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Positioning key for local HVAC&R industry

While some sectors of our economy have immediately borne the brunt of the coronavirus pandemic, for others the impact is not so straightforward. According to Refrigerants Australia executive director Greg Picker, there are mixed signals coming from the HVAC&R industry.

“I have spoken to manufacturers and there is no real sense yet of any dramatic impacts,” says Picker.

“On the supply side, those entities supplied by China are now feeling more comfortable, even though they are still coming back online. Supply from Europe, however, is becoming more difficult. But overall the message is that, for now, there are products to buy.”

After enforced closures of manufacturing facilities in China in January and February, some companies have resumed production.

In mid-March, Danfoss reported that six of its factories in China were already back at an average production capacity of 95 per cent. And China’s National Bureau of Statistics data for March also point to an increase in manufacturing activity.

But Picker says that even if Chinese production does not recover as quickly as hoped, Australia’s position as an importer from different parts of the world could help.

“We take technology from Europe, the US and Asia,” he says. “That is pretty unusual – most markets are supplied primarily by one manufacturing hub. We are insulated a bit from the worst impacts.”

Another factor making it difficult to gauge the impact of COVID-19 is that we are now in what is traditionally the quietest quarter for imports.

On the demand side, Picker says that most Australian manufacturers expect demand to fall off at some point. But there are dramatically different outlooks across the industry, depending on the sectors they service.

“Those entities that service wholesalers and large corporates have seen strong demand, possibly because some wholesalers are trying to secure a backlog of products,” he says.

“But those who supply those at the coalface – retail and small commercial – have seen a significant downward trend.”

Picker says that industry is now focused on two key questions.

“First, when does the COVID-19 hibernation end? And second, when it does end, will there be a mad rush for everything? Manufacturers, wholesalers and contractors are all facing a high-risk guessing game to work out when they should invest.”

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