There’s no denying that the economic downturn of recent years has affected not only the US HVACR companies, but also other business entities globally. Despite its negative impact, the crisis has incited in many companies the hunger for innovation and technology in order to serve the current market needs and, ultimately, survive. Jordan Baker, Regional Manager, Middle East, Greenheck, speaks to Jerome Sanchez about strategies his company has adopted.
The last several years have been tough for HVACR companies all over the world. A decrease in sales and activity and in the demand for residential and commercial services, owing to the decline in the number of new construction projects, have been the obvious indicators. The HVACR industry is partly influenced by the new construction market with revenue generated from equipment installations in new residential and non-residential projects.
Thriving through the crisis
To survive the lingering economic crisis, HVACR companies in the US have developed new business strategies and increased their investments in research and development to bolster their product lines to meet the changing market needs. Jordan Baker, Regional Manager, Middle East, Greenheck, acknowledges the fact that the downturn has affected US companies and that Greenheck is taking steps to combat the crisis. “To overcome the economic downturn of the last four years, Greenheck’s management team has embraced an ‘aggressive growth’ strategy. The company continues to invest in new product development, manufacturing equipment and technology,” says Baker.
In addition to boosting technology and innovation, Baker adds that Greenheck has focused on being the “easiest company to do business with”. He emphasises that the growth strategy involves employees and business partners in a total team effort to drive growth and build for the future.
When the financial crisis hit the market hard, installation of new heating and air conditioning equipment, which perhaps, represents a major expenditure for an average family or business, was reportedly delayed until it was absolutely necessary. While a few customers flatly dismissed the idea of new installation or replacement of their systems, others found the means to have their existing heating and air conditioning systems replaced or retrofitted.
With a considerable initial investment in the replacement and retrofit of the old equipment, many families and businesses are looking for the benefit of a significantly lower utility cost and better energy efficiency and performance in the new equipment. In line with this, Baker expresses his observation that retrofit projects are climbing rapidly, not only in the US but also especially in early booming GCC countries like Bahrain. He also stresses the fact that since customers of retrofit projects have already experienced dealing with old HVACR equipment, companies have to make sure that the end-users see a significant change after the replacement or retrofit project is completed. “Market channeling is an essential component to service these experienced customers,” Baker says. “When the end-user drives refurbishment, it is important to provide solutions that drastically cut their operating costs … funds that would have been consumed by energy bills stay in their accounts and can be utilised for other ventures.”
Against the backdrop of his company’s effort to introduce new and enhanced energy-efficient products to cater to the market’s present requirements, Baker speaks about the role of testing laboratories in addressing the key concerns of families and companies about their HVACR equipment. “The laboratories are used to develop new products or redesign existing products to address energy efficiency, indoor or outdoor air quality, noise, safety, and reliability concerns,” explains Baker. He adds that the current testing capabilities of their laboratories include aerodynamic, acoustic, structural, environmental and thermodynamic testing. He also points out that the company’s on-site laboratories are testing to the latest versions of AMCA, ANSI, ASHRAE, UL, and other industry standards of performance.
Apart from providing enhanced products to address present market needs, Baker believes that expanding beyond the traditional markets in order to build value in a wider range of projects and redesigning products to fit individual market segments also comprise the strategies currently employed by US companies like Greenheck.
When asked about the market’s response to new technology and his company’s innovations, Baker says that the ability to invest in new and enhanced products has given the company the ability to react to market needs and deliver quality and energy efficient products. “Engineers specify and owners are requesting [the products] for the building projects,” he reveals. In his opinion, consultants and contractors who embrace new technologies and offer modern solutions to “archaic” consumption methods stand out from others. “Energy efficiency lowers annual operational costs, and indoor air quality increases productivity,” he elaborates.
Market presence in the GCC
Weakened demand in HVACR services in the US during the recession has led companies to look for business opportunities in other parts of the world, including the GCC states. In this light, Baker observes that the construction market throughout the GCC region remains aggressive even during times of crisis. “Qatar and Saudi Arabia are rightfully shining stars with massive infrastructure projects,” he points out. However, he expresses concern over a dip in the number of projects in Dubai, because the decreasing trend starves business and results in a very cost-conscious and intensely competitive construction landscape.
Speaking about Greenheck’s expanding presence in the Middle East, Baker gives credit to the company’s “long, strategic history of designing and manufacturing products that last while bringing value to the entire HVACR system”. He explains that to assist the long-term strategy, his company has been implementing methods to more effectively attend to market-specific products and customer service needs. “The same core values that drive Greenheck to lead the US ventilation market are rapidly increasing our presence throughout the Middle East,” he says.
The roadmap ahead
Recent reports regarding the US HVACR industry projects predicted that the sector would return to growth in 2012. According to IBISWorld, the industry will see a rise in revenue of approximately eight per cent, and the growth is expected to continue until 2017. The projected positive performance of the industry is reported to be driven by improvement in the residential and non-residential new construction markets, as they rebound from recessionary lows. An additional benefit for the industry will reportedly be from an increasing number of retrofit and renovation works.
The HVACR companies in the US have learnt to adapt to the lingering economic crisis by ramping up on the energy efficiency and environmental friendliness of their products. Reflecting on this, Baker says, “The US has encountered its fair share of economic downturns and continues to learn from each of them.”
In an optimistic tone, Baker reveals that Greenheck’s market segments are speculated with an eight per cent growth on an average for the next five years. As for the region, he says that each of the GCC countries has different growth sectors with unique product requirements. Baker says: “We are constantly expanding our product offering as a single-source solution to a project’s ventilation system, servicing the industry growth segment.”