I began these updates back when the Chinese Commie Crud (tm Sgt. Mom) started and it’s time for another one. I’ll put it below the fold to spare those who aren’t interested.
For those who don’t know, I own a HVAC distributor, and HVAC is a subset of industrial distribution.
Inventories are still at or near record levels for most items. We don’t trust anyone yet. Vendors and others keep speaking of some sort of slowdown coming in the next few months, but we aren’t seeing any of that yet, so it is pedal to the metal.
We are winding down certain categories as we start to approach Fall, due to some new energy requirements for HVAC coming soon. By the way, if you are considering a new central air conditioner or heat pump for your domicile, this is the year to do it as next year everything will be around 25% more to hit the new requirements. Don’t shoot the messenger.
So in that area, the flowers are sort of going to arrange themselves. We are lucky to have sell through privileges in the northern tier, but the southern tier of states has to wind their positions down probably starting now or get stuck. Or they are going to have to clear out that dead inventory to the northern guys next year.
Outside of that, there are still some major headaches. Anything with a chip is still a problem. Some items are more affected than others, but replacement parts like printed circuit boards are difficult. Another thing still difficult are finished goods from Asia, specifically ductless mini split units. At this point we have just given up on certain vendors and have moved business around. We can’t wait forever and things move fast. Our customers aren’t going to wait. Options are limited, but they are out there for guys like me who bulldog it and don’t mind calling everyone. I think some companies are just going to fail eventually. If they can’t get chips, they can’t make anything.
So in general, our major investments in inventory are paying off and the manufacturers are shipping “not awful” which is better than 12 months ago. LTL freight is still a nightmare and of course we have labor issues like every other business, but in general, things are OK.
I’m sure that if I could transport my pre-covid self into today and see how I attack my work day that it would look like lunacy, but compared to 12 months ago its like a vacation. Funny how you get used to adversity and get steeled to certain things when you have been run through the mill.