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issue: November 2004 APPLIANCE Magazine

HVAC - Our 41st Annual Report
Demanding Comfort


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by Jill Russell, Assistant Editor

As industry regulations continue to push the HVAC industry toward higher efficiencies, OEMs are taking product design to the next step to also meet consumer needs.

Now, more than ever, the HVAC industry—following suit with the rest of the appliance industry—is focusing on the homeowner’s needs and wants, especially when it comes to added features, options, and design elements. In addition to an extended focus on the homeowner, the industry is working to meet the ever-increasing efficiency regulations approved within the past year. At a time when standards were thought to limit the amount of innovation in new products, others say this past year has proved to be one of the most advanced in regard to overall product design and technological innovation.

As today’s consumers become more educated and concerned with the HVAC systems in their homes, their concerns regarding efficiency and cost savings are also growing. This, along with government-mandated standards, has pushed the HVAC industry to design innovative products consumers are demanding.

 
Lennox International Inc. assembles one of its air-conditioning units. The company says a recent change in its manufacturing operations to coordinate marketing, product development, and research across all of its HVAC brands has helped it introduce a record amount of new products within the last year.

A New Status Quo

Throughout the last 3 years, the HVAC industry has been in the midst of controversy over energy-efficiency standards. This year was no different, as the industry was torn over the 13 seasonal energy efficiency rating (SEER) for residential central air-conditioners and heat pumps up to 65,000 BTU that was originally presented by the U.S. Department of Energy (DOE) in 2001. Initially, most of the HVAC industry opposed the raised standard, saying 13 SEER would result in increased costs for both the manufacturer and the consumer that would not be compensated by energy savings. Additionally, some thought the 13 SEER would eliminate a differentiated product offering since lower SEER-rated units would be obsolete. After industry groups and associations fought the standard, the Bush Administration and the DOE agreed upon a 12 SEER rating in May 2002. Then in April 2004, the U.S. Court of Appeals for the Second Circuit ruled that the DOE had reduced the standard improperly, and the 13 SEER rating was reinstated. Today, the industry is working to adhere to the heightened standard by its Jan. 23, 2006 deadline.

According to most industry players, the 2006 minimum requirement is the biggest challenge manufacturers will have to meet. “With just over a year until the DOE’s mandated 30-percent increase takes effect, HVAC companies are busy preparing production facilities and marketing plans,” notes William G. Sutton, president of the Air-Conditioning and Refrigeration Institute (ARI). Originally requesting a judicial review of the 13 SEER rating and supporting the proposed 12 SEER rating, the ARI later withdrew its challenge in support of helping manufacturers reach the new standard.

While most of the HVAC industry has accepted the 30-percent increase, there are still concerns about the costs required to meet the standard. “Simply put, it will be more expensive for companies to produce a 13 SEER unit than a 10 or 12 SEER unit,” says Robert J. McDonough, president and COO, Worldwide Heating and Cooling for Lennox International (Dallas, TX, U.S.). Mr. McDonough says that because an estimated 90 percent of industry sales are expected to be 13 SEER products, the industry could potentially experience price pressures. Now, with the looming deadline, companies are working to find ways for products to meet the standard without reaching significantly higher price points.

“ The industry as a whole was caught off guard because everyone currently makes a pretty cost-competitive 12 SEER product today,” explains Chris Campbell, senior product manager and HVAC project lead for Whirlpool Corporation (Benton Harbor, MI, U.S.) “Now, everybody has to fight to figure out how we’re going to build a 13 SEER piece of equipment to reach that minimum efficiency, but also make it competitive in the marketplace.”

This, he says, is a challenge, as generally the size of the unit increases with the higher efficiency rates. “To get more efficiency, you have to remove heat quicker and that requires more surface area on the coil surface,” Mr. Campbell explains. “Therefore, to remove heat more quickly with less electricity, you have to increase the size of the platform to do so.” Mr. Campbell adds that increases in material costs of copper, aluminum, and steel has also increased the final cost of the unit. He says that although Whirlpool has looked into incorporating alternative materials such as plastics into product designs, it has decided to focus on streamlining its manufacturing practices to help curb costs.

Whirlpool also made design adjustments to help assist with cost issues. According to Mr. Campbell, the company has redesigned its air-conditioners to optimize the coil, the airflow system, and stratification across heat exchangers. “It’s a total redesign from the ground up, and that in itself will allow us to reach those efficiencies,” he says. Whirlpool’s product lineup for 2006 will feature 14 and 15-SEER models in addition to its 13-SEER units.

