Refrigeration and Air-Conditioning Services and Repair Shops

SIC 7623

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in servicing and repairing household and commercial electrical refrigerators and air-conditioning and refrigeration equipment. Establishments primarily engaged in servicing and repairing gas refrigeration equipment are classified in SIC 7699: Repair Shops and Related Services, Not Elsewhere Classified; and those repairing automotive air-conditioning equipment are classified in SIC 7539: Automotive Repair Shops, Not Elsewhere Classified.

Industry Snapshot

Since the middle of the twentieth century, refrigeration and air-conditioning products have evolved from luxury items primarily offering comfort and convenience to vital components of many industries. In the early 2010s, virtually every scientific and technological industry relies on cooling systems and equipment that control the temperature, humidity, air movement, and air quality of enclosed environments. Commercial, residential, and other buildings also rely on climate control systems.

Refrigeration and air-conditioning service and repair shops employ the mechanics and service technicians who keep self-contained and split-system air-conditioner units, electric refrigeration equipment, and electric refrigerators in good repair. In the mid-1990s, there were an estimated 3,658 establishments in this category. Typically, these firms were small. By 2005 the total number of refrigeration and air-conditioning service and repair shops had climbed to 8,204 establishments, with a workforce of 38,447 employees. Combined, shops posted revenues of $2.5 billion. By the end of the decade, the number of firms had fallen slightly to 8,005, but the workforce remained relatively steady at 38,624. Industry revenues, however, climbed to $3.02 billion, and experts predicted a positive outlook for the industry into the 2010s.

Organization and Structure

The three main employers of refrigeration and air-conditioning service and repair technicians are manufacturers of environmental control equipment; distributors or dealers who sell and service equipment; and firms involved in air-conditioning, heating, and refrigeration. Some technicians also establish themselves as entrepreneurs, opening their own repair businesses.

The majority of establishments operating in the refrigeration and air-conditioning service industry--some 67 percent--are corporate entities. Of the remaining establishments, 31 percent are sole proprietorships and 2 percent are partnerships, according to the U.S. Census Bureau. Industry establishments are located throughout the United States.

Small appliance products serviced by industry technicians include home refrigerators and freezers, room air conditioners, packaged terminal heat pumps, dehumidifiers, under-the-counter ice makers, vending machines, and drinking water coolers. Industry service technicians also work on complex customized appliances used in the chemical, pharmaceutical, petrochemical, and manufacturing industries, as well as in industrial ice machines and ice rinks.

Background and Development

The earliest climate control systems--piped steam installed to heat factories, churches, assembly halls, and other large buildings--eventually led to ventilation systems that combined heating with circulation of fresh air. About the same time heating systems were being developed, experimentation with artificial refrigeration began. By the mid-1800s, inventors understood the principles on which mechanical refrigerators operated. Dr. John Gorrie applied those principles when he invented a cold-air machine to relieve the suffering of yellow fever patients in a Florida hospital in 1842. After the Civil War, several companies in southern states applied them in ammonia-absorption machines to make artificial ice. Nevertheless, until the early twentieth century, refrigeration continued to rely on ice cut during the winter and stored for later use.

While the technology to cool and circulate air was developed by the beginning of the twentieth century, nothing was known about regulating its moisture content, or humidity, until Willis Carrier carried out a scientific study on air-conditioning. In the summer of 1902 he designed the first system to control the temperature, humidity, and circulation of indoor air. Soon afterward he devised a way to cool using an artificial fog instead of coils. The two methods became the basic ones involved in all later air-conditioning equipment. Industry after industry adapted Carrier's invention for controlling humidity to their particular production purpose. Because of his pioneering research and inventions, Carrier became known as the father of air-conditioning.

In 1914 Carrier developed the first residential air-conditioning system. Seven years later, he created the centrifugal refrigerating machine. This machine had a refrigerant that made it possible to produce safe, dependable, large-capacity cooling devices. By the 1930s, air-conditioning spread from industry to become common in stores, theaters, and other large buildings.

In the early days of the industry, manufacturers and distributors trained most technicians and mechanics in how to repair air-conditioning and refrigeration equipment. The equipment had limited capacity to cool and regulate air quality, so the systems and the skills needed to maintain them were relatively simple. Over the years the equipment became increasingly sophisticated, and the knowledge and skills required to maintain cooling systems became more specialized. Modern equipment utilizes a wide variety of synthetic refrigerants, depending on the cooling job to be done and the types of evaporators, condensers, and compressors in the system. In addition, components are being installed with microcomputer controls. Because of the high-technology aspects, modern refrigeration service and repair workers generally receive training at community colleges, vocational-technical schools, and trade associations. Preparatory courses include electronics, chemistry, physics, mathematics, drafting, and writing.

