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BIG 5: Clients still calling for quality

MEP and HVAC buyers are refusing to look for rock bottom prices

Tight budgets hve lead to greater competition
Tight budgets hve lead to greater competition

In spite of a global slowdown that has forced many in the construction and development industries to look for the lowest price options, the manufacturers and suppliers of HVAC (heating, ventilation and air conditioning) and MEP (mechanical, engineering and plumbing) solutions have claimed that developers and specifiers are not cutting corners on price.

And, speaking at this year’s Big 5 exhibition, 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 that it’s starting to grow again,” said Peter Klyver, marketing director for the Swedish Ostberg Group [1A17], which is dedicated to energy efficient ventilation systems, such as small heat recovery units and energy recovery wheels.

“Our main clients are hotels and, as everyone knows, this is the place to be for hotels,” Klyver added.

“They’re not looking for the cheapest solutions but actually the right balance between quality and price. We’re a Swedish company and with that comes a certain reputation for quality – we’re not the cheapest but we’re certainly not the highest price either.”

Western Airducts’ [1D14] 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 of course see a lot of clients that are looking only at the bottom line.”

However, according to Western Airducts, this had led to a push towards better levels of service. “Manufacturing has become a service industry, and we’ve been conscious of that in the UK and are now applying those principles here.

“Our company is not just about manufacturing but brings our expertise in logistics, handling, delivery and service to the table as well. Our prices are not the cheapest of cheap but they’re not the most expensive – with offices all over world, headed up by our UK head quarters, clients know that they can pick up the phone any time they have an issue.”

The Chinese company Gree [1A31] manufactures air conditioning solutions, chillers and fan coil units and currently boasts a global network of 20,000 distributors, while producing more than 27 million units per year, enjoying a 46% market share in AC in China.

“We’ve been doing good business in retail and wholesale but, of course, we’ve also witnessed a decline in construction over the past year,” explained vice general manager of overseas sales Larry Lam.

“We actually 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 certainly think we can compete on quality.”

Zakir Ahmed, the general manager 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 [1E11] is a UAE-based company that has been supplying the market with fan coil units (FCUs), air handling units (AHUs), cooling towers, humidifiers, fans and more from a wide range of international manufacturers for the past eight years.

Sales executive C.S. Rathish said: “This market is currently ruled by prices and competition. Some big projects and high profile smaller ones too still demand quality but others often want rock bottom prices.

“There are some cases where there’s a genuine cheaper alternative but, in others, a handful of contractors are unfortunately willing to compromise quality for price.”

However, Rathish is quick to point out that the 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, that said, we’ve already gone past our target for this year.

“The next six months into 2010 could be fairly difficult, but then we’re confident that we will see the market come back strong.”

So why are some companies reveling in current economic conditions while others are struggling to make ends meet and slashing jobs every few months?

“It’s about the structure of a company. Big companies have huge marketing budgets, big distribution costs; Gree is very lean. The product may cost the same to manufacture but delivery costs less, there’s hardly any HQ overheads, you just get the same brand value and the quality without the mark-up,” explained NIA Limited’s Ahmed.

The one certainty is that HVAC specialists still see the Middle East as an essential market to be part of.

“This is our first time here and, the architecture and finish is amazing – it’s like the F1 of construction and anyone in the industry must want to be involved here,” said Western Airducts’ Scott Lintern.

“In terms of the air quality engineering side of the business, we’re getting a feel for the market and trying to network. As health and safety regulations come in here, we feel we can play our part with 30 years’ experience manufacturing according to UK regulations.”

This year’s Big 5 also marks Gree’s debut at the show. “It’s our first year and we’re here because we’re confident of Middle East growth. We’re looking for opportunities, particularly at our commercial product level,” said Lam.

“We really feel that we can provide better solutions to the air conditioning market here. AC is a necessity in this part of the world and end-users shouldn’t have to pay high costs for it,” he added.

“We’re here looking for new customers and to build relationships, to find distributors for our different ranges,” said Klyver.

“Of course customer service is important now but hasn’t it always been important? Maybe it’s more important here because of the way you do business – based on friendship.”

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