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Blowing hot and cold

The economic downturn has dealt a blow to the fans and blowers market in the GCC. The gaze is now set on Saudi Arabia and Qatar, where there is palpable activity, say industry insiders.

| | Aug 15, 2010 | 3:45 pm
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The economic downturn has dealt a blow to the fans and blowers market in the GCC. The gaze is now set on Saudi Arabia and Qatar, where there is palpable activity, say industry insiders.

The writing on the wall is clear: projects have been delayed, kept on hold or even cancelled. Global MEP packages have been reviewed downwards. Given this scenario, cost tops the list of priorities, with concern for energy efficiency coming a distant second. This is the independent, yet unanimous, verdict reached by representatives from the fans and blowers market in the GCC – in particular, Systemair, Dynair, Aldes, Leminar, Nuaire and Faisal Jassim Trading Company.

Improper installation and maintenance are other worries that manufacturers and consultants have to contend with. But the general mood is to weather the storm by remaining competitive, raising customer awareness and trying to make inroads into more promising markets – these at present being Saudi Arabia and Qatar.

When it comes to the size of the fans and blowers market in the GCC, the verdict is neither clear nor unanimous. Amit Ahuja, General Manager, Maico Gulf (Dynair), estimates the market size to be between Dh320 million and Dh350 million, Qatar between Dh60 million and Dh70 million and Saudi Arabia between Dh120 and Dh150 million.

Mohammad Abulwafa, Product Manager, Faisal Jassim Trading Company, Abu Dhabi, thinks that the size of the market is increasing and getting more importance than before. He estimates it to be between $15 billion and $20 billion of projects under construction or at the design stage. He pegs Saudi Arabia at between $2 billion and $3 billion, the UAE at between $5 billion and $7 billion, with Qatar standing at $1 billion. Gaetan Pierrefeu, the Managing Director of Aldes ME, admits to the difficulty in arriving at a conclusive figure. “We have assumed the fans market to be around Dh160 million in the UAE for the moment,” he says. “But this is quite difficult to estimate clearly, due to different specific fans (small extract fans and smoke exhaust fans, to name two) and different manufacturers and distributors.”

The figures, therefore, are not conclusive and appear, at best, to be ‘guesstimates’, as the economic downturn has made it difficult to pin down numbers with any degree of certainty. As Aboobacker Aslam, Sales and Marketing Manager at Systemair Middle East, points out, “Sales from Dubai alone is down by 40% – around 20% estimated reduction in overall business.”

The other spokespersons echo this view. Pierrefeu explains, “Business has been even more competitive on price, with contractors more demanding on this key sales factor.”

Ahuja, points out that this is in contrast to 2007, when most contractors were busy designing projects that were yet to be announced. “Frankly, in the UAE,” he says, “there are no new projects that we are working on. The existing projects in Dubai have already been designed and are under way.”

Andrew Kirton, General Manager, Nuaire, says that fewer projects under construction have led to greater competition. Another fall-out of the situation, he says, is that due to tighter banking regulations, suppliers are having to accept extended payment terms.

Rakesh Mistry, Design and Estimation Engineer with Leminar, which represents Casals and Twin City, believes, as do the others, that Abu Dhabi has helped stabilise the market, which was in danger of keeling over. “We were not active in the Abu Dhabi market, but now we are getting five per cent of the market share for fans,” he says.

Pierrefeu lists the reasons: “Dubai has been much more affected than Abu Dhabi due to the revelation of the real estate bubble, mixed with a stock of offices and apartments. The Abu Dhabi market is safer due to oil revenues, a real demand for housing and offices and a need for education and health facilities.”

Ahuja, while agreeing with Pierrefeu, warns: “Everyone was looking at Abu Dhabi as a saviour. But even Abu Dhabi has slowed down. There has been a drastic reduction in the pace of work. Nobody is in a hurry; earlier, everything was in the fast-track.” Ahuja believes that this is because owners and developers are treading with caution. “People are evaluating their investments even in projects that are under way,” he says. “They are now saying, ‘Let’s do it in phases’. The bottom line is, people have time today.”

Though it comes with a caveat, the important players in the fan and blower sector, sensing growth in business opportunities in Saudi Arabia and Qatar, have either set up shop there or are strengthening an already existing base, hoping to inject life into a weakening market. Aslam admits that Systemair’s distributors have a full-fledged base in Qatar and that the company is now setting up a network in the Kingdom, in response to the number and size of projects that have been announced there.

