 sales growth and forecasted that to carry into 2019.

Contractors also cited a good business environment in 2018, many attributing it to positive changes in the tax laws and an easing of regulatory burdens.

Everyone is concerned about price increases due to national and international politics (can you say tariffs?), but for now that hasn’t hit yet.

Contractors like Dan Foley, who received the Dan Holohan Award from Taco, Inc. during the show, is an example of a contractor who finds great benefit from attending the expo and using it to kick off the year on a positive footing.

The Bad – Not to be a naysayer, but despite all the good feelings of the show, there are realities we all need to face. The economy is the biggest one. Just read Connor Lokar’s market forecast article on page 22 and you will see what I mean.

Many manufacturers acknowledge that the economy could negatively impact the costs of their finished goods, but hold out hope that shipments in 2019 will be on the upswing.

The Ugly – In a nutshell, the key economic indicators (the U.S. Single-Family Housing Starts growth rate, for example) have been sliding for some time, which Lokar says is a warning sign that the economy is slowing. That means potentially fewer HVACR projects. It also can mean that residential consumers may steer their spending towards more renovation work ‘ the baliwick of High-Performance HVAC contractors.

One reason: the Air Upgrade Process. Check out Rob Falke’s explanation of that process in his article on page 18.
More ugliness exists in the form of tariffs, government shutdowns, technician shortages, and the impending patchwork of state-led refrigeration regulations that can be a huge burden to contractors. All this makes 2019 a potentially ugly year.

Welcome to 2019

This mixed bag also includes a bright spot. Lokar sees things turning around in the fourth quarter of 2019. And if you are a Performance-Based Contracting’ company, you are somewhat insulated from the negatives because you offer something no one else can ‘ provable results in comfort, energy efficiency, safety, and health.

So welcome to 2019. It will be challenging, but opportunities abound. Apply your training and skills for the betterment of your customers, and make this year one of your best ever!