Supply Shortages, High Prices Plague Summer Outlook For HVAC Contractors

It’s shaping up to be a long, hot summer for HVAC contractors and their customers. Disruptions in the nationwide supply chain that began during the COVID-19 pandemic still have not been resolved. Shutdowns last summer played havoc with the supply of parts, and suppliers are still playing catch up, as raw materials remain scarce.

Furthermore, prices are going up among some components and key raw materials. Waiting times for parts can run into weeks or even months.

Supply shortages of HVAC equipment

Summer weather increases the demand for HVAC equipment, especially in hotter climates. A spike in air conditioner demand is generally welcomed by most contractors, but supply shortages make it difficult to deliver on customer needs. Managing a backlog of impatient customers is a new challenge for many HVAC companies.

The shortages impact materials, such as steel, aluminum, copper and plastics, whose costs are expected to rise in coming months. Among metals, the price hikes could be 20 to 30%, while prices of plastics could almost triple. Copper futures recently reached an all-time high, and steel price indexes are also at record levels.

Shortages of electrical components

Shortages have been reported of copper and electrical components, such as motors and compressors

Shortages have been reported of copper and electrical components, such as motors and compressors, which are specific to the units that use them. There is also a shortage of microchips that are components in high-efficiency systems and furnaces, and resins used in the evaporator coil pans are scarce.

Some HVAC supply firms have had difficulty obtaining evaporator coils used in air conditioners. Specialty items such as control boards have a wait time of up to two to three weeks, or longer.

Shortages projected till end of 2021

The shortages are projected to continue until the end of 2021. Even as small shipments trickle in, they are often sold quickly. The situation is unfamiliar to the HVAC trade, which has traditionally not had issues with equipment availability.

Shortages in the HVAC market are a reflection of broader supply and cost challenges of the construction market. Prices for goods used in residential construction have increased almost 10% over the past 12 months, according to the U.S. Bureau of Labor Statistics.

Higher transportation costs impact supply chain

Higher transportation costs are impacting both the supply chain and HVAC contractors.

Personnel shortages continue to plague many HVAC companies, too, and a technician shortage is also contributing to longer wait times in some areas. A scarcity of labor has been a 20-year challenge for the HVAC industry, but it is reaching new levels as days go by.

Order in advance and stockpiling equipment

Alternatively, HVAC contractors may seek to switch brands to help ease availability issues

One approach contractors are taking to the problem is to order equipment in advance and stockpile it for when they need it. One Denver contractor reportedly ordered almost a million dollars of equipment in advance.

Alternatively, HVAC contractors may seek to switch brands to help ease availability issues. Identifying a manufacturer that has stock available can ease the inconvenience of customers having to wait for new equipment.

need for regular HVAC maintenance

Another approach is to educate homeowners about the importance of maintenance, such as changing filters, which can avoid a need for larger repairs involving equipment that is in short supply. Maintenance service is doable because it doesn’t require new equipment, replacements or add-ons that can be hard to come by.

Unfortunately, among consumers, maintenance may have been delayed or ignored during the pandemic, which is aggravating the urgency of the current situation.