Topic Thread

  • 1.  Prepare now for equipment price hikes!

    Posted 04-20-2018 01:53 PM

    Tariffs imposed by the Trump administration on imported steel and aluminum are having a profound impact on raw metals used in the production of HVACR equipment and component parts.  Several OEMs have already announced equipment price hikes, and more are likely to follow.   Don't get caught short. There are things you can do to manage the financial impact on your business.

    ACCA's voice is not silent:  ACCA remains in front of tariffs increasing costs on ACCA Members and taxing consumers.   ACCA has been in communication with OEMs on this issue to ensure contractors' voices are heard as the OEMs respond to the impact of the tariffs on their businesses.  

    Two manufacturers have announced equipment price hikes.  Don't be surprised if other OEMs follow with similar price hikes.  Several contractors have reported receiving price increases nearing 10% on sheet metal products, registers, and diffusers.

    • Daikin/Goodman announced effective 6/15/2018, their equipment and parts prices will increase from 4 to 9 percent, but coils and certain components could be in excess of 9 percent.
    • Carrier-UTC has announced a price increase of up to 6 percent on residential and commercial equipment effective 7/01/2018. These increases will impact Carrier, Bryant, Payne and ICP brand names.

    Take immediate steps:  ACCA recommends that you work with your customers to alert them to market volatility created by these issues.  Things you can do: 

    • Gently encourage customers in the market for new HVAC systems to act now instead of delaying a decision as prices for HVAC equipment are increasing. 
    • Pricing is based on company costs.  Evaluate the impact these price hikes may have on your pricing and anticipated margins and act accordingly.  Much like the trucking industry does in adding a fuel surcharge when faced with unanticipated market upswings in fuel price, one option would be to consider a "steel and aluminum tariff surcharge." But, be very transparent with your customers. In your communications with them, attach any information you may have received from OEMs, suppliers, distributors, etc., announcing impending price increases. This up-front verification will help explain the reality of the situation and position your company as the trusted contractor.  
    • Protect yourself with a contract escalation clause. ACCA recommends using your ACCA Member discount with ConsensusDocs to purchase contract language that protects you from price fluctuations. ACCA is a partner with ConsenusDocs and has vetted the contract language for you. The ConsensusDocs 200.1 Time and Price Impacted Materials Amendment document covers you from price fluctuations and is flexible for any material that may be subject changes in price. In addition to ACCA, this document has been reviewed by allied industry trade associations.

      To purchase this contractual language using your ACCA Discount visit www.consensusdocs.org/QuickPurchase?coupon=ACCA100. ConsensusDocs has several contract packages that ACCA Members can purchase, but we recommend purchasing the Subcontracting Package Unlimited. This valuable package includes document 200.1 which provides language to protect you from price fluctuation, but also includes dozens of other contracts you will find useful. 
    • Lastly, as a good business practice, contractors should always shop around among equipment manufacturers to determine the best purchasing options.  As a large purchaser of equipment, don't hesitate to push back to make the right decisions for your company and your customers on price increases.  Always remember -- to your customers -- the contractor is the brand; not the manufacturer!   

    Informed and prepared contractors can manage these type of pricing issues.  Keeping you informed of market conditions and sharing intelligence is part of ACCA's mission to lead your company to business success!    

    Sincerely,

    Paul



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    Paul Stalknecht
    President & CEO
    ACCA
    Arlington VA
    (703) 575-4477
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