François Boueri, President of Daikin McQuay Middle East, opens up about life, engineering and the challenges ahead for the HVAC industry
Growing up in Jounieh
I was born in Lebanon in 1961. I grew up in a suburb of Beirut, called Jounieh. I am Lebanese from my father’s side and Panamanian from my mother’s side. Her parents were of Lebanese origin, but she was raised in Panama, as a result of which we, as a family, have very strong ties on both sides.
I went to Le Collège des Apôtres, situated in my hometown. It is a school run by “Les Missionaires Libanais”, better known as “Kreimist”, a Lebanese Maronite priests order. “Apotres” follows the Lebanese-French system of education. The order has missions and schools in other parts of the world, as well, such as in Brazil and Australia.
As a boy growing up, I had more than adequate exposure to engineering. My father’s office was not far away from school. And during summer break, I would spend more time in the office, helping with this and that, picking up units in the warehouse and travelling with the technicians to install or to repair units. I earned an hourly wage, but that alone was not the motivation – I was genuinely interested in my dad’s company and work environment. And strange as it might sound, I always knew I was going to be a mechanical engineer.
Due to the war in Lebanon, in 1979, my parents wanted me to study abroad. I applied and was accepted in Notre Dame University, where my maternal uncles had studied. I flew to the US alone, where I joined the University for a bachelor’s programme in Mechanical Engineering. Notre Dame is a great alma mater with a transforming power – not only for the education it gave me but also for the values it instilled in me and for the friendships I made during my years under the Dome. I graduated in 1983 and, from there, went to pursue a master’s in Construction Management at George Washington University in Washington DC.
I obtained my master’s in 1985 and flew back to Beirut to work in my father’s company, Fedairco. My father, François Naim Boueri, God rest his soul, was a well known and respected engineer in Lebanon. On my first day on the job, he said to me: “Now that you have earned an engineering degree, you are ready to start learning. The day you stop learning, you stop being an engineer.” And learn I did. He taught me the real world application of pyschrometrics, water and refrigerant piping, duct sizing, how to cost and manage projects… everything. I was earning only $85 a month, owing to the devaluation of the Lebanese Pound, as a result of 10 years of war in Lebanon, but it was great to learn under my father the fundamentals of HVAC being applied in a building and to see the impact in real life of a good design versus a bad design. At the time, I worked as a designer and an installer; I was on the other side of where I am now, as a supplier!
Intimations of McQuay
Life continued in this manner for a little over two years and, then, war raged again. I had to make a decision. During my studies in Notre Dame, I had met Marijean Moran (MJ), who attended nearby St Mary’s. While I was deeply attached to Lebanon and to my family, much to my own surprise, I found myself making the decision to leave for the US, the reason being that MJ and I had decided to get married, and Lebanon at the time was no place to get started! So in early 1987, I left Lebanon and made it back to the US. In April 1987, and at the age of 25, I was the first amongst my friends to get married! I applied for and landed a job with McQuay International in Minneapolis. This was to be the first of many assignments with McQuay International and the first move we would make as a couple.
My first position with McQuay International was as a Product and Application Engineer in the Export department of the company. The department was dedicated to giving technical support to international clients based in the Middle East and Europe.
The assignment was not my first interaction with McQuay, though. My tryst with McQuay had, in fact, started in late 1984, during my studies at George Washington University. My father called me one day and urged me to locate a company in the US that could supply chillers. Father’s company, Fedairco was the distributor for Fedders for many years with big success in the Lebanese market. Fedders, in late 1984, filed for Chapter 11 and could no longer provide chillers and was divesting its various businesses. Fedairco was in the middle of a contract execution involving supply of chillers to the Lebanese University. Delay was not possible, but Fedders could no longer supply and was beyond any liability and protected by Chapter 11. I suddenly remembered a friend of mine, Rick Snyder, who went to Notre Dame, as well, and whose father, I remembered, was somehow involved in the air conditioning industry with the company he owned, Singer. I felt he could help in pointing me in the right direction. I called him and asked, “Rick, would your dad know of a chiller manufacturer looking for opportunities in Lebanon?” His reply was quick: “Funny you should call me now. My father has just acquired McQuay International.” This was the first time I had ever heard of McQuay. I called Dick Snyder and introduced myself, and Dick invited my father and I to Minnesota to meet McQuay senior international managers in early 1985. That was my first exposure to McQuay. During that same period, I travelled with my father to meet with Fedder’s CEO, Sal Giordano. Those meetings were my first international business experience. I remember watching and learning from my father as he prepared his files and meetings and negotiated what he needed, both technically and commercially.