 
Rheem recently introduced the Rheem Prestige 16-SEER condensing unit. The company says the units feature Comfort Alert™ diagnostics in addition to on-demand dehumidification and a scroll compressor tailored to consumer comfort and efficiency preferences.

Rheem’s Air Conditioning Division agrees that the costs associated with the efficiencies are an industry-wide concern. “After Jan. 23, 2006, the energy savings will be less dramatic to consumers with 13 SEER systems because the SEER gap will shrink,” Alan Kessler, vice president, Research and Design for Rheem Air Conditioning (Fort Smith, AR, U.S.), tells APPLIANCE. “Our responsibility as manufacturers will be to provide real and demonstrable value that can be understood and appreciated by consumers that differentiates 13-SEER-based systems.”

Rheem has achieved this with the help of its company-wide innovation team, consisting of engineering, product development, manufacturing, business, sales, and marketing experts, who have helped the company introduce 14 new products within the past 18 months. Set for release before December 2005, Rheem’s Prestige Series® and Ruud Ultra Series® include both 18- and 16-SEER models with a two-stage condensing unit featuring diagnostic controls and a monitoring system. The company says that its current product line already includes a variety of 13-plus SEER condensers and heat pumps, but that it is working toward adding condensers up to 18 SEER for the high-end market.

Hot Mandates

Another standard continuing to affect product designs is the second phase of the ANSI standard for flammable vapors ignition resistance (FVIR) for power-vented water heaters. Set for January 2005, the second phase requires that 30-, 40-, and 50-gal power-vented water heaters be resistant to flammable vapors. The third and final phase of the regulation affects high-capacity 75- and 100-gal direct-vent water heaters and is set for July 2005.

Jim Bienias, senior product manager, Residential Products for Rheem Water Heaters (Montgomery, AL, U.S.) says that the new regulations are helping the industry to look at different types of technology. “One of the advantages that we have with the next phase is that power-vent water heaters have electronics on board,” he tells APPLIANCE. “Because of that, we can look at another type of technology to aid in the prevention of igniting flammable vapors outside the water heater.”

Mr. Bienias says that Rheem is looking into the use of hydrocarbon sensors to prevent the unit from igniting. “The electronically controlled power vent units typically have electronic ignition systems,” he says, “which is different from the standing pilot-type products. Because of this, we are reviewing sensor technologies that will sense hydrocarbons before the ignition cycle is even initiated.”

 
Aprilaire's Intelligent 8570 Thermostat for both residential and commercial applications can monitor and exchange information with other Aprilaire products and control optimized system functions.

Customer Considerations

In addition to the increasing number of regulating mandates, the HVAC industry is starting to design products around consumer taste. York International introduced the idea of custom options at the AHR Expo and boldly displayed a new line of air-conditioners and heat pumps in six designer color choices. “Consumers are more interested in the style and look of their air-conditioner and heat pump and whether or not these units complement their home décor and landscaping,” says Cos Caronna, senior director of Design Engineering and Product Management, York International, Unitary Products Group (Wichita, KS, U.S.). In order to offer consumers a variety of customized options, the company’s Affinity™ series comes standard in Champagne, and Stone, Terra Cotta, Bermuda, Gun Metal, Jet Black, and Chocolate colors are also available.

In addition to providing consumers with aesthetic choices, another trend hitting the industry is designing integrated comfort systems for homeowners. “Consumer emphasis on comfort and savings will always be the force that propels HVAC industry innovation,” says Mr. Kessler of Rheem’s Air Conditioning Division. “Consumers are becoming more aware of the air quality in their homes. They are increasingly more active in seeking solutions for a healthier home, improved air quality, optimized energy savings, and comfort-conditioning harmonized with their particular needs.” This, he says, is spurring an increase is system option packages that offer both comfort and economic advantages associated with energy efficiency, environmental improvements, and system protection. Rheem recently integrated Emerson Climate Technologies’ Comfort Alert™ Diagnostic system, for example, offers consumers a system approach to comfort (see Connected Comfort).

In step with other HVAC manufacturers taking a system approach, Lennox introduced its PureAir™ Air Purification System as part of its Dave Lennox Signature™ Collection. The unit is said to remove approximately 50 percent of household odors and chemical vapors in 24 hours. The unit’s low-speed continuous fan circulates air between the heating and cooling cycles, which, according to the company, increases the effectiveness of the filter.

