Residential HVAC Remains Resilient to COVID-19: Nears Pre-Pandemic Growth

Download PDF version

A global pandemic is a scenario that few big corporations have plans for, let alone small businesses. The emergence of COVID-19 has affected nearly every industry worldwide. All businesses have been forced to pivot, adapt, and at times, completely reinvent their operations to survive. Looking at data from tens of thousands of Home Service professionals, Jobber’s Home Service Economic Report: Spring Edition sheds light into how segments such as Contracting, which includes the HVAC industry, have proven resilient in the face of hardship.

Reflecting on trends observed over the past six months, the data reveals that Contracting and the Home Service category as a whole are on a strong path to recovery, and rebounding to pre-pandemic growth levels. To understand where we are heading, let’s explore some key findings in more detail to help HVAC businesses make better informed decisions.

Marginal Economic Dip Amid Peak COVID-19 Months

With very few exceptions, almost every Home Service industry felt the economic impact of COVID-19; some more severely than others.Data reveals that the Home Service category was far less impacted by the pandemic compared to other categories April was the hardest hit month according to nearly all indicators across all categories. Timed with widespread stay-at-home orders and a significant drop in consumer demand, median revenue for Home Service businesses decreased by 15% year-over-year.

Despite these challenges, data reveals that the Home Service category was far less impacted by the pandemic compared to other categories such as Clothing Stores, which saw a year-over-year revenue decline of 87%, and Restaurants, which saw a revenue decline of 53%. While the Contracting segment, which includes industries such as construction, electrical, and plumbing, in addition to HVAC, did see a 15% decline in April revenue; it remained relatively stable compared to others, proving to be resilient to economic downturns even during a historic crisis.

New Work Scheduled Reaches a High Point

The stable and meaningful nature of Home Service work helped maintain and provide jobs to millions of Americans throughout this time, all while delivering comfort and safety to their communities. New work scheduled for Home Service businesses reached a record high in JuneWhile unemployment shot to a record high of 14.7% in April (largely due to the pandemic), the Home Service category was relatively less impacted, and recovered much quicker than others. Several industries within this category, including HVAC, were designated as essential throughout the country, allowing many of these businesses to continue operating even as others were forced to close.

In June, new work scheduled for Home Service businesses reached a record high for the year with an increase of 15% year-over-year. The Contracting segment, which was seeing new work growth of around 2% year-over-year before the pandemic hit, actually hit a record high of 14% growth in June. As new work scheduled continues to look optimistic, Contracting enters Q3 with a positive start.

Rebuilding Revenues to Pre-Pandemic Growth

Prior to the pandemic, the Contracting segment was seeing industry-average revenue growth. However, the steep decline in new work being scheduled when the stay-at-home There has also been more disposable income available to many that have started working from homeorders came into effect impacted revenues and caused a decline of roughly 25% below expectations. This quickly changed as homeowners spent more time at home than ever, making them more inclined to take money set aside for travel and invest in home projects they’ve been putting off. There has also been more disposable income available to many that have started working from home, and are spending less money than usual due to lesser commuting to work and lesser dining out, if at all.

In just two months, the Contracting segment saw a turnaround in revenue, from -15% year-of-year growth in April and May to 10% in June. With the upswing momentum of new work scheduled in this segment, Contacting is well-positioned to see continued revenue growth entering Q3. It’s impressive to see contracting businesses overall return to pre-COVID levels so quickly.

The first half of 2020 has really shown the resilience and resourcefulness of small businesses in the Home Service category. Although many businesses have suffered tragic losses, others have survived this crisis quite well, and have started getting back to their pre-lockdown performance levels. Although we have not yet seen the full impact that the COVID-19 pandemic will have on small businesses, there is hope for HVAC entrepreneurs that industry growth will continue to increase during the third quarter and beyond.

Download PDF version Download PDF version

Author profile

Abheek Dhawan VP of Business Operations, Jobber

Abheek Dhawan is currently the VP of Business Operations at Jobber. Previously he started and led the business operations department at Shopify Plus, and held a variety of other analytical roles in industries such as real estate, financial services, and energy. Abheek is an alumnus of the University of Waterloo and Wilfrid Laurier University, where he studied math and business, respectively.

