HVAC construction market contractors express optimism at year's end
How’s the HVAC construction market in your part of the country?
For the first time in perhaps several years, there’s a good chance it’s doing pretty well.
Many companies are reporting that business seems quite healthy, according to those Snips has recently spoken to in its coverage of the sheet metal forming and ductwork fabrication industry.
It wasn’t hard for Randy Novak, president of Novak Heating in Hiawatha, Iowa, to come up with markets where workers are very busy. Novak just completed a term as president of the Sheet Metal and Air-Conditioning Contractors’ National Association. The job took him across the country to shops of all sizes, and gave him a chance to speak with many members.
Novak said in some regions of the country, such as Boston, San Francisco and New York City, SMACNA members find themselves with almost more work than they can handle. Hospital and university construction is especially busy in New England and the Bay area, Novak said.
“They’re just exploding with man-hours,” he said. “They’re really, really doing well. They’re doing some great things out there and there’s a lot of construction.”
Novak was quick to add contractors in some parts of the country continue to struggle, however.
A comeback market
SMACNA’s new president, Tom Szymczak (pronounced “Sim-check”), had similar comments. Szymczak runs SSM Industries Inc. in Pittsburgh, a $70 million sheet metal and mechanical HVAC contractor that specializes in nuclear power plant work, along with spiral duct and other industrial projects.
The six states his company serves — Pennsylvania, Virginia, West Virginia, Maryland, Ohio and New Jersey — are starting to see HVAC construction activity increase, he said.
“It hit (Pennsylvania) pretty hard,” he said. “(The downturn) lagged behind most of the country by about two years, so where a lot of sectors had started to come out a year ago, we’re just starting to see the climb out of the hole about now.”
As a large contractor spread across six states, Szymczak said SSM may have been more fortunate than most when it came to surviving the deep ductwork fabrication recession of 2008-2012.
“We handled it relatively well,” he said. “We’re fortunately diversified enough. We have five sectors in our company. With our ability to travel, we do a lot of traveling from state to state for work. It’s benefited us quite a bit to come through this. We were able to find something somewhere.”
The company’s current employee count is about 350, a figure Szymczak said he expects to remain stable, along with the company’s workload.
“This year is going pretty good,” he said. “I don’t see us having a big increase in our volume. I look for it to remain somewhat flat again with a little increase. But overall… I see projects that had been kind of stagnant starting to redevelop, so overall I see the uptick coming.”
And that’s good news, he added.
“I think we’re finally getting movement in the right direction.”
ACCA stays upbeat
Members of residential HVAC contractor group the Air Conditioning Contractors of America appear to agree with Szymczak’s assessment. For several years, the association has been surveying members’ feelings each month on the chances for economic growth in the near term. ACCA members are asked how they feel about business prospects, existing activity and staffing levels.
The results are turned into a number from one to 100 and called the Contractor Comfort Index. Anything above 50 means most contractors anticipate an increase in business, with higher numbers indicating greater confidence.
All of 2014 has seen generally high numbers, with the index reaching the record high of 86 in May. For September, the most recent figure available, the index was at 75.
For many members of the Associated General Contractors of America, the problem isn’t finding work — it’s finding the workers to do the projects.
After a long stretch of near-Depression-level unemployment, the number of out-of-work construction workers fell to 7 percent in September — the lowest figure since 2007, the association said.
An estimated 16,000 new industry jobs were created for the month, bringing total employment to 6 million.
“While we are eager to see even more construction employment gains, there is no denying the fact that the industry has been in recovery mode for much of the past three years,” said Stephen E. Sandherr, the association’s chief executive officer. “But the industry won’t be able to keep filling positions if there aren’t enough qualified workers available to fill them.”
Sandherr said not enough schools offer vocational training to meet the labor demand. The AGC is lobbying for states, cities and private companies to establish more technical educational programs.
“Labor shortages happen when a growing industry meets a stagnant pool of qualified workers,” he said. “It is time to align our education and training systems with current economic conditions so more young people can benefit from the rebound in construction demand.”
Although it still has a ways to go to reach the highs of the mid-2000s, housing has been a bright spot in 2014 — a trend that the National Association of Home Builders hopes will continue into next year.
In September, U.S. housing starts surpassed 1 million, the NAHB said, citing government data. It was only the third time this year that housing construction reached that level. Total production for the month increased 6.3 percent to a seasonally adjusted 1.02 million annual rate.
“I expect we will see a continued recovery as job creation grows and consumers gain more confidence in the housing market,” said David Crowe, the association’s chief economist.
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