Stratospheric Ozone Protection.
The biggest challenge facing refrigeration and air-conditioning service and repair technicians in the 1990s and first decade of the 2000s was compliance with rules and regulations governing refrigerants. During the early 1970s, scientists identified the use of chlorofluorocarbons (CFCs)--a common refrigerant--as a primary cause of the depletion of the ozone layer of the earth's atmosphere, which protects life from harmful radiation. The U.S. Environmental Protection Agency (EPA) and the Food and Drug Administration (FDA) banned the use of CFCs in all but a few essential applications in 1978.

In 1986 further research showed a connection between CFCs and global warming. Scientists also found an opening in the ozone layer over Antarctica. Recognizing the global nature of the problem, 24 nations and the European Economic Community (EEC) convened in Canada in 1987. As a result of the meeting, in 1992 most of the major CFC and HCFC (halon) producing and consuming nations signed the Montreal Protocol on Substances That Deplete the Ozone Layer. The Montreal Protocol, along with later amendments, called for a gradual reduction in worldwide consumption of eight chemicals and, ultimately, their complete phase-out. The agreement also encouraged countries to recover, recycle, and reclaim controlled refrigerants.

The United States drafted additional regulations regarding CFC and HCFC substances as part of the 1990 Amendments to the Clean Air Act. The act contained regulations affecting mechanics repairing or servicing an appliance or industrial process refrigeration. As of July 1, 1992, a service technician could not knowingly release or dispose of any substance used as a refrigerant in a manner which permitted the substance to enter the environment. Furthermore, effective November 1995, the prohibition applied to substitutes for CFCs and other banned refrigerants, unless the EPA specifically determined the substances posed no threat to the environment. CFC production was completely banned by 2000. The penalties and fines for violating the act's provisions could be severe.

In 1993 the EPA published additional regulations for refrigerant recycling and emissions reduction. The regulations provided guidelines designed to minimize release of CFC and HCFC refrigerants into the environment during the service, maintenance, repair, and disposal of appliances. Technicians were required to follow the act's required practices and use equipment certified for the type of appliance opened for service. These guidelines applied not only to technicians, but also to refrigerant reclaimers, appliance owners, and manufacturers of appliances and recycling and recovery equipment.

By the late twentieth century, air-conditioning and refrigeration were essential in all segments of modern society. Nearly every newly built home had central air conditioning installed, and many existing buildings were retrofitted with air-conditioning equipment. Carefully controlled temperature and humidity conditions were crucial to the manufacture, transport, and storage of numerous products. Numerous chemicals, pharmaceuticals, explosives, solid state electronic devices, and oil products required refrigeration during their production. Fully 95 percent of food production depended on refrigeration, including some half-billion tons of perishable food each year. In addition, refrigeration supported surgery by safely storing drugs, blood, bone, and tissue, and by supplying clean, pure ice for such purposes as frigid anesthesia.

Each refrigeration and air-conditioning application represents a different segment of the large and very diverse service industry. Each segment requires engineers and technicians who can keep the equipment and systems operational. Opportunities for establishments that service and repair refrigeration and air-conditioning equipment should increase as the number of applications increases.

While utilities skyrocketed due to higher energy costs throughout the first decade of the 2000s, consumers and business owners alike were unaware of the importance of energy conservation when it came to the maintenance of their HVACR systems, which included heating, ventilating, air conditioning, and refrigeration, according to the Air Conditioning Contractors of America (ACCA). "The amount of energy wasted by inefficient air conditioning is huge," according to Paul T. Stalknecht, ACCA president and CEO. Of the 55 percent that it costs to heat or cool residences and businesses, anywhere from 15 to 30 percent is lost in dollars. Therefore, the 2005 energy bills included a "significant provision that is key goal of the American Living Campaign for Sustainable Comfort." Initially introduced by the ACCA in 2003, this project required the Secretary of Energy, the EPA, and the Small Business Administration to work toward educating consumers, as well as business owners, about proper HVACR systems maintenance.

Brian Harvey, president of Laurel, Maryland-based H & C Inc., as well as an ACCA member, went before the House Small Business Committee on May 4, 2005, to voice his concerns regarding unfair competition. Specifically, Harvey pointed to contractors who were being subsidized by utilities with a monopoly in certain geographic areas. In addition, fair competition was heating up as big-box stores like Home Depot and Sears became involved within the air-conditioning market.

Meanwhile, the Air-Conditioning and Refrigeration Institute (ARI) and the EPA released their newest guidelines directed toward manufacturing facilities that "produce, use, store, or transfer refrigerants." In 2005 an industry survey revealed that great strides were made on the part of the air-conditioning and refrigeration industry, with 50 percent of those queried reporting the construction of new facilities having a "zero emission goal."

At the end of the first decade of the 2000s, climate, equipment, and fuel prices remained the most significant factors in determining cooling costs. For example, in Texas the average homeowner spent $600 a year on cooling, whereas the average cost in the Midwest was half of that. Because the consumer could not influence the first two factors, efficiency was the primary focus. Ideally, old units could be replaced with new, much more efficient units. According to Elisa Bernick in the Family Handyman, "Replacing a SEER 7 unit with a SEER 14.5 unit that costs $3,000 will save you about $700 a year and pay for itself in five years."