Related companies
Jobber

View all news from
Jobber

Related links
Articles by Abheek Dhawan

In case you missed it

Data-Driven Digital Solutions To Optimize Energy Efficiency In Buildings

Over the last decades heating, ventilation, and air-conditioning systems became significantly more energy efficient. This is immensely important as they are one of the largest energy-consuming loads in commercial and residential buildings. Smooth performance of the systems requires careful installation, thorough cleaning, and regular maintenance. Running an HVAC system (energy) efficiently is challenging because of constantly changing variables: people entering and leaving a building, changing temperatures and seasons which affect the heating, cooling, and air quality immensely. Research by the European Commission found that buildings are responsible for 40% of all European energy consumption. Emission reduction goals This has a significant environmental impact and will become more expensive over the next centuries while countries work on their net-zero and emission reduction goals. How can the HVAC industry, in cooperation with the green tech sector, ensure less energy consumption and fewer CO2 emissions? Are any other energy-saving options available? Energy-focused digital twins can be used for the planning, operation, and optimization of systems Following, three data-driven solutions for more energy efficiency in buildings are presented. To understand and operate a technical system it is necessary to have a precise understanding of the system’s parameters and boundaries. HVAC systems are installed in buildings. Buildings, although varying in size, purpose, and layout, can be described by a set of parameters called a digital twin. Energy-focused digital twins can be used for the planning, operation, and optimization of systems. Machine learning algorithms In HVAC applications, a digital twin can be used to design and operate equipment more precisely. It helps to detect defects quicker or even before a failure appears. This saves maintenance costs and reduces potential downtimes. The biggest potential of energy-focused digital twins might be the possibility to use those data sets to train machine learning algorithms. This allows the use of artificial intelligence to optimize HVAC systems. It can raise the energy efficiency of these systems and significantly reduce costs and CO2 emissions. Machine learning offers the HVAC industry immense possibilities. Tracking energy usage on building and room level generates a valuable data set that can be used to operate HVAC systems more energy efficient. Tracking room utilization AI can also consider the exact number of people present in the building when regulating the temperature One example of the use of AI to achieve more energy efficiency is temperature control in buildings. No matter what time of day or night, nor outside temperature or season, the AI algorithm can optimize the temperature in the building according to those variables. AI can also consider the exact number of people present in the building when regulating the temperature. This is important as the number of people and their body heat change the room temperature significantly. The system reacts to all variables by heating more or cooling down further. While it is possible to count people while entering and leaving a building, it is also possible to track their room utilization. The algorithm can not only notice the changing temperatures in rooms caused by body heat. Overall energy consumption It is also able to track where the lights are turned on and off and at what times. Possible reoccurring patterns in those actions can be identified by the algorithm. All this information can be considered when adapting building and room temperature. Tracking people’s actions gives AI detailed information to incorporate into the optimization processes to achieve more energy efficiency. In the same manner, air quality and humidity can be optimized. Especially in commercial buildings, the ventilation is often running too high Especially in commercial buildings, the ventilation is often running too high. Over ventilation is a large waste of energy. If fewer people are in the building it should be lowered to reduce the overall energy consumption. Especially in a work environment, both temperature and ventilation are of high importance, as it has a direct impact on the productivity of most people. Smart control system A smart control system will process all available data on the energy usage in a building and adjust the HVAC system accordingly, in real-time. The more information it can gather for a longer period, the better the system becomes. This saves energy, emits less CO2 and reduces costs. A manual adjustment will never be as efficient, as the number of variables is too large. Additionally, AI can identify any irregularities occurring in the HVAC system and alert the responsible person. Predictive maintenance ensures less downtime. Voltage optimization based on a building’s energy consumption data is a solution that can also enhance energy efficiency in buildings. It can be applied to reduce costs, electrical energy consumption and CO2 emissions. Optimizing the voltage level in real-time means reducing it to a lower level, based on the consumption of the building. Highest savings level The CE certification shows that fluctuations of voltage can be tolerated by a device Electrical energy is supplied to buildings by grid operators. They are supposed to supply 230 V. However, a constant voltage level cannot be guaranteed. The voltage fluctuates. Therefore, all electronic devices must be able to work within those fluctuations. They allow a range of plus and minus 10%, which is compulsory by law. The CE certification shows that fluctuations of voltage can be tolerated by a device. 10% of 230 V allows the reduction of the voltage level to a minimum level of 207 V. At this level, all devices in buildings are guaranteed to run smoothly. Every volt above 207 V can thus be considered more than necessary for the devices to work properly. This means, that at the highest savings level, all devices still work within their specifications. Lower electricity costs But with a lower voltage, the energy consumption is lower. Consuming less energy results in a reduced carbon footprint and lower electricity costs. The advancement of technology and availability of higher resolution data already allows building managers to look at optimizing HVAC systems for better energy efficiency, especially in newer buildings where those systems are installed right away. Consuming less energy results in a reduced carbon footprint and lower electricity costs This provides less energy consumption and less CO2 emissions. As buildings and their HVAC systems are consuming large amounts of energy which emits tons of CO2 every year, enhancing the energy efficiency in buildings becomes crucial on the way to net-zero. Energy-Saving solutions HVAC systems must work with the highest energy efficiency possible, considering that the weather extremes we are experiencing all over the world (colder winters and hotter summers) will increase the demand for them, if not make them indispensable. But these solutions are not only available for new buildings. Existing buildings can also be retrofit by their owners and operators to take advantage of the emerging data-driven trends in the green tech industry. Energy-saving solutions like voltage optimization can significantly reduce buildings’ carbon footprints. Combing several different data-driven energy-saving solutions will reduce the carbon emissions in the building sector significantly.

