MEP sector is not cutting corners

Sentiment at The Big 5 was that quality remains king, reports Matthew Warnock

Despite a global slowdown that has forced many in the construction and development industries to look for the lowest-price options, manufacturers and suppliers of HVAC and MEP solutions have claimed that developers and specifiers are not cutting corners on price.

Speaking at The Big 5 exhibition at the end of last year, companies specialising in these fields have also claimed that the slight tightening of buyers’ budgets has, in fact, led to a better and more competitive sector. “There is certainly still a big market here in the Middle East, and while it may not be as huge as it was a year ago, we do feel it is starting to grow again,” said Peter Klyver, marketing director for the Swedish Ostberg Group, which is dedicated to energy-efficient ventilation systems.

“Our main clients are hotels, and this is the place to be for hotels. They are not looking for the cheapest solutions, but actually the right balance between quality and price. We are Swedish, and with that comes a certain reputation for quality – we are not the cheapest, but we are certainly not the highest.”

Western Airducts’ Tom Prideaux-Brune agreed that the search for the right price was not exactly destroying the industry. “Our company manufactures grilles, diffusers and delivers air-quality engineering. To be honest, many of these products are very similar across the board, and therefore you do see a lot of clients looking only at the bottom line.” However, this has lead to a push towards better service levels. “Manufacturing has become a service industry. We have been conscious of that in the UK, and are now applying those principles here.”

The Chinese company Gree manufactures air-con solutions, chillers and fan coil units, and currently boasts a global network of 20 000 distributors, while producing more than 27 million units a year, enjoying a 46% market share in China. “We have been doing good business in retail and wholesale, but of course we have also witnessed a decline in construction over the past year,” explained vice general manager of overseas sales Larry Lim.

“We see the current market as a great opportunity for Gree to grow its business. What developers are actually looking for is a cost-effective solution at an attractive price, and we can certainly compete on quality.”

Zakir Ahmed, GM of NIA Limited, which supplies Gree’s products in the region, added: “A few years ago, property prices were booming and nobody was bothered about price; all they were bothered about was delivery and execution. Now developers and clients need a more realistic price solution.”

Maxell Trading is a UAE-based company that has been supplying the HVAC market for the past eight years. Sales executive CS Rathish said: “This market is currently ruled by price and competition. Some big projects and high-profile smaller ones still demand quality, but others often want rock bottom prices. There are some cases where there is a genuine cheaper alternative, but a handful of contractors are unfortunately willing to compromise quality for price.”

However, Rathish is quick to point out that this view of the market is far from a negative one. “We feel that it has been a little tough to attract business in the past few months but, having said that, we have already exceeded our target for this year. The next six months could be fairly difficult, but then we are confident that we will see the market come back strong.”

So why are some companies revelling in current economic conditions while others are struggling to make ends meet and slashing jobs every few months? “It is about the structure of a company. Big companies have huge marketing budgets and big distribution costs, whereas Gree is very lean,” explained NIA Limited’s Ahmed.

The one certainty is that HVAC specialists still see the Middle East as an essential market. “This is our first time here, and the architecture and finishes are amazing – it is like the F1 of construction,” said Western Airducts’ Scott Lintern. “In terms of the air-quality engineering side of the business, we are getting a feel for the market and are trying to network. As health and safety regulations become more important, we feel we can play our part with 30 years’ experience manufacturing according to UK regulations.”