New AC Units in Low Supply
I’ve been in A/C & heating business for over 30-years & founded Magic Touch Mechanical in Mesa, AZ in 1997. In all those years, 2020 is the first time I’ve ever seen new AC units in low supply. I’m not talking about one manufacturer being behind schedule, I’m talking about almost every brand name across the board.
NOTE: Additional updated info added December 2020. This article (Part 2) was originally posted September 2020
Back in mid-July I wrote an article named Covid-19 Creates Air Conditioning Shortages. At the time, two major brand names were in rough shape: Trane & Goodman (Daikin). Both manufacturers were reporting their new AC units in low supply, not just in Arizona but throughout the entire U.S.
In the same article I mentioned this was good news for competitive manufacturers like Lennox, Bosch and Mitsubishi. Magic Touch regularly installs all five of these brands (and others), so we still had access to the equipment needed. Fast forward two months and the supply deficit has grown worse, now affecting almost every HVAC equipment manufacturer & supplier.
New AC Units in Low Supply Fall 2020
As I write this in the 3rd week of September 2020, it’s still 107° Fahrenheit in & near Phoenix, AZ. Valley residents are well aware summer 2020 has been the hottest ever recorded – we talk about it regularly, LOL.
Combined with the fact that we’re all spending more time at home, demand for new AC units is extremely high. Many people have used this time at home to tackle home improvement projects, HVAC seemingly very high on many lists. With manufacturing slowed or even stopped for periods of time due to Covid-19 supply has not kept up with demand.
Manufacturers and suppliers who were not experiencing supply shortages back in July are now reporting other supply chain shortages. Several have reported they expect these shortages to continue into the Fall. Even brands whose own manufacturing facilities have remained fully operational, report supply issues on components they depend on. UPDATE: As of December 2020 shortages continue. Certain models from each brand are backordered 30 days or longer.
An example of this would be the temporary closing of the Copeland compressor plant earlier this year. Most manufacturers rely on components made in other factories to complete the assembly of their heating and cooling units. Worse yet, most utilize components from the same factories – Copeland compressors being one component many major brands all use.
HVAC Contractors Explore Other Brands
Unlike Magic Touch Mechanical, many, if not most HVAC Contractors don’t represent 5 or 6 different heating & AC brands. It’s much more common for AC Companies to only sell & install 1 or 2 different brands. While there are definitely benefits to this business model, I feel it benefits the company more than the customer. That said, I decided long ago we were going to carry every brand that met our criteria for value, durability, etc. I’m a consumer too and I want “options” not ultimatums. I want our clients to not only choose us but choose the brand they want too… application permitting of course.
With new AC units in low supply, our model certainly paid off for both us and our customers this summer. Even with significantly increased demand compared to previous years, we were able to acquire the equipment our clients wanted.
However, companies that sold only the brands that were having supply issues began exploring & even switching brands. I don’t blame them; they have clients to serve and frankly I’d probably do the same… luckily, we already sell those brands. This shift in brands however means more people swimming in the same pool. As a result, nearly every brand is reporting parts, coils, and new AC units in low supply.
Some Relief in Sight?
Rest assured HVAC equipment manufacturers are not sitting idly by without product to sell. Shareholders frown on such behavior! Most have added shifts to make up for the reduced staff needed to maintain social distancing on the manufacturing floor. One of our manufacturers recently announced they were moving manufacturing machines further apart in their facility to keep them running. In other words, they’re doing whatever they can to work around the challenges they face from the pandemic and regulations.
We have certainly seen movement and are yet to be in a position where we simply cannot get equipment. However, it’s no longer as easy as clicking the mouse of picking up the phone to get certain components. Longer wait times, and additional freight charges are increasingly more frequent as local branches trade inventory with each other across the country.
NOTE: As of December 2020, (fireplace season), we’ve also seen shortages in fireplace and fire pit parts. We’ve heard from several heating system manufacturers that they’ve shifted distribution to increase supply of heating products in general to colder climate areas. For those of us in the Southwest, this is leading to longer wait times for product.
Supply & Demand Economics
We know what happens when demand is high and supply is low, it means prices increase. I’m an avid bicyclist and build custom BMX race bikes & cruisers in my downtime. More people spending time out of malls and restaurants has led to an explosion in the demand for bikes & parts. I’ve seen bikes selling for 3-5x what they did pre-coronavirus. Trying to get bicycle tubes in some sizes has been an exercise in futility. Parts you can get your hands on are far more expensive than they were in January.
What do bikes have to do with air conditioners? Well, we need our air conditioning and heating systems a heck of a lot more than we need a bike! I expect we’ll see prices increase more significantly in the coming months than we have in years past. That’s not a guess, it’s supply and demand economics, which applies to any product in short supply & high demand.
UPDATE 12/2020: The Trane Company recently informed their contractor/dealer network of price increases effective January, 2021. I fully expect other brand manufacturers to follow suit. While we expect these increases every year, the percentage of increase is much higher than we anticipated or have typically seen in years past. In other words, no matter where you live in the country, expect to pay even more for HVAC products in 2021 as manufacturing and shipping challenges & costs have increased.
New AC Units in Low Supply: Buy Low – Buy Now
I know I’ll get some readers who will say I’m saying what I’m about to because I sell air conditioners. To them I say – don’t forget I also make a living fixing air conditioners. The older the air conditioner, the more times I probably get to make money as they fail more frequently. Frankly, I love old air conditioners… they’re quite literally my bread and butter!
Thanks to Google analytics, I also know a lot of my readers don’t even live in my company’s service area. Most readers who take the following advice don’t even live near Phoenix and I gain nothing if they do.
My advice: If your air conditioning and heating system is close to replacement age, or not serving you well – replace it now. HVAC Manufacturers always increase their pricing in January typically between 5-10%. My guess is this January we’ll see substantially greater increases. If you have the means, I’d tell anyone who thinks it’s close to that time; do it before the end of the year. Not only will you save hundreds, possibly thousands of dollars, you’ll have a better chance of getting the model you want.