Interview Synopsis

US commercial HVAC industry – Q4 2020 update

  • Multi Asset
  • Industrials
  • North America

Commercial heating, ventilation, and air conditioning (HVAC) sales aren’t likely to return to 2019 levels until Q4 2021 or beyond, due to continued uncertainty regarding the trajectory of COVID-19, according to a former VP at Comfort Systems USA Inc.

COVID-19 cools HVAC Industry sales; technology key for boosting efficiency

The HVAC industry’s operating environment, including revised H2 2020 growth expectations, was first on the Interview agenda. “Best-in-class companies were probably trying to get something in double digits or approaching double digits, and other companies were probably looking in the 5-6% growth range,” the specialist told Third Bridge Forum. However, a growth rate of approximately 3% is more realistic, they added. 

Meanwhile, the “big unknown” is the impact of remote working, which will become increasingly apparent as more building owners contend with unleased space, cancelled leases or fewer renewed leases. The expert expects remote working to increase permanently, resulting in continued headwinds for building owners. 

HVAC market trends and analysis – challenges & an ageing workforce

The Interview then looked more closely at the challenges facing the various HVAC industry growth segments, categorised as: smaller commercial retail, mid-market, heavy industrial and mission-critical. Overall, the competitive landscape is “extraordinarily fragmented” after accounting for the largest OEMs such as Trane, JCI, York and Daikin. It was also noted that “once you’ve established your reputation in those places where there’s less price sensitivity, it’s very difficult to unseat the incumbent.” Indeed, relationships and reputation, undeniably important in any industry, are particularly vital for HVAC industry players, according to the Interview. 

With the average age of a technician being 50-something, the issue of an ageing workforce was also discussed. The expert emphasised the need for companies to drive efficiencies by embracing technology, which will also entice younger generations to the HVAC industry. 

“There is technology out there today that would tremendously, if adopted properly, impact the efficiency in my operation and drive profits, but so many HVAC contractors have been reluctant,” the specialist said. Automation will “start becoming table stakes within the next 5-10 years”, although there are two big prohibitions, we heard.  

Other topics covered included cost structures, evolving system regulations, and HVAC revenue streams.

To access all the human insights in Third Bridge Forum’s US Commercial HVAC Industry – Q4 2020 Update Interview, click here to view the full transcript. 

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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