So What Does Our 2011 Mid-Season HVAC Distributor Survey Tell Us?

Today HARDI released to the public the results and analyses of our 3rd annual joint HARDI-JP Morgan Equity Research Mid-Season HVAC Distributor Survey. While I encourage you to read the detailed report yourself which is available for download via a link in the actual release, this year's survey gives us several important insights:

1. 2011 is not going to be a major "recovery year" as many in our industry had projected



2. The residential HVAC business appears to be in the midst of some significant, long-term structural changes



3. Commercial HVAC is better than expected, but not because of long-term positive indicators like new construction, but rather repairs and minor upgrades just enough to limp through another 5 yrs or so



4. We are far from realizing the true impact "dry-shipped" R-22 residential units are going to have on the HVAC industry



5. Inflation is already hitting our industry and will be a major issue unless we can find ways to keep our products affordable to the average residential and commercial customers

There are a lot of findings in this year's survey that many in the industry aren't going to like. It's time we start facing these headwinds and begin adjusting accordingly.

February Distributor Sales Show Mild Improvement but Slower Growth

HARDI announced North American HVACR average distributor sales for February 2011 up over 7% from same month last year and maintained a string of three consecutive months of at least a 10% annual growth rate. February’s numbers showed improvement over January’s performance but continue a downward trend in annual growth rates. See the full release here.

HARDI Economist Discusses Japan Disaster Implications

HARDI Chief Economist, Alan Beaulieu of the Institute for Trend Research, issued a brief today to HARDI member companies outlining the economic implications of the terrible disaster in Japan. Beaulieu outlines how the disaster will have significant impact on some aspects of the economy, but it should not have a major impact on consumer demand in the US. HARDI members who did not receive this brief should contact services@hardinet.org. Non-member companies who would like to receive this kind of information in the future should contact membership@hardinet.org.

AHRI January 2011 Heating, Cooling Equipment Shipment Data Shows Overall Positive Trend for Central Air Conditioners And Air-Source Heat Pumps

AHRI's summary of unit shipping data from January 2011 reports decreases from January 2010 in the movement of residential gas and electric storage water heaters, commercial gas storage water heaters, and oil warm air furnaces, and increases for commercial electric storage water heaters, gas warm air furnaces, central air conditioners, and air-source heat pumps.

Overall, January 2011 shipping data is positive for central air conditioners and air-source heat pumps, especially when considering the December 2010 data, according to Andrew Duguay, HARDI economic analyst. See HARDI's complete summary and analysis here.

Distributor Growth Cools Considerably to Start 2011

HARDI announced North American HVACR average distributor sales for January 2011 affirmed the association’s concerns about a post-tax-credit-slump following the 25c tax credit cap reduction from $1,500 to $500. The January 1, 2011 cap reduction also include the imposition of a “lifetime cap” barring previous credit recipients dating back to 2006 from claiming credits for additional energy efficiency improvements performed this year. HARDI’s Monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) Report showed average growth for the month down nearly 12% from last month’s strong 17.4% average growth rate. Click here for the full release.

Strong December Sales Reaffirm Tax Credits' Impact

HARDI announced North American average HVACR distributor sales for December closed out 2010 in line with the association's forecast, but fell short of most manufacturer and analyst projections going in to the year. HARDI's monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) report showed average growth for the month of 17% over December 2009, undoubtedly driven by the impending expiration of the full $1,500 residential tax credits. Click here for the full release.

All About 2011 Forecasting

I couldn't be happier with our special January issue of HVACR Distribution Business which is entirely devoted to forecasting 2011. Forecasting features by HARDI's Chief Economist, Alan Beaulieu, JP Morgan's Stephen Tusa, Douglas Elmendorf, Director of the Congressional Budget Office, Jim Beecher of G.W. Berkheimer, and much more. Dare I say this is the finest issue the magazine has ever published so check it out now.

The NEWS Podcast on Latest Facing HVACR Distributors Now Available

Check out this podcast by The ACHR NEWS discussing issues and opportunities we see facing HARDI distributors this year. The NEWS' entire "Newsmakers" podcast series is great so be sure to check it out each week.

HARDI Expresses Concerns Over New Energy Star Furnace Specs

Just posted to HARDI's website, HARDI filed comments with U.S. Environmental Protection Agency (EPA) ENERGY STAR program on the latest draft of proposed specifications for the next generation of residential furnace's labeling program. Think regionalization and take a guess at the majority of our concerns.

Distributors' November Sales Strong, but 2011 Challenges Loom

"The latest numbers from HARDI distributors is very encouraging, however a word of caution is worthwhile given the outlook for housing, end of the [full] tax credit, and the outlook for the commercial industry," said HARDI Chief Economist, Alan Beaulieu. "Banks are beginning to lend more commercially but housing will be an ongoing lending issue. We would suggest that too much not be read into the numbers. A straight-line projection at this point could be disastrous."

See the full release here. HARDI will be releasing a down-graded forecast for Q1 2011 next week and hosting a webinar with Beaulieu on January 18 exclusively for HARDI members. Go to www.hardinet.org for more information.