Things progressed well from there, and during the 1986 AHR Expo, Fedairco signed and sealed an agreement with McQuay that made it a McQuay distributor for Lebanon.
So after working as a McQuay distributor for a short period of time, I joined them as an employee in the McQuay world headquarters, in Minneapolis, Minnesota!
McQuay had hired me in 1987 to actually take me to Europe to work in the international division, to be established in Paris at the time. This got delayed by two years not without causing some frustration, as I was eager to move. Looking back, and despite my urge to get into sales, the delay, in fact, turned to be beneficial. During the two years in Minneapolis, I gained a lot in terms of knowledge. I worked under Dave Bennett, Export Product Manager, from South Africa, who had moved to Minnesota. I learnt a lot from Dave on all products and McQuay internal processes. He explained the inner workings of the various HVAC equipment the selection parameters and adequate operation environments. His teachings complemented all that I had picked up at Fedairco. While with Fedairco, I had learnt about site details and how to design water flow and how to take care of pressure drop; the equipment was secondary. In Minnesota, though, I got to learn about the actual equipment, be it centrifugal chillers, water-source heat pumps or simple DX split units. I became conversant in the full range of McQuay products.
The McQuay US Product Division was divided in separate departments, such as Chiller Product Group, Airside Group, DX Group, Water Source Heat Pump Group and Terminal Units Group. These groups comprised specialised engineers, each in his field, and focused on the needs of the US market. We learnt a lot from these specialists. We had to be multilingual in all the products, since our export clients had us as a single point of contact for all their queries. Furthermore, we were more challenged to learn as the questions we received from Middle East or Europe were not standard and, usually, a US-based engineer would never have to deal with these different standards or specifications.
Looking back, those two years, together with the Fedairco years, formed my technical foundation. In Fedairco, I wrote design programs to apply the various concepts my father taught me. In Minneapolis, I applied what I learned from Dave Bennett to develop a full technical manual of Water Source Heat Pump units. Keep in mind that computers were rather new and very slow, and we had to know our fundamentals to minimise computing time. We had one computer in the export department, and running a centrifugal selection could take hours, as compared to the minutes it takes today. We had to deeply understand the selection criteria and how to size a centrifugal chiller for a given operating environment. Failure to understand meant running multiple selections over various nights and not getting answers. In comparison, today, an engineer would get more than hundreds of selections in minutes. The selection software today features foolproof, built-in algorithms.
The two years were eventful also because it was then that the question of R134a and R123 surfaced. McQuay had been using positive-pressure design, whereas Trane and Carrier were using negative-pressure design. It was a duel between the merits of R11 (negative pressure) and the merits of R12/R500 (positive pressure). At the time, the HCFC versus HFC campaign gained ground, and McQuay was lucky that R134a proved to be a drop-in for R500 and a replacement for R12. At the time, McQuay was the first company to drop HCFCs and move to HFC 134a, whereas Carrier and York were continuing with R123, because they had machines that were designed for R11. And the R11 drop-in was R123, with a number of modifications.
In February 1989, I finally got the opportunity to move to Europe. My job was to bring US-manufactured products to Europe and the Middle East while providing a direct technical support within Europe, eliminating the distance, language and time-zone difference. We first set up our offices in Amsterdam and within the AAF International operation. In 1991, we moved to Brussels as part of the new European headquarters, based in Brussels. With the move, my responsibilities evolved. Instead of technical and commercial support for US products, I was now responsible for sales and business development for all HVAC products manufactured by Snyder General, be they made in the US, Italy, France or UK. The region I covered was now the Middle East and Europe.
Besides McQuay, other SnyderGeneral products included Wesper and AAF. SnyderGeneral had other offices in Europe, with Brussels serving as the headquarters for the continent. It was from Brussels that the sales and marketing strategies for Europe and the Middle East emanated. It was while in Belgium that I learnt how to set up and manage a team. It was quite a challenge, because the different SnyderGeneral Group entities in Europe had different management approaches.
