HVAC & Plumbing Contractors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 102,300 HVAC and plumbing contractors in the US provide installation, repair, and maintenance services for air handling and water management systems. Just over 60% of HVAC and plumbing contractors are solo operators. Contractors may specialize in residential, commercial, institutional, or industrial service.

Dependence On Construction Industry

Demand for HVAC and plumbing services is highly dependent on trends in the construction industry.

Increasing Sophistication Of HVAC Systems

Demand for improved efficiency in the non-residential market has led to increasingly complex HVAC systems and automated monitoring programs.

Industry size & Structure

The average plumbing and HVAC contractor employs 11 workers and generates about $2 million in annual revenue.

    • The HVAC and plumbing contractor industry consists of 102,300 companies (including solo operators), employs more than 1.2 million workers and generates $218 billion annually.
    • Just over 60% of HVAC and plumbing contractors are solo operators and generate about $65,200 annually.
    • Major customer segments include single family homes (20% of industry business), office buildings (10%), manufacturing and industrial buildings (5%), educational buildings (8%), commercial buildings (7%), health care and institutional buildings (6%), and apartment buildings (4%).
    • Large companies include EMCOR Group, Comfort Systems USA, Johnson Controls, and ARS Rescue Rooter.
                                Industry Forecast
                                HVAC & Plumbing Contractors Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 14, 2023 - Nonresidential Projects Drive Construction Spending Growth
                                • Nonresidential and residential construction spending have posted steady growth in 2023. However, while nonresidential spending was up year-over-year in mid-2023, residential spending was down over the same period as high interest rates and home prices have curbed demand. Producer prices charged by nonresidential HVAC and plumbing contractors have risen steadily in 2023 and, by Q3, were up moderately over the same period in 2022. Amid steady demand, by Q3, HVAC and plumbing contractor wages and employment were both higher compared to a year earlier.
                                • The reshoring boom taking place in the US manufacturing sector represents a nearly unprecedented opportunity for construction contractors, according to Construction Dive. Since 2021, manufacturing firms have spent $614 billion to onshore production in the US, according to estimates by the White House. These investments are partly due to public funding legislation, including the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act. The laws have spurred investment in megaprojects in semiconductor, renewable energy, and electric vehicle manufacturing. The scale of many of these projects represents an economic multiplier as they spur additional investments in infrastructure and supply chains needed to support them. To benefit from the manufacturing renaissance, industry insiders suggest contractors increase their presence at manufacturing industry trade shows and conferences and work to build a talent pool with expertise in the manufacturing arena.
                                • Elevated mortgage rates, record-high home prices, and low inventory of homes to buy are expected to make 2023 one of the weakest years for home sales since the housing crash and recession of the late 2000s, according to The Wall Street Journal. Existing- home sales are projected to be about 4.1 million in 2023, which would be the lowest number of sales since 2008, according to Redfin. In mid-October, the average 3-year fixed mortgage rate was 7.57%, marking the highest rates in 23 years, according to Freddie Mac. Homeowners who are locked in a low rate are reluctant to sell, which has reduced inventories of previously owned homes. According to a September survey by Fannie Mae, only 16% of respondents said it was a good time to buy a home.
                                • North American engineering and construction spending is forecast to rise by 5% in 2023 compared to the 12% growth seen in 2022, according to FMI’s fourth-quarter 2023 North American Engineering and Construction Outlook. Overall growth in 2023 will be supported by double-digit gains in key segments, including manufacturing (up 58%), multifamily (+18%), and lodging (+16%). Other segments expected to post strong growth include healthcare (+9%), public safety (+9%), amusement & recreation (+8%), educational (+8%), office (+8%), transportation (7%), and commercial (+6%). With a 13% decline in spending, single-family housing is the only segment that is expected to post negative growth in 2023.
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