HVAC, 3rd Edition

The U.S. market for heating, ventilation and air conditioning (HVAC) manufacturing is recovering from a period of economic setback that started with the great U.S. recession of 2008. HVAC manufacturers had previously enjoyed a period of steady growth between 1997 to 2006 when equipment sales for heating systems and air conditioners increased 41% and 45%, respectively. But the economic downturn brought with it a stalled housing market, a stoppage of new home and commercial construction initiatives, and massive layoffs at factories that manufacture HVAC equipment.

The year 2012 represents a pivotal point for HVAC companies that are seeking to capitalize on market opportunities domestic and abroad, as well as secure long-term contracts and borrow cash at low interest rates to fund capital investments. Meanwhile, the U.S. government continues to ignite the economic recovery by funding projects that invest in rebuilding the U.S. infrastructure.

In September, U.S. Energy Secretary Steven Chu announced awards totaling more than $76 million in funding from the American Recovery and Reinvestment Act to support advanced energy-efficient building technology projects and the development of training programs for commercial building equipment technicians, building operators, and energy auditors. The 58 projects will help make the nation's buildings more energy efficient and cost-effective. They will also support programs to train workers to service and operate new and existing buildings, to develop and deploy best practices resulting in fewer greenhouse gas emissions, and to establish a green workforce with technical expertise to reduce energy costs for consumers. These projects are considered a major spark to ignite HVAC manufacturing and lead to renewed confidence that shipments will increase. Still, many HVAC manufacturers are greeting the end of 2012 with cautious optimism as they await the outcome of the U.S. Presidential election. SBI Energy, in its new report, HVAC 3rd Edition, finds that through 2015, HVAC manufacturing growth will remain relative flat across all categories until the next administration solidifies its economic recovery plans and begins to assertively back additional initiatives that require the latest energy-saving HVAC equipment.

This report examines the competitive and economic challenges facing U.S. manufacturers and consumers of HVAC equipment. The chapters discuss the key constituents affected by the downturn in HVAC manufacturing and profiles the leading manufacturers. We size the market based on historical data between 2002 to 2011 and forecast growth through 2022. Market sizing focuses on the various segments of U.S. HVAC manufacturing, including:

• Heat transfer equipment (excluding room and unitary air-conditioners)
• Room air-conditioners and dehumidifiers (excluding portable humidifiers)
• Warm air furnaces, including duct furnaces and humidifiers, and electric comfort heating
• Unitary air-conditioners, excluding air source heat pumps
• Air source heat pumps, excluding room air-conditioners
• Ground and ground water source heat pumps (single and split systems)

Our analysis takes a top-down approach to market projections in which we first estimate overall U.S. HVAC equipment demand and production activity, including import and export values, and then extrapolate and project the value of finished HVAC goods. The presentation of market sizing data is as follows:

• U.S. Shipments of HVAC Equipment, 2006 to 2012
• U.S. Imports of HVAC Equipment, 2006 to 2012
• U.S. Exports of HVAC Equipment, 2006 to 2012
• U.S. Market Value (Trade Balance) of HVAC Equipment, 2006 to 2012
• Projected Market Value of HVAC Equipment Manufacturing, 2012 to 2017
• Projected Market Value of HVAC Equipment Manufacturing, 2018 to 2023
• Key Growth Categories of HVAC Equipment Manufacturing, 2012 to 2023
• Cost per Unit of HVAC Equipment Manufacturing, 2012 to 2023
• Producer Price Indices Affected HVAC Equipment Manufacturing, 2012 to 2023
• We also includes market sizing data of the global HVAC industry as follows:
• Global Market Value of HVAC Manufacturing by Region, 2012 to 2023
• Asia Market Value of HVAC Manufacturing by Country, 2012 to 2023
• China Market Value of HVAC Manufacturing by Type of Equipment, 2012 to 2023
• European Market Value of HVAC Manufacturing by Country, 2012 to 2023

Data sizing the market for “green” HVAC products is presented in the following ways:

• U.S. Shipments of Geothermal Heat Pumps, 1997 to 2023
• U.S. Market Value (in $ millions) of Indoor Air Quality Products, 2012, 2017 and 2023
• U.S. Market Value (in $ millions) of Green HVAC Monitoring and Control Devices, 2012, 2017 and 2023