Pierrefeu echoes this view. “There is a real demand in Saudi Arabia, with a strong domestic market supporting the growth, with a need for education facilities, hospitals, and housing for the young population,” he says.

Kirton, speaking from Nuaire’s point of view, says: “We recognise that the Saudi market is becoming of more importance to our market sector due to reduction in opportunities in other GCC countries.” His company, says Kirton, has recalibrated its strategy by focusing more on the supply of ventilation systems there, which involves the input of Nuaire’s ventilation specialists at the design stage.

Companies, like Dynair, have responded to the changing scenario by adapting their products. Speaking on behalf of his organisation, Ahuja says: “Saudi Arabia is a very different market. For one, any product there that runs on electricity does so on 60Hz frequency cycle, while in the rest of the GCC, it is 50Hz. We have now designed and tested our products to run on 60Hz frequency cycle, and so we are Saudi-ready. We are looking to enter the market through a distributor network and through our own set up. We are doing due diligence, and have identified a couple of people and have already started marketing (to some markets). But we are looking for the right channel partners across the country. We will start with Riyadh and, then, diversify into Dammam and Jeddah. But Riyadh is most active. Most of the construction and development is taking place there.”

But Ahuja is quick to add that though the market in the Kingdom is huge and there are many projects up for the taking, the receptiveness to change is slow, as one has to operate against an essentially conservative backdrop, where customers don’t readily change to new brands. “It is an interesting challenge to break into KSA,” he says.

When it comes to Qatar, speaking from Dynair’s experience of over 15 years in the country, Ahuja says that his company has intensified its activities there, as it is vibrant in terms of business.

Mistry says that Leminar, has started a joint venture operation in Qatar with the Dyarco Group from January this year, with a sales and marketing team in place, but has not yet received orders for fans. “The Qatar market is encouraging and the potential is there,” Mistry says. He, however, adds, “The pace of projects is slow compared to the UAE. But the money is there. And also, they are bidding for the 2022 FIFA World Cup.”

The World Cup could, perhaps, prove to be the panacea that the construction sector, in general, is looking for. The fan and blower market hopes to benefit from the spill-over effect, considering the symbiotic relationship the two sectors enjoy.

“The business opportunities in Saudi Arabia and Qatar have been stable in numbers, but the time frame for the completion will be probably longer,” warns Pierrefeu, on a conclusive note.

Meanwhile, expanding the customer network and product range and improving service, especially after-sales service, appears to be the three-pronged approach of the sector to combat market realities. This translates into going back to the basics.

Alluding to after-sales service as the key to the success of Leminar, Mistry says, “We have factory-trained technicians, spare parts for all the fans and complete knowledge of our products, which make all our customers happy.”

Aslam lists strategies Systemair has adopted to spur on a sluggish market: expanding to other growth markets, adding new product lines like AHUs and air distribution products, while laying emphasis on products like air curtains and heaters.

On the other hand, Pierrefeu says, “Our target is to propose the right offer with the best support and services (knowledge and follow-up) to our customers, at the most appropriate/competitive price.” But he also astutely points out: “Cost is the first criterion for MEP contractors. Energy efficiency has not really been considered and implemented yet by MEP consultants (it is still in the hands of authorities like ESTIDAMA). Reliability and brand name are considered by MEP consultants to make the shortlist of three approved manufacturers.”

Ahuja, too, names pricing as high priority, as also service, and customer intimacy for Dynair, but is quick to add, “Pricing is not such an important issue, because we are already well-established in Dubai, and people know our price.” However, he agrees that the market, at least for now, is cost-driven. Kirton, while seconding the view that price plays a big part in the current market climate, warns: “It is important for designers to understand that reducing the amount of expensive air conditioned air that is extracted from a building can have a huge effect on the total energy usage, as chiller loads have the single biggest effect on energy costs in any building.

Alluding to the market prior to 2008, especially in Dubai, where every supplier had a big chunk of the pie, Ahuja points out, “People are quoting any price to get a project. Some of the pricing is absurd. I don’t understand the strategy. I sometimes wonder if they are making any money at all out of this.”

Desperate times, perhaps, call for desperate measures, and visibility and being a player, despite low margins, till the tide turns in favour of the market, could prove to be a wise game plan.

With the global focus on it, sustainability is an aspect that needs to be factored into the equation. Cutting costs while offering energy-efficient products is, therefore, a balancing act for the sector.