Despite the larger heating and cooling industry's push to replace old units, at the end of the first decade of the 2000s, a slow rebound from the economic recession at the time caused consumers to turned to repair shops to manage their existing cooling system. According to a February 2009 survey conducted by the Air Conditioning, Heating & Refrigeration News, more consumers were opting for repairs rather than replacement. Bill Mihalovich, president of Air Repair Mechanical Services, noted that "a lot of [residential] customers, both new and existing, want to fix older systems rather than replace them." However, although consumers were not replacing inefficient units, broken units were more commonly replaced with a new unit. "Usually it's because of the wait time for an indoor or outdoor coil to be ordered," David Hutchins, president and owner of Bay Area A/C and Appliance, agreed. "In many cases, customers won't wait weeks for a part."

The Obama administration began work to tighten legislative restrictions on the heating and cooling industry to further protect the environment. For example, as of January 2010, the United States had banned the use of R-22, a refrigerant used as a coolant in the majority of U.S. households. However, existing units could be maintained, and a small quantity of R-22 was produced to service these units. In addition, R-22 could be removed from the unit, recycled, and reclaimed to recharge the existing system. According to the Air Conditioning, Heating, and Refrigeration Institute, "A phase-out period was developed to provide equipment owners with enough time to switch to ozone-friendly refrigerants when they would normally replace their air conditioner or other equipment. This transition is important because supplies of R-22 will be more limited after 2009, which may cause the price of R-22 to increase. Starting in 2020, new R-22 will no longer be produced, so consumers will need to rely solely on remaining supply or reclaimed refrigerant to service any systems still operating after that date."

Current Conditions

According to IBISWorld, the heating and air-conditioning industry in the United States was worth about $67 billion in the early 2010s. A 2011 report by the research firm stated that "Though revenue from new installations slowed during the recession [during the end of the first decade of the 2000s] when construction levels fell, steady demand for maintenance and repair services kept the heating and air conditioning industry running. As the real estate market improves, so too will industry demand." Government initiatives to install more energy-efficient systems was also expected to help boost the industry in the 2010s. Indoor Environment & Energy Efficiency (IE3), the official journal of the ACCA, also noted the effect of heightened energy-consumption awareness on the industry. According to Jim Fisher of Goodman Global Group in Texas, "Homeowners recognize that energy costs are not going down. The HVAC system is a fairly large consumer of fuels, so their counter to high energy costs is a more efficient product." Whether this involves installation of a whole new system or upgrades to existing systems, the future for the HVAC repair and service industry was optimistic as the nation entered the 2010s.

Workforce

According to the U.S. Bureau of Labor Statistics (BLS), 224,320 people were employed as heating, air conditioning, and refrigeration mechanics and installers in 2010. More than half worked for cooling and heating contractors, with the rest working in large buildings, schools, and factories. Approximately one of every eight technicians was self-employed, and the average hourly wage was $20.45 per hour, up from around $14 per hour in 1999. Texas employed the most workers in this industry, followed by Florida, California, New York, and Pennsylvania. States with the highest average salaries for this occupation were Alaska, Washington, D.C., Hawaii, Massachusetts, and New Jersey.

Apprentices usually start out at half the wage rate of experienced workers. Approximately 20 percent of the technicians are union members, most belonging to the Sheet Metal Workers' International Association and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada. Many employers provide such benefits as health insurance, pension plans, work-related training, uniforms, company vans, and tools.

Technicians learn the trade through technical school, apprenticeship training, or occasionally, informally on the job. Six-month to two-year programs in air-conditioning, heating, and refrigeration are offered by secondary and post-secondary technical and trade schools, junior and community colleges, and the armed forces. Besides the basics of installation, maintenance, and repair, students study theory, design, equipment construction, and electronics. Frequently sponsored by trade and union organizations, formal apprenticeship programs usually run three or four years and combine classroom instruction and on-the-job training. Those who learn the trade informally usually begin by helping an experienced technician and performing tasks that gradually become more difficult.

All technicians who purchase or handle refrigerants must pass a written certification examination administered by organizations approved by the EPA. They may become certified in three possible areas: Type I, servicing small appliances; Type II, high pressure refrigerants; and Type III, low pressure refrigerants. Some trade organizations provide training programs to prepare technicians for the examination, as well as general skills improvement training and self-study courses.

In 2012 the outlook for employment in this industry was good, and the BLS predicted that jobs for heating, air-conditioning, and refrigeration mechanics and installers would increase 28 percent between 2008 and 2018--much faster than average for all occupations. According to the BLS, "[an] emphasis on better energy management is expected to lead to the replacement of older systems and the installation of newer, more efficient systems in existing homes and buildings. Also, demand for maintenance and service work should rise as businesses and homeowners strive to keep increasingly complex systems operating at peak efficiency."

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