Though American companies have been relocating production to Mexico for decades, the 2016 presidential campaign has made the topic a hot-button issue once again. Few would argue that relocating manufacturing to an area where an item can be produced at a lower cost makes good business sense. However, boarded up factories and unemployed factory workers have become politically potent symbols. Some manufacturers, on the other hand, are hoping to change the narrative and focus on their activities in the US, including promoting products as being “made in the USA.”
Imports From Mexico Have Risen Substantially, But Remain Only a Small Share of US Demand
In the HVAC industry, as in many others, much of the shift in output has been to Mexico, a nation that has free trade with the US through NAFTA. In fact, over the last ten years Mexican HVAC equipment exports to the US have more than tripled. A number of HVAC companies moved at least some production operations there during that time, including:
Some relocation efforts will continue to be made as companies examine their overhead and seek ways to reduce costs. The most recent example occurred when Carrier announced in May 2017 that it would be laying off 600+ manufacturing jobs at its Indiana factory by the end of 2017.
However, despite the fear that some may have of an irreversible shift away from US production, domestic manufacturing of HVAC equipment remains substantial. More than three-quarters of the HVAC equipment sold in the US in 2016 was made in the US. In fact, HVAC equipment produced in Mexico accounted for less than 10% of US demand last year. While that number has risen over the years, US manufacturing facilities will continue to be the largest suppliers of HVAC equipment demand.
HVAC Equipment Manufacturers Are Not Shy About Promoting Made in USA Products
Many companies -- including Goodman, Lennox, and Modine -- promote their commitment to manufacturing in the US on their websites. Despite news to the contrary, including Carrier’s recent announcement of a decision to relocate some production (after considering a more significant change last year), investment in new US manufacturing capacity continues as well. Daikin, for example, completed construction of a 4 million square foot air conditioner and furnace factory, including 1.7 million square feet of manufacturing space, in Texas in 2017. The factory will produce equipment sold under the company’s Amana, Daikin, and Goodman brands.
Research on the US HVAC Equipment Market
For more information, see the Freedonia Group’s US HVAC Market Forecasts industry study. This comprehensive report provides an analysis of HVAC Equipment:
- Supply & demand
- Product outlook
- Industry composition
- Market share
- Mergers & acquisitions
- And much more
Need detailed information on specific HVAC products? For historical demand data and forecasts by product, energy source, market, and region, see The Freedonia Group’s series of studies on the HVAC equipment industry, which include:
About the Author:
Kyle Peters is the Assistant Manager of the Machinery and Equipment Group at The Freedonia Group, where he works on studies related to the US and global machinery, appliances, and industrial components markets.