December 26, 2023

HVAC Pulse

Hi all,

I've got one last issue for 2023 even though it sounded like last week's was the last one, but I ran across some news and links and wanted to share them.

Last week, I saw news that a company called Ambient Enterprises was forming a partnership with DMG, DMG North, and Toro Aire. A few thoughts:

I spent the majority of my career divided between DMG and DMG North and I'm happy and excited for my former coworkers. My time at both companies just so happened to be right before they both moved to their current headquarters. Looking back at how much they grew in my time there, in the time since I've left, and now this, is remarkable.

I'm curious as to why it's called a partnership. I'm assuming it is some sort of partial stake rather than an all out acquisition. In the past, I've seen rep firms acquire stakes in other firms when their line cards are similar and it gives them a bigger addressable market. In this case, I'm thinking access to financial resources and access to additional product lines.

Finally, is this the end game for all HVAC companies? Continued consolidation until there's only a few big players and tens or hundreds of smaller, niche firms? We are seeing this not just in the rep firms, but also in the actual manufacturers themselves. Daikin continued its years long shopping spree by acquiring Alliance Air in March to add to its long list of acquisitions of manufacturers including Venstar, Goodman, McQuay AND rep firms like Thermalair and stakes in Norman S. Wright.

If you look at other industries, NBC, ABC, and CBS ruled television for decades until a startup called Netflix disrupted their business model which we're still seeing pan out today. You also had the big 3 in the American auto industry of Ford, GM, and Chrysler. Eventually Honda made a name for itself with fuel efficient cars during the oil crisis of the 1970's and then an electric car start up called Tesla forced the old stalwarts to rethink its product AND go to market strategy.

I can see a similar thing play out in the HVAC industry but maybe not for a long time. Air conditioning isn't as sexy as Hollywood or cars when it comes to starting a new company and disrupting an industry. The current go to market strategy of using local reps and distributors has worked for decades and I don't see it changing any time soon. And it keeps me employed.

What are your thoughts on the consolidation of HVAC companies? Is it a good or bad thing?

If You Read One Thing

What Happens When Facebook Heats Your Home

In Denmark, Meta, the parent company of Facebook, is using the heat produced from cooling its data centers to heat local homes.

The heat pumped out by data centers isn’t hot enough to be plugged into people’s houses directly, and an energy company has to both boost the temperature and handle billing. The utility company captures the heat from Meta at around 80 degrees Fahrenheit (around 26.6 degrees Celsius), before boosting it to the 170 degrees Fahrenheit (76.6 degrees Celsius) needed for district heating, says Palle Grøndahl, Fjernvarme Fyn’s acting head of development.

Quick Links

⚡️ Electrify Your Home 101

I recently received an Electric Coach certification from Rewiring America. So naturally, I made a YouTube video covering the basics of electrifying your home.

🏋🏻 California wants to pump. You. Up.

Regulators quietly came out with draft language last month that would require existing homes to replace their air conditioners with heat pumps or more-efficient HVAC systems when they burn out.

This is a big, almost drastic step in getting people to switch to heat pumps. But if you think about it, it's almost necessary if we are to meet the state's goal of installing 6 million heat pumps by 2030.

Final Word

Finally, I decided to move this newsletter from Substack to Buttondown. I don't believe in some of the actions and beliefs of the Substack leaders and I no longer want to use their service. For you the reader, hopefully nothing will change and you will continue to receive this newsletter. Thanks again for reading and being a subscriber. Here's to 2024. For real this time.

Thanks for reading! Whenever you're ready, here are ways I can help you.

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3. YouTube Channel - You can find all my video content at my YouTube channel.

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