As a part of the assignment, I had the responsibility of completely setting up in certain markets. In essence, I would go to a market, search for and meet 10 to 20 companies, pick what would be the best pick for our products in that particular market, negotiate an agreement, put quotas out and give training. The training had to do with how to select, price, prepare submittals and sell our products. I would also ensure that the new distributor would understand the systems of each of the factories and how best he could interface with each of them.
During that period as a Sales and Distribution Manager, I travelled extensively to Saudi Arabia, Egypt, Turkey, Qatar and the UAE. It was during this time that I was involved with McQuay projects in the region, such as Burj Al Arab and the exhibition halls at the Dubai World Trade Centre, to which we sold air-cooled systems from Italy. I was also involved in Kuwait, in such projects as Antenna Tower and Kuwait University, to name two.
In 1995, on the heels of OYL purchasing SnyderGeneral, I was reassigned to the US, this time to New Hampshire. Up until that time, I had worked in products and technical support as well as sales and distribution management. I was offered an opportunity to work under Mike Christopher, Vice President and CFO of AAF McQuay. Mike had come with Joe Hunter from York with the task of growing McQuay business through a series of strategic initiatives. He was also responsible for implementing the STP financial process across McQuay entities. My task was to assist Mike in the various sales and distribution joint ventures he was setting up: McQuay Espana, Equipos McQuay in Mexico, McQuay Caribe in Puerto Rico, McQuay Latin America and McQuay Service in France. As an International Business Development Director, I actively participated in negotiating, setting up and representing McQuay International in the various joint ventures as an active Board Member.
It was a thrilling time, as both Mike and Joe were great mentors. They took me under their wings and trained me on finance and business management. I was also engaged in the daily operations to ensure the joint ventures were set up to grow fast and were properly supported by the various McQuay factories.
It was during this period that I learned how to run a business from inception. To start a business and grow it through the first five years is a rare skill and is very critical for any business. You really learn the meaning of each line on the P&L and the impact on a business of each line on the balance sheets. Businesses in the early stages are vulnerable, and they either grow profitably or die. Cash flow is critical for the first five years. We succeeded in those years to grow the business we started tenfold in three years.
In 1997, and following the success in the New Hampshire assignment, I was offered the opportunity by Mike and Joe to return to Lebanon and have my first position as a General Manager, running McQuay Mediterranean LLC. While based in Beirut, the company was responsible for sales, distribution and service in a vast region that covered Turkey, Egypt, the Near East and CIS countries. My goal was to grow the business of McQuay in these markets. In 2001 and 2002, it became clear that McQuay had yet again changed strategies and that growth was no longer the aim. I was very disappointed but managed the business till 2004, when I decided to leave.
My years in McQuay were a great experience, but it was time to move on. McQuay was always a good engineering company with some advanced product technology and good manufacturing capabilities. Unfortunately, from 1982 through 2006, McQuay had undergone many short-term changes in strategy and management. McQuay International, a small company until 1982, first acquired the air conditioning business of Westinghouse. Later, SnyderGeneral acquired McQuay in 1984 and expanded it through multiple acquisitions without ensuring proper synergies. In 1994, SnyderGeneral sold the company to OYL Industries, a part of the Hong Leong Malaysia-based holding. OYL brought Joe Hunter, York’s successful International Vice President to grow the business with the aim of taking it public by the year 2000. This failed to materialise due to the Asian financial crisis at the time. This again brought another change in strategy in 2001, when Joe left the company. Any change in strategy that you implement has a deep effect on the personnel, R&D and market focus. Unfortunately, the series of short-term changes and the turnabout of McQuay, ensured that it stayed a distant fourth amongst the big US HVAC players. McQuay’s fate was to change again in 2006, when it was acquired by Daikin Industries. This time, the parent company acquired McQuay not to sell it off in a few years but to fully integrate it and transform it as part of a true HVAC global leader. While the products have tremendously improved, thanks to the big R&D investments since 2006, what really changed was the company culture and long-term approach to strategy.