The Role Of Next Generation Refrigerants In Economic And Environmental Recoveries

A landmark UN scientific study has once again highlighted the short window available to prevent irreversible climate change. Businesses are coming under pressure to dramatically accelerate their net-zero carbon initiatives. This comes at a time where market dynamism is returning across a range of key sectors following a downturn triggered by the pandemic. Businesses are also being pressured by stakeholders to recover revenues lost during the pandemic and to start rebuilding commercial activity. Typical supermarket products With refrigeration sitting at the heart of some of the biggest industries across the globe, including food commerce, healthcare, manufacturing and technology, decisions on refrigerant technology tap into the heart of the debate around environmental credibility, consumer expectations and economic recovery. So how can businesses balance the need to adopt more environmentally-preferable refrigerants with the urgent need to boost revenues? The technology factors into many of the most important facets of modern society Often when you think of refrigeration, you instantly think of cold storage and supermarket refrigeration. Without refrigerants, we wouldn’t be able to extend the life of many typical supermarket products or have the convenience of home storage. However, that isn’t the only role refrigeration play in our daily lives. In fact, the technology factors into many of the most important facets of modern society. The healthcare sectors, for example, would struggle to reduce the spread of infection without the use of modern air-conditioning, while the pharmaceutical industry requires refrigeration to store life-saving medications. Preserving human life On top of this, the digital revolution would not be possible. Without coolants, the data centers run by companies such as Amazon, Facebook and Google would overheat, resulting in system failures and service outages. And finally, with temperatures rising across the planet because of global warming, and heatwave events becoming more common, refrigeration is increasingly important to preserving human life. Without refrigerants, recent extreme weather events would have been even more devastating. However, although refrigeration has been a solution for many human challenges, finding a refrigerant that is both safe and environmentally preferable is a challenge. In fact, before recent breakthroughs, many of the chemicals used as refrigerants, such as ammonia, sulphur dioxide, carbon dioxide and methyl chloride, were poisonous, corrosive and even explosive. Non-Flammable alternative CFCs were found to be extremely harmful to the ozone layer and were therefore phased out In the 1930s, a compound called chlorofluorocarbons (CFCs) was commercially introduced as a non-toxic, non-flammable alternative to established refrigerants and was in widespread use for a variety of applications by the mid-20th Century. However, CFCs were found to be extremely harmful to the ozone layer and were therefore phased out in favor of hydrofluorocarbons (HFCs). The story wouldn’t end there, however, as HFCs were found to be potent greenhouse gases with high global warming potential (GWP). EU regulators therefore demanded their phase-out from 2016. By 2024, HFCs must be phased out so industries have been scrambling to find alternative low-global-warming-potential solutions. Unique chemical bonds The answer came in the form of hydrofluoroolefins (HFOs), developed by renowned chemist, Rajiv Singh. HFOs are known for their unique chemical bonds, which allow them to break down in just