Manufacturers seeing delays and shortages trickle down to homeowners.
Every year the industry sees a price increase on equipment and repair parts. Naturally, inflation is the annual cause of this. The increase is usually 3%-4%. This year we saw a 6% increase. Unexpectedly we have been handed a second increase of 5%, which brings the total to 11% for 2021…so far. This means the cost of new equipment going into homes has increased by about $1500.00 for the most basic systems and up to $2000.00 on high-end equipment.
We are seeing such high costs this year because of basic raw materials such as metal, aluminum, copper, microchips, and other items. They typically come from overseas, and several countries over there are still fighting the virus. Until a steady stream of supplies gets delivered to equipment makers, the supply won’t meet the demand.
The supplies and equipment became really sparse towards the end of summer for Fox Family Heating & Air. Fortunately, as a Trane dealer, we snuck through the summer without having to delay installations for our customers. In response to the shortages almost every other distributor saw, like Goodman, Lennox, Bryant, Carrier, and others other companies around Sacramento, weren’t able to get some of their customers’ new equipment.
In response to that, the manufacturers sort of woke up and realized they needed to produce more equipment early in 2021 to make sure they’re ready for the summer. They promised 20% to 30% more inventory for 2021. Well, it takes a lot of manpower to fabricate an air conditioner, a furnace, and evaporator coils.
I heard it takes 70 people on an assembly line to create one air conditioner. Let alone furnaces and coils! You can imagine the labor involved in major factories. They cant get people back to work due to illness, fear, or laziness due to continued unemployment assistance from the taxpayers. Without people, low production of equipment persists.
With low manpower and low levels of raw materials globally, 2021 will be a rough year. Obtaining equipment is already a huge undertaking right now. Even the most loyal companies like ours are not being allowed enough transparency to see the levels! So, we might go into a person’s home and agree to a certain system, order it, and be told they don’t have it. Frustrating.
Stay tuned this summer, and I’ll keep you up to date as I find out from the powers that be…