The biggest topics over the last year or so in the HVACR industry have been the supply chain and labor markets. They’ve combined to create a perfect storm of challenges for the HVACR industry. Also, during this time, demand for HVACR products has increased then remained steady. The forecast is to continue to remain steady. Other factors are worrisome. Companies have issued multiple price increases — Allied Air, Carrier, Lennox, and others. HVAC manufacturers are achieving record sales, but not record profits because of supply chain issues. Contractors are navigating this market carefully — and successfully — for the most part.

There are three areas of impact you need to successfully navigate in 2022: material shortages, labor issues, and homeowners. Many consumers are flush with cash and are looking to upgrade their HVAC units now instead of waiting. Here are some strategies for you to be successful in the coming year.

Supply chain issues

To handle supply chain issues, consider sourcing materials from multiple vendors. You can also branch out of your typical suppliers to create backup and/or alternate sources when supplies get tight. Adding more inventory on parts and products is a tricky balance. Be prepared to be able to service the newly varied inventory you now stock.

Treat suppliers well

If you don’t already, treat your suppliers and transportation companies very well. Remember that while you’re in business with these companies, all your interactions are with people. If you treat people well, they’ll respect you and help you. Some may go out of their way to make something happen for you when you really need it because you treat them better than the rest of your competition does.

When is it important to treat them the best? During the most difficult times. It’s easy to treat partners nicely when things are going well, but your suppliers will remember how you treated them when times were hard. And that will go a long way when you need them to make some extra effort for you.

Constant communication is key

Communicate frequently when there are issues and delays. First, communication with manufacturers and transportation companies will help you know when products and parts are supposed to arrive. Next, communicate with customers so they know what’s happening and when. Is there a part that’s delayed? Let your customer know right away. That way, the customer won’t blame you for the problem. They’ll know you’ve been helpful and are working for them during the entire process from sales to installation and customer service, etc.

Do more repair work

If replacement units are months away from being stocked, you can focus on repairs you can do now, including service maintenance that will keep systems running for a longer period. Doing maintenance and service work can also keep your crews more consistently busy than holding off work because of delays. Of course, some parts may be delayed just as much as the bigger units, so make sure you have a sufficient supply of parts for your service needs.

Manage your margins

Price increases are coming faster and more often than ever before – from manufacturers’ equipment to raw materials such as flexi-duct and aluminum. To keep pace with the increases, determine the margins you need to make on each project type – repair, new air conditioner or furnace, service call, etc. Make sure your prices reflect those margins. Include an expiration date on your estimates, and maybe tighten up the timeline temporarily so you don’t get caught completing projects at little or no margin. Unfortunately, price increases will impact your customers’ purchasing abilities. Remember to always offer financing when you’re quoting prices to customers. Payment options help customers leverage their money and help them pay for a project when they might not have all the cash on hand or help them better swallow a sudden price increase.

Employees – keep your existing employees

While the “great resignation” has impacted all sorts of industries, it's exacerbated labor problems already present in the industry.

Once you hire, onboard, and train employees, it’s even more critical to keep them. The Society for Human Resource Management says employers spend the equivalent of six to nine months of an employee’s salary to find and train their replacement. To keep your employees, you should review — and potentially improve — your current benefits, compensation, bonuses, and other incentives so your employees will stay with your company. That doesn’t mean you have to immediately increase everyone’s wages; there are many ways to improve employee satisfaction. In fact, one of them is effectively listening to your employees. Companies that listen to their employees most effectively have better retention rates.

While you want to make sure you keep your employees through the short-term crisis in increased demand, and labor and supply chain shortages, keep a long-term view of employment. Your company will be better for it, and your employees will be happier.

Prospective Employees – recruit, recruit, and recruit

According to the annual Nextar member survey, an overwhelming number said they wished they had increased their recruiting efforts, even before everything changed in March 2020. Improving benefits and satisfaction for your current employees will help in your recruiting efforts because word of mouth is one of the best ways to find qualified candidates. However, there are additional tactics to consider. Hiring bonuses, paid training, flexible hours, and unique benefits can help attract workers. Companies are also making job offers faster, so sharpen your skills on identifying the right person, and when you do, make the offer quickly. Don’t lose them to another employer — or even worse, a competitor. Finally, always be in recruiting mode — be on the lookout for the next hire.

Consider these ways outlined above to help your company navigate the multiple crises of a tight labor market and supply chain crunch happening at the same time. Thinking through some significant ways to respond will help you be successful in the short term and long term.