What the clutter in the supply chain means for HVAC repairs

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Now you know all about the supply chain mess that is wreaking havoc on the global economy. The start of the pandemic was the straw on the camel’s back that broke the global supply chain, and it may be some time before it is fixed.

Building owners are undoubtedly feeling the negative effects of product shortages. But we’re here to say that the consequence of the supply shortage that you should be most concerned about is your building’s HVAC system.

HVAC contractors nationwide have been hampered by rising costs, a labor shortage, and the inability to get their hands on needed materials like microchips. All of this causes delays in repairs. And with the onset of winter, it’s time for building owners to embark on what could be a lengthy HVAC procurement process.

The supply chain nightmare taught us all a lesson in logistics and globalization that we probably didn’t want. It’s critical that property owners prioritize HVAC repairs now, be flexible with contractors, and build the resilience of their supply chains.

Supply chain chaos

You may remember that supply chain problems all started right after the virus struck and caused a shortage of life-saving medical supplies and personal protective equipment (PPE). At the start of the closures, a huge demand for N95 masks and other PPE exceeded supply. The panic buying of consumers also caused strange situations (shortage of toilet paper).

Unfortunately, this was only the beginning. Factories in parts of the world with much of the global manufacturing capacity have been hit by the pandemic, leading to shutdowns. The shipping companies thought that consumer demand would decrease because of the lockdowns, but they were woefully wrong. With home orders in place, consumers continued to shop online for everything from personal computers to home gym equipment. Increased demand has overwhelmed supply chains and slowed the movement of goods.

All in all, it was a perfect storm. And now, more than 18 months since it all started, just about everything that is produced or manufactured is in short supply. As a result, almost all industries have been hit hard. In particular, the automotive industry has been significantly affected, as a shortage of microchips has led to a dramatic drop in automotive production and increased costs for consumers.

The shortage of microchips is a problem that plagues HVAC contractors. Semiconductors are essential components of HVAC systems and their global supply is very limited. Shortages of all kinds of other HVAC parts have also been reported, including compressors, motors and raw materials like copper, steel, aluminum and plastic.

Work away

Shortages of HVAC components have resulted in significant price increases. Raiven HVAC’s supply chain research reveals that specialty equipment, including semiconductors, will likely see price increases of 10-30% soon. Copper prices hit a record high in May 2021, jumping over 130% from March 2020. Steel prices nearly doubled in August 2021 from last year, according to a government index American that follows the price.

The US Pacific Northwest and Southwest have just experienced a historically hot summer, increasing demand for HVAC services. The HVAC industry is also no stranger to labor shortages, but the pandemic has made matters worse. All of these factors combined to result in the highest HVAC distributor delivery times since 1987, according to Raiven’s research.

Karl Pomeroy, Managing Director and President of Motili, a nationwide HVAC service provider, said many of the HVAC industry’s supply chain problems have also been caused by “all-time highs in business growth” for the industry.

The labor shortage in the HVAC industry has also had a significant impact, Pomeroy said. “As our industry progresses technically, I think the labor shortage is more pronounced,” Pomeroy told us. “It takes a higher level of skill to maintain some of these pieces of equipment. The industry is also feeling a rise in inflationary labor costs, as so many of these companies have to attract and retain the best employees, and they pay more. So not only are we paying more for finished goods and parts and parts, but we are also feeling the pinch of more expensive labor.

Pomeroy added that for the owner of a typical building, he has seen his costs increase quite dramatically over the past 18 months, and “there really is no end in sight.”

Stay ahead of the seasons

So, yeah, everything is pretty messy right now. But while this sounds like an apocalyptic scenario, all is not gloomy. By taking the right steps, there are many things that building owners can do to relieve pain. Without a doubt, you have already been faced with an increase in HVAC service prices and delivery times for over a year, so you have probably found some solutions. But as this supply chain mess drags on, it’s imperative to keep a laser-like focus on your HVAC system, especially as winter approaches.

HVAC systems are one of the most expensive and vital pieces of equipment in commercial buildings, and breakdowns can be catastrophic. Have your HVAC system inspected now, especially if it is malfunctioning. If there are any necessary fixes that require parts, the lead times may be longer. Be proactive and patient with contractors and have repairs done before the cold sets in.

Preventive maintenance of HVAC systems is more critical than ever at this time. Check and change air filters monthly, keep the unit clean, and check heating specific parts like gas / oil connections, burner combustion, and heat exchangers. This type of maintenance prolongs the life of the appliance and helps prevent major problems during the heating season.

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“Tenant satisfaction is a huge factor affected by HVAC systems,” Pomeroy said. “A lot of our customers are moving to a model where they look at their Total Product Portfolio (HVAC), look at the age of those products, and do preventative maintenance to keep them in top operating condition. Our customers are also more proactive when their systems begin to approach their replacement age and put them on a planned replacement strategy.

Backing up a system

A second equally important thing that building owners can do right now is build the resilience of their supply chains. And that doesn’t just apply to HVAC repairs and contractors. Take a look at all your vendors and suppliers and find ways to strengthen your supply chain in these unpredictable times.

Beware of being stuck in a sole source situation. Establish secondary suppliers and subcontractors for essential services (like HVAC) and feel free to contact them if their delivery times are shorter or in case of emergency. Also consider using supply chain management software. The joint programs of Blue Yonder, Infor, Oracle and SAP help building owners gain better visibility into their suppliers and supply chains and they also benefit greatly from planning.

Perhaps the worst part of the supply chain nightmare is when it ends. Major Southeast Asian exporters of critical components like semiconductors still struggle to contain COVID-19, and global port and shipping congestion could last until 2022.

The Biden administration has taken steps to alleviate the problems, for example urging the Port of Los Angeles to operate 24 hours a day, 7 days a week. But as noted by Mary Barra, CEO of General Motors and Other business leaders, shortages and rising costs have forced many companies to completely rethink supply chain management.

Pomeroy said building owners need to be “proactive instead of reactive” with their HVAC systems. Property managers should focus on their HVAC units and ensure that their mechanical components are in good working order. If they are not focusing on CVC right now, he said, “they are preparing for a very difficult time.”

“I don’t think this is a case where, in two to three months, all of these supply chain issues and labor shortages affecting CVC go away,” Pomeroy said. “I think we all came into 2021 thinking, well, it’s gonna be better. In some cases it has been better. But in some cases, this has not been the case. The demands of the HVAC industry have been high. For those customers who sit and wait, they run the risk that the day they decide to do something, they will be unable to find a source of labor or not be able to find the materials. .

Lead times for HVAC repairs may be longer and costs may be higher, so be proactive about this situation and monitor it closely. Have fall HVAC servicing done as soon as possible, and also think about other essential supplies and parts that might be affected. Resilience, flexibility and planning skills are the key attributes for surviving this turmoil in the supply chain. You are probably already familiar with the supply chain problem, don’t wait for it to leave you behind.

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