a few days, so they don’t linger in the atmosphere if released and therefore don’t meaningfully contribute to global warming. Since launching its Solstice line of HFO refrigerants in 2012, Honeywell has averted the production of more than 200 million metric tons of greenhouse gases, equivalent to emissions from more than 42 million cars, more than all passenger cars in Germany. Honeywell has averted the production of more than 200 million metric tons of greenhouse gases The automotive industry was one of the first sectors to recognize the strengths of HFOs. During the past 10 years, nearly 75 million cars made in Europe have been fitted with HFO-based air conditioning systems. Supermarkets have also been reaping the benefits; more than 30,000 grocery stores currently use Honeywell’s non-flammable HFO refrigerant, Solstice N40, reducing their energy consumption by 10% and their global warming potential by a factor of three. Residential heat-Pumps HFOs are on the brink of being adopted for domestic use as well. New Honeywell HFO solutions are ideal for residential heat-pumps which enable the elimination of fossil fuel burning in our homes, for heating and for hot water generation. HFOs superior performance deliver ‘best-in-class’ energy efficiency, hence enabling heat pumps to generate more renewable energy from the waste heat vs. alternative solutions. As enablers for energy efficient solutions and systems, HFOs also offer unique opportunities for future developments such as domestic air conditioning, cooling of electronic vehicle batteries and the fast growth of data center cooling. The ‘Green Deal’ is EU flag ship regulation on climate and economy recovery. Overall, buildings are responsible for about 40% of the EU’s total energy consumption, and for 36% of its greenhouse gas emissions from energy. Greenhouse gas emissions These new regulations and the corporation sustainability goals create a range of new opportunities To make it specific, heating and cooling, in the EU is responsible for 80% of energy consumed in residential buildings. Rapid adoption of Heat pumps and improved energy efficient solutions; are key contributors for Europe to reach the ‘Green Deal’ goal of being carbon neutral by 2050 and the recently adopted accelerated ‘fit for 55’ goal to reduce net greenhouse gas emissions by at least 55% by 2030. Adopting Low Global warning refrigerant, safe & energy efficient cooling solutions and replacing fossil fuel burners with heat pump systems to generate heat; are also key contributors to corporations’ sustainability goals (ESG). These new regulations and the corporation sustainability goals create a range of new opportunities for HFO solutions. As the popularity of HFOs grows, they’ll have a major role in mitigating climate change and enabling a carbon neutral economy. Pharmaceutical supply chains Happily, what’s good for the environment is also good for the economy. HFO production is already creating thousands of long-lasting jobs. The global pandemic stopped many people from enjoying a range of everyday pleasures such as visits to sporting events, restaurants and cinemas; activities at venues that are often reliant on some form of air conditioning and refrigeration, a sharp reminder of the role played by modern refrigerants. The technology continues to develop and evolve ensuring that a range of activities can continue to happen. From protecting the food and pharmaceutical supply chains to ensuring the continued operation of modern communication technology, next generation refrigerants will support some of the most important parts of the modern economy and a better environment.