“Energy efficiency and reliability have a low share now,” admits Abulwafa, while Mistry taking into account the other horn of the dilemma, says, “Today, when the whole world is shifting towards green buildings, energy efficiency and reliability are key issues.” Aslam succinctly sums up the situation: “Generally speaking, the emphasis is solely on cost. Stress on efficiency and reliability apply only on select projects.”

Ahuja takes an even more sceptical and cynical view of the situation, while bemoaning lack of standardisation and resistance to new technology. “People do talk about green buildings, but I’m amazed by the ‘medieval specs’ (specifications) that we hear,” he says. He admits that a lot of energy is being wasted. “At the end of the day, owners of malls will pay the energy bills, which they will, then, pass on to customers.”

Since sustainability and innovation often go together, the GCC market also needs to address the problem of being open to change. Mistry stresses that the market is ready for new technology when it comes to fans and blowers. But Ahuja points out that consultants and designers have their own standard parameters, within which they have to work. Besides, ASHRAE Std 62.1 has a set of fixed guidelines for ventilation for toilets and kitchens. In certain cases, therefore, there may not be enough wriggle-room for innovation.

With issues like survival and pricing gaining immediacy and urgency, retrofitting does not often and necessarily feature on the to-do list, think the market representatives. Speaking of the limited scope of the retrofit market, Abulwafa says: “We are always enhancing to use VFDs and to incorporate them in the controls. Changing the impeller pitch angle is a good way to adjust only the performance to a certain level.”

Kirton, on the other hand says: “We do not see many cases of retrofitting to change the fan performance or increase the efficiency. The cost to retrofit to incorporate a VSD in all but the larger fan sizes would not be economical.”

Expressing the general opinion, Pierrefeu says: “The retrofit market is promising, but it will take some time, as the market was totally focusing on the construction of new buildings. We haven’t yet been called for such energy-saving retrofit assignments.”

Regarding certification of products, the main players say that they adhere to a stringent testing regimen, based on either European or American standards. Though they think that having region-specific testing would be welcome, they are not sure if it is possible or practical or even necessary, at least at present.

Abulwafa says that all the fans Faisal Jassim Trading Company supplies are certified and licensed to bear AMCA seal as a third-party certification. Leminar follows ISO, BS, EN, Dubai and Abu Dhabi Civil defence and Applus standard for Casals fans, reveals Mistry. He says that his company tests performance parameters for fire with Warrington, a testing authority, and adds: “It will be good if they test beyond fire. Measurement, flow, head and so forth.” Regarding advocating regionally based testing centres, Mistry says: “If someone is available locally, we can get it certified here at our expense. To certify air conditioning units, we have to courier to Thailand, and the activity costs a fortune.” He points out that on the flip side, suppliers need to make sure that the credibility is high.

Aslam says that Systemair tests for flow, pressure drops, vibrations, power consumption and noise/vibration at the company’s European facilities at Skinnskatteberg in Sweden and WIndischbuch in Germany. He advocates regional-based testing centres. “It gives more credibility to us as a manufacturer, and makes our work easier with the local authorities, who are keen on tests,” he says, and adds, “Moreover, it becomes convenient for us in a few cases, where the designer/contractor doesn’t want to admit to the mistakes in design calculations and doubts the performance of the product supplied.”

Aldes has its own laboratory in its headquarters in France to test mainly airflow, noise, and the power consumption of its range of fans. It follows the EN ISO 5801 standard for the airflow curves. High temperature fans are tested as per EN 12101-3 by APPLUS laboratory in Spain, says Pierrefeu. When it comes to getting testing done locally, he believes that the move would, perhaps, help a few local companies to get certification quickly but points out that all the main fan manufacturers are from Europe or the United States, with their testing facilities in their home country. “Testing centres would be more useful for some locally made products like, fire dampers, VAV boxes, grilles and diffusers,” he says.

Kirton says that all Nuaire’s products are manufactured in the UK to stringent European standards. Performance parameters they are typically subjected to are, air volume, external static pressure and sound spectrum tests.

Regarding regionally based testing centres, he says, “Anything that helps to educate the local markets of the importance of the proper control of ventilation systems would be a great advantage in reducing energy costs and environmental impacts.

Ahuja believes that standards formulated in Europe will eventually come to the Middle East, and will become binding.

