What Has Been the Impact of the Coronavirus Pandemic on the HVAC Market?
3 Jul 2020
Welcome to our Expert Panel Roundtable, a new feature of HVACInformed.com. We will be asking timely questions about the HVAC market and seeking out experts in the field to provide responses. Our goal is to promote a useful exchange of information on a variety of topics and to create a forum for discussion of important issues facing the industry. Launching this new feature in the middle of a global pandemic made choosing our first question quite easy. We asked our Expert Panel Roundtable: What has been the impact of the coronavirus pandemic on the HVAC market?
The coronavirus pandemic has had a significant impact on the HVAC market. Heating and air conditioning systems, and all those companies supplying components or services, are essential to personal comfort at a time when more people are at home. Even more essential, HVAC technology provides the cooling and air filtration necessary in life-sustaining hubs like hospitals and medical laboratories. Outbreaks and quarantines disrupted supply chains and forced us to think differently about how to use our global supply network to support business continuity. The virus also challenged us to change operational procedures in order to protect our employees and plants. It required a steady balance of complying with new and varying regulations and safety procedures, while continuing to serve our customers and critical infrastructure. COVID-19 has tested almost every facet of our business, but is helping us build stronger relationships with customers, channel partners, governing bodies and industry associations.
April was the hardest hit business month for our industry. According to HARDI, their average distributor experienced a sales decline of 19% during April 2020 versus April 2019. Sales are definitely coming back in the month of June, but we still will see a single digit decrease versus June of 2019: The unemployment rate will have an impact on spending by consumers. Unemployment rate in the West, Northeast, Ohio and Indiana regions was still very high when looking at the last figures posted by HARDI. This pandemic forced our customers and Panasonic to be creative. We were able to concentrate on webinar training and phone calls to stay in front of the customer while many contractors were successful with virtual sales calls. Any visual needs could be provided virtually. It seems the more creativity a company had, the more successful it was – something that rings true always.
When the pandemic broke out in the U.S., our company, like many HVAC businesses, experienced demand fluctuations. Contractors were either not allowed to or were reluctant to enter people’s homes for sales and installation purposes, resulting in decreased demand and, ultimately, decreased sales. The impact was then felt at the supply chain level, with both upstream and downstream effects. With full warehouses due to decreased sales, we had to re-forecast supply needs at the factory level. Naturally, this had a trickle effect throughout the supply chain, impacting the contractor, distribution, warehousing, and manufacturing tiers. In response, we had to pivot quickly to calculate demand more accurately and to keep distributors informed of potential supply issues. We are proud to say that, to date, there have been few product outages and the supply chain is now operating at pre-COVID capacity. Social distancing restrictions also changed the way we offer training.
During extraordinary times, it has been encouraging to see a renewed focus on something the HVAC industry has been delivering for years – comfort. There is a heightened emphasis on creating healthier, more comfortable, functional living environments. For our customers, this means making their homes work smarter and more efficiently – and that presents a great opportunity for our industry. We are encouraged by discussions about economic recovery and optimism about HVAC innovations to address a variety of needs – from duct-free systems that give zoned control to the individual to heat or cool their space, to larger VRF systems that can power an entire home or business more efficiently. As we look toward the COVID-19 rebound, I think all of us in this great industry can recognize the importance of our work and take pride in the positive impact our products and services have on helping American consumers and businesses.
A couple of decades back the realisation that insufficient fresh air rates and inadequately cleaned ventilation ducts led to “sick building syndrome” resulted in legislation and new regimes for HVAC maintenance, including greater implementation of inspections and cleaning solutions. Now the COVID crisis is creating a strong demand for further improvements of air quality in indoor spaces, especially regarding the filtration of recycled air to reduce the risk of cross-infection. For good air quality to be maintained it needs to be monitored and appropriately controlled, which will require the retrofitting of air quality sensors that measure CO2 and particulate concentrations and suitable software able to report issues and automatically adjust fan speeds and window opening. The device integration features offered by IoT software enable air-quality monitoring to be added to the existing HVAC controls; “closing the loop” to ensure improved ventilation is achieved by accurate control of the HVAC system.
In the face of adversity, we have been reminded that we have some very dedicated, flexible and capable staff working within the industry, which is increasingly recognizing the need for cleanliness of our cooling and ventilation systems at this testing time. Unfortunately, many clients have been forced to close buildings or restrict access, which has resulted in job losses within the industry. For our company, project work came to an immediate stop when lockdown hit. However, we are expecting a significant surge in orders now that the restrictions are being lifted; but in the short term, workforces must diversify from traditional project management skills to maintenance and repair. As clients spend less on maintenance activities (due to low revenue) a multi-skilled workforce will be in demand to drive costs down. With the economy shrinking and the expectation of a recession, there will undoubtedly be more significant impacts on us all.
We have been lucky that we have seen a limited amount of disruption to our current commercial projects, the vast majority of which are in Central London. Construction is ongoing on all of those projects now, and we are not expecting delays to be too severe. One impact that we may see in the commercial office building sector is a move away from large, open-plan offices, and so flexible HVAC systems which can be easily and cheaply reconfigured are going to be a real asset. There has also been a lot of talk about the effect of HVAC systems in spreading COVID-19 and other infections, and we expect this to remain a hot topic moving forwards. Top-class sanitizing filtration is going to be a necessity. Our underfloor air conditioning systems are well placed to enable optimal air filtration. Underfloor systems allow for air filters to be easily changed and maintained.
We have seen examples of poor ventilation systems contributing to the spread of COVID-19 in offices, restaurants and other commercial premises. But whether person-to-person, airborne or faecal-oral transmissions, there are many changes that can be made in terms of HVAC to mitigate the spread of the virus going forward. Transmission by touch is the most prevalent risk, and smart technology is going to play a key role in reducing touch points. Smart elements include facial recognition technology for building access, the elimination of pressing lift buttons in favour of a destination hall call and touchless flushes in WCs. Increasing ventilation reduces the risk of spreading and while natural ventilation may find favour in some quarters, I think a mixed mode will become more commonplace, even replacing the familiar sealed building model. Ventilation systems will inevitably have to run more frequently in order to bring in abundant fresh air.
The coronavirus pandemic has changed drastically how HVAC companies conduct their businesses – at least in the near term. However, the crisis has also created new opportunities to deploy HVAC technologies and new approaches to help diminish the disease. In the short term, the pandemic has created a brutal economic downturn, which has been felt at every level of our industry. Hopefully, that downturn will be followed by a recovering economy that includes a renewed appetite for the products and technologies our industry sells.