Karl Pomeroy, President and GM, Motili.
After a year and a half of a global pandemic, some aspects of society seem to be slowly returning to normal. But even when things do return to a total sense of normalcy, the “normal” we knew in 2019 won’t be normal that’s here today or ahead of us. We’ve collectively been through a global sense of upheaval. How could circumstances not have changed after all we’ve been through as a nation, as business owners, and as individuals?
One of the effects of pandemic-related work stoppages is an altered supply chain. In March 2020, most businesses were upended in one way or another. Some stopped producing products while others sent their employees to work from home. Because of these changes, we’ve begun to see supplier constraints emerge along with escalating commodity expenses. Maybe these changes haven’t been highly disruptive yet, but for the average HVAC business owner, we’re starting to see changes in the availability of materials, and these supply chain issues could be with us for a while.
We’ve become accustomed to doing business with a typical scenario: “Something’s broken, so call a contractor or supply house to get the part and then repair or replace it within a day or two.” Typically, needs were identified and met on a fairly quick timetable. Businesses were able to find materials and labor as they were needed. The pandemic changed that.
How is Covid-19 impacting the HVAC industry?
Even as the US economy has rebounded out of the recession stronger than many anticipated, the country is now in the midst of a significant labor shortage. It’s not just manufacturing. It’s across the board in retail and the service sector too. The rebound effect from a year of a pandemic is that our workforce is in various stages of returning back to work. Many available jobs have yet to be filled and that’s having a direct impact on manufacturing and service.
The current reduced size of the workforce has had a cascading effect through the HVAC channel. It affects manufacturing, but it also affects every supplier that’s awaiting units. And as they wait, so do their customers who are unsure about the timing of the installation of those new units. The delay is felt through every part of the process.
An additional factor impacting supply chains and services is the escalating commodities market and the inflationary impact of doing business. Lack of supply means shipping delays. In order to make up the time, prices go up, and budgets need to be adjusted. Commodities that may have once been easily obtained from a known supplier likely now cost significantly more than they did a year ago. Or they may be available with longer wait times, causing procurement delays that ultimately impact customers.
As long as the economy remains on an upward trajectory, it’s likely that constraints in the supply chain will continue. This is because so many factors are all in flux simultaneously: Manufacturing, shipping, procurement, and installations and service are all far behind schedule and trying to catch up. As long as the demand is there, the ability to align products and schedules with customer needs will be impacted.
Businesses that are proactive have a better opportunity of getting their hands on products. And due to the inflationary nature of today’s marketplace, while they may be paying more, I predict that prices will continue to increase since we can’t keep up with the pace of need.
Action now means fewer headaches down the road.
Here are some ways a property owner and operator can get ahead of challenges and issues with HVAC management:
• Work through an HVAC asset tagging project at one, some or all properties to take stock of the age, condition and efficiency of each unit. This will help property owners and operators gain a bird’s-eye view and enable them to plan ahead.
• With a plan in hand, establish a multiyear preventative maintenance and replacement program to shorten service-level agreements (SLAs), reduce costs due to labor and equipment availability and optimize maintenance budgets.
• For multifamily properties, conduct preventative HVAC maintenance and replacement in off-peak HVAC seasons. A case study by my company found that this can lead to improvements of 20% or more in resident satisfaction during peak seasons.
The future isn’t all gloom and doom. The best way to mitigate the pitfalls in this new way of doing business is to be prepared. It’s one of the golden rules in HVAC; evaluate systems and plan for repairs and replacement. It’s more important than ever. Planning and scheduling lead times for projects will help create a sense of control over the evolving marketplace. Proactive is the new reactive, and with forethought and some planning, HVAC repairs and replacement can happen on a schedule — even with the demand of today’s marketplace.