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What makes the German machine tick?

We look at the elements that drive innovation and best practices in HVACR industry

| | Nov 30, 2011 | 8:31 pm
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Climate Control Middle East looks at the elements that are driving innovation and best practices in the HVACR industry in Germany and what’s behind the Made in Germany pride. We examine what the challenges for industry in Germany are, how they are impacting the key players and what end-users are demanding in terms of innovation, energy efficiency, reliability and capital costs. Story: Vikas Roy.

It has been the most challenging of times since the global financial crisis has impacted all aspects of business. Yet, different companies have adapted differing strategies to cope with the situation and have experienced contrasting fortunes.

For instance, Andrej Honstein, Area Sales Manager of ebm-papst Middle East, says his company has had the best year of its history in 2010, with over 30% increase in turnover. Thomas Orr, Managing Director of TROX Middle East, has a similar story to tell. He points out his company decided to open a 150,000m2 Air Handling Unit factory in Germany with an investment value of Euro 50 million at the height of the economic downturn. Ing. Herbert Bremstaller, CEO and company founder of ECOTHERM Austria GmbH, says his company, which he claims is a global market leader, has been expanding continuously even during the last two years.

Hans Altmann, Regional Manager-Middle East & North Africa at Techem Energy Services, explains how regulations and standards in Germany have made his company come up with best practices and innovations. He points out that the German Heat Cost Allocation Decree is the basis of a consumption-based energy cost allocation for centrally generated shared utilities and regulates the allocation of 100% of the energy cost to the individual consumer. Unfortunately, he says, the benefits of a regulated energy cost allocation was undermined, as the real estate industry had to cope with other issues for the last few years. “Today the rising energy cost and the pressure to reduce the operational cost for buildings with joint utilities like central or district cooling is giving momentum to implement international standards and best practice for a pay-for-use model,” Altmann adds.

Orr explains that the European and, specifically, German standards, coupled with the demands of the German people, dictates that TROX constantly deliver top quality products conforming to the highest standards. “Our impressive R&D division (11 facilities worldwide) keeps us ‘ahead of the game’ in terms of product innovation and regulations,” he says.

Speaking about the projects his company is supplying to across the world and what innovations they contain, Bremstaller says ECOTHERM mainly sells turnkey hot water and steam systems in the MENA and Asia region. “Customers are amazed by the advantages of ECOTHERM: flexibility, premium quality, innovation, premium service, efficiency, experience, reliability, sustainability, partnership, internationality,” he adds.

Focusing on the market in the GCC, Orr points out that TROX is currently launching its latest product ranges that are developed specifically with this region in mind. “These new offerings marry the aesthetic requirements with the aerodynamic ability required to meet the traditionally higher air volumes associated with Middle East cooling loads, while still taking cognizance of the evolving energy efficiency requirements,” he says.

Honstein strikes a more realistic note, saying “we hope our (ebm-papst Middle East’s) green innovations will gain market share in GCC as well. But to do this we need more awareness about energy usage, more stimulus and higher energy regulation standards from local authorities”. By contrast, ECOTHERM, which has “in the last 13 years successfully supplied systems to the most prestigious projects in the GCC, like the Burj Khalifa and Mecca Royal Clock Hotel Tower”, says that in the GCC its projects are getting bigger and bigger, and that it wants to provide its partners and customers premium support from the beginning of the project until the end.

Altmann strikes a note of caution while describing the experiences of Techem, which he describes as an energy management service provider with innovative products. “Our experience in the GCC showed that energy measuring hardware never served the purpose it was intended to unless there is a full service provider operating and maintaining this system along with entire IT infrastructure for data recording and billing,” he adds. Hence counterfeit products may penetrate into the markets but will not survive, as the market is changing to a service-oriented one, with no chance for only-hardware-supply, Altman says.

ECOTHERM adds that competitors will not succeed in counterfeiting products, a point TROX’s Orr is in complete agreement with. “The unfortunate part is that these ‘copycat’ companies believe that re-creating what a piece of equipment looks like will also reproduce its performance.” Orr says.”This is certainly not the case when discussing air handling equipment, and many clients have discovered this to their detriment.”

All respondents agreed that the market is difficult at the moment, with Altmann stating that the rising energy costs are dictating the market pace and that no one will accept hidden cooling charges in the rent anymore.

Asked how TROX was helping the GCC in overcoming the challenges that have risen out of the downturn, Orr said: “We can source the best products at the best possible price from any one of our 13 manufacturing facilities around the world to provide the customer with the best solution for their requirement. This has, and will, remain a standard for TROX before, during and after the downturn.”

Altmann responded by saying: “By reducing the energy consumption we automatically reduce the carbon footprint which is one of the highest per capita on the global level; on the local level we make the real estate industry attractive again by reducing the rents/service charges and making these more transparent.”

The downturn has led to a shift in focus within the GCC, with ECOTHERM saying that it is obvious that the invested money for new buildings has decreased in the UAE while huge projects will either be started or continued in Saudi Arabia and Qatar respectively. Orr’s view is that while TROX will remain completely committed to the UAE, the possibilities in Qatar and Saudi Arabia cannot be ignored.

ebm-papst says the downturn is not making it change its strategies vis-à-vis the GCC. Instead, says Honstein: “Due to our success in this market, we want to continue our strategy of promoting energy efficient solutions and green innovations.”

Altmann, for his part, adds: “The downturn has stripped the cover from the real estate industry and unveiled the weakness of the existing solutions. I see a much better perspective today for our business compared to a year ago.”

Bremstaller strikes the most upbeat note in conclusion, stating that “during the last few years” ECOTHERM’s turnover in the GCC states was “continuously improving” along with that of the whole group. “So the downturn did not influence ECOTHERM at all.”

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