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The mission of HARDI, the national association of Heating, Air-conditioning & Refrigeration Distributors International, is “Making wholesale distributors the channel of choice for HVACR manufacturers and contractors.” To accomplish the mission takes a combination of an engaged membership using the organization’s toolkit to maximize their potential.
We wanted to hear about the pain points members are currently facing, and new initiatives available to help HVACR wholesale distributors within their daily book of business. We sat down with Talbot Gee, HARDI CEO, in advance of the HARDI Annual Conference: IGNITE, taking place Dec. 3- 6 in Houston to hear about member challenges and issues, and what’s in store at the event. For more information on the event and the organization, please visit www.hardinet.org.
Ruth Mitchell: We’ve watched as supply chain issues, labor shortages and climate change have impacted industries across the world. How are HVAC distributors fairing, and how is HARDI helping guide its members on these issues into 2023?
Talbot Gee: Our distributor members have become incredibly creative as they’ve had to adapt to the persistent challenge of long and unpredictable lead times. As demand eases, so will the backlog of orders at suppliers and that will allow lead times to improve.
We closely watch and interpret government affairs that impact our members’ businesses. We keep our thumb on the pulse of the supply chain and give our members industry data, but also the perspective required to understand where they sit in the channel.
We have a robust talent program in which we offer industry-specific recruitment and retention solutions. We also create specialized training curricula for the most critical job positions — helping distributors better develop and retain the talent they already have.
RM: Having just listened to Brian Loftus, HARDI’s market research and benchmarking analyst, give his August update, he alluded to a slowdown in product demand during the year ahead. How does HARDI help prepare and guide its members through the cycle ups and downs?
TG: We work to guide our members through these challenges by providing valuable tools like the monthly TRENDS report (https://hardinet.org/pages/monthly-sales-trends), in which Brian Loftus provides analyses of dollar-weighted company performance, adjustments for changes in number of billing days, overlays with heating and cooling degree days, sales-to-inventory ratio, and day sales outstanding metrics.
Monthly economic temperature checks are provided to our members via our Data Driven Newsletter (www.hardinet.org/pages/data-driven-newsletter), HARDInomics (www.hardinet.org/pages/hardinomics) and TRENDS. Our in-house experts breakdown complex analyses through periodic video summaries and timely webinars.
Additionally, custom intelligence services such as our Demand Per Location (www.hardinet.org/pages/custom-intelligence) tool address wide variations in local economies so our members can better allocate their resources.
RM: What are the new issues the HVAC industry is facing?
TG: Distributors are grappling with rising costs of operation, product, and selling, general and administrative expenses.
1. Because of supply chain delays, distributors need to keep more inventory. Not only are there additional financial costs associated with carrying extra inventory, but operational efficiency is compromised when trying to function around it.
Further, carrying this greater inventory (at inflated prices) has been possible because of contractors’ ability to pay their bills at historically fast rates. Should contractors start slowing their payments to distributors, cash will get tight quickly as will inventories and product availability.
2. We are concerned about the impact of Regional Standards on distributors in the Southeast and Southwest regions. With the required installation compliance date, many distributors are working to ensure their non-compliant equipment is sold before the deadline. For some distributors impacted by Hurricane Ian, the demand for product has been delayed while cleanup and recovery efforts are underway. Because of this, we have asked DOE for leniency in meeting the deadline but have not heard back on this issue yet.
There are also concerns for next year. As of Jan. 1, 2023, there will be new equipment regulations and limitations. There is concern about whether suppliers will be able to adequately support demand with appropriate product in the first half of 2023. This will have different effects in different regions too, which could create some inventory whiplash across the country.
3. Labor challenges continue to be a concern. Between an aging work force, a lack of qualified candidates and two years’ worth of pandemic stress, our members are feeling the pressure to maintain performance and production levels. Couple these factors with issue No. 1 above, and distributors have a major challenge ahead of them to keep their businesses right-sized between service expectations and profitability.
4. The last two years have seen an incredible rate of contractor ownership changes, which continues today. Several of these changes have further stressed supply chains and product availability as well as some supplier relationships. As a result, distributors are doubling down on innovative value-added services for their contractor customers, so price isn’t the one and only factor when contractors are choosing who they buy from.
RM: What’s new at HARDI HQ?
TG: Throughout these times of heightened uncertainty, we feel an obligation to provide our members with the best, most relevant information and content they are unlikely to find elsewhere, so we’ve continued to grow the frequency and depth of content on the economy and the HVACR market, government affairs, and talent retention, development and recruitment.
1. We strive to support the evolving needs of our members by continually developing our talent programs. Recently, we’ve added external learning management system (LMS) capability, so that companies who have their own LMS system can port our curricula or individual courses into their own. We’ve also seen a growing need for development of outside sales teams and have added a Territory Manager Certification program to our learning and development resources.
2. We are in the final stages of development for a HARDI Market Intelligence dashboard, which provides users with a graphical display of core HVACR business metrics. It’s designed to help users visualize complex sets of HVACR market data, and assist with making informed business decisions.
3. We offer local market analyses to aid distributors in forecasting, performance evaluation, expansion and sales strategy because market trends are becoming increasingly localized.
RM: HARDI’s annual convention will take place Dec. 3-6, 2022, in Houston. Its theme, IGNITE, tells me we are in for another exciting and engaging event. How does the theme translate into the convention programming, and tell us about the keynote sessions that will drive home the information and guidance HARDI members can use in their daily book of business, especially with the challenges mentioned above?
TG: We have heard repeatedly from members that the last two years have been two of their respective company’s best in history but also the most exhausting and least fun for their teams because of all the challenges and disruptions mentioned previously. IGNITE is all about rekindling the excitement and fire for distributors and their vital place in the channel going forward.
The 2022 HARDI Annual Conference has four distinct tracks: Personal Advancement, Organization Development, Business Impact and External Factors. Through each of these lenses, attendees will be engaging in discussions and sessions that truly originate from a place of innovation. Coming out of the COVID-19 pandemic, many of our members are faced with defining their new normal. This is a chance for them to break out of molds that are no longer serving them. Our speaker line-up will inspire ideas and help them to ignite new ideas.
For more information on HARDI, please visit https://hardinet.org/
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