Heating and Air Conditioning in the US Industry Market Research Report Now Available from IBISWorld

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Weakened demand for Heating and Air Conditioning industry services during the recession intensified price-based competition and put pressure on profit margins. Many companies were unable to compete and shut down offices, laid off employees and enacted other cost-cutting measures. Though revenue from new installations slowed when construction levels fell, steady demand for maintenance and repair services kept the industry running. As the real estate market improves, so too will industry demand. Government initiatives to reduce energy consumption will promote installations of newer, more energy-efficient units. However, competition from operators in outside industries such as electricians and manufacturers will constrain growth. For these reasons, industry research firm IBISWorld has added a report on the Heating and Air Conditioning industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

The recovering real estate market will drive demand for HVAC services through 2017

The Heating and Air Conditioning industry is heavily influenced by activity in the construction market, with the majority of industry income generated from heating, ventilation and air-conditioning (HVAC) installations in new residential and non-residential structures. “Maintaining, monitoring and repairing existing equipment also accounts for a significant share of revenue, lending the Heating and Air Conditioning industry some stability amid the volatile construction markets of recent years, but also making it susceptible to changes in the levels of disposable income,” says IBISWorld industry analyst Andrea Alegria. In the five years to 2012, declining construction markets contributed to revenue contracting at an average annual rate of 4.5% to $58.3 billion.

The total collapse of the housing market and subsequent economic recession caused new construction activity to decrease dramatically. “During the five years to 2012, demand for new housing was hampered by an oversupply of existing homes, the growing number of home mortgage foreclosures and declining property values,” adds Alegria. “Non-residential building construction activity also declined as the recession led to a contraction in the business sector.” This contraction resulted in a smaller workforce, which in turn, led to vacancies in commercial buildings and weakened demand for new nonresidential structures. These factors hurt demand for Heating and Air Conditioning industry services.

Weakened demand for industry services intensified price-based competition and put pressure on profit margins. Many companies were unable to compete and shut down offices, laid off employees and enacted other cost-cutting measures. Some went out of business or were acquired by larger companies. The majority of industry operators are smaller firms that specialize in specific regions or industries. More firms are expected to enter the market as the construction sector improves, but most of these operators will be smaller firms and nonemployers that left during the Great Recession. This trend is similar to other sectors that are dominated by small operators, because these entities often enter and exit an industry depending on changes in demand. Industry firms will have declined at an average annual rate of 2.6% to 84,125 enterprises in 2012, while employment will have declined at a rate of 1.6% to 407,264 people in 2012.

After four years of declining revenue, the industry is projected to return to growth in 2012, with revenue forecast to rise about 8.0%; this growth is expected to continue into the five years to 2017. During this period, industry growth will be driven by improvements in the real estate market as the residential and non-residential building construction markets all rebound from recessionary lows. The industry is also expected to benefit from an increase in renovation and retrofitting activity. For more information, visit IBISWorld’s Heating and Air Conditioning in the US industry report page.

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IBISWorld industry Report Key Topics

This industry consists of establishments that primarily install and service heating, ventilation, air conditioning and refrigeration equipment. The work performed includes new installations, additions, alterations, maintenance and repairs. This industry shares the same report code as plumbing services (23822), but this information is not included in this report. Instead, the Plumbing industry is detailed in IBISWorld’s 23822b report.

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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