MDM's 6 Trends Driving Distribution in 2010 Spot On

If you don't read MDM and are involved in wholesale distribution (or go to market through wholesale distribution) you need to start now. Their 2010 year in review is right on in my opinion and identifies the same drivers HARDI is using in our own strategic planning to provide new and greater value to our members. Next month The Wholesaler will publish our 2011 forecast for HVACR distribution which was written before we saw MDM's 2010 review, but goes into detail on several of these same trends' impact on 2011.

The Good, Bad, and Future of 25c Tax Credit Extension

It should not be minimized what a victory it was to have an extension of the 25c tax credit for residential energy efficiency improvements included in the tax bill that was signed into law last week. Just a few months ago most lawmakers knew little about 25c, and it was competing against a Rockefeller Center-sized Christmas tree of other tax provisions for inclusion in that bill. Congrats to HARDI's Manager of Government Affairs, Jon Melchi, ACCA's VP of Govt. Affairs, Charlie McCrudden, and Austin Primiano of Lennox International who tirelessly worked Washington and coordinated efforts over the last several months to secure this extension.

Unfortunately, an extension in today's political climate cost a reduction in the credit amount but I know HARDI will continue to work towards at return to the previous $1,500 credit level. As evidenced in this Columbus Dispatch article, the reduced level is causing a rush by many homeowners to get improvements and HVAC installations done before the full $1,500 credit expires next week. November and December are shaping up to be huge months for HVAC distributors and contractors, however we must look ahead to what could be a tough Q1 next year. 2011 will be about getting back to basics. A $500 credit is nice, but it won't create demand like $1,500 did so be prepared to use slow January and February to train and educate your people and put them in the best position possible for a grind-it-out 2011.

22 Building Trades Leaders Make Late Push for 25c Extension

HARDI and 21 other leading organizations representing manufacturers, distributors, contractors, small businessess, state officials, and energy efficiency interests sent a letter today to Senate leadership urging the full extension of the "25c" tax credit set to expire at the end of the month. 25c provides homeowners with access to a credit up to $1,500 for qualifying energy efficiency improvements, and has been essential to HARDI distributors' modest growth in 2010.

Currently the Senate is debating a tax bill which includes only a one-year extension after a slashing of the credit amount, and HARDI has concerns that the severely paired down extension will provide just extremely limited sales and employment benefit to the HVAC industry. We have little time left to try to get a full extension passed by the Senate. Go to www.savehvacjobs.com today to do your part to help!

Missing the Forest Through the "Dry-Shipped" Trees

Yesterday HARDI filed comments with the U.S. Dept. of Energy (DOE) on their proposed guidance for certifying newly-produced R-22 residential condensing units. DOE proposed two paths that would essentially pave the way for the installation of mis-matched condensing units, and it was this apparent reversal in decades of precedent that is the point; a point that I fear most in our industry may be missing. While the recent reintroduction of "dry-shipped" R-22 condensing units (due to the way EPA's 2010 HCFC Phaseout Regulations were written which I still consider a loophole) is the talk of the HVAC community right now, DOE's proposed certification procedures for these units is the real story. If unchanged, DOE's guidance is essentially signaling knowing consent that these condensing units will be installed with unmatched indoor coils. This is drastically different than DOE's matched system certifications for any other newly-produced split system based on the assumption that both the indoor and outdoor equipment will be installed at the same time. Instead DOE is proposing a blatant gaming of the test procedure system far detached from reality.

While our industry has invested resources to promote, support, and advocate the value of properly matched system installations, this one DOE ruling could undermine all of it with one bureacratic swoop. Either our industry is based on matched, split-system cooling or it isn't. Either our industry delivers the performance listed on hang tags or it doesn't. This isn't a refrigerant issue, this is a glimpse into our future. Either we support and defend our current matched system certification process or we abandon it because there is no way we can have it both ways for long. R-22, R-410a, or whatever the next refrigerant coursing through our split systems is isn't the point. Ensuring those split systems are properly matched and running as advertised is, which is why HARDI cannot support DOE's proposed endorsement of improper installations.

Distributor Inventories and Sales Rise Again in September

HARDI announced North American HVACR median distributor sales for the month of September 2010 were up over 10% from last year in its Monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) Report. This marks the seventh consecutive month in which overall distributor sales were up from the previous year. Running twelve month sales were up for the second consecutive month. Seven of HARDI’s U.S. regions outperformed the same month last year, and five regions experienced double digit growth compared to last September. Canada continued its strong run and maintains the highest running twelve growth among all HARDI regions. Click here for the complete release.

2010 Annual Conference: Distributors Stepping Up

Last year's HARDI Annual Fall Conference was dominated by the AHRI-ACEEE regional standards consensus agreement. This year's Conference was hijacked by "dry-shipped" R-22 residential condensing units. Many in-depth discussions were had and it became obvious how important HARDI's position and role in this issue will be to determining how long this practice might continue.

Attendance mirrored our industry's performance this year by far exceeding 2009, but falling just short of 2008. With 1,100 of the the HVACR industry's finest, this conference also featured the most participation by equipment manufacturers to date with Nordyne, Rheem, Trane, Goodman, Mitsubishi, Daikin, Sanyo, LG, and even more. Allied Air was especially recognized for a whopping 50 years of participation in our Conference Booth Program.

