Thoughts on Coronavirus & Our Industry

It is amazing how quickly things can change in the course of a week or two. I was brought up to always follow the news and goings on within the country and around the world. I have been following the news on this virus since it first started making headlines in China. Like most folks I didn’t pay it much heed as I did not believe that it could come to the United States, or if it did then it wouldn’t have any impact on us.

When it started making headlines in Seattle it surprised me. My brother and his family are located just a few miles away from that unfortunate nursing home. I spoke with him the other day and his kids are out of school, his work has shutdown entirely, and his wife is working from home. For such a populated area it now feels like a ghost town. It has been this way for a few weeks but we still had seen no impact or change in things here in Kansas City. It wasn’t until the past couple days that things began to pick up here.

There were a few cases announced in the county where I work and a few additional in a neighboring county. I believe it was on Thursday where Kansas had its first reported death from the virus. My wife and son went to the grocery store on Friday to stock up on the essentials and it was a madhouse. Many people were panicking, for some reason. It seemed they had lost all respect for their fellow men. Businesses have already begun to shut down and I believe it is only a matter of time before they shutter the schools here as well.

This virus, along with the economic instability that comes with it, is now impacting everyone across our country and the world. At this point there is no telling just how long this panic will last. I am not worried about the virus itself. I am not a medical professional, but I believe this has been hyped up by the media to an extreme level. I can only hope that we will all begin to come to our senses. In the meantime all of us have to deal with the impacts of shuttered businesses and so called social distancing.

From what I understand there has been minimal impact on the pricing and supply side of refrigerants. This is good news, but the question is what impact will we see in HVAC industry overall? I was thinking about this yesterday and I do not believe there will be too much downturn. For an example, let’s look at grocery stores. The demand for food, toiletries, and supplies have been through the roof. So, that would mean the necessity of having running refrigerators and freezers at the supermarkets would be even higher then normal. The supply chain of reefer trucks to move the product between warehouses and stores will still have to flow. The warehouses will still need to store the product. The plants will still need to manufacture the product. The good news is that a lot of these businesses are operating at overload capacity. When that happens systems will break or fail sooner. This means repair bills, refrigerant recharging, and perhaps whole new installs.

As of now the supply chain looks to be intact. If that starts to crumble then things will get much worse for everyone and we will see all of this demand fall. Assuming the supply chain stays up and everything is fine on that front the other avenue I was thinking about is the air conditioning sector. If businesses are closed down then that means far less demand and far less chance of failure of commercial units. This could be in office buildings, department stores, or restaurants and bars. The demand from these customers on HVAC repair may dry up rather quickly.

The opposite side of the coin is with all of these folks staying home there is going to be much more demand on your traditional split systems. If this social distancing and working from home continues for months then we could see a sort of boom of air conditioner repairs at home. It is not yet hot here in Kansas City, but if we look at Miami I can see they are already in the eighties. Give it another month and folks will be turning on their air conditioners if they are not already. Imagine the impact of running air conditioners all day and night due to self quarantines. No more turning the AC up before you leave for work. This increased demand will no doubt cause an increase in failures.

Conclusion

In closing folks I think it is important to remember that so far this Coronavirus is very similar to previous timelines. If we go back to 2009 when the Swine Flu was in full swing there was not near as much panic. This is odd because if you look at the overall numbers of the Swine Flu they are very surprising. According to Wikipedia nearly seven-hundred million people were infected with the H1N1 Swine Flu from 2009. Out of those seven-hundred million there was an estimated three-hundred-thousand fatalities. (Some estimates as high as five-hundred-thousand.)

So far with this Coronavirus there have been around six-thousand deaths. It has been making headlines now for about ten weeks. Six-thousand deaths divided by ten and then multiplied by fifty-two gives us an estimated fatality rate for the year. This equals out to about thirty-one-thousand fatalities. For argument’s sake lets times that number by ten to account for compound growth since the virus is still relatively new. That puts us at around three-hundred-thousand deaths across the world.

Now, please don’t take this the wrong way. I am not trying to minimize anyone’s death to this virus. Each death is a tragedy. The point I am trying to make here is that this Coronavirus may not even surpass the Swine Flu pandemic that we had back in 2009. I honestly don’t even remember the Swine Flu from 2009… so I am hoping that this Coronavirus goes the same route and in a few months time we would have all but forgotten about it.

Thanks for reading folks,

Alec Johnson

RefrigerantHQ

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