As a result of my disappointment with McQuay, I decided to get out of air conditioning altogether. Still, I did not want to move out of Lebanon, as my family was thriving and happy there. Prior to arriving in Lebanon in 1997, to take up the General Manager position, my wife and I had been married for 10 years. By 1997, we had moved six houses and had three children. Despite all this, if I managed a sense of equilibrium, the full credit goes to my wife, with whom I have a great rapport. I believe that unless your spouse supports you and is adaptive and carries the weight, you cannot make it through such moves or through such a demanding career. I thought that starting 2004, we would settle in Lebanon and seek a slower pace to provide space for the children to grow.
In 2004, and after leaving McQuay, I was offered the distribution for Lebanon, which I accepted and established AMI sarl, a family business. But personally speaking, I was no longer passionate about HVAC and started to spend time away from the “ageing industry”, as I called it. I explored environmental technologies – the aspects that interested me the most were water issues, solar energy and smart buildings. Eventually, I discovered that my passion was in water, the scarce resource that is so vital for life and for a clean environment. I undertook as exhaustive a study of water as possible, keenly focusing on domestic wastewater treatment for reuse in various applications. Water is still a passion, and I see myself contributing, one way or another, in finding solutions for users in the MENA region, which is the most water-distressed zone in the world.
Unfortunately and suddenly, in 2006, war hit Lebanon yet again. I was shaken out of my idyllic existence. My eldest son was turning 17. Something about his age resonated with my own experience, when I had to leave due to war back in 1979 to study in the US.
The decision was taken – as a family, we moved to Philadelphia, which was MJ’s birthplace and where we had got married, in 1987. As much as it was hard to leave, we had to, in order to secure the education of our children. Though we shifted our base to Philadelphia, I continued to travel to Lebanon and the Middle East region while at the same time consulting for US-based companies looking to expand business to the Middle East. The companies I assisted were in the fields of new energies and water treatment.
During the height of the war, Fernando Corral, a previous board member of McQuay Espana, and a friend, got in touch with me to see how I was managing and to offer any assistance he could. In his capacity as Managing Director of Daikin Spain, he asked me to consider working with Daikin. Knowing that I was disillusioned with the air conditioning industry, he insisted that I take a look again, especially considering that McQuay had just been acquired by Daikin Industries. He basically told me, “Daikin is a very dynamic company that thinks long term. It is a cut above any other company you came across. I am sure you will thrive in it, and we can use talent like yours.”
Caudio Capozio, COO of McQuay Europe, was also looking to fill the Managing Director position for McQuay in Dubai, and he encouraged Daikin to consider me. Despite my apprehensions, I decided to give it a shot and asked to meet Daikin Europe senior management for an interview, in Brussels. Even today, I am able to recall the experience of that visit to the last detail. I can safely say that the minute I stepped into the Daikin office, I sensed the power and the winning culture of the company. Suddenly, I wanted to be back in HVAC.
I met with Daikin Europe President, Masatsugu Minaka and the European senior management. It was an instant falling in love with HVAC all over again. Earlier in Lebanon, I had told my wife I would never go back to the HVAC industry, but at that moment in Brussels, I decided to join Daikin, because I could see what the company could do for McQuay and how it could transform McQuay into something dynamic.
Today, I can say with utmost conviction that we have a totally different culture in the company. And I am Daikin and not McQuay. The correct way to say it would be that I am working in the McQuay section of Daikin.
I joined the McQuay Dubai office in 2007 as a Managing Director and a bachelor. My wife and I decided to live separately for a year, so my eldest son could complete his last year in high school without another disruption. He had to apply and be accepted to a good college, and a move would disrupt the process. My task was to prepare McQuay for the integration with Daikin Europe Middle East branch. It was an intense year, with the challenge being to find the best possible way to merge and transform the two companies into one. The Daikin Middle East office was next door, and my counterparts in Daikin and partners in this effort were Shinichi Tachikawa and Saidja Geirnaert. We started with two business models, two company cultures and two organisations. It was a challenging, very rewarding and a growing experience, as we had to still run the business and manage the day-to-day tasks while pushing for a full speedy integration. I joined in July 2007, and the integration was completed in August 2008. It was a full integration from a legal, organisational and strategic perspective. In the April of 2008, when we announced the integration in a joint meeting between the two companies, we could sense the challenge – the McQuay personnel sat on one side, and the Daikin personnel on the other side of the meeting room. It was a silent but loud reminder that unless the integration is felt and practised individually no strategy will work. Today, it is a different story altogether. I can proudly say that if you walk into the offices today or interface with any of our staff, you will not know who started out as a McQuay employee and who as a Daikin employee. We are all one team, and the Daikin culture is the uniting culture. Yes, some will sell a McQuay chiller or a Daikin VRV, but we are all Daikin McQuay and support one another. There is no fault line, and the integration has proved to be a strong bonding experience. Today, it is one culture, one future with big plans, and all are pulling in the same direction.
