Heating Season Preview
The winter of 2013-2014 left many people traumatized. Nearly every part of the U.S. was impacted in some way. It brought unusual cold weather and ice to the South, lower than normal temperatures in much of the West, an onslaught of blizzards and polar vortexes in the Midwest, and piles of snow and bitter cold in the East. Even those accustomed to tough winters found themselves caught off guard by this one.
When homeowners are forced to cope with these kinds of conditions, it generally means good things for the heating and hydronics industry. Repairs and upgrades kept lots of wholesalers and contractors busy. The experience of last winter’s travails likely have more businesses and homeowners thinking about making investments and improvements in their heating systems as they head into this winter.
If long-range forecasts are any guide, this winter will likely be considerably milder than last, but still may pack a few punches. Many forecasters, including the National Oceanic and Atmospheric Administration (NOAA) expect El Niño to play a major role in weather patterns for this winter.
According to LiveWeatherBlogs.com, depending on the severity of this year’s El Niño, forecasters predict that some parts of the country, such as the West and Midwest, will see drier conditions this year. However, the East Coast may experience slightly above-average snowfall. The South is expected to once again see severe ice storms. In terms of temperatures, it is expected to be a little milder all around than last winter, with most parts of the country hovering around normal or slightly above normal temperatures.
Like the weather, no one can, with any certainty, predict what business conditions will be for this winter’s heating season. But, there is general optimism among many in the heating and cooling industry. Business has been solid and the economy appears to be continuing a slow and steady upward climb.
“The market is very robust this year. After a long, cold winter, many rushed, mid-season heating equipment ‘band-aid’ fixes have since turned into comprehensive repairs or replacement projects,” said Mark Chaffee, vice president of brand management at Taco. “It appears as though there is a lot of upgrade and service work to prepare for next winter. The economy is improving gradually and home and building owners seem more likely to be funding work that they postponed.”
“We are very optimistic about this winter’s heating season, we had an excellent first half of 2014 and we preparing for a strong second half,” said Rex Gillespie, director of marketing at Caleffi North America, Inc. “We are seeing solid growth in all geographical areas including Canada.”
“I visit a lot of wholesalers and they are ramping up for a strong heating season. Inventory levels are creeping up, which is a good sign,” said Bob “Hot Rod” Rohr, manager of training and education at Caleffi North America, longtime radiant heat installer, and Plumbing Engineer columnist.
“Many delayed repairs and efficiency improvements are now happening. There seems to be a lot less fear about making needed improvements to mechanical systems. Managers are looking with greater interest at systems that provide real and substantial return on investment,” said Ray Schaffart, marketing and sales support manager at Modine. “But, there are challenges. There always are some buyers who need to be convinced that changes or improvements should be made. The challenge is that some end users don’t see the need for upgrades that would lead to greatly improved energy efficiency.”
“Uponor’s radiant heating and cooling business has been experiencing double-digit growth this year, which is a very positive sign given the economic conditions of the recent past,” said Mark S. Hudoba, LEED GA, director of Heating and Cooling at Uponor North America. “Success in the commercial radiant heating and cooling market has fueled a significant portion of the growth. In addition, the upswing in residential new-home construction has also assisted with Uponor’s radiant heating growth.”
“Heating season, by its very nature, brings about a moderate spike in production and sales activity and we expect that trend to follow a traditional path,” predicted Chad Sanborn, product marketing manager at Bradford White Corp. “Combining that seasonal activity with a steadily growing new housing market will contribute to a healthy fall/winter season.”
“We are very optimistic about the coming heating season. Market indicators are favorable. Interest rates remain low, housing continues to recover and other indices continue to improve,” said Kirk Vigil, business development manager of Domestic Buildings at Grundfos North America. “Building owners and homeowners have more confidence and are investing in new projects, homes, and improvements. Of course, another early and cold winter would be a bonus.
“Industry sales during the first quarter were surprisingly lower than expected, but that may have been due to it being too cold to shut systems down. Thus, we saw more repair versus replace,” explained Joe Langlois, product manager at ECR International, Inc. “Hopefully that will add to a more robust replacement market prior to the season this fall. We are rather bullish on heating equipment sales in general this fall, and in particular on boilers.”
Many agree that things are looking particularly positive on the boiler side of things.
