by Mike Murphy, editor-in-chief

Maintaining the edge of excellence amid all the non-traditional competition of big box companies, consolidators, utilities, and manufacturers can seem daunting at times. Ever thought that independent HVACR contracting businesses are destined for the scrap heap, similar to the TV repair shops of old?

It won’t happen because this industry is simply too diverse, too challenging, and too dependent upon entrepreneurial ingenuity for any one big entity to get it right.

Consider just the diversity of this industry. Look through the pages of this month’s issue and you’ll see articles about national account business systems, hydronics, chillers, rooftop units, commercial refrigeration, controls, and residential marketing. Can any one HVACR contractor be an expert in all of these fields? Can any one big box retailer, manufacturer, or utility company? No. The service aspect, alone, is simply too daunting a task for any one company to tackle.

However, over 50,000 HVACR contractors employing more than 600,000 people (U.S.Economic Census data), and very likely another 50,000 smaller one-man shops and moonlighters, can make a pretty big impact.

Contractors always have and always will dominate this competitive environment. The U.S. Census indicates that the dollar value of service and construction work contributed by contractors in the HVACR industry is $57.3 billion. The total swells as one adds the business from companies not reporting payroll.

Market Data

We thought it might be interesting to explore the size of a few of the
markets we were writing about this month. Following is what our research turned up.

National Accounts. Industry sources estimate the size of the national account service and equipment segment to be between $1.8 and
$3.2 billion. Landing the global Wal Mart account may seem to only be within the reach of a manufacturer service organization or a national consolidator. However, one Midwest contractor manages a peer network of nearly 500 HVAC service companies. Hmmm, how many manufacturers can compete with that?

Chillers. Recent research reveals that the chiller market in the U.S. represents nearly $4 billion in equipment and service business.

Rooftops. Rooftop business in the U.S., defined as up to 120 tons, accounts for about $8.8 billion in equipment and service opportunities.

Who’s in Control?

Service and maintenance work
generate a large portion of our industry’s economic productivity. Seventy percent of commercial HVAC business is repair and replacement, and residential is nearly the same. Guess who performs the majority of that work?

Contractors, especially those with service agreements, who form relationships with their customers will always be in the driver’s seat.

Mike Murphy,
editor-in-chief, at
mmurphy@penton.com
or call 216/931-9320.