When it comes to customer responsibility, the experts cry foul. They believe that while manufacturers and suppliers, on their part, are expected to follow stringent product certification standards, customers are not always held accountable and, hence, don’t do their bit. Suppliers cite incorrect installation, lack of maintenance and improper fan selection, as the main problem areas.

“There is not enough care about installation practices in the GCC,” Pierrefeu says. “This concerns not only fans, but also the whole system, where a circular ductwork with good insulation could avoid any leakage and reduce pressure losses, and where a proper location of grills and diffusers increases the efficiency of the air distribution system.” He thinks that even when it affects efficiency, there has yet been no noticeable move towards incorporating best practices.

Abulwafa thinks that many designers do not incorporate fan efficiency requirements in their design in a clear statement. In his opinion, incorrect installation practice in the region is due to lack of experience of contractors and improper fan selection. “It is worrisome, as it is linked to energy efficiency,” he says.

Lack of proper maintenance and fan selection cause breakdowns, Mistry says. He believes that fan design and selection criteria are keys to fan selection. “Furthermore, instead of two-speed motors, VFDs are a better choice, in terms of energy efficiency,” he says, and adds, “We have come across wrong wiring connection, improper installation, and in some cases, wrong static pressure calculation.”

Aslam lists low/high airflow due to improper ESP calculation, over-sizing, incorrect system design, lack of maintenance and inefficient control systems, as areas that need attention.

In the days of the real estate boom, it was a practice to allocate large safety margins, which led to over-sized fans that operated at flow rates far below their design values. Aslam says that he now sees a move to improve these aspects.

Kirton says, “We are very rarely called back to site if the fans have been installed and commissioned properly, which is why we offer local support at the commissioning stage.”

Ahuja, on the other hand, thinks that basic norms are routinely bypassed, product manuals are not read and compromises are made in the installation process. “Their excuse is, space and design constraints,” he says. “So I do believe these two have to be factored in by architects at the tendering stage itself. But unfortunately, they are not considered during the tendering stage.”

He adds: “Eventually, the equipment is not installed properly, and we, suppliers, are blamed for the performance of the equipment.” He strongly believes that poor installation and lack of timely maintenance will, in the long run, hamper energy efficiency and performance. In Ahuja’s opinion, though energy efficiency is seen to be important, only 10% of projects actually pay heed to it.

Kirton believes that the standard of installation, although lower than European standards, has improved significantly over recent years, and adds, “But we still see some ventilation system designs that will have a negative effect on energy usage, due to unnecessarily high static pressure requirements.

The experts agree that raising awareness and educating all the parties involved is vital at this point of time, to help change the buying approach from price to more crucial factors like reliability and energy efficiency. Their organisations, they say, have taken the seminar and campaign route to ensure this.

“Aldes Middle East is a complete solution provider,” Pierrefeu says. “So we are trying to demonstrate that the price issue doesn’t matter, especially with each item or a batch of items but the whole system, to make it work more efficiently with higher reliability.”

The company has implemented training sessions in its Middle East facilities with the support of its new showroom to exhibit its products to educate its existing and potential customers. “We have also started technical newsletters to emphasise some general and specific points about our different activities,” Pierrefeu says. “From September till December 2010, we will tackle different kinds of fans, how to read a fan curve, fans with forward-curves and backwards-curves blades and belt drive.”

Pierrefeu adds that Aldes has conducted technical seminars aimed at authorities, MEP consultants and contractors to address the issues of fire protection and air diffusion. “All these have received really good feedback, as these organisations are usually keen to get useful technical information to solve their different issues,” Pierrefeu says.

Abulwafa says that his company conducts seminars for customers to educate them on features other than cost. “Low-cost fans means more maintenance troubles,” he adds.

Apart from conducting seminars, visiting designers and end-users in connection with their EC line of energy-efficient fans, is the approach Systemair has adopted, Aslam says.

Speaking about Nuaire, Kirton says, “We are approaching the market via the specification route through M&E Consultants, as it is important to convince the system designers of the benefits of fan control technology, prior to projects being tendered.”

Ahuja points out that rising cost, if not concern for the environment, will finally force errant parties to toe the line. “Energy is getting very expensive the world over,” he says. “I don’t know for how long we can continue to use cheap energy like we are doing in the Middle East. Standards written down in Europe will, at some point in time, come to the Middle East, and people will have to follow them,” Ahuja concludes.

When it comes to market preference, Aslam gauges it to be American and European technologies, in that order, but with a leaning towards European technology in car park/tunnel ventilation systems. Systemair, he says, has supplied car park ventilation, kitchen ventilation, staircase pressurisation, general ventilation and air curtains to the region.

