December 2021 Newsletter

A Word from our President

cody

by – Cody Hanna-Hanna Heating & Air

Hello everyone!

We would like to thank BCS for hosting last month’s general meeting, there is no general meeting in December. January’s meeting is at WTI on January 20th, 2022 @ 11:45.

The KCCA wishes you a very merry Christmas and a happy new year!

See you all in 2022!

Please feel free to email or call Cody at (316) 945-3481 or cody@hannainc.com with any concerns or questions.


xmas

Reminder for those who RSVP

KCCA Christmas Party!!

Wednesday December 15th, 2021 @ 6:15PMPrairie Pines Festivals
4055 N. Tyler Rd.
Maize, Ks 67101  

Reservations are closed!


Education

Thank you to everyone who attended this years classes.

The board will be looking at doing some

classes Fall 2022


Congratulations to Zachary Perrault on becoming another tool scholarship winner.  Zachary has been with Kelly & Dawson Service since May 2021 and graduated from WSU Tech.


KCCA $500 TOOL SCHOLARSHIP
The board revised the Tool Scholarship a little. KCCA wants the employee to be working for the KCCA member for 3 months before they are eligible for the $500 tool Scholarship. So in short the employee or employer need to submit application and proof of graduation from one of our local trade school after the employee has worked for them for 3 months.


November’s General Meeting

November’s general meeting was hosted by BCS.  Wendall Love did a great overview of what BCS has to offer the HVAC contractors and gave us some great information on some new products coming out. 

Congratulations to Krys Spiker from Spiker Heating & Air, he was the BIG $100 winner @ November’s meeting.

Hope to see you @ future meetings!! All general meetings are held on the 3rd Thursday of every month except August & December.


2021-2022 Meetings
 
December       Christmas Party
January           WTI @ WTI
February         Stoney w/MABCD 
March             Butler County Community College
                       @ BCCC in Rose Hill
April                Wichita City Mayor
May                WSU Tech @ WSU Tech
June               Tom Roberts

This list is subjust to change due to speakers not able to make the date we have selected for them.

Labor, Supply Shortages Hit Manufacturers’ Bottom Lines in Latest Quarter

Backlogs reach records as factories work to catch up

FORWARD LOOKING: Carrier CEO Dave Gitlin said supply chain issues impacted the company’s margins in the latest quarter, but long-term trends, such as a focus on sustainability, point to continued strong performance.


The major HVAC manufacturers saw higher sales and revenues in the third quarter thanks to continued strong demand and the effects of several price hikes. Margins were another matter. Increased expenses for materials and parts, along with higher labor costs, all had an impact. The questions going forward are how long will costs remain elevated due to supply chain issues and will demand remain high?

For example, Lennox International reported record third-quarter revenue of $1.06 billion, but the company took hits of approximately $75 million to revenue and $25 million to operating profit from supply chain issues. This was despite four price increases this year. Trane Technologies also reported record revenue in the third quarter, but margins declined by more than 50 basis points.

Contractors have been able to absorb these price increases to an extent thanks to strong demand from consumers. The shift to work from home and government stimulus boosted this demand much higher than expected when the pandemic started. That demand continued through the third quarter, and should remain in part because of the supply shortage, but manufacturers are seeing signs of moderation.

That’s true for both replacements and new-home construction. David Gitlin, CEO of Carrier Global Corp., said new-home builders delayed several projects due to supply constraints in a range of materials and supplies. Carrier’s residential backlog was 70% higher in the third quarter than it was a year ago. Gitlin said there has been a year-over-year decline in residential equipment demand, although it’s hard to compare this year’s performance to 2020.

“Looking ahead for the company overall, demand remains strong. But global supply chain bottlenecks and shortages are not expected to be resolved soon, and COVID-19 adds more complexity to labor and production disruptions.”

Todd Bluedorn
CEO, Lennox International

Commercial Business Starts to Return

The good news for manufacturers comes from the commercial side of the business. Gitlin said Carrier received more orders in these segments, with schools and warehouses being especially robust. He said restaurants and retailers are also coming back to the market. As a result, the HVAC manufacturers are becoming a reopening play for investors.

Modine Manufacturing Co. reported higher commercial sales in the third quarter, driven by higher sales of heating and ventilation products. Data center demand was especially strong. Still, operating income declined $3.5 million from the prior year to $10 million. The decrease was primarily due to higher material prices and labor costs.

The same supply issues that slowed residential deliveries affected commercial production. CEO Todd Bluedorn said Lennox’s commercial business was hit hard by an outbreak of COVID among workers. That added to the issues created by the supply chain.

“Looking ahead for the company overall, demand remains strong,” Bluedorn said. “But global supply chain bottlenecks and shortages are not expected to be resolved soon, and COVID-19 adds more complexity to labor and production disruptions.”

HVAC executives are looking at ways to ease these constraints now and going forward. Gitlin said Carrier created a supply chain war room that operates 24 hours a day. He said Carrier staff have been on-site at suppliers and the company is using digital tools to stay better connected with customers.

