Recovering residential construction will boost sales of heating and air-conditioning systems.
Los Angeles, CA (PRWEB) October 20, 2013
Residential and commercial construction, as well as private spending on home improvements, largely drives demand for the Heating and Air Conditioning Manufacturing industry. In 2009, the industry experienced a substantial decline as a result of the housing and construction slump that accompanied the recession. “Although the industry began to recover in 2010, several years of revenue growth was still not enough to offset the early recessionary declines,” according to IBISWorld Industry Analyst Stephen Morea. IBISWorld estimates that industry revenue slightly dropped by an annual average rate of 0.5% in the five years to 2013. Nevertheless, industry revenue is expected to increase by 1.5% to $42.9 billion in 2013.
Since almost any new structure (residential, commercial or industrial) requires some form of heating, ventilation, air conditioning and refrigeration (HVACR) equipment, new construction activity has the most significant influence on the industry. New home construction turned the corner in 2010 and significantly increased in 2012 when the number of housing starts jumped by 29.1%. Building activity in the private, nonresidential or commercial market also improved. Another major market for the industry is projects related to the replacement of existing HVACR equipment. Economic conditions, ordinary wear and tear of equipment, a movement toward more energy-efficient equipment and environmental concerns drive HVACR replacements. “As employment and disposable income increased, consumers had more funds available to invest in home improvements,” says Morea. A third source of industry demand is from restaurant and food service firms who purchase the industry's refrigeration equipment, such as walk-in coolers and refrigeration display cases. This product segment saw lower returns as restaurants postponed investing in new refrigeration units during the recession. However, as consumer spending improved and people began to dine out again, sales of refrigeration equipment also increased.
In recent years, revenue for all key markets in the industry improved. In the future, sales are projected to return to prerecession levels, driven largely by renewed residential construction activity. A recovery in consumer spending will also drive demand for refrigeration systems in downstream food service industries. Energy-efficiency expectations are also forecast to spark sales.
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 the Heating and Air Conditioning Equipment Manufacturing industry manufacture residential, commercial and industrial heating, ventilation, air conditioning and refrigeration (HVACR) equipment. Revenue includes miscellaneous receipts for resales of products without further manufacturing, contract work done for others on their materials and receipts for repairs, scrap and refuse sales. Automotive units are excluded.
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