“After an unusually slow start due to slow boiler activity, sales of our core indirect water heating products have rebounded nicely in the second quarter with growth from existing and new customers,” said Stephen Ross, general manager at Heat-Flo. “Despite a continuing climate of economic uncertainty, we are forecasting continued growth for 2014.”
“We are seeing growth in all areas of our business and across all regions of the country. We continue to grow in condensing boiler technology,” said Marc Heffner, director of marketing at Lochinvar. “Based on positive pre-order sales, Lochinvar anticipates a strong finish to 2014. NOAA is predicting a normal winter for December 2014 through February 2015, so we believe it should be a terrific season for Lochinvar.”
“Initially this year we saw a lot of parts sales, but sales have evolved into replacement and change-out equipment sales, which are strengthening,” said Chuck O’Donnell, director of marketing at Laars Heating Systems Co. “We’re even seeing some commercial new construction sales, though not as strong as replacement sales. We expect sales to be up, with an emphasis on condensing equipment.”
“We have had a strong year so far,” said Dan Foley, president and owner of Foley Mechanical, Inc., and columnist for Phc News, a sister publication to Plumbing Engineer. “We have seen a return of ‘mega projects.’ Typically we have one big project going at any given time.”
Foley sees good things for the season ahead, as well.
“Service and maintenance should hold steady compared to last year. I expect to see an increase in replacement work,” Foley said. “We have many systems we have been nursing along and repairing over the last several years rather than replacing. This can only go on for so long before these systems need to be replaced.”
What is behind this optimism? A healing economy and an improving housing market are certainly part of it.
“We’re optimistic as we head into the new winter season,” Chaffee said. “Consumer confidence is up and the overall economy is improving. And, with recollections of last winter, which was unusually severe across many parts of the country, people are making preparations. That includes heating system work of all type and variety.”
“Much of the radiant business exists in high-end custom homes, which take longer to construct than tract homes. Therefore, the longer construction cycle creates a lag between the total new home construction increases and the actual heating and cooling product sales,” Hudoba said. “We are now seeing signs that the new home construction recovery that started 12 to 18 months ago is impacting product sales revenue.”
Hudoba pointed out another important factor associated with this season’s sense of optimism: the end user’s desire for comfort.
“Consumers continue to value increases in their comfort levels,” Hudoba said. “Remember when air conditioning was an option? Now, it is standard even in entry-level homes. Homeowners’ expectations regarding comfort continue to rise.”
“Before the recent improvements in the economy, people seemed to be thinking exclusively, ‘What can I do to save on my energy bills?’ But now, comfort is a more important part of the HVAC equation and that leads to higher quality system work,” Chaffee explained. “Many now seem to be considering what they can to influence energy spending without sacrificing comfort.”
However, a desire to be warm and comfy doesn’t mean that end users are looking past the bottom line.
“Consumers have not forgotten the recent economic conditions, and they remain cost conscious,” Hudoba said. “Customers want cost-effective, energy-efficient, high-comfort radiant heating systems.”
“No doubt, there is an uptick in high-efficiency systems, both for hydronic and volume water heater applications,” O’Donnell agreed.
As owners strive to get the most for their dollar, efficiency is the name of the game. And that applies both to energy and space.
“Energy efficiency is a major consideration. Buyers are considering the highest efficiency equipment and are exploring options like geothermal, wood, and pellet burners, as well,” Rohr said.
“We believe there will be continued growing demand for wall-hung boilers whether they be condensing, non-condensing, space heating or combi,” Langlois said.
Brian Fenske, specialty channel sales manager at Navien, echoed Langlois’ sentiments.
“We as an industry are witnessing sealed combustion, wall-hung, space saving, high efficiency combi boilers leading the charge in separating and individualizing the heating systems of multiple occupancy dwellings,” Fenske said. “The combi boiler product sales segment has grown tremendously since 2007. In a six-year time span, the sales of combi boilers in North America has risen from around 7,500 units to more than 50,000.”
With more options out there and consumers becoming more educated on their choices, it is more important than ever to keep ahead of them.
“Plumbers and HVAC professionals should be gearing up their knowledge base in preparation for the latest trends in high efficiency,” Rohr said. “Components as well as the actual building shells are all part of the system. Our industry needs to be prepared to offer options. Most shoppers are much more educated regarding choices and options. Be sure to be up to speed on all the newest offerings.”