He writes, “Manufacturer price increases across 2022 resulted in price increases greater than the reduction of installations. Overall revenue jumped, labor fell (fewer jobs), and profit soared. The same thing that happened in 2022 will happen in 2023, thanks to price increases from SEER2. Fewer installations for more money will mean record profits.”
Supply chain issues will continue through this year, though many logistics experts say the situation may substantially ease by the third quarter.
However, in an October 2022 Bloomberg Newsletter, author Brendan Murray warns that this might be overly optimistic. He quotes one Jason Miller – an associate professor of logistics at Michigan State University – who says that we should be wary of excessively confident predictions of a return to supply chain norms in 2023.
“Across all manufacturers, an insufficient supply of labor and raw materials has been effectively unchanged since the third quarter of 2021 in terms of severity,” says Miller.
HVAC manufacturers and distributors recognize that things remain tight and are taking steps to battle shortages. In the AHR Expo 2023 Trend Report, Steve Yurek, president and CEO of AHRI, says, “The current situation is unsustainable and is leading members to re-evaluate the sourcing of components to better ensure reliable availability in the future.”
This, combined with the industry’s need to ensure that next-generation refrigerants can be used safely in residential applications across all 50 states by mid-decade, are the top priorities at AHRI right now, according to Yurek.
As a result of all this and more, we will continue seeing price increases throughout the HVAC value chain.
A byproduct of supply chain issues and price increases is that many HVAC contracting businesses are selling to private equity firms. Private equity firms are creating bigger national companies that can more easily work through supply chain and other issues.
As a result, this may be the best time in HVAC Industry history for contractors to sell their businesses.
The Continuing Impact of Technology
Because more people are working from home today, and with the continuing spread of respiratory illnesses, Indoor Air Quality (IAQ) is more important than ever before.
The good news, according to the 2022 American Home Comfort Survey, is that homeowners are willing to spend 65% more on IAQ than they were five years ago! Plus, they are willing to pay more for Smart Technology that allows them to squeeze more value from every energy dollar they spend.
In a recent CMS NextTech blog post, Matthew Jones says, “In the U.S., 24% of households already own a smart thermostat, and 80% of those people plan on buying another in the future, as the Consumer Technology Association reported.”
Furthermore, advancements in emerging technologies like artificial intelligence and virtual reality are changing everything in HVAC. Some other technologies to watch include:
Ice-Powered or Thermal Storage-based Air Conditioning. Learn more about this in a January 2023 article by Jeff Sturgeon of National Comfort Institute
State-of-the-art High-Performance HVAC Testing and Diagnosis tools and training. The technology behind these tools and instruments continues to evolve. This helps trained and certified HVAC professionals test and measure HVAC systems. This ensures those systems, including ductwork, operate at peak performance and deliver the highest energy and comfort value to homeowners
Smart Air Conditioning Systems are part of what is known as “The Internet of Things.” HVAC equipment can connect to other smart appliances to allow the monitoring and control of energy use and comfort
Some manufacturers are starting to use 3D printers to create parts and supplies that are in short supply because of supply chain issues. Some HVAC manufacturers are exploring this technology and more to help alleviate shortages
Digital Payment Technology. I’m not talking about credit card swiping here. Technology from company and service management systems can enable digital invoicing and accepting payments from systems like PayPal, Apple Pay, and others
Digital Communications with your field service, installation techs, and customers increase productivity and improve customer relationship building.
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