Dan from Madison

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.

So here we are around nine months into this covid deal, and things are getting more unrealistic by the day.

We are hearing, but don’t have proof, that municipalities and other governmental orgs are requiring MERV 13 filters for buildings. Which brings us to a couple of problems.

I run an HVAC distributor and we are getting lots of calls for MERV 13 filters. We represent four filter companies. Two aren’t taking orders for MERV 13 product and of the other two, our best lead time is 4-6 months. For those who want to wait, we are encouraging them to buy a years supply and just store them.

We are even having trouble getting our standard pleated MERV 10 product due to factory production slowdowns because of covid. So we are getting some of the shooting of the messenger by our customers, but we can handle that OK.

Why the long lead times? Besides the crushing demand, the same companies that make media for masks, make media for MERV 13 filters. You can guess where priority is right now. Also, nobody has told me if the filters, presumably loaded with covid, will be someday declared a hazardous waste by OSHA, making their changeout completely ridiculous. Not to mention that MERV 13 filters create enormous amounts of static pressure, which will be terrible for a lot of systems, especially older ones. There are already rumblings of certain equipment manufacturers engineering departments getting ready to go to war with the authorities mandating these filters, and declaring “no warranty” on equipment failure due to lack of return air and MERV 13 filters putting their equipment out of engineering spec. This is super fun.

We have been recommending for a long time that people use standard pleats in combination with a bipolar ionizer or UV product, both of which in the past few months have received covid killing certification. We are hoping this MERV 13 train isn’t fully out of the station just yet and that everyone will start to get a bit more realistic. But since it is 2020 we aren’t expecting much.

Preface – I own an HVAC distributor – HVAC distribution is a subset of industrial distribution.

I received today an interesting letter from our supplier of PVC fittings. PVC is used in everything from plumbing to venting furnaces and a lot of applications in between. Every single contractor in the USA uses a PVC type product in their daily grind. The letter talked about several price increases from PVC resin suppliers – I have seen this before, and it isn’t too terribly unusual (any excuse to raise the price, right?). But also, there was this:

Hurricane Laura dealt a devastating blow to the Gulf Coast of Louisiana where a substantial amount of PVC resin and related plastic raw materials is produced. Hurricane Laura damaged many chemical plants, including those in the PVC supply chain, and left many without any electricity. Two of the four PVC resin manufacturers have declared force majeure. Hurricane Laura also severely damaged portions of the railway system used to transport PVC resin from the Gulf Coast to various locations across the country. Depending on the severity of the damage to these manufacturing plants, regional infrastructures and railway system, the time required for us to receive PVC resin could be negatively impacted.

Which is all to say that many building projects will see further delays, and the price just went up. Add to this the difficulty we are seeing with finished goods such as furnaces due to covid related production issues, and raw material price increases (silver) and it all makes for a miserable time to be an industrial distributor – although a time that has provided opportunity and rewards hustle and thinking outside of the box. I have never worked harder at keeping the barns full, but my contractors are very thankful and understand the challenges.

Energizer batteries is even having covid related production issues. I have never been out of batteries before, but I guess we have never seen a year like 2020.