“ Integrating air-conditioning, heating, indoor air quality, and controls into whole house systems that work together as indoor comfort solutions is a key focus in our development efforts,” Mr. McDonough of Lennox says. In fact, the company recently announced the launch of its AirAdvice® Program, designed to provide indoor air quality education and testing to consumers. The program works when an AirAdvice monitor is installed in a home and collects temperature, humidity, odor, and volatile organic compounds such as dust, dirt, and pollen in 1-min cycles. Reports are then generated on a Web site where consumers can review the information.

 
Designing its products with the idea of bringing an improved and integrated level of comfort to the homeowner, Rheem Air Conditioning (Fort Smith, AK, U.S.) has introduced its 16-SEER Condensing Unit and High-Efficiency Air Handler as part of its Prestige product line. Equipped with Comfort Alert™, a diagnostic protection system, the condensing unit features an upward discharge pattern to direct air away from shrubs and bushes. To provide customized solutions, Rheem also designed its air handlers to include upflow, downflow, and horizontal models, in addition to side or front refrigerant connections. The units come equipped with a permanent filter and circuit breakers and, according to the company, when installed together, help provide an entire home comfort solution.

John Bloemer, director of product development for Aprilaire (Madison, WI, U.S.), a manufacturer specializing in indoor air quality products, says these new home comfort systems are possible because of the increased use of electronics within the HVAC industry. “When we look across our product line, one of our efforts is intelligence. Our products work great by themselves, but if you attach them together, they can share information so that the system works even better,” he says.

The company recently introduced its Intelligent 8570 Thermostat for both residential and commercial applications and says it is designed for all types of HVAC equipment. The thermostat is capable of exchanging information with other Aprilaire products and can reportedly make decisions based on outside conditions, system run time, and humidifier set point controlling what functions each unit should perform. In the home, the company says the thermostat can provide control over other thermostats to provide a whole-house operating comfort system. For commercial applications, the thermostat is said to provide features such as programmable fan operations, program memory, keypad lockouts, and occupied and unoccupied modes.

As indoor air quality plays an increasingly important role in today’s comfort systems, Bengt Rittri, president of Blueair, Inc. (Charlotte, NC, U.S.) and Blueair AB (Stockholm, Sweden) says there is a need for new filter technology. “Most air purifiers, for example, still use a technology from the 1940s called HEPA,” he tells APPLIANCE. “These filters were originally made for submarines and power plants and were not intended for home use.”

The company says it has developed specialized filters to fit residential needs by combining mechanical and electrostatic technology. The HEPASilent® Filtration System contains a filter made up of three layers that is said to effectively filter smoke, carbon, exhaust, and virus particles. In fact, the company’s 601 Model received the highest clean air delivery rate (CADR) by the Association of Home Appliance Manufacturers (AHAM) in its annual directory, with the company’s 501 Model taking second place. With a minimum rating of 50 for Energy Star, the Blueair 601 Model received a CADR rating of less than 450 for pollen, less than 445 for dust, and 438 for smoke. “The consumer is becoming aware of the poor state of indoor air quality and is solving the problem through air purifiers,” Mr. Rittri says. “With the multitude of models and technologies to choose from, consumer research is mandatory in the selection process.”

York has taken the idea of “total comfort” to the commercial market with its Sunline® MagnaDRY™ system. The company says that the unit combines a high-efficiency, single-package heating and cooling unit with a dehumidification system that operates independent of the cooling load. “It effectively removes high levels of moisture from the air without overcooling the space, keeping rooms much more comfortable,” Mr. Caronna says. Unlike traditional units, he says York’s new models feature an additional humidistat and remove moisture without going into a cooling mode. When the unit’s control board senses a dehumidification need, it initiates a reheat mode that is run at the same time as a minimum cooling mode. If a temperature change is needed, the reheat mode is replaced by a maximum cooling mode. The company says all models have independent dual refrigerant circuits for efficient part load operation and can be designed for curb mounting on a roof, slab-mounted at ground level, or set on steel beams above a finished roof. “It is an excellent choice for supermarkets, galleries and museums, libraries, or hotels,” Mr. Caronna says.

 

As part of its commercial line, State Water Heaters (Ashland, TN, U.S) introduced a new line of Sandblaster® self-cleaning water heaters.