Comfort cooling: the district cooling approach
As a company, we have supplied various district cooling plants as well as mega plants. The Business Bay project of Empower, the Jebel Ali Metro station project of Tabreed and two plants at Palm District Cooling immediately come to mind. We have also supplied to TAS and Stellar for their packaged plants. In Qatar, we have many projects of large tonnage already installed, such as Khalifa Stadium, Barwa City and those related to the Qatar Foundation. In Kuwait, we have many large plants for PAAET and others.
Furthermore, and thanks to the ADC (Applied Development Center) at McQuay in Minneapolis, Daikin is constantly investing in new technologies for compressors with large tonnage. I dare to dream that in three years, we will have the most advanced, energy-efficient chiller line-up for district cooling applications and large plants, in general.
We have always believed in district cooling as a solution for the region, and we are investing to support it in infrastructure, organisation and products. We also believe that district cooling will offer a good environmental solution and an overall cost-effective solution. However, in the context of the sudden collapse of the construction boom, the current business model of district cooling failed. I strongly believe the model should be reviewed to ensure its sustainability. District cooling makes sense if the required load and the provided load are balanced, in the sense that there should not be excess capacity.
It would also make sense if electrical utility rates are set to encourage district cooling companies in order to justify the big investments. It is also equally important to lift electrical subsidies to ensure that end users resort to efficient systems, even in the standalone model. This environment would be conducive to district cooling, the aim of which is ultimate electrical savings and environmental protection. The end-user, developer, economy and the district cooling company need to operate in a coordinated manner. If any of these factors fall out of place, all will be negatively impacted. Despite the fact that users of district cooling suffer from high rates, district cooling companies have failed financially. Thus district cooling companies and operators must be more selective in choosing which projects to invest in. Banks are now doing project financing, so that would put a third party, a neutral assessment, to make sure if a project is viable or not.
In my view, district cooling is an option not only for new developments but also for existing cities that are still using ageing air conditioning plants, such as air cooled chillers supplied in the 1980s and early 1990s. The building industry in Saudi Arabia is old compared to the industry in the UAE. It is densely dotted with buildings that use old technologies. If you can do district cooling and install cooling water pipes in the cities, you will see a huge shift in energy efficiency. In the Saudi context, it makes sense to replace chillers on the roof and give chilled water at much higher efficiencies and at a financial benefit to both the end user and the district cooling company. Upgrading old equipment for the individual owner requires a heavy unexpected capex, and they would certainly opt for district cooling, if given the chance. This model would also ensure that district cooling companies would build a plant to match the needed load, since it is measurable and real and not speculative. For new developments, district cooling will work if the load and capacity are developed at the same time.
The standalone approach
When it comes to standalone, efficient systems do exist. Water-cooled systems, available for district cooling, can be applied for standalone buildings, subject to scale applicability. For instance, water-cooled 1,000 TR systems are very efficient. This would require proper investment in equipment and in the skills of the operator and a proper maintenance regimen to ensure that the energy efficiencies are achieved and maintained. A water-cooled system, unless of a certain scale, say 10,000 TR and above, would be financially difficult to optimise and manage for a standalone. They would be better off by opting for air-cooled systems. They should still choose a high-efficiency, air-cooled system, which is more expensive than the current industry norm in a region, characterised by subsidised electricity and by an absence of regulations to promote energy-efficient practices.
