Today I read this choice article on Fox with the lengthy title of “Air conditioning shortage ahead of hot summer causes nationwide price spike” and was reminded of the Gell-Mann Amnesia Effect. To remind everyone, the definition is:
Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.
In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.
As someone who has been in the field of HVAC distribution for 32 years I know a thing or two, as they say. Lets take a look at this article (yes, a good old fashioned fisking) and see if it reports what we are seeing on the ground here, or if reality has been distorted somewhat, and we perhaps have an example of the Gell-Mann Amnesia effect as I peruse the rest of the news for today.
Right out of the gate there is this:
It follows a year of growth across companies within the HVAC category, with major manufacturers like Trane Technologies PLC up 24% year-over-year, while Raytheon Technologies ticked up 21% and Avis Budget Group surged nearly 125%.
I had no idea that Raytheon or Avis had anything to to with HVAC, but I suppose one of their subsidiaries could. I highly doubt it.
However, the proliferation of air conditioning units is outpacing supply. Shipping delays are rippling down the supply chain, resulting in a lack of inventory for components.
Proliferation means a rapid increase in numbers. I am assuming that the writer means that the DEMAND is outpacing supply which is sort of true, in certain markets and with certain products. There are shipping delays in everything, but we have been adjusting to the new world bringing in more safety stock. I am assuming also that they mean that there is a lack of inventory for components on the OEM side because that is not what we are seeing on the aftermarket side. Parts never really saw an issue, and this is one of the calls that I got wrong when covid started. I assumed that parts would be the main issue, but it is finished goods and has been all along.
“If you want AC, you’ll have to wait four to eight weeks,” FOX Business’s Gerri Willis told “The Claman Countdown.”
Well, that depends on the type of AC. In my market for central ac, we have enough for “our guys” and the end users are subject to their availability. Could be a week or two just because it is Summer, it is hot, and everyone’s schedules are full just like always in the Summer. It isn’t a product availability issue for most items. Ductless mini splits, window airs and other stuff made “over there” is quite another story. We are taking care of “the family” and everyone else, well, they are getting penalized by not having a long term business relationship with a good distributor. All of my competitors are doing the same thing.
Demand for AC units is already surging ahead of looming droughts in the West and power grid issues in Texas.
Again, what type of AC units?
On the West Coast, some energy groups are warning that California is the U.S. region most at risk of power shortages this summer due to the state’s growing reliance on renewable energy sources like wind and solar.
So what? California has had a horrible and disastrous energy “policy” for decades. I don’t see what this has to do with the title of the article. I suppose it could be red meat for Fox’s readers by taking a gratuitous shot at wind and solar.
In Texas, recent power outages and rolling blackouts that left millions without heat or electricity have unmasked vulnerabilities to the state’s grid. Energy experts point out that hot weather could further strain the grid, with one grid operator urging Texans to conserve power and “reduce electric use as much as possible” for a few days after heat waves caused a significant number of generation outages.
Looks like filler to me, nothing here that relates to the title of the article. The writer is confusing an air conditioner shortage with a power issue.
As a result, more Americans are turning to air conditioning systems in order to prepare for the hot months ahead.
This makes no sense whatsoever. When people are hot, they want AC. If a factory has a process or workers, they need AC. Otherwise, you don’t.
Meanwhile, as more office buildings reopen following coronavirus shutdowns, the need to replace units that have been dormant for the past year – or to upgrade to cleaner air alternatives in a post-COVID world – is putting more strain on supplies.
Most of the companies that provide air cleaning devices have caught up with demand. Some units if not mothballed correctly will need replacing, but I haven’t really seen this as an issue, at least thus far.
Brad Dunn, vice president of marketing and sales of United CoolAir, tells FOX Business that fears of extreme weather and power outages to outdated or dull AC units have compounded to become the perfect storm for the industry.
This can’t possibly be a correct quote from Mr. Dunn as there is no such thing as a “dull” AC unit. I laughed at this one. Longer run times/cycles do induce wear and tear on units, and especially older ones. Hey, your car doesn’t drive a million miles (usually) and mechanical equipment in your domicile is no different. The dirty and unreliable power is a real killer as everything has circuit boards. We should sell far more surge and power protection devices than we do.
One heating and air conditioning corporation in Eastchester, New York, already has a waiting list ahead of the summer season after booming sales. AMHAC, a family-owned business that installs and repairs air conditioners, is still waiting on some key components such as sheet metal, motors, circuit boards, copper coils and engines that help the units start.
It’s Summer. Everyone has waiting lists. I am seeing no shortages in sheet metal, motors, or circuit boards. Coils (I assume they mean evaporators) are on allocation, but it is freeing up just a bit and as mentioned previously, we have enough for “the family”. I have no idea what an “engine that help the units start” is. That one is almost as funny as the “dull” AC unit.
Yet, it’s not only supplies that the company is waiting on: The workforce is also lagging behind. And according to AMHAC General Manager Natalie LLoyd, it’s an industry problem.
Absolutely true, and true for just about every industry right now.
Prices have increased over the past six months and are expected to continue to tick up, according to Dunn from United CoolAir. Component shortages are not the only source of blame: Rising costs of fuel and inflation are also being passed down to the consumer. In 2021 alone, prices have already risen 15%.
Prices are way up due to raw material pricing but I am starting to see copper and lumber start to go back down. Chemicals are all at super high levels. I think that some of this will start to decrease again after this surge in demand abates a bit. And yes, all of these price increases get passed along to the consumer.
Meanwhile, 68% of builders reported shortages of HVAC equipment in May 2021, which is delaying new construction and projects.
Builders maybe – but they don’t have the relationships with the distributors – the contractors do. New construction is a brutal and low margin business. My guess is that the contractors are using the units that they can get to repair and replace at existing homes and businesses, a much higher margin job. We don’t really play in the new construction end for a lot of reasons, but that is probably a pretty good guess. We had one home warranty company that we cut off when the manufacturing issues began last year – the margins were too low and the maintenance of that account too high. Our contractors are priority number one.
As HVAC manufacturers anticipate more Americans to lean on air conditioning, experts are encouraging customers to plan ahead and put in orders as early as possible. Even though homeowners, builders and office managers at the brunt of the shortage, it’s a boon for the manufacturers.
No idea what this means. Again, if someone’s AC isn’t broken, they typically won’t be calling.