2021 Word of the Year—Shortage.
From vaccines and turkeys to cars, 2021 will be remembered for shortages. While some shortages were quick to resolve, some will linger and persist throughout 2022. The commercial and industrial HVAC industry will continue to experience backlogs and price increases due to supply and demand imbalances, shipping and logistics logjams exacerbated by lockdowns and border closures, port congestion, and personnel scarcities. As the world faces more lockdowns due to the Omicron variant, shortage relief is not in the near future.
Unfortunately, shortages will continue throughout the world and across the commercial and industrial HVAC industry. For example, new lockdowns in China will directly impact the semi-conductor shortage, which will impact heating, air conditioning, ventilation, and other building systems. Semi-conductors are critical in construction products, such as lighting, fire protection, and air-source-heat pump systems.
In a joint statement by the co-chairs of the ‘The Construction Leadership Council (CLC)’, John Newcomb and Peter Caplehorn warn that the limited availability of semi-conductors used in boilers and other heating systems risk being deprioritized by other sectors.
“Due to the size of their orders, there is a natural bias in the system towards automotive and electronics firms, which may cause issues for manufacturers of boilers and building-related electrical systems.”
2022 Commercial & Industrial HVAC Supply Predictions
In addition to chip supply concerns, the CLC expects rising energy costs and price inflation to amplify industry concerns in 2022. Specifically, the CLC estimates a minimum price increase between seven to ten percent and has warned that delays and volatile prices for global shipping to exist throughout the third quarter of 2022.
According to the CLC, seven of the world’s ten largest container ports are in China, so a delay there can have an astonishing domino effect, not to mention China’s ‘zero’ policy on COVID outbreaks.
Finally, the CLC reminds us that “with the Beijing Winter Olympics taking place in February, factories will be closed in 64 northern Chinese cities to improve air quality. This will almost certainly affect many construction products, which will have a knock-on effect on levels of inventory later in 2022. While some issues have eased, they have not been fully resolved, and longer lead times will return as the volume of demand increases later in the year.”
The commercial HVAC industry recommends that necessary projects, which may have been placed on the back burner, should be prioritized. HVAC repair and installations should be fast-tracked in 2022, as projects could have delays of weeks or months due to the backlog of supplies and before the prices jump to their project highest levels.