Table Of Contents

Chapter 1 Executive Summary
Zero-Energy Buildings are HVAC Growth Opportunity
Rebound of the U.S. Housing Market
Home Remodeling Will Add to Growth Contributed by Construction
U.S. HVAC Market Valued at $14.3B
Table 1.1: U.S. Market Value (in $ millions) of HVAC Equipment
Manufacturing, 2006, 2010, 2011 and 2012
Figure 1.1: HVAC Spending Per Capita in China, U.S. and Europe, 2012to 2023
Table 1.2: U.S. Shipment Value (in $ millions) of HVAC Manufacturing byType of Equipment, 2012, 2016 and 2017
Standards Affect the HVAC Industry
Air Quality, Comfort, Control, and Efficiency Drive HVAC Demand
Indoor Air Quality (IAQ) Market Offers Growing Opportunity
Control Systems Offer Additional HVAC Opportunity
Green Technology Driving the HVAC Market
IAQ Market Size
Table 1.3: U.S. Market Value (in $ millions) of Indoor Air Quality Products, 2012, 2017 and 2023
Sensor and Control Devices Provide Green Efficiencies
Table 1.4: U.S. Market Value (in $ millions) of Green HVAC Monitoring and Control Devices, 2012, 2017 and 2023
China Dominates Global HVAC Manufacturing
Table 1.5: Global Market Value (in $ millions) of HVAC Manufacturing by Region, 2012 to 2017
Energy savings in the European Union
Table 1.6: European Market Value (in $ millions) of HVAC Manufacturing by Country, 2012 to 2017
Unprecedented Increase in Cost of Raw Materials
Programmable Thermostats Bring Greater HVAC Control

Chapter 2 Introduction
Scope of the Report
Methodology
U.S. HVAC Market Today
Product Definition and Classification
Types of HVAC Systems
Figure 2.1: HVAC System Components
Types of Heating Systems
Green Technology Gaining Traction
The International HVAC Market Centers in China
The SEER Rating

Chapter 3 Market Trends
Table 3.1: U.S. Government Funded Projects Involving Advanced Building Control Strategies, Communications, and IT for Net-Zero Energy Buildings
Table 3.2: U.S. Government Funded Projects for Water Heating, Residential and Commercial Appliances and Misc. Electric Loads
Zero-Energy Buildings are HVAC Growth Opportunity
Figure 3.1: Residential and Commercial Energy Consumption (BTUs) in the U.S. 2006 to 2023
Table 3.3: 2015 Projected Buildings Energy End-Use Expenditure Splits
(in $ billions), by Fuel Type
The Recovery Act Aims to Increase Building Energy Efficiency (BEC) .. 37
Rebound of the U.S. Housing Market
Table 3.4: Air Conditioning Equipment by Type of Housing Unit, 2012 .. 39
Figure 3.2: Monthly Consumption of Steel (in $ millions) by Type of U.S. Construction Project, 2006 to 2012
Home Remodeling Will Add to Growth Contributed by Construction
Table 3.5: U.S. Home Remodeling Index (RMI) Trend, 2011 and 2012 . 42
Standards Affect the HVAC Industry
Measures Used to Achieve 13 SEER
Figure 3.3: Millions of U.S. Homes Using Central Air Conditioning, by Age of HVAC Equipment and Year of Home Construction
Figure 3.4: Share of Homes with Central and Room Air Conditioning by Decade
Air Quality, Comfort, Control, and Efficiency Drive HVAC Demand
Indoor Air Quality (IAQ) Market Offers Growing Opportunity
IAQ Standards: AINSI/ASHRAE Standards 62-200 and 55-2004
Control Systems Offer Additional HVAC Opportunity
Communication Improvements in HVAC Control
OBIX: Networking HVAC
Programmable Thermostats Bring Greater HVAC Control

