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Home / ANALYSIS / PMV Roundtable: Himoinsa, JCB & GENAVCO on temporary power

PMV Roundtable: Himoinsa, JCB & GENAVCO on temporary power

by John Bambridge on Oct 9, 2017


L-R: Daniel Crossan, project manager at Himoinsa; Hussein Elkashef, sales manager for SDMO at GENAVCO; and Faisal Hamze, manager for JCB Power Products.
L-R: Daniel Crossan, project manager at Himoinsa; Hussein Elkashef, sales manager for SDMO at GENAVCO; and Faisal Hamze, manager for JCB Power Products.

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It is not every year that the back-up and temporary power segment makes the headlines, but when the power went down at the Dubai Mall in April 2017, the industry held its breath. Six months on, PMV Middle East collects the thoughts from three experienced industry hands to see how this event and broader industry trends are driving the development of this fiercely contested power generation market segment.

Opening the discussion is Daniel Crossan, project manager at Himoinsa Middle East, who notes: “The decree was that every major hotel, mall and building had, by law, to have a secondary backup power supply — so what we have been looking at is where we fit in.”

Internationally, Himoinsa is already a leader in the provision of back-up power systems, and in 2017 alone has delivered several major solutions in the Gulf, including in Dubai, as well as in Morocco. Since the decree, the manufacturer has also had a number of further projects with malls and hotels.

Crossan notes: “The decree was made just before the summer, so it’s gone a bit quiet now and I don’t think it’s fully filtered down yet. However, recently we’ve seen a pick up on the same subject, and between now and the end of the year we expect to see a lot of tenders being floated for these kind of major landmarks and buildings. For the minute we’ve just started seeing the first requests being made for major landmarks, such as the Address Downtown.”

Next up is Hussein Elkashef, sales manager for generators at SDMO dealer GENAVCO, who notes: “It was a rule before to have a backup or secondary source of power in case of power failure, but now it has become a strict rule.”

“Even normal residential buildings, with nine storeys or even less, now require backup generators. So looking to the number of mega projects and the infrastructure which is coming now — there is really a lot of requirement and demand coming in the near future.

“We have started getting these kind of tenders for the Expo Village and the projects in Palm Deira and Creek Harbour, where there is a really big requirement for standby generators.”

In agreement with his peers is Faisal Hamze, Middle East manager for JCB Power Products, who adds: “There are a lot of requirements now coming to tender, as my colleagues mentioned — especially for independent power plant (IPP) projects — and we see a lot of enquiries and are participating in so many projects of this size.”

He elaborates: “The opportunities are especially big for standby applications, for hotels, malls, increasingly for data centres, and for construction. In the mid-size segment we are seeing a lot of demand from the rental business. This sector is growing because cash flow is quite an issue at the moment, people are more reluctant to buy, and so they are going for rental options for the time being.”

Crossan adds: “It depends on the application. If the power goes off in a hospital or hotel, it’s critical that you get that power back on very quickly — so in that sort of an application, you cut a lot of the competition out. On a construction site, if a generator goes down and a tool stops, it might stop the guy working for half an hour or an hour, but it’s not going to have a major impact on the overall application.

“In Dubai, the law was that you had to have a standby generator, but there was no real control over what that actually meant; whereas now, they’re getting stricter about the loading that generator can do, the classification of that generator, and how long that generator can run for in terms of primary replacement protocol, standby and continuous applications. There is also more engineering around the requirement of the building to match the generator — so its’s a specified application now where you’d expect to have an engineering team involved in it.

RENTAL BUSINESS

Aside from standby applications, the rental sector is market segment that presents both a range of opportunities, but also significant challenges to premium manufacturers such as Himoinsa, JCB and SDMO, from GENAVCO.

Elkashef notes: “After the financial crisis in 2009, customers and end users became cautious about investing in buying a machine — that’s why most of them went for either leasing or rental options. That has made it a good time for rental companies and for sure for us — because whenever you’re dealing with a rental company, you will be expecting to do a bulk deal for a big volume of machines. In the last five years we have had three repeat orders for a single customer. Last year, we also delivered 70 generators to one rental company based on a direct finance option from the factory: the units were let back-to-back from SDMO to GENAVCO, and from GENAVCO to the customers for four years — and this was the only way we could break in.

“With financing, you might perhaps enjoy only a single digit of margin, but still you will do a good volume of business if you can provide that facility to your large fleet customers.”

Crossan notes: “A rental application for a generator tends to be wholly different to a standard application. The reason why Himoinsa has a rental range is that it has recognised that rental is a very large part of the generator industry — so to try and put a standard product into a rental application is very tough.     Rental customers tend to want a product that is quick, cheap and comes with everything — but normally there tends to be a trade-off.”



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