Logo - CCME
Digital Issue - CCME

‘Competition is high but the cash flow is slow’

Although research suggests that the HVACR accessories sector is poised for growth in the coming months, industry insiders concur that the sector is faced with a number of challenges. Benwen Lopez has the story…

| | May 13, 2018 | 3:48 pm
Share this story

HVAC accessories not only enhance the performance of HVAC systems, but they also improve the comfort in a facility. From improving energy efficiency to enhancing fire safety, accessories play a crucial role in these systems.

Towards better energy efficiency
As energy efficiency gains focus, HVAC accessories play a crucial role in improving energy performance. As Balagopal Nair, Engineering and Business Development Manager, Faisal Jassim Group, explains: “Accessories, along with the equipment, play a major role in the overall performance of the system. They account for a large number of harmful emissions released into the environment. We need to implement the use of green systems that will help in not only improving indoor comfort and quality but also in reducing energy consumption and harmful CO2 emissions.”

Concurring with this view, Ali Umair, General Manager, Doby Verrolec, says: “Accessories such as ductwork jointing systems, gaskets and sealants play a pivotal role in energy conservation. According to the U S Department of Energy, leaking ductwork is the single biggest cause of energy waste in residential and commercial buildings, contributing a whopping USD 2.9 billion in the United States alone.”

Umair further explains that leaking ductwork allows contaminated air to be sucked into the ducting system and spread throughout the building. “Using products tested to DW-144 or SMACNA can ensure leakage contained is within allowed limits of the duct, thereby minimising energy loss, while also improving air quality.”

Voicing a similar opinion, Safdar Mirza, Assistant General Manager (Sales & Marketing) GECO Industrial and Packaging, says: “Accessories play a very crucial role in any given equipment. Apart from keeping the equipment running, they contribute to the overall energy and waste parameters of the equipment. Energy-efficient accessories are the need of the day. Many countries worldwide have shown initiatives to control the energy wastes contributed by conventional accessories.”

Even components like insulation play an essential role in pushing the energy-efficiency envelope, as Umesh Unni, Regional Commercial Manager (Insulation), Hira Industries, says: “In Insulation, it is vital to determine the thickness to avoid condensation and heat loss. In projects, we propose to ensure the right calculation for the accessories is made. Apart from the thickness, the right material is [essential], otherwise, you will end up consuming more energy and paying more.”

With regional strategic initiatives like the Dubai Supreme Council of Energy wanting to reduce power consumption by 30% by 2030, the industry is driven to cross the set benchmarks and align with such initiatives. As Ajith Abraham, Territory Manager – Building Service Products, Leminar Air Conditioning Company, explains: “A lot of our products comply with the regulations of the Dubai Supreme Council of Energy. In the accessories product range that we represent, we have various kinds of products, such as insulation, which meet the Green Building Regulations, rubber inserts, which comply with low-flame spread indexes, adhesives and coatings with low volatile organic compounds, energy-efficient valves and fittings as well as lead-free gauges.”

Highlighting technological advances made in the accessory segment, Umair says: “One of our products is the AirCon Energy Saver, which helps save 30% energy by reducing the run times on the AC compressor. It analyses the room air temperature via a bead sensor and effectively prevents the system from overcooling the air and avoids excessive compressor operation.” He adds that the product works in commercial and residential applications for new and old installations.

Testing and approvals
It is a no-brainer, regulatory and third-party testing ensures that any product performs as intended to. While conventional certifications like the ISO are met, industry insiders suggest that a critical practice by the Dubai Central Laboratory (DCL) is the random inspections, which push accessory manufacturers to maintain or go beyond the prescribed standards.

Explaining the role of DCL in testing and certification, Unni says: “DCL personnel randomly pick up samples, either from the site or the factory and test them to see if they meet the standard requirements and the certification is valid for one year. They also conduct factory surveillance and pick up samples from the line or the start to ensure that the standards are met throughout.”

Highlighting a hurdle in the regulations, Abraham adds, “Multiple product approvals and listings of products in vendor lists, which do not meet with the market standards and specifications, drive down the prices and force contractors to install products of low quality, which, in turn, kills the sustainability of a project.”

Market hurdles
Even as the market presents opportunities like the Expo 2020 and retrofitting of buildings, the main issue concerning stakeholders is cash flow.

“In 2018, as the Expo 2020 draws near, the number of jobs keeps increasing, but a major roadblock is the cash flow problems,” says Unni. “The competition is high, but cash flow is slow. The jobs keep coming in, but we just need to ensure that before the job is executed, the cash is secured.”

Sharing similar concerns, Umair adds, “The biggest challenge we face is finding a way to retain acceptable margins and pass on price increase, when raw material prices are consistently climbing.”

Other market hurdles, such as the fluctuating oil prices and VAT, pose a challenge to the sector, as Mirza explains, “The volatile oil prices have brought in uncertainty to a level that is felt among different industrial sectors and has slowed down major new and existing projects in the GCC region.”

For stakeholders like Umair, it is the geopolitical situation in the Middle East that contributes to the market challenge platter. However, he also believes that demand would undoubtedly ramp up by the end of 2019, with Saudi and Oman markets expected to grow, owing to the increasing investment in large-scale developments, aimed at boosting the economy through non-oil commodities.

Explaining the effects of VAT, Nair says: “Today as the non-oil foreign trade soars up, along with the positive effects of VAT, the government is investing heavily on infrastructure projects and has created a healthy atmosphere for investors in tourism, health, education and retail, as well as in hospitality sectors.”

Echoing Nair’s views, Abraham adds that unlike other countries in the Middle East, the UAE to a great extent has reduced its dependence on oil prices.

Summing up
Industry voices believe that though the market presents excellent opportunities for the sector to grow, it is only when the influencers come together and define solutions to overcome the challenges – such as cash flow, pricing and quality control – that the sector would be able to navigate through tough economic climates.

Share this story

Feedback for this story

Your email address will not be published. Required fields are marked *