I don't know if you've ever attended an International Air-Conditioning, Heating, Refrigerating Exposition, but I think everyone in this business should, because there's just so much to see and learn. This is where I get my best information about what's going on in our industry, who's doing what, and in what new directions the products are heading. And this year's show in Orlando (February 7-9) was no exception.
They have a great new convention center there in Orlando, Fla., which I was told is the second largest in the United States - and who could complain about the weather or other things to do there? Of course, Disney World is in the midst of a major renovation right now, but this is truly a family vacation city with easy access, low motel rates, and cheap rental cars. But then again, I don't live too far away. I'm not looking forward to going to Chicago in the dead of winter for next year's show though (but I plan to be there).
What was the news at this Expo? All the equipment manufacturers were abuzz about the rapidly rising prices of steel, copper, and aluminum. Everybody had different figures, but one source said their costs for metals had risen almost 90% in the past 12 months, which is really driving up prices in our industry - and we don't use as much steel as they do in automobiles and home appliances. So, it looks like our country is about to see a huge round of inflation.
There's been another huge price increase over the past year, but this time it has been for the popular HFC refrigerant R-134A (its price has almost doubled). It is mainly used in large chillers, car air conditioners, refrigerators, and freezers. So if you had a pretty good stock on-hand several months ago, you're about to see some windfall profits. The reason for this price increase isn't the rising cost of fuels, the war in Iraq, or the weak U.S. dollar. It has come about because of a fire in a big refrigerant manufacturing plant in Japan (Daikin), which happened as several other refrigerant manufacturers were in the process of changing over their production to produce R-410A and other blends for the huge residential air-conditioning market.
As for this change to the new HFC refrigerants, which I have been expecting to see all across the line and on all brands with the coming federally-mandated change to minimum 13-SEER residential air-conditioning equipment next year, after speaking to several equipment manufacturers, it doesn't look like the phaseout of R-22 equipment is coming as rapidly as I had expected. Why not? Simply because no one wants to be the first to have a line without R-22 systems. Contractor resistance to this refrigerant (due to its higher price and potential service problems) has everyone I talked to nervous about changing over too quickly - but the full phaseout of R-22 is just 10 YEARS AWAY!
The other big news at this show is the Chinese. Their products were everywhere, in the dozens of booths from mainland manufacturers, and in the booths of American manufacturers that are importing and labeling the Chinese products. I guess the Cold War is over.
What does their stuff look like? Well, anything that we would find a use for was usually in the form of very inexpensive mini-split air conditioners or service meters and components. I've used the term 'that we would find a use for,' because a tremendous amount of the things being displayed were spot coolers and other items that look like they belong in a Wal-Mart or a Home Depot. Not the stuff of HVACR contractors or supply houses.
But even these lower-cost Asian items have seen price increases due to the low American dollar and due to a recent 4% rise in import taxes.
Another interesting tidbit of news is that the first Japanese HVAC manufacturer to enter the United States (back in 1982), Daikin, is planning another run at our market after leaving it in 1988. They are one of the world's largest HVACR manufacturers and they sell their products throughout the world. They were also the ones who first introduced 'mini-split' units to us, although almost all domestic manufacturers now offer such a line of products. Daikin did have an agreement with the Trane Co., but I'm not sure where that stands now. It looks like they will be based in Georgia again, and they will go by the name Daikin A/C (not Daikin U.S. Corp., as before).
Also, it looks like the Fedders name is growing in the industry again, as they continue to expand their product line through buyouts and trade alliances. The most recent was their purchase of the Orlando, Fla.-based Addison Products, which expands their offering into the commercial sector of our business once again.
I did find several interesting new products at the Expo, but I will discuss them in coming issues. <<