September 2009- Like the rest of the appliance industry, HVAC equipment is experiencing a downturn. According to the Air-Conditioning, Heating and Refrigeration Institute, Arlington, Va., which represents manufacturers of air conditioning, heating and commercial refrigeration equipment, U.S. factory shipments of gas-fired warm-air furnaces dropped 12.5 percent in June, compared with the numbers from one year ago.

The AHRI’s statistics also show that residential electric water heater shipments for June dropped 24.6 percent from one year ago. Residential gas water heater shipments also fell, posting a 27.5 percent decrease.

Combined U.S. factory shipments of central air conditioners and air-source heat pumps were down 17 percent compared to June 2008. And heat pump shipments for June were down 15 percent from the same month one year ago.

Hoping for a rebound
Last year, The Freedonia Group, a Cleveland-based international business research company, which publishes more than 100 industry research studies annually, released "HVAC Equipment," which detailed trends through 2011. At that time, the company forecast that demand would increase 3.2 percent per year to $16.8 billion in 2011, driven by advances in new nonresidential construction and growth in the residential replacement market.

The study noted that heat pumps account for the largest share of heating equipment demand and will account for 47 percent of heating equipment demand in 2011. In addition, warm air furnaces will continue to account for the second-largest share of heating equipment sales through 2011, despite a loss in market share.

It pointed out that unitary air conditioners will remain the largest segment in the cooling equipment industry, accounting for more than 70 percent of total demand in 2011. Absorptive liquid chilling systems are expected to post the strongest gains through 2011 as industrial and commercial construction rebounds over the forecast period. Packaged terminal air conditioner sales will achieve above average gains because of a rebound in lodging construction expenditures. Room air conditioners will also post above-average sales as quieter and more efficient units become available.

Replacement market
On January 1, 2010, the United States will prohibit the use of R-22 in new systems. R-22 is a hydrochlorofluorocarbon, which has been used in residential heat pumps and air conditioning systems for more than four decades.

According to the Environmental Protection Agency, "releases of R-22, such as those from leaks, contribute to ozone depletion. In addition, R-22 is a greenhouse gas and the manufacture of R-22 results in HFC-23, a by-product that contributes significantly to global warming. As the manufacture of R-22 is phased out over the coming years as part of the agreement to end production of HCFCs, manufacturers of residential air conditioning systems are offering equipment that uses ozone-friendly refrigerants."

AHRI President Stephen Yurek noted in a press release, "Owners of this equipment should be aware of the impact this next environmental milestone may have on them. There is a lot of confusion surrounding the R-22 phaseout for equipment owners."

The EPA notes, "The Clean Air Act does not allow any refrigerant to be vented into the atmosphere during installation, service, or retirement of equipment. Therefore, R-22 must be recovered and recycled (for reuse in the same system), reclaimed (reprocessed to the same purity levels as new R-22), or destroyed. After 2020, the servicing of R-22-based systems will rely on recycled refrigerants. It is expected that reclamation and recycling will ensure that existing supplies of R-22 will last longer and be available to service a greater number of systems. As noted above, chemical manufacturers will be able to produce R-22 for use in new equipment until 2010, and they can continue production of R-22 until 2020 for use in servicing that equipment."

For more information, see the AHRI’s Web site dedicated to the phase out, www.PhaseOutFacts.org or www.epa.gov.

With an impending turnaround in both residential and nonresidential construction, as well as demand from the replacement market, HVAC should experience growth in the upcoming years. MM