The supply shortage of furnaces and repairs parts

12/3/2021

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Before we get started, my intent is not to induce panic or blow the supply shortage out of proportion. I do believe it is necessary and vital for people to be informed. I also have a unique perspective that can help.

Quick back story

Fresh out of school, in my mid-20s, I was fortunate enough to work for a major HVAC equipment manufacturer.

I worked in quality engineering, where I was tasked with identifying components that failed in the field, and working with our manufacturing line, engineering, and our suppliers to get the problem solved.

A couple of years into the job, we had the largest component problem in the 50-year history of the company. Our units around the world were failing at a rate of almost 30%. (Typically, the rate was ½%).

Because of my position, I participated in meetings with the highest-level executives in the company. Of course, as someone in my early 20s, I sat at the back of the room and hoped they didn’t call on me.

One takeaway from this experience was that manufacturers will not communicate the severity of these problems to our clients – ever.

I’d imagine it would be because we didn’t want to cause panic or have them jump ship and use another manufacturer.

Additionally, those within our company who were not at these meetings didn’t know the severity either. It was very tight-lipped.

This experience and knowledge have led me to a hypothesis of what is happening at HVAC manufacturers today – because of the now 2+ year pandemic we are experiencing.

Current State of HVAC equipment and Parts

HVAC manufacturers are experiencing a shortage of equipment that can result in furnaces not being available, anywhere, in early 2022.

I see this as a disastrous scenario, as a furnace is a required appliance for you to be able to safely survive in your home.

Additionally, alternate heating sources such as space heaters, pellet stoves, fireplaces, will be pushed to availability issues once the shortage is in full effect. After all, the big box stores only have so many space heaters.

Made in the USA (well, sort of)

Even though our supplier of HVAC Equipment, Goodman (Owned by Daikin Group, the world’s largest HVAC Manufacturer), assembles their equipment in Texas, they don’t manufacture every single component of it.

All other HVAC manufacturers do this as well. In fact, the majority of them use the same components from the same vendors. This is just like all car manufacturers.

Goodman does fabricate the sheet metal cabinets of the furnace, the heat exchanger, coils, and other “mostly” metal parts in their Houston plant.

But all other components such as electronics and motors are sourced from suppliers, all over the world.

And those suppliers get components from other suppliers as well.

This creates a supply chain that is very long, complicated, and fragile.

At this time HVAC manufacturers are experiencing a shortage of circuit boards for their furnace and motors for their furnace. Circuit boards use similar chips as cars, and well, you know how difficult it is to find a car today.

Why can’t they just use different parts?

During the design phase of a furnace, manufacturers must do thorough testing for performance and safety. The testing has to be based upon the components designed to be built with the equipment. Almost always, it isn’t possible to switch out a motor and begin building with a different version without performing new testing. This takes millions of dollars and a long time to complete.

Also, AHRI has to certify each furnace, coil, air conditioner, etc. using the data from the tests.

When can the country run out of furnaces?

The demand for furnaces in January in the United States is typically this highest of the year. Of course, that will put additional strain on availability.

Goodman is the world’s largest furnace manufacturer, and we are one of the largest dealers in the area.

I’m concerned that if the largest manufacturer and largest dealer are out of furnaces, we won’t be able to source from anywhere else.

Price Increases – Again

Since the beginning of the pandemic, Goodman has done a great job prioritizing equipment for us so that we have what is needed for our clients.

They have been turning away smaller companies so we can get what we need.

But for them, it’s been bad for business to turn down sales and it has led to many price increases in the past year.

I anticipate more price increases in 2022 as well. Most likely from 8-15%.

So what action are we taking to ensure our clients avoid a furnace emergency?

We are working hard to place a large order of furnaces to be able to keep stock in our warehouse to take care of our customers. Our goal is to purchase enough stock to last the winter season.

Additionally, we will look to purchase from second sources, online, etc.

Whatever it takes.

What should I do as a homeowner to avoid my own furnace emergency?

If your furnace is on its last leg, do not wait until it breaks down to take action. Reach out to us and secure replacement equipment as soon as you are able.

Breakdown puts you in an emergency situation that could have been prevented.

In addition, if your furnace breaks, the same supply chain issues causing furnace shortages are causing delays in getting repair parts.

So even if it is repairable, you may be without heating for up to 21 days.

Next steps

For clients who have received quotes from us in the past, Call or contact us to reserve your furnace today.

For clients who may be concerned about the condition or reliability of their furnace, we can stop out for a free inspection and provide pricing for replacement.

Of course, there is no obligation to purchase. As always, it’s always your choice.

And to make it easy, we also have great, low monthly payment financing options that many of our clients take advantage of.

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