ARC says HVAC control market collapsed in 2008 and 2009

October 28, 2009
ARC Advisory Group
News

Summary

The collapse of the US housing market and subsequent chain reaction of events made for a very difficult business climate for 2008 and 2009, but it may start to grow.

October 28, 2009: The Heating, Ventilating, and Air Conditioning (HVAC) market, like nearly all other markets, has been significantly impacted by the economic turmoil that materialized in 2008 and accelerated through the first half of 2009. The HVAC market enjoyed a strong 2007 and early in 2008 the market looked like it was going to enjoy another strong year, but the collapse of the US housing market and subsequent chain reaction of events made for a very difficult business climate for the remainder of 2008 and into 2009.The HVAC controls industry is in the middle of a very interesting transition. The market seems to be mature and stable — the seven largest suppliers account for more than four-fifths of all sales. “However, fundamental changes taking place in the market, such as the need for enterprise visibility, integration of HVAC systems with other building automation systems, increasing use of analytics in HVAC control, energy management initiatives, and the impact of web enabled systems and cloud computing make this dynamic market ripe for innovation,” according to ARC Research Analyst Joseph Gillespie, the principal author of ARC’s “HVAC Control Systems Worldwide Outlook.” Increased Focus on Building Lifecycle Costs One aspect of HVAC control systems that was not always considered in the past is that energy efficiency, lower environmental impact, and improved employee productivity all add up to a lower total cost of ownership and more attractive bottom line. However, this oversight is quickly dissipating and as building owners and engineers plan new projects or prepare for renovations, they are considering more than just the cost of buying, installing, and commissioning individual elements. Intelligent control systems can monitor and optimize energy consumption, quickly send out alarms and notifications that can prevent downtime, provide reports of systems that may be in override mode, and record historical data to monitor trends in energy consumption. Systems that are geared towards lowering the total cost of ownership over the entire lifecycle of the building and have the ability to tie this information into the enterprise level will experience the strongest growth over the forecast period.IP Technology Expands the Functionality of HVAC Control SystemsThe adoption of Internet communication standards and Web Services in the HVAC controls market is extending the concept of smart buildings by including intelligent analysis of building data. In sharp contrast to traditional HVAC solutions, the new requirements for HVAC solutions include providing facilities managers the tools to perform the same sophisticated business intelligence analysis typically reserved for enterprise applications. Recognizing the emerging need for increasing business intelligence, more HVAC controls suppliers are focusing on providing these capabilities. The goal is to develop intelligent HVAC solutions capable of providing facilities managers the ability to base operational decisions on real-time performance data, uncover hidden costs, and find opportunities to reduce energy consumption and save money through comprehensive facilities management.Recent Legislation and Stimulus Efforts Will Drive Growth in North American MarketThere is increasing local and national focus on drafting legislation in many countries that addresses building energy usage. There have been several major pieces of legislation in the US within the past five years that provide framework and financial incentives via increased tax deductions, loans, and grants to increase energy efficiency in buildings. At a time when the primary factor inhibiting growth in nearly all markets is the availability of capital and heightened opportunity costs for capital investments, new and increased incentives provided by the government to spur investments in building efficiency may be enough of a “shot in the arm” to counteract the substantial headwinds facing the overall economy and lead to healthy growth in the HVAC market beyond 2009.About ARC: Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manufacturing and Supply Chain solutions. No matter how complex your business issues, our analysts have the expert industry knowledge and first-hand experience to help you find the best answer. We focus on simple yet critical goals: improving your return on assets, operational performance, total cost of ownership, project time-to-benefit, and shareholder value. Learn More

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