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issue: January 2004 APPLIANCE Magazine

52nd Annual Appliance Industry Forecasts
North America: Individual Company Outlooks - HVAC

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by Lincoln Brunner, Contributing Editor

As the housing market continues to chug along at near-record levels, the situation appears stable and bright for HVAC manufacturers.

As it prepares for a 2004 air-conditioning and furnace product launch that will "make it easier for dealers to sell high-end systems," Carrier Corporation (a division of United Technologies) is looking forward to 2004 with "cautious optimism," said spokesperson Jon Shaw.

"There are many variables, such as weather, the global economy, and the geopolitical state that we don't control," Mr. Shaw told APPLIANCE. "Though the general economy is expected to improve in 2004, housing starts are expected to decline. However, we expect shipments of residential split systems to grow next year. As well, the add-on/replacement market is an ever-increasing source of growth."

Mr. Shaw said federal National Appliance Energy Conservation Act (NAECA) minimum efficiency standards will drive the company's air-conditioner and heat pump product development.

"However, this also provides an opportunity to insert a significant amount of new technology into our products in order to improve performance, cost, and durability," Mr. Shaw said.

While the Rheem Air-Conditioning division did roll out some new products in 2003, the company's key focus was to regroup under a new leadership staff and aim at 2004 with both barrels.

"Starting in mid-2004, we've probably got more exciting new product development projects that will be launched and commercialized into the market in one year than we've done in possibly the past 10," said Jack Sinkler, vice president of Marketing for Rheem AC. "For 2003 ... we challenged our R&D and our product teams to find ways to improve the overall quality of our Rheem and Ruud product lines. We needed to bring better products to market faster, [and] we needed to revitalize our product line on a more condensed time cycle.

"We basically ankle-strapped everybody to each other so they became buddies," Mr. Sinkler joked. "It took us a while to get through the HR implications, but we were successful."

The company's large product launch includes a revitalized rectangle unit with what Sinkler called "the lowest profile in the industry" and a 100-percent scroll solution at the compressor. The company also is planning to introduce a new 80-percent efficiency furnace and a revitalized cube product (the company's value line of condensing units).

As for the company's 2004 prospects, Rheem is staying cautiously optimistic. "We're optimistic, but realistic," Mr. Sinkler said. "We're anticipating slight but moderate growth on the air-conditioning and the heating side. Potentially even though the builder market is going to be at record levels, if you look at the last decade or so, we think the builder market could take a slight downtick, just because of interest rates coming up some."

Codes and standards took the fore in 2003 for the gas water heater market, and players there are expecting more of the same in 2004. This past year, a new standard for flammable vapor ignition resistance (FVIR) was the biggest issue to hit the industry, according to Dave Martin at Rheem Water Heaters. To meet the FVIR standard, Rheem introduced the Guardian product and feels it has the best among a widely varied field of product responses to the new standard.

"It was a huge, revolutionary change for the industry," Mr. Martin said. "It was the biggest thing we ever had to deal with. Basically, on a full-year basis [for] residential gas water heater sales, you're affecting 85 percent of the sales."

For 2004, more regulatory fun is on the way for gas water heater manufacturers as the NAECA requires them to increase the efficiency of gas water heaters by 10 percent and electric heaters by 5 percent.

"What that requires each manufacturer to do is say, 'OK, how are we going to meet that?'" Mr. Martin said.

As for 2004 overall, Rheem Water Heaters anticipates that housing starts will remain at the 1.6- to 1.7-million start level and for a 10-million-unit market, Mr. Martin said.

Read all the articles from our January 2004
52nd Annual Appliance Industry Forecasts

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