It was around a year ago now when we started to hear about this thing called Covid. My kneejerk at that time was “it’s just the f1cking flu”. Quite the year.
For those not acquainted, I own an HVAC distributor, and we are a subset of industrial distribution. I have written some updates along the way of this new Covidian world. Here are a few more thoughts of where we were, where we are, and where I think we are going.
1) I thought our AR was going to be ravaged. Boy was I wrong. AR is as healthy as it ever was. We probably have some PPP money being used improperly by some customers, but the fact of the matter really is that HVAC in general has been very, very strong. People had to stay at home and with extra money from not going on vacations decided to upgrade their HVAC systems. Indoor Air Quality (IAQ) was obviously a very good driver for us in both residential and commercial segments.
2) I originally thought that replacement parts would be an issue. Nope. It was all about finished goods, and still is. Our main domestic provider of HVAC equipment is digging out of the hole that seemed infinite in nature, caused by all of the distributors cancelling everything during the original shutdowns, and then re-ordering everything x 2 or more when the weather got hot in Summer. It was brutal, but we worked through it. All of the favors were called in, and I scoured the USA for new trading partners to come up with some solutions. That work paid off and will pay off in the future as now I have more partners to rely on. I have never worked so hard to get product – one week I worked 100 hours. I have had one day off since last February that wasn’t a holiday. Not looking for sympathy – these are things that you do when you are the boss but I’m glad we have a bit more normalcy now.
3) Right now, the ports on the West Coast are a mess, and there is a major container shipping issue to/from Asia. This is already causing hella problems with items such as ductless mini split systems, PTAC units, window airs, dehumidifiers, and the like. We are going to see major issues in these segments when it warms up.
4) Inventory controls are out the window. Product comes in surges rather than the patterns we were used to that had been developed over decades. We are still getting orders in on some items from last July. It is very tough to manage. We don’t dare send anything back to the manufacturers for fear of not getting the items again, but our turns are a farce right now. There really isn’t a solution, and we hope that our normal buying/supply patterns return later this year. I have rarely used my line of credit in the past, but until this thing normalizes, I have no choice.
5) Competition isn’t working as hard as I am. I really am happy about this as I am seeing new customers and coming up with innovative solutions or new products/vendors, and a lot of my competitors have either given up or just aren’t that interested in trying new things. It has really opened some doors. Hard work does create luck.
6) I protected, and continue to protect, our long time, loyal customers when the availability sh1t hit the fan and shielded them fiercely when other contractors came calling as their distributors ran out of product. We immediately halted new dealer acquisition and allocated product to “our guys”. My customers were very thankful for very few product outages. This created some angst as these potential new customers were offended when I politely told them to “pound it”, but that’s too bad. We did the right thing.
7) The future is bright. If we can get a handle on the inventory, we feel that there will be a burst of commercial work coming as companies get fully back up and running. I think that residential won’t slow down any time soon either. This polar vortex we are currently experiencing pushed a lot of units over the edge.
8) Some items are still hopeless. MERV 13 filters are a complete joke, along with UV product. MERV 13 filter lead times still sit at 16-20 weeks. Want a backup generator for your house? 20 weeks minimum. Our Bipolar Ionizer manufacturer that we represent has done a fantastic job re-supplying so that fight is over for now.
There is a lot of work left to do, but in general, we are finally, mercifully seeing some light at the end of the tunnel.