“We are tackling this situation both tactically and strategically,” Gitlin said.

Seeking More Sources for Supplies

Emerson CEO Lal Karsanbhai said his company ramped up the use of secondary sources and qualified alternative suppliers. Emerson redesigned products to utilize available components and redirect freight to avoid backlogged ports. To offset the labor shortage, Emerson raised wages, shifted production to factories with a more stable workforce, and accelerated the deployment of automation.

Attracting new workers was only half the battle. Karsanbhai said high turnover also created issues at plants. That’s another reason why manufacturers are looking at more automation. Gitlin said Carrier aims for 6 million automated man-hours by 2026.

Gitlin said Carrier is looking at ways of making its supply chain more resilient. This includes minimizing the single points of failure. Gitlin said Carrier executives are targeting having dual sources for 75% of the needed components.

China, which was provided manufacturing manpower for the past two decades, was struck by a range of problems, including COVID outbreaks and industrial power outages. Gitlin said Carrier was paying 10 times as much to get a container out of China at it was a year ago. Karsanbhai said the pandemic now has manufacturers looking at spreading risk in different geographic areas.

“These dynamics show how important regionalization is,” he said.

Even U.S. Factories Faced Issues

As Lennox shows, the answer isn’t just moving production back to the United States. Aaon Inc. reported a decline in unit volume of around 11%. Company executives attributed the decline to a very tight labor market that slowed plans to ramp up production. While the company’s overall headcount grew during the year, that was due to getting its facility in Longview, Texas, up to speed. The number of workers at Aaon’s plant in Tulsa, Oklahoma, was slightly down year over year. Also, the Longview plant was struck by a COVID outbreak that reduced the production of coils that were needed to complete units in Tulsa.

HVAC executives agree that these issues will work themselves out eventually and that the HVAC industry will benefit from long-term trends. These include a move to improved IAQ and decarbonization. Gitlin said more than 30% of residential heating sales in North America are heat pumps.

Karsanbhai called the past year’s environment both challenging and rewarding. All the executives went out of their way during their earnings reports to praise their staff for their hard work in challenging times.

“I am proud of the work our team is doing to meet customer needs while managing significant headwinds from persistent material inflation and tight supply chain dynamics,” said Dave Regnery, CEO of Trane Technologies.


Funny Photos


risk management corner

Don’t Let Your Guard Down Around Cold Weather

Although extreme cold weather has traditionally been isolated to certain parts of the country during the winter months, with climate change we are seeing shifts in how long cold weather will linger, where it is hitting, and the impacts it can have for those who are not prepared.1

Until you have witnessed firsthand the devastating effects of a blizzard, ice storm, wind storm, and other cold weather events, you may not realize how destructive — and dangerous — they can be. Temperature fluctuations can cause soft, fluffy snow
piles to become dense, sharp ice blocks. The weight of snow can cause damage to homes, vehicles, and power lines. Icy wind can obscure visibility, water can form black ice on roads, and sharp drops in temperature can cause frostbite to exposed skin
in minutes. Prepare for the worst by creating an emergency preparedness and response plan. Even if you think you will never have to face certain cold weather safety conditions, having a plan could be your saving grace if there is an unexpected cold
weather event.

Emergency Preparedness
Addressing unique challenges specific to each business’ facilities, operations, and potential risks through an emergency preparedness and response plan is a tried and true way to prepare. Train your employees on your plan, and keep a copy of the
plan on-site to reference. Pay attention to the National Weather Service as they issue watches, warnings, and advisories across various media channels. Depending on what type of cold weather is predicted, be ready to advise your employees to stay home if driving conditions are too dangerous. Update your business hours online if you need to close early or open late.

Business Response
Is your business ready to handle a cold weather event? There are several things to keep in mind that may help to keep your workplace and employees safe:
 If ice or heavy snow are predicted, keep the area well lit and have shovels and sidewalk salt on hand to help prevent slips, trips, or falls.
 Power outages due to heavy wind, snow, or ice may leave you without electricity. Consider purchasing a backup generator and keeping an emergency kit at your business.
 Keep a close eye on the temperature — if employees must be outside be sure they have regular warming breaks and provide the appropriate protective gear for the weather.
 Evaluate your company vehicles for winter weather readiness and make sure each one has a full tank of gas, an emergency kit, snow scrapers, and a spare shovel.

Employee Safety
Above all else, employee safety should a top priority. Your employees are your number one asset, and in unfamiliar weather situations they should know who to turn to for direction, and how to keep your business — and themselves — safe. It’s also a good idea to have your employees create a communications plan between their departure location and destination if they must drive.As seasonal changes bring lower temperatures each year, businesses should plan for the highest threat when it comes to weather events. Remember, it is better to be over-prepared than left out in the cold.

1. https://www.bbc.com/news/science-environment-58425526 Accessed 10/5/2021.

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