Despite the impending "fiscal cliff" the global HVAC industry appears to see a bright future and so do I. All the indicators we are seeing are quite positive with a remarkable increase in requests from North America and around the world" to provide expertise to help develop new and improved products and help expand business strategies into new markets. Companies are moving quickly to take advantage of the rapidly improving business conditions".

Recent surveys bear this out. In a just released AHR Expo survey of more than 1,000 HVACR manufacturers worldwide 70% of the respondents expect the economy to be better in 2013 than in 2012. 35% of respondents expect sales increases of more than 10% and 32% forecast sales increases between 5 and 10 %. 41% said the residential sector would account for the strongest demand for new products. To meet this demand, 75% of AHR Expo exhibitors said they will be introducing new products or services at the upcoming 2013 AHR Expo in Dallas.

Last month the UK's Infiniti Research released their study which forecast the Global Air Conditioner market to grow at a Compound Annual Growth Rate (CAGR) of 18.5% over the period 2011-2015 driven by the increased need for energy-efficient air conditioners and the steady replacement of older air conditioners.

I would point to two key themes which are "niche markets and differentiation." Most manufacturers don't want to get caught in the commodity product trap where price is the primary differentiator. Small and medium manufacturers are much more aggressive today believing they can be successful if they clearly define their market, understand the drivers and provide a product customized to those needs. This "rapid customization" approach is becoming increasingly common in the industry.

Editors Note: CR4 would like to thank Larry Butz of GEA Consulting, for contributing this blog entry.