Chapter 4 Market Size
Table 4.1: U.S. Market Value (in $ millions) of HVAC Equipment Manufacturing, 2006, 2010, 2011 and 2012
Table 4.2: U.S. Shipment Value (in $ millions) of HVAC Manufacturing by
Type of Equipment, 2006, 2010, 2011 and 2012
Table 4.3: U.S. Shipment Value (in total units) of HVAC Manufacturing by
Type of Equipment, 2006, 2010, 2011 and 2012
Table 4.4: Cost Per Unit of HVAC Equipment Manufacturing, 2006, 2010, 2011 and 2012
Figure 4.1: HVAC Spending Per Capita in China, U.S. and Europe, 2012 to 2023
Table 4.5: U.S. Shipment Value (in $ millions) of HVAC Manufacturing, by Equipment Category, 2006, 2010, 2011 and 2012
Table 4.6: U.S. Shipment Value (in Units) of HVAC Manufacturing, by Equipment Category, 2006, 2010, 2011 and 2012
Table 4.7: U.S. Market Value (in $ millions) of HVAC Equipment Manufacturing, 2012 to 2017
Table 4.8: U.S. Shipment Value (in $ millions) of HVAC Manufacturing by Type of Equipment, 2012, 2016 and 2017
Table 4.9: U.S. Shipment Value (in units) of HVAC Manufacturing by Type of Equipment, 2012, 2016 and 2017
Table 4.10: Cost Per Unit of HVAC Equipment Manufacturing, 2012, 2016 and 2017
Table 4.11: U.S. Shipment Value (in $ millions) of HVAC Manufacturing,by Equipment Category, 2012, 2016 and 2017
Table 4.12: U.S. Shipment Value (in units) of HVAC Manufacturing, by Equipment Category, 2012, 2016 and 2017
Green Technology Driving the HVAC Market
Table 4.13: Total 2012 Cost Comparison of Geothermal Heat Pumps and Oil-fired Furnace and Electric Air Conditioner
Table 4.14: U.S. Shipments of Geothermal Heat Pumps by Model Type, 1997 to 2023
IAQ Market Size
Table 4.15: U.S. Market Value (in $ millions) of Indoor Air Quality Products, 2012, 2017 and 2023
Sensor and Control Devices Provide Green Efficiencies
Table 4.16: U.S. Market Value (in $ millions) of Green HVAC Monitoring and Control Devices, 2012, 2017 and 2023
China Dominates Global HVAC Manufacturing
Table 4.17: Global Market Value (in $ millions) of HVAC Manufacturing by Region, 2012 to 2017
Table 4.18: Global Market Value (in $ millions) of HVAC Manufacturing by Region, 2018 to 2023
Table 4.19: Asian Market Value (in $ millions) of HVAC Manufacturing by Country, 2012 to 2017
Figure 4.2: Energy Efficiency Programs in Asia
Table 4.21: China Market Value (in $ millions) of HVAC Manufacturing by Type of Equipment, 2012 to 2017
Table 4.22: China Market Value (in $ millions) of HVAC Manufacturing by Type of Equipment, 2018 to 2023
Energy savings in the European Union
Table 4.23: European Market Value (in $ millions) of HVAC Manufacturing by Country, 2012 to 2017
Table 4.24: European Market Value (in $ millions) of HVAC Manufacturing by Country, 2018 to 2023
China Leads U.S. HVAC Import Market
Table 4.25: Value of U.S. Imports (in $ thousands) of HVAC Manufacturing, 2006, 2010, 2011 and 2012
Table 4.26: U.S. Import Value (in $ thousands) of Air Conditioners, Window or Wall Type, Self-Contained, Less than 2.93 KW per Hour,2006, 2010, 2011 and 2012
Table 4.27: U.S. Import Value (in $ thousands) of Air Conditioners,Window or Wall Type, Self-Contained, 4.98 KW-HR or Greater
Table 4.28: U.S. Imports (in $ thousands) of Air Conditioners, Window or Wall Type, Self-Contained, 2.93 KW-HR or Greater But Less than
4.98KW-HR, 2006, 2010, 2011 and 2012
Table 4.29: U.S. Imports (in $ thousands) of Air Conditioning Machines, Window or Wall Type, Not Self-Contained, NESOI, 2006, 2010, 2011 and 2012
Table 4.31: U.S. Imports (in $ thousands) of Air Humidifiers or Dehumidifiers, Not Incorporating a Refrigerating Unit, 2006, 2010,2011 and 2012
Table 4.32: Value of U.S. Exports (in $ thousands) of HVAC Manufacturing by Country, 2006, 2010, 2011 and 2012
Canada and Mexico Are Leading Export Nations
Table 4.33: U.S. Exports (in $ thousands) of Air Conditioners, Window or Wall Type, Self-Contained, Less than 2.93 kW-hr, 2006, 2010, 2011 and 2012
Table 4.34: U.S. Exports (in $ thousands) of Air Conditioners, Window or Wall Type, Self-Contained, 4.98 KW-HR or Greater, 2006, 2010, 2011 and 2012
Table 4.35: U.S. Exports of Air Conditioners, Window or Wall Type, Self-
Contained, 2.93 KW-HR or Greater but less than 4.98 KW-HR, 2006, 2010, 2011 and 2012
Table 4.36: U.S. Exports (in $ thousands) of Air Conditioners, Year-Round Units, 2006, 2010, 2011 and 2012
Table 4.37: U.S. Exports (in $ thousands) of Air Humidifiers or Dehumidifiers, 2006, 2010, 2011 and 2012
Rising Prices Heat Up HVAC Market
Table 4.38: U.S. Market Value (in $ millions) of HVAC Manufacturing,2018, 2022 and 2023
Table 4.39: U.S. Market Value (in $ millions) of HVAC Manufacturing by Type of Equipment, 2018, 2022 and 2023
Table 4.40: U.S. Market Value (in units) of HVAC Manufacturing by Equipment Category, 2018, 2022 and 2023
Unprecedented Increase in Cost of Raw Materials
Table 4.41: U.S. Market Value (in $ millions) of HVAC Manufacturing by Type of Equipment, 2018, 2022 and 2023
Figure 4.3: Producer Price Index for Parts, Accessories and Components of HVAC Equipment and Year-Over-Year Change, 2006 to 2023
Table 4.42: U.S. Market Value (in units) of HVAC Manufacturing by Type of Equipment, 2018, 2022 and 2023

