The refrigerant transition is creating opportunities for companies that deal in surplus equipment — and for contractors who want to keep installing non-A2L systems as long as they can.
Comfort-cooling systems, such as heat pumps, air conditioners, and chillers, that require refrigerant with a GWP of 700 or more can no longer be manufactured or imported under the federal American Innovation and Manufacturing (AIM) Act, and can only be legally installed in the U.S. through the end of the year. And while manufacturers and distributors are trying to build their inventory of new A2L-compatible units and manage different aspects of the transition, there’s still a demand for older equipment that uses non-A2L refrigerant, such as R-410A.
That’s where companies like Lazco Corp. and Surplus City come in.
“There’s a ton of surplus inventories right now,” said Steve Lazar, Lazco’s founder and president. “I am dealing with incredible opportunities.”
Lazco, which sells both residential and commercial equipment, has no warehouse, but operates under what Lazar calls a “sell-buy” model. He locates desirable surplus, at a distributor or a manufacturer, for example, matches it with a buyer, and arranges for shipping.
“Everything I deal goes directly from the seller to my customers,” Lazar said during an interview at this year’s AHR Expo. “I don’t stock anything. I negotiate all deals directly with the distributors and the manufacturers.”
Surplus City, which sells residential and commercial HVAC systems, equipment, parts, and supplies, is riding a similar wave, according to CEO Tom Lehman. The company, which is based in Lebanon, Indiana, recently opened a new warehouse in South Carolina, a move that in part was made to accommodate surplus R-410A equipment, Lehman said.
“Our role is to be available to the OEM and distribution parts of the market that find themselves with too much inventory,” said Lehman, adding that Surplus City is typically an outlet for products that have been selling slowly elsewhere, have become obsolete, or are considered surplus due to canceled projects. “We’re still flexible enough to find custom solutions to address individual concerns from our partners,” he said.
“We are still committed to R-410A support during the transition, and our repair-and-replace focus makes us an ideal partner to work with during these periods of uncertainty,” Lehman added. “As that window closes, we look forward to supporting the low-GWP refrigerants and helping our partners manage ideal inventory.”
In the midst of the equipment transition, Lehman said, news that the U.S. Environmental Protection Agency (EPA) would revisit the refrigerant regulations behind the change, plus the talk of tariffs on imported products, has led to a “volatile” distribution market.
“Managing inventory is never easy, and especially difficult during transition periods,” Lehman said. “Add tariff discussions and EPA discussions, and any type of inventory and demand planning becomes incredibly complex.”
Lazar said businesses like his offer a way for distributors and OEMs to bring in revenue for their R-410A systems at a time when those businesses need to direct their spending, their warehouse space, and their efforts toward the equipment transition.
“A distributor, if he’s going to load up his customers with R-410, product, they will not be able to move (to) the new refrigerant, because they’ll have their money tied up in the R-410, they’ll have their warehouse tied up in the R-410, and their focus tied up, and they’re they need to be making the transition,” Lazar said.
Distributors that are switching equipment lines present Lazco with a similar opportunity, he said.
Lazco buys surplus from other distributors and major OEMs, and sells not to contractors, but to what Lazar calls a secondary distribution market. Some sales are to companies in South American countries.
“This is the thing right now, especially with the change in the refrigerant, there isn’t anyone who really doesn’t have surplus,” Lazar said. “So Lazco is the best source to help companies turn their surplus into working capital, and we are available to save people money if they’re interested.”