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Globalization of the HVAC Industry and the U.S.’s Place in It

Oct. 21, 2014
Air conditioning perhaps is one of the last global industries in which the United States plays a significant role, but that could be changing.

If asked to name the largest air-conditioner manufacturer in the world, how would you answer? Would you guess Trane, as I did, or one of the other “big three”? The correct answer, surprisingly, is Gree Electric Appliances Inc. of Zhuhai, China. Last year, the 23-year-old company claims, it sold more than 60 million units valued at USD $19 billion. Gree’s market is not limited to China. It has nine production facilities, two outside of China (in Brazil and Pakistan); more than 70,000 employees, including 5,000 engineers; and a sales office in California. A comparison of product specifications indicates Gree’s offerings are competitive with similar equipment being sold in the United States, and the company has undertaken several environmental initiatives.

Air conditioning—developed by Willis Carrier, an American engineer—perhaps is one of the last global industries in which the United States plays a significant role, but that could be changing. Europe passed us in hydronic technologies years ago, and steam heating, once a backbone U.S. HVAC technology, is a dinosaur (although, as I pointed out in an article for the January 2003 edition of HPAC Engineering’s Boiler Systems Engineering supplement titled “Save That Older Steam System,” steam heating can be very efficient). Newer high-efficiency air-conditioning technologies, such as variable refrigerant flow, which originated in Japan and still is led by Asian manufacturers, have further eroded U.S. HVAC manufacturers’ worldwide industry leadership and market share. So, what can the U.S. HVAC industry do to continue as a major player in the global air-conditioning business? I think we need to do what inventors/entrepreneurs such as Carrier, Dave Lennox, and others did: innovate and discover. We need to once again have the will and appetite to fund research and development, even if it reduces shareholder dividends and the market’s singular focus on short-term profitability. Furthermore, we have to renew our commitment to science, technology, engineering, and mathematics education because without bright, well-trained engineers and scientists we aren’t capable of achieving breakthrough discoveries. Any other strategy is a fool’s errand.

Many of us remember when the U.S. auto industry was the largest in the world. According to, during the 1950s, auto production in the United States exceeded—several times over—that in Great Britain, France, Japan, Sweden, and all other nations combined. Both Ford and GM produced their 50 millionth vehicle during that era, and according to some sources, by 1960, fully one-sixth of the U.S. labor force was employed directly or indirectly in automobile production. But according to Zacks Equity Research, for the first nine months of 2012, Ford and GM’s combined market share—in the United States alone—had fallen to 34 percent.

The challenge for U.S. HVAC manufacturers is this: Don’t go the way of the auto industry.

About the Author

Larry Clark

A member of HPAC Engineering’s Editorial Advisory Board, Lawrence (Larry) Clark, QCxP, GGP, LEED AP+, is principal of Sustainable Performance Solutions LLC, a South Florida-based engineering firm focused on energy and sustainability consulting. He has more than two dozen published articles on HVAC- and energy-related topics to his credit and frequently lectures on green-building best practices, central-energy-plant optimization, and demand-controlled ventilation.