How the Labor Shortage Impacts HVAC Supply Chains (and what to do about it)

Today’s labor shortage and supply chain issues are no joke. Employers can’t find employees, customers can’t get their goods and we’re all left wondering when the madness will end.

A primary driver of the labor shortage is the increased trend of employees leaving their jobs. The Great Resignation, as it’s being called, has resulted in millions of Americans handing in their two weeks’ notice (4.5 million in November 2021 alone), outpacing every other year on record since the Bureau of Labor Statistics began tracking this data in 2000. Although hires have outpaced separations in recent months, employers are still battling over a relatively limited pool of candidates and having to offer higher pay, better benefits, and more remote work opportunities to remain competitive.

Another notable factor influencing the labor shortage is the drop in labor force participation. While the unemployment rate trended down over the course of 2021, the labor force participation rate has remained below 62 percent, not quite recovering to pre-pandemic levels. In other words, today’s labor market is facing an interesting situation where people who want a job are generally finding a job, but not as many people want a job in the first place.

This reshuffling of the labor force over the course of the pandemic has impacted just about every supply chain in the world, and the HVAC industry is no exception. Now on the tail end of winter, many building owners have experienced first-hand how long it can take to receive a much-needed part when a unit breaks down at an inopportune time.

While economists are still uncertain whether the labor and supply chain challenges we are facing today will continue through the end of 2022 and beyond, building owners have to accept this new normal and make the necessary plans to deal with it. Taking the proper steps now will prevent a lot of headaches down the road.

So, how does a national labor shortage translate into supply chain issues for HVAC equipment? Aren’t there still plenty of experienced HVAC technicians to go around?

Well, not exactly.

The labor shortage we are experiencing today has coincided with difficult changes in the HVAC industry. Increased pressure to make HVAC units more environmentally friendly is leading to some units needing to be replaced altogether rather than repaired, and the units themselves are becoming more difficult to service due to advancements made in the electronics running them. 

This perfect storm of changes paired with an ongoing lack of accessibility to necessary parts and a turbulent labor market means experienced labor simply can’t keep up. Data provided by Emsi, a labor market analytics and economic data provider, shows job postings for heating, air conditioning and refrigeration installers have remained above historical norms, but hiring levels have yet to meet the increased demand.

Karl Pomeroy, GM and President of Motili, a nationwide HVAC service provider, said these changes are especially having an impact on property managers. “Historically a lot of property managers have not really worried about supply,” said Pomeroy. “They’ve been accustomed to the fact that if something breaks, they’ll pick up the phone to call a contractor and will get it replaced.”

Now, it’s not so easy.

“These units are becoming more and more complex with more electronics onboard,” Pomeroy said. “Property management staff may not have the same capabilities to do repairs like they used to. Electronic boards make them more complex and difficult to manage.”

Ultimately, a national labor shortage mixed with increasingly complex equipment and changing regulations explains a lot about the current state of the HVAC supply chain. 

Luckily, there are ways building owners can get ahead of the issue.

Keeping your HVAC system in working order and helping it run for as long as possible can help you avoid some of these issues. Doing so will help protect you from having to do any significant changes until the labor shortage and supply chain issues have passed.

In order to do this, you first need to know what type of HVAC equipment you have and what condition it is in. This could be harder than you think.

“Most property owners really have no idea what condition their equipment is in,” said Pomeroy. “Properties get turned over so frequently that owners don’t know how old their HVAC is. The key is for property owners to do a significant evaluation, schedule replacements for the next 12-18 months and maintain their systems really well to extend the life of these units. Preventative maintenance can dramatically increase the life of these machines.”

If you don’t know how to figure out the current condition of your HVAC system yourself, schedule an inspection and have a qualified technician give you an overview of everything you need to know. How often should you be changing filters? What are warning signs that a significant problem could be just around the corner? What minor parts could you replace now to avoid a major issue down the road? Gathering answers to questions like these and putting together a checklist of preventative maintenance steps will help you keep your units running for as long as possible. 

It’s hard to maintain what you don’t know you have, so figure that out first and the rest will follow.

Ultimately, you might need to be prepared to pay more than you are accustomed to and wait longer than usual over the course of the coming months.

It’s not the HVAC company’s fault, so don’t get frustrated with them. The cost of equipment and labor have both increased dramatically in recent years, leaving HVAC contractors no choice but to increase their prices along with them.

But, there are ways property managers can account for these increased prices and wait times. By factoring these variables into the property’s budget forecast and making the necessary arrangements to deal with them over the course of the year, managers can remove the surprise factor and better accommodate the delays.

“For budgets, we suggest being more proactive,” said Pomeroy. “Proactive is the new reactive.”

While it might be more appealing to delay paying for a new piece of equipment until the current labor shortage and supply chain issues have subsided, sometimes there’s just no getting around it. If a unit breaks down and tenants start to complain, your only option might be to pay up and wait. 

Whatever your specific situation may be, the current state of the HVAC industry’s supply chain and labor pool make it clear that next year’s HVAC repairs are today’s problem. Like it or not, property managers must accept this new reality (temporary though it may be) and do what they can to mitigate its impact. Planning for your HVAC needs now will protect you from running into very frustrating (and potentially very hot or cold) problems down the road.