Plumbing & HVAC Contractors
Description
Companies in this industry install and service plumbing, heating, and air-conditioning equipment. Major companies from the US include ARS/Rescue Rooter, Comfort Systems USA, EMCOR, and TDIndustries.
Global demand for plumbing and HVAC services is increasing as economies progress and rising consumer inclination for comfort and luxury. The global market is projected to reach about $370 billion by 2030 with a compound annual growth rate (CAGR) of 3.9% between 2020 and 2030, according to Statista. Plumbing and HVAC contractors typically operate regionally, but some large companies are beginning to expand globally.
The US plumbing and HVAC contractors industry includes about 105,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $205 billion.
COMPETITIVE LANDSCAPE
New technology for HVAC and plumbing applications are driving growth in the industry. Systems that connect HVAC, lighting, and security elements as well as tools to monitor energy use and efficiency are popular in residential and commercial installations. The growing use of voice-control devices like Amazon's Alexa or Google Home is also driving residential demand for newer HVAC systems. Smart tech is also driving plumbing demand with personalization of shower and toilet function key for home markets and water efficiency for toilets and faucets important to larger installations. Some smart fixtures can also diagnose problems and alert for needed maintenance. Contractors experienced in new technology can benefit from new construction and remodeling demand as well as maintenance work.
Profitability depends on the volume of work a company can acquire, since most costs are fixed. Accounts receivable tend to be high, so a high volume of work also helps assure a steady stream of payments. Larger companies may have a competitive advantage in winning projects that require both design work and installation and in serving businesses with facilities in multiple markets. Small companies can compete by specializing in individual markets and by focusing on customer service. The US industry is highly fragmented: the 50 largest companies account for less than 15% of revenue.
Competitive Advantages:
Specialization - More residential and commercial customers are demanding personalization and efficiency options from HVAC and plumbing systems. Contractors able to offer specialized services to meet those needs should be able to win business.
Apprenticeships - Given the long-term shortage of skilled labor, companies able to offer training and apprenticeship programs will be able to recruit and retain more workers.
PRODUCTS, OPERATIONS & TECHNOLOGY
HVAC and plumbing contractors provide maintenance and repair of single detached residential buildings, which account for about 10% of the industry's revenue, followed by construction services for new single detached residential buildings. Some shops fabricate their own sheet-metal ductwork. Technicians are trained on installation and repair but often specialize in one or the other.
Plumbing contractors install bathroom and kitchen fixtures and the associated pipes in residential or commercial buildings, and may also install gas appliances and pipework.
HVAC and plumbing companies usually specialize in either commercial or residential segments, as the work differs fundamentally. Within both segments, revenues are further split between installation and maintenance; commercial companies usually do both, in many cases providing continuing maintenance under long-term service contracts.
For installation work, companies buy equipment such as furnaces, coolers, and air conditioners from distributors. Major equipment is custom-ordered for each project. Some sophisticated HVAC systems incorporate computerized monitoring and control components. Compressors, chillers, blowers, and other equipment are bought from manufacturers like Carrier, Trane, and Honeywell. Most materials are bought from specialty distributors like True Value, Graybar, and WESCO, or from home improvement centers like Home Depot and Lowe's.
Global demand for plumbing and HVAC services is increasing as economies progress and rising consumer inclination for comfort and luxury. The global market is projected to reach about $370 billion by 2030 with a compound annual growth rate (CAGR) of 3.9% between 2020 and 2030, according to Statista. Plumbing and HVAC contractors typically operate regionally, but some large companies are beginning to expand globally.
The US plumbing and HVAC contractors industry includes about 105,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $205 billion.
COMPETITIVE LANDSCAPE
New technology for HVAC and plumbing applications are driving growth in the industry. Systems that connect HVAC, lighting, and security elements as well as tools to monitor energy use and efficiency are popular in residential and commercial installations. The growing use of voice-control devices like Amazon's Alexa or Google Home is also driving residential demand for newer HVAC systems. Smart tech is also driving plumbing demand with personalization of shower and toilet function key for home markets and water efficiency for toilets and faucets important to larger installations. Some smart fixtures can also diagnose problems and alert for needed maintenance. Contractors experienced in new technology can benefit from new construction and remodeling demand as well as maintenance work.
Profitability depends on the volume of work a company can acquire, since most costs are fixed. Accounts receivable tend to be high, so a high volume of work also helps assure a steady stream of payments. Larger companies may have a competitive advantage in winning projects that require both design work and installation and in serving businesses with facilities in multiple markets. Small companies can compete by specializing in individual markets and by focusing on customer service. The US industry is highly fragmented: the 50 largest companies account for less than 15% of revenue.
Competitive Advantages:
Specialization - More residential and commercial customers are demanding personalization and efficiency options from HVAC and plumbing systems. Contractors able to offer specialized services to meet those needs should be able to win business.
Apprenticeships - Given the long-term shortage of skilled labor, companies able to offer training and apprenticeship programs will be able to recruit and retain more workers.
PRODUCTS, OPERATIONS & TECHNOLOGY
HVAC and plumbing contractors provide maintenance and repair of single detached residential buildings, which account for about 10% of the industry's revenue, followed by construction services for new single detached residential buildings. Some shops fabricate their own sheet-metal ductwork. Technicians are trained on installation and repair but often specialize in one or the other.
Plumbing contractors install bathroom and kitchen fixtures and the associated pipes in residential or commercial buildings, and may also install gas appliances and pipework.
HVAC and plumbing companies usually specialize in either commercial or residential segments, as the work differs fundamentally. Within both segments, revenues are further split between installation and maintenance; commercial companies usually do both, in many cases providing continuing maintenance under long-term service contracts.
For installation work, companies buy equipment such as furnaces, coolers, and air conditioners from distributors. Major equipment is custom-ordered for each project. Some sophisticated HVAC systems incorporate computerized monitoring and control components. Compressors, chillers, blowers, and other equipment are bought from manufacturers like Carrier, Trane, and Honeywell. Most materials are bought from specialty distributors like True Value, Graybar, and WESCO, or from home improvement centers like Home Depot and Lowe's.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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