Chapter 5 Manufacturer Profiles
Aaon
Figure 5.1: AAON Sales (in $ thousands) and Year-Over-Year Growth,2009 to 2012
Carrier
Figure 5.2: Carrier Sales (in $ millions) and Year-Over-Year Growth,2009-2012
Figure 5.3: United Technologies Corp.’s Portfolio of Carrier HVAC Products
Continental Materials Corp.
Daiken Group (Goodman Global)
Ingersoll-Rand (Trane)
Figure 5.4: Ingersoll Rand Sales (in $ billions) and Year-Over-Year Growth, 2009-2012
Johnson Controls
Figure 5.5: Johnson Controls Sales (in $ millions) and Year-Over-Year Growth, 2009-2012
Lennox International
Figure 5.6: Lennox International’s Portfolio of Commercial HVACProducts
Figure 5.7: Lennox International Sales (in $ millions) and Year-Over-Year Growth, 2009-2012
Watsco

Chapter 6 Consumer Market
Air Conditioned Space Increases Since 1992
Figure 6.1: Average Energy Consumption (millions of Btus per housingunit) and Number of Housing Units (millions), 1980 to 2009
Residential Heating Options
Figure 6.2: Water Heating in U.S. Homes, by Housing Type
Figure 6.3: Main Space Heating Fuel Choice by Decades of Construction, Pre-1950 to 2009
Figure 6.4: Central Air Conditioning Equipment Use by U.S. Region
Decreased Construction Leads to Fewer HVAC Installations
Figure 6.5: Residential HVAC System Utilization (in thousand housing units)
Figure 6.6: Primary Electric Energy Breakdown of Residential Buildings . 130
Figure 6.7: U.S. Residential HVAC Retrofit Expenditures (in $ millions) in Owner-Occupied Properties, 2002 to 2012
Commercial HVAC Sector has Different Needs
Figure 6.8: Commercial Building Primary Energy Use Breakdown
Figure 6.9: Fuels Used by End Use in Large Hospitals
Employment Outlook for HVAC