Here's How HVAC Contractors Can Navigate Shortages

The ongoing shortage of HVAC equipment and tools has created a significant challenge for contractors around the country. At the same time, companies are also up against intense environmental conditions, like the extreme winter weather that impacted much of Texas in early 2021. The right strategies can help HVAC businesses navigate this shortage and make the most of the equipment they can order. Due to the lingering effects of the COVID-19 pandemic, raw material and component shortages have disrupted several critical links in the HVAC manufacturing supply chain. Various raw materials The most significant have been shortages of various raw materials, including aluminum, copper and plastic, and a notable lack of semiconductors. The semiconductor shortage has had a particularly broad impact on industries of all types. Right now, any industry that uses power electronics — from automakers to graphic cards manufacturers — is struggling to source enough chips to meet demand. The semiconductor shortage has had a particularly broad impact on industries of all types Many economists and industry observers are unwilling to make predictions about when the shortage will end. However, some have estimated that it could be as late as 2023 before semiconductor production returns to normal. Industries that produce raw materials needed for essential HVAC equipment may face similar recovery timelines. Salvaging working parts Consumer confidence is growing, and demand is returning to more normal levels as the pandemic begins to end. These market conditions could mean a quicker return to business as usual for these essential industries — but HVAC professionals should probably prepare for shortages that last well beyond 2021. There are a few strategies individual companies and contractors can use to outmaneuver these shortages. Temporary replacement components Loaner A/C units and temporary replacement components can bridge the gap when repairs are necessary Offer loaners and temporary repairs - Loaner A/C units and temporary replacement components can bridge the gap when repairs are necessary but customers aren’t interested in waiting for a new part. You may be able to offer loaner components or window units that can help keep customers cool. Salvaging working parts from systems your business replaces can give you a stockpile of functional, used items you can use for temporary repairs. These fixes will not last as long as a new part or complete HVAC system replacement. Still, they can provide a valuable stopgap when options are limited or customers aren't interested in more extensive work. Preparing reverse logistics Communicate with suppliers - Some manufacturers reduced component stockpiles to a minimum before the pandemic and have few spare components as a result. Others continued to buy items and may have parts on hand for contractors who need replacement components immediately. Communicating with your suppliers will let you know if rush orders are a possibility. In some cases, you may not have to worry about long lead times for every part, but only for specific components or products. Communication will also help you better prepare your reverse logistics Many HVAC businesses are also building stockpiles of their own, ordering parts and components well in advance to cover anticipated needs. Knowing which components or products are likely to require long lead times will help you inform your customers and get ready for repairs more effectively. Communication will also help you better prepare your reverse logistics — the processes you use to return unneeded or unwanted parts to suppliers. Good working practices Prioritize safe and sustainable work - Now is the time to make safety even more of a priority than usual. HVAC businesses can struggle in good times if a key employee is injured on the job. Independent contractors likely can’t afford the missed work that an injury may mean. The correct PPE and good working practices will help keep workers safe and encourage them to stay, making it easier for companies to avoid the HVAC skills gap. Safety will be especially important on hazardous job sites, like active construction or demolition areas. Following safety best practices for those locations will help keep you and your team safe. Cleaning condenser coils Teaching people how to safely clean their AC unit could provide similar benefits Let customers know how they can help - Communication with regular customers can also be key. It’s not unusual for someone to wait until their air conditioner has stopped working to schedule maintenance. As a result, issues with HVAC system components will typically not be noticed until they have failed or started to cause problems. It also means customers will miss out on maintenance that could reduce the strain on an HVAC system — like changing filters and cleaning condenser coils. Teaching people how to safely clean their AC unit could provide similar benefits. Encouraging regular maintenance and offering deals on services can keep their systems running for as long as possible without repairing or replacing components. Proactively informing customers about the long lead times needed for new or replacement parts may help you communicate why this upkeep is so important right now. Navigating the shortage Enable customers to upgrade their repairs - Other strategies that encourage customers to invest in replacements rather than repairs can help offset the higher costs of HVAC equipment. Second chance offers and similar deals allow customers to credit the cost of a repair against a replacement unit. These offers mean that even if customers choose to repair rather than replace a system, they can change their minds without losing the money spent on the initial fix. HVAC contractors should be willing to pass along these increases to customers Be willing to shift - Prices for HVAC equipment are likely to remain high during the shortage, and business costs will be higher as a result. HVAC contractors should be willing to pass along these increases to customers. Building in higher expenses for components and essential resources to your pricing will help you navigate the shortage. HVAC equipment shortage Anticipate related equipment and parts shortages - Your business should also be preparing for related problems — like the ongoing shortages of vinyl car wraps or replacement auto parts. Fleet vehicles that need repairs may be out for days or weeks at a time. Maximizing the lifespan of all business equipment with preventive maintenance will help keep the business running in the long term. The HVAC equipment shortage is likely to last well into the future — potentially as late as 2023. Businesses and contractors should prepare for rising costs and long lead times for new components and systems. To adapt to these new market conditions, companies may want to readjust their pricing schedules and change how they communicate with customers and suppliers. Proactive communication that prioritizes transparency will help businesses make the most of supplier relationships and let clients know what they should expect.