In standalone, unfortunately, the building developer is driven to minimise his investment and is not concerned with the lifecycle expenses. The contractor, under pressure for submitting a competitive bid, will try to do the job at a minimum cost. And you have the developer that builds to sell, so his priority is capex and not opex. In other words, naturally, he will not want to invest in highly efficient air-cooled or water-cooled systems. For the industry trend to change you will need government regulations or power utility systems to deny permits unless a minimum efficiency is met. This type of regulatory structure is essential in a speculation-driven market. Until regulations are enforced, standalone will remain energy inefficient. For a developer who would build to own and operate, he would invest and look at lifetime-cycle costs, and our task as a supplier is to avail the highest possible energy-efficient systems with optimum lifecycle costs and efficiencies.
The Daikin VRV system is revolutionary and took Europe by storm in the 1990s. Even where a VRV system does not apply (in large-scale projects), air-cooled efficient screw technology is also available and desirable. The route ahead involves putting efforts to educate and, hopefully, shifting the trend in the market, so it aspires for efficiency in standalone systems.
If the utilities or the municipalities decided, “Hey, let us commit to introducing regulations and enforcing them”, they will solve the power and environment needs. Unfortunately, they are not doing that. That’s an obstacle for standalone systems. If I want to be utopic, all the suppliers should get together and agree not to promote anything below a certain efficiency level. In that regard, I encourage Climate Control Middle East to be a mediator for the industry, to get the big MNCs to say, “We will not sell below a particular efficiency as a code of honour.”
Mentors in my life
My father immediately comes to mind, all along and not just at work. I also had a few mentors in smaller degrees along the way in school, university and at work. I also had people that I learned from in not so positive a way. In other words, by seeing what they have done and the impact it left on others, I learned what not to do. I have also learnt and continue to learn from my children, by observing their way of growing and discovering the world. For sure, my wife has been and continues to be a fantastic influence on me.
I am indebted to my father, my mother, brother and two sisters, without whom, at various stages of my life, I could not have reached where I eventually have. I am indebted to my wife. Things do not happen in a vacuum. We tend to get the glory at work, but it is only possible owing to a strong support structure at the home base. She was a partner all along and supported me through all the relocations and uncertainties and challenges I have encountered.
Daikin, as a culture, is a current mentor. The Daikin culture reflects the Japanese culture, which is based on consensus, respect and absolute credibility. And not to forget, proper manners and etiquette. I was in Japan during the recent earthquake, and Daikin CEO, Noriyuki Innoue headed a task force to look after the earthquake victims. Within 48 hours of the earthquake, the task force had called our 16,000 employees in Japan to check on their families and houses. Luckily, we did not suffer in our factories, and we had no injuries amongst our employees or family members, although many homes were damaged. Daikin further continued to check on their suppliers and business partners to check on their well being. The company implemented a support system, all the while maintaining focus on the business-related work and maintaining a calm demeanour. And this is the culture we have in the company. And it is inspiring for all of us.
I have three children – Kevin, 21; Patrick, 18 and Grace, 16, who is studing for IB in Grade 11 here at the Dubai American Academy. Kevin is at Macalester University, in St Paul, pursuing a double major in History and Anthropology. Patrick is at Northwestern, Chicago, also pursuing a double major in Electrical Engineering and Neuro Sciences.
My wife, MJ, is terrific. She studied English and Arts and worked early on in the retail industry in the US as a fashion designer. She is well versed in children’s literature and is a published author. She has written a book, called Lebanon 123 and co-written another, called Lebanon A to Z.
This might sound boring, but I am passionate about work. I find a lot of fulfillment and personal growth in my current work. I am balanced, though, with my family being the other side of the equation. And by family, I mean my inner family, my family in Lebanon, my in-laws in the US and my mother’s side of the family in Panama.
As for sports, I play squash with my kids and chess (when they accept). And I work out in the gym on a regular basis. I am also an avid movie-goer. I also like to read and am fond of legal thrillers, history and political science. Right now, I am reading The 360 Degree Leader.
My approach to life
I believe we are all born equal regardless of our race, country, culture or religion. We should take no credit for who we are compared to others that are less fortunate in their start. I keep in mind that our current success follows our past failures and may be, in turn, followed by other failures. I used to see and judge people and things with a black and white approach. Today, my vision has many grey areas. I believe we do not know enough to judge others, and every human being has the chance to grow and be better even up to the last second of their lives.