The commercial appliances feature a "hydro cannon" that blasts incoming cold water into the tank under pressure and then uses venturi action to circulate the water through the heater. This, according to the company, creates a higher level of turbulence to prevent sediment from collecting on the bottom of the tank.

A Bright Outlook

With customer demands and industry regulations spurring innovation and new product designs, the future of the HVAC industry is expected to reach record shipment levels. According to ARI, this year will mark the third consecutive year in which record U.S. shipments of central air-conditioners and heat pumps will pass 7 million, with expectations to hit 7.3 million. “The big impact this year compared to 2003 is the expanding economy with underemployment being reduced and job growth, although not as strong as hoped, helping to restore consumer confidence,” Mr. Sutton explains.

“ With three record years in a row for unitary shipments and a much improved economy, which helps the commercial building side of the business, the HVAC industry is well positioned to enjoy a very good 2005,” he tells APPLIANCE. “Expanding market opportunities abroad, as those economies improve and mature, help to brighten future prospects.”

Rheem Air Conditioning agrees that this year will be a record-breaker. “Unitary shipments appear to be headed for a record level in 2004,” Mr. Kessler says. “This is due to the economic recovery and the continuing expansion of the industry in both new construction and replacement markets. “It is not out of the question to foresee 8 million units in the near future.”

However, Whirlpool thinks differently. “I think it’s going to remain [the same],” Mr. Campbell says. “We as an industry probably grow 5 to 6 percent annually. We grow consistently, but it’s predicated on the weather, housing starts, and over the past 10 years, it’s consistently averaged a 5-percent growth rate.”

Whirlpool says that the industry might see more repairs and expects the industry to consequently experience a bump around 2006 and 2007. “Today the cost difference is minimal to replace a compressor versus the cost to replace the whole unit,” Mr. Campbell says. “Consumers are now thinking they should replace the compressor, for instance, instead of replacing the entire unit.”

For the room air-conditioner segment, Rheem says it expects the industry to expand in global markets. Mr. Kessler attributes this to previously “untapped” markets within developing countries where room air-conditioners were once considered a luxury appliance. As China has taken the lead on room air-conditioner production, growing to 80 percent of the world’s production, the numbers are only expected rise. According to UK research firm BSRIA, the Chinese market has grown from producing 0.5 million units in 1990 to 15.5 million in 2003. In 2004, it is expected the country will produce 42.5 million units.

“ After a long period in which the North American HVAC industry enjoyed relatively little competition from overseas, non-traditional international competitors have begun to enter the North American market,” says Mr. McDonough of Lennox. “We’ve seen a lot of changes in the company’s first 100 years, and we’ll see more changes in our next 100 years. We will do what is necessary to compete.”

As with the cooling side, the future looks bright for the heating market. The Gas Appliance Manufacturers Association (GAMA) reported that as of press time, U.S. shipments of both gas warm-air and oil warm-air furnaces were up approximately 14 percent over 2003. Residential electric water heaters were also up 6.4 percent, although residential gas water heaters were down 17.4 percent. The commercial segment remained strong, as electric water heaters experienced a 19-percent increase over the same period in 2003, and gas water heaters were up 8.3 percent. “Right now, our statistical programs show us that shipments are up almost across the board,” says Evan Gaddis, GAMA president. “Inventories are going down, sales are going up, and that is almost across the board in the entire industry. We think we’re going to have a pretty good year.”

Overall, the industry is feeling optimistic about the upcoming year and expects it to mimic 2004 on a larger scale. The idea of a total comfort solution is expected to gain momentum as both consumer preferences and education and government mandates push innovation further as comfort options are demanded. Additionally, as the industry continues to expand globally, most manufacturers anticipate an increase in innovation and technology. “[The future looks] excellent with continued growth in both commercial and residential applications,” says Mr. Kessler. “The HVAC industry, once considered a luxury, will remain a necessity in North America. Emerging markets, such as China and India will provide exponential growth for the industry.”

 
issue: November 2004 APPLIANCE Magazine
HVAC - Our 41st Annual Report 
  • Demanding Comfort : FEATURE ARTICLE - As industry regulations continue to push the HVAC industry toward higher efficiencies, OEMs are taking product design to the next step to also meet consumer needs. 
  • Connected Comfort: Emerson Climate Technologies’ Comfort Alert™ Diagnostics is a 2004 AHR Expo Innovation award-winner...
  • Driving Innovation: Samsung Electronics was determined to reduce the size and cost of its new line of three-phase inverter-based air-conditioners...

 

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