Heating & Air Conditioning Equipment Manufacturing in the US Industry Market Research Report Now Available from IBISWorld

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As the housing and nonresidential construction markets recover, so too will demand for heating, ventilation and air-conditioning equipment. The rebound in the food service and storage services industries will likewise boost demand for refrigeration equipment. Energy efficiency will be a key trend in the industry's future growth as increasing environmental awareness push manufacturers to produce more energy-efficient equipment. For these reasons, industry research firm IBISWorld has updated its report on the Heating & Air Conditioning Equipment Manufacturing industry.

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Growing exports and increased construction activity will help renew revenue

During the five years to 2012, revenue for the Heating and Air Conditioning Equipment Manufacturing industry has been hot and cold. Three phases have characterized the industry during this time: stable growth in 2007 and 2008, a recession-related dip in 2009 and slow recovery since 2010. Recovery is expected to continue in 2012, with revenue growing an estimated 1.1% to total about $37.3 billion. This near-term growth uses recessionary lows as a baseline marked by little-to-no demand due to a surplus of houses. Overall, industry revenue remains below the 2007 level and is expected to fall at an annualized rate of 1.7% over the five years to 2012. Domestic demand for industry products stems mainly from the construction, food service and warehousing sectors. With regard to construction, the industry recently suffered from a saturated market and decline in home starts. In downstream food service industries, cheaper dining options, such as fast food, have maintained demand for refrigeration systems, but higher-end establishments have backed off investing in new cold-storage units. According to IBISWorld industry analyst Josh McBee, these trends have occurred on the back of reduced consumer spending in the wake of high unemployment and down consumer sentiment. Meanwhile, the price of steel as a production input largely determines manufacturers' profitability. This commodity's price has been high recently, but cooling steel prices should help improve US firms' margins.

Trade also drives revenue, but imports typically outpace exports. This trade deficit stems from the ability of foreign manufacturers to produce goods using relatively cheaper labor and with less regulatory oversight and a leveraging of supply chains located overseas, says McBee. The savings realized during production are passed on to the consumer and make imports more affordable for US buyers. IBISWorld analysis reveals the Heating and Air Conditioning Equipment Manufacturing industry exhibits a low level of market share concentration. The top two companies in this industry are the United Technologies Corporation and Johnson Controls Inc. Low industry concentration stems partly from the diversity of products manufactured in this industry, but also from the high number of small and medium-sized businesses. Some firms specialize in products for specific downstream markets in nonresidential buildings, such as commercial and industrial blowers and fans. Others may contribute to the industry through producing compressors, parts or other tertiary goods. As the leading companies emerge from the doldrums of the recession, market share concentration is expected to increase in the wake of renewed merger and acquisition activity. In early 2011, Lennox acquired Manitowoc's Kysor/Warren business, which makes refrigerated systems and display cases for supermarkets.

Looking ahead, sales volumes are projected to return to prerecessionary levels by 2015 on the back of export growth and resumed construction activity in residential and commercial markets. Recoveries in consumer spending will also drive demand for refrigeration systems in downstream food service industries. Also, replacement demand stemming from efficiency expectations will drive sales of some environmentally friendly units. As a result, IBISWorld forecasts industry revenue to increase through 2017. For more information, visit IBISWorld’s Heating and Air Conditioning Equipment Manufacturing in the US industry report page.

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IBISWorld industry Report Key Topics

Companies in this industry manufacture residential, commercial and industrial heating, ventilation, air-conditioning and refrigeration (HVACR) equipment. Products include heaters and heat-transfer equipment, compressors and compressor units, nonelectric warm-air furnaces, heat pumps, room air conditioners, commercial refrigeration equipment, unity air conditioners, air purification equipment, and industrial and commercial fans and blowers. Units for automotive use are excluded.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
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