Real Cool Prospects

Comfortably cool in his air-conditioned office, President James M. Skinner Jr., of Philadelphia's Philco Corp., leafed through his weather reports last week and broke out a sunny smile. "It hit 90DEG in Indianapolis, 91DEG in Chicago, 92DEG in Cleveland, 93DEG in Knoxville, and even higher in the Deep South," he exulted. "If only this nice hot, humid weather continues, we'll really sell air conditioners this year."

Sales of room air conditioners generally follow the thermometer. The past two summers were cool, and the industry's sales were slow, sliding along at roughly the 1956 level of $3.2 billion. This season is shaping up as the hottest in the industry's 57-year history. Carrier Corp., the industry's Goliath (total 1958 sales: $252.5 million), is selling room units 32% ahead of last year, and Fedders Corp., biggest seller of room units (fiscal 1958: $53.9 million), is running 10% ahead in shipments. In March alone, Westinghouse, which has air-conditioned everything from President Eisenhower's Gettysburg farmhouse to King Saud's Saudi Arabian harem, topped last year's shipment rate by 47%. Borg-Warner's York Division, which normally shuts its window-unit assembly lines by June 30., scheduled production well into July.

Makers predict that production of room units will rise from last year's 1,350,000 to about 1,700,000, and shipments of central air conditioners will go from last year's 224,000 to 280,000. They expect a boost from the record number of new houses going up this year (see Construction); 10% of them will be built with central air conditioning v. only 1.4% in 1952. Says the Federal Housing Administration: "Within a few years, any house that is not air-conditioned will probably be obsolescent."

Paying Its Way. The boom is fathered by increased U.S. spending, but it is mothered by smart marketing. The industry has steadily brought down prices (current range: $225 to $375 per ton for central units in new houses) while putting out more compact, smoother-operating products every year. Thanks to miniaturization, the 1959 models of Admiral, Carrier and others are 50% to 60% smaller than in 1956. General Electric claims that one of its 1959 bedroom models is virtually noiseless. Westinghouse, Fedders, Emerson are putting out install-it-your-self "portable" models. York is packaging parts needed for installation with the cooler to reduce high and widely fluctuating costs of putting it in. As optional equipment. Philco is offering an "Ionitron" (price: $50) to charge the air with negative ions, which, says Philco after a five-year hospital study, snuff out the sneezes of victims of hay fever.

This year's giants in the field are stronger than ever because they have weathered a vigorous shakeout. A few years ago there were 100 manufacturers. Scores dropped out, including Servel, Vornado, International Harvester. Each victim left behind a heavy inventory, which went at fire-sale prices. Now inventories are down to the bone, and the price wars are past.

Instead of selling on price alone, the industry this year is marketing the idea that air conditioning pays its own operating costs (range per summer: $15 per ton in the North to $75 in the South). Armed with massive surveys, the industry's economists and sociologists proclaim that air conditioning cuts a family's bills for going out to air-conditioned movies and restaurants by $5.80 per summer week, that it cuts the housewife's laundering time in half and her housecleaning time from 8 1/2 hours per week to 4 1/2 (by reducing dust), that it causes adults to sleep two hours longer per summer night. The industry thinks that the savings in laundry and medical expense more than offset the cost of operating.

Providing Results. While air conditioning has been installed in 90% of all U.S. theaters, 40% of the restaurants, 25% of hotel rooms, 10% of hospitals and 6% of the 1959 cars, manufacturers think that the biggest market--office and industrial uses--still lies ahead. The American Institute of Management estimates that when 15% of a city's desirable office space has been air-conditioned, owners of the remaining 85% must install it to compete. Nationwide, the 15% mark is rapidly being reached, since nearly every major postwar office building is air-conditioned.

"The industrial air-conditioning market has scarcely been tapped," says President Donald C. Minard of Trane Co. (1958 air-conditioning sales: about $40 million). Main reasons: air conditioning requires quite a bit of space to cool giant plants adequately, and the cost is high. Recently there have been breakthroughs on both fronts. Trane successfully air-conditioned Teletype Corp.'s sprawling, one-story, 600,000-sq.-ft. plant in Skokie. Ill. by installing 15 combination heating-cooling units at a cost of $1.500.000.

In a five-month test, the U.S. General Services Administration found that air conditioning raised productivity by 9 1/2%, cut absenteeism by 2 1/2% and errors by .9%, lifted employee morale. GSA holds that air conditioning pays for itself if it boosts productivity by just 1 1/2%. Now GSA wants to spend $300 million to air-condition Government offices.

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