In Kirton’s opinion, the market is split between USA-led specifications, which favour centrifugal fans (blowers) and European-led specifications, which favour axial fans.

Pierrefeu, speaking on behalf of Aldes, says that small extract fans are still commonly used for toilet extraction in offices, mosques and villas. He enumerates products that make it to the shopping list: “Low-energy consumption fans with EC motors are available by manufacturers (Aldes has a full range called Microwatt), but are not really used in the UAE market, yet. As noise is an important criterion in the UAE, double skin inline cabinet fans should be used for common applications in residential/commercial buildings. Smoke exhaust fans with high temperature rating (400°C – two hours) are the standard in the UAE for smoke extraction and staircase pressurisation – mainly roof fans and axial fans. Jet fans for car parks are being used more and more in Dubai but are strictly forbidden in Abu Dhabi.”

Explaining this point further, Ahuja says that jet fans and induction fans for car park ventilation were first introduced in Europe, and have found their way to the GCC market only in the last three years. Interestingly, says Ahuja, though Dubai and Qatar have been receptive to jet fans, Abu Dhabi and Oman have opted for conventional ducted fans. The question as to which is more suitable is open to debate, he says.

Abulwafa thinks that when it comes to fans, in terms of technology, sustainable fans that are able to withstand harsh weather conditions of high temperature and humidity are on the wish list of contractors. This is indicative of the fact that market preference is often dictated not only by technology and standardisation but also by the need of the hour.

Kirton says, “We specialise in supplying smoke ventilation products, particularly car park ventilation systems, as well as general ventilation systems, which respond to user requirements.”

This goes to prove that though ventilation for buildings is in demand, car park ventilation accounts for a big chunk of the market – 80% to 85% – thanks to the rising number of malls and towers. Since land is expensive, underground parking has become a necessity. Says Ahuja: “In a G+40 building, you need to make space for 400 cars. This is where car park ventilation comes into play.”

In the final analysis, if the report cards of Systemair, Dynair, Aldes, Leminar (Casals), Nuaire and Faisal Jassim Trading Company are taken cumulatively as a yardstick, the fans and blowers market in the GCC has not fared badly, despite the slow pace of the construction sector. But, as most report cards typically say, it can do better.

Among large projects, Systemair has recently supplied fans and blowers to Dubai Metro; Pearl Qatar; The Wave Muscat, Durrat Al Bahrain townhouses; Damasquino Mall, Syria and Jordan Gate Tower.

Dynair says it has supplied its ventilation equipment to Sky Courts, Dubai; Seba Tower, Abu Dhabi; Lusail, Qatar and Radisson SAS in Bahrain.

According to Aldes, it is focusing on extract ventilation fans for all kinds of applications – villas, malls, hospitals, schools and towers, and smoke exhaust fans for fire protection. Its customers in the region include Qasr al Sarab Hotel; Ferrari World, Abu Dhabi; Umm al Quwain Hospital and RAK Hospital.

Leminar says it has supplied applications to commercial and residential buildings, warehouses and logistics facilities, pumping stations, electricity substations, sewage treatment plants, district cooling plants, schools and hotels, among others. Its main customers include the Hydra Project, Abu Dhabi and Tamouh District cooling plant (Reem Island), Abu Dhabi.

Kirton, speaking for Nuaire, says that his company has supplied products in the region to Yas Island car park (used for the Abu Dhabi Grand Prix); Al Zeina at Al Raha Beach, Abu Dhabi; Qatar Civil Defence Headquarters and the Doha Pars Sorbonne University.

Faisal Jassim Trading Company lists the Abu Dhabi Financial Center and Etihad Towers, in Abu Dhabi amongst its customers.

Does this long list translate into healthier account books for the sector? Admittedly, driven by the need to see itself out of the woods, the sector has kept the market moving by deploying various strategies, but with each player trying to carve a larger wedge of the pie for themselves, whether there will be enough to go round is anybody’s guess.

Ahuja, perhaps, voices the niggling worry that most players in the sector have felt, but have not dared to articulate, when he says: “My worry is 2011 and 2012 in Dubai. I see no new projects, so there’s bound to be a ripple effect. Consultants began to feel the pinch a while ago, and now it is beginning to affect contractors.”

Will the ripple effect drag the market in its powerful undertow? At this stage, no one wants to stray into the realm of supposition.

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