Industrial Distribution 9 Months Into Covid

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Around every three months or so I am trying to put up a post on how it is going in the always exciting world of industrial distribution. I own a HVAC distributor, which is a subset of industrial distribution.

Not too much has really changed as far as my job goes over the past three months, with a few notable exceptions.

The really big bugaboo is finished goods. Things like furnaces, condensing units, evaporator coils, etc. are still difficult to get and are being rationed. All of the favors are being called in, and it is all hardball, all the time. Very stressful. I have incurred freight costs like never before sourcing equipment from regions of the country that perhaps over ordered, or don’t need particular products. But it is job number one to keep my contractors busy and making money. Their success is our success. I have never worked so hard and so many hours – I am really, really tired. Basically all I do all day is go over my inventory reports and try to fill holes. Then in the evening or on weekends I do my “regular work”.

Parts and pieces are, remarkably, a much different story. There has never been any sort of real disruption in parts. I expected things in this area to go south rather quickly, as many components and parts are made “over there”, but it really never happened. Sure, there is an issue here and there, but nothing to really talk about.

I expected AR to be a complete and total mess but that never really happened either – yet. I don’t know if companies are using PPP money to pay their bills, or maybe we just have a more resilient industry than most but AR is really in damned good shape.

Covid in our company – we got our first positive a month or so ago and have had a few since and several spouses who were positive. All cases were asymptomatic or had mild symptoms. At first it was a huge deal, now we all know the procedure and just do it. We are doing everything we can at our facilities to stop the spread such as installing bipolar ionizers, staggering shifts and reducing hours, disinfecting common areas, along with mask wearing and distancing (and a number of other things). We are pretty proud that all of our cases were able to be tracked to events outside of our workplace thus far. But we aren’t counting any chickens.

HVAC is about as essential as an industry can get in the Winter months and we are hoping to keep as fully staffed as possible and keep things moving. This year has been exhausting with all of the changing rules between different states, different counties, and all the rest. I haven’t had a day off since February and don’t expect one any time soon, as we need a decision maker on hand at all times until sh1t calms down, just a bit. We will squeak out a single digit increase in volume through it all, and we are very thankful to the man upstairs that we are so fortunate to be in an essential industry, unlike so many others.

Don’t forget about all of the maintenance people and mechanics – they are heroes too, not just medical people in all of this.

11 thoughts on “Industrial Distribution 9 Months Into Covid”

  1. Really appreciate this kind of update from the front lines! And good to know that you & your staff are surviving & keeping working — thanks to the politicians’ Lock Downs, so many other people have not been given that opportunity.

    Interesting observation about the generally ready availability of imported parts. That ties in with the reports of massive shipments from China driving up the costs of container traffic, and ports in the US working overtime to handle all the imports.

    Those of us with tinfoil hats or clearer vision (take your choice!) would see that as consistent with the generally-asymptomatic CovidScam being a planned act of economic warfare. Keeping the imports flowing at a time when US industry is being hit with the burden of politicians’ Lock Downs will help accelerate the transfer of the remaining US industrial capacity to China and places in the East where China has a lot of clout. Over time, a US which becomes so heavily dependent on imports for essentials of modern life will pose no threat to China’s rulers. As Sun Tzu observed so long ago, the true Art of War is to win without fighting.

  2. Thanks for the update. Tucson went from the hottest summer on record to night temps of 43 and a freeze warning in one day about two weeks ago. We have an old HVAC unit and I pray it lasts as long as I do.

    Economic reports that differentiate between red and blue states seem to be rare. It would be interesting.

  3. I’m a board member of a non-profit that got PPP money. PPP was in essence welfare paid in the form of a continued paycheck (the loan was forgiven if the money was spent on payroll with no layoffs in either three or six months, I forget which). Money’s fungible of course, so I’m sure people used the cash flow to pay other bills. I’m assuming the AR situation is a combination of the first response when assuming a defensive crouch is pay off outstanding bills, coupled with a lack of shiny objects that would normally attract money, and that flowed down from households to your contractors to you.

    I’m also on the board of our HOA. Annual fees were due in September and collection has been at least normal, not the big plunge we had been expecting. What happens in 2021 after a 4-6 week nationwide lockdown is still a question.

  4. @Gavin – from what I am hearing, there will be zero manufacturing, at least in my industry, going to China any time soon.

  5. One of my sons works for a small but impressive business that makes high end, custom CNC machines for the woodworking industry. After similar issues trying to get needed parts from, well from anywhere, an interesting thing happened.

    They design and custom build their own machines and so have some control over what goes in them. They can, I assume, make some parts from scratch if necessary. And demand is crazy.

    It started with the Amish (socially distancing since the 1600’s!) who are big into furniture making in this part of the world. Also shrewd business folk, among the first to see opportunities. But then, as everyone everywhere was sitting around looking at their quarantine surroundings, a massive wave of home renovation exploded. Damn it if I’m gonna have to look at these four walls (with windows and doors) I wanna look at some nicer ones.

    In his industry the big dogs pre-covid were Italian companies (high end and well engineered) and Chinese ones (crap machines but cheap). As in your industry those guys are not coming back any time soon.

    Odd times, odd times indeed.

    TW

  6. We are a small multinational (USA/EUROPE) engineering consulting firm for the electric power industry. We too were able to keep going and grow our business. A lot of our business is done during spring and fall power plant maintenance outages in the USA/CANDA and Mexico. A good chunk of our order book moved from spring to fall so we are really busy now. PPP helped us get through the summer without cutbacks. Our A/Rs are good (our clients usually prompt pay anytime). Total electricity demand is down as offices are closed as well as schools, malls and other users.

    We are seeing some lack of commitment in early 2021 but I suspect the arrival of vaccines will help the general business environment.

    We’ve travelled through the entire pandemic (I started with a business meeting in Grand Central Station followed by drinks in the Campbell Apartments Bar in late February). The whole travel cutbacks were mostly unjustified fear. No COVID in our crew that we know of.

    I get tired of those whose salaries are guaranteed and gripe about risks or inconvenience of staying home. The majority of people in most countries could not stay home but had to put up with ineffective lockdowns.

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