HARDI's Board of Directors added over 50 new wholesale distributor members, with many being part of a new strategic partnership with Johnstone Supply. Mingledorff's Inc. won this year's NATE testing award for providing the most NATE tests as an organization, and helping HARDI's distributor membership maintain its standing as the #1 provider of NATE testing.

Just about every Committee and Council meeting and session was packed or over capacity as distributors attempt to grow their competitive advantages by being the most informed and most efficient. Check out #hardiconf on Twitter for play-by-play from Houston.

Thank you to our special guests and presenters from AHRI, ACCA, NATE, HRAI, Consortium for Energy Efficiency, US EPA ENERGY STAR, Food Marketing Institute, Alliance for Responsible Atmospheric Policy, and JP Morgan Equity Research. And as always HARDI's economists from the Institute for Trend Research were outstanding.

Rheem Manufacturing Looks to HARDI to Sharpen Forecasts

Supplier Member, Rheem Manufacturing in Fort Smith, Arkansas, hosted HARDI’s Talbot Gee to discuss ways HARDI’s Targeted and Regional Economic News for Distributor Strategies (TRENDS) program and Chief Economist, Alan Beaulieu, and the major HVAC and water heating manufacturer could work more closely together to build better market forecasts and channel efficiency. HARDI and Rheem also discussed changing channel and market dynamics as well as the impact of current and future policy issues on the HVACR industry.

Pictured left to right: Talbot Gee, HARDI, Ken Rothgeb and Bill Hanesworth, Rheem

Distributor Inventories and Sales Rise in August

Columbus, OH- Heating, Airconditioning and Refrigeration Distributors International (HARDI) announced North American HVACR median distributor sales for the month of August 2010 were up over 15% from last year in its Monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) Report. This marks the sixth consecutive month in which overall distributor sales were up from the previous year. For the first time this year the running twelve month sales were in the black, albeit slightly. Seven of HARDI’s U.S. regions outperformed the same month last year, and two regions’ August growth exceeded 20%. Canada continued its strong run and maintains the highest running twelve growth among all HARDI regions. See the complete release here.

HARDI Introduces New Manager of Government Affairs

HARDI announced yesterday the addition of Jonathan Melchi to the HARDI staff as the association’s Manager of Government Affairs. Melchi will augment and grow HARDI’s government affairs activities that began just four years ago with the sole objective of representing, promoting, and advancing the interests and concerns of HARDI’s more than 400 HVACR wholesale distributor member companies. Melchi joins HARDI during a time of unprecedented uncertainty regarding energy efficiency, environmental, tax, labor, and small business policy. First and foremost Jonathan will focus on securing an extension of the $1,500 residential tax credit for high efficiency HVAC retrofits. See the complete release here.

HARDI Launches Industry, Nation Wide Effort to Extend HVAC Tax Credits

HARDI launched today a new website, http://www.savehvacjobs.com/. The new site is for the entire HVAC industry to use to promote and facilitate an nation-wide grassroots movement to extend the expiring 25c, $1,500 residential tax credits for the installation of high efficiency HVAC systems. From this new website, HVAC contractors, distributors, manufacturers, manufacturer representatives, and service providers can quickly and easily personalize a pre-drafted letter or compose their own letter to their federal legislators urging the immediate extension of these important tax credits before they expire at the end of 2010.

HVAC businesses can also send their company name or logo to join@savehvacjobs.com to show their support for 25c extension. “Our goal is to have a page with so many HVAC company names and logos on it that the page appears to scroll forever,” said HARDI’s Executive Vice President & COO, Donald Frendberg. “The idea started with Riley Sales, a distributor member outside Philadelphia, PA, who had created an online petition for their employees and contractor customers to sign and send to their representatives calling for a tax credit extension. It was such a fantastic idea that we asked if we should do something similar on a national level.”

HARDI is encouraging all of its over 400 U.S. distributor member companies to show their support on the site and more importantly to urge all of their thousands contractor customers to use the site several times a week until their representatives get these tax credits extended. “We know from many testimonials which we’ll start to post on this new website soon that many HVAC distributor jobs were in fact saved or created by the sales boost this tax credit provided,” stated HARDI Vice President, Talbot Gee. “We can only imagine the positive employment impact the tax credits have had on the tens of thousands of professional contractors out there, and of course the manufacturers of the qualifying equipment. We hope this provides the industry with a central portal for companies of all types to come together and speak as one massive and loud unified voice until we get these tax credits extended.”

HARDI has repeatedly expressed serious concerns of a regression in 2011 of the modest recovery experienced so far in 2010 if the $1,500 tax credits are not extended before they expire this December. “New units still aren’t flying off the shelf like we hoped despite the heat and the tax credits this year, but the mix of high-efficiency units being installed is keeping a lot of HVAC businesses going these days,” said Gee. “I don’t want to think about a 2011 without the benefit of these tax credits so we’re urging every HVAC business to do everything they can in the next three months to help us get these tax credits extended.”