– Edited by Pratibha Umashankar
As you read this, Italy has just concluded the Mostra Convegno Expocomfort (MCE), to be held in Milan from March 15 to 18. There’s always a sense of euphoria around such events. “I am pretty sure it will be a great success and a lot of ideas around future technologies will come out,” says Francesco Scuderi, Technical and Regulatory Affairs Manager and Team Leader (Process Cooling and Food Cold Chain), at Eurovent. While MCE will showcase the latest innovations in the HVACR sector and provide a platform for the HVACR fraternity to network (for details, see “All roads lead to Milan”), could it be seen as a barometer for the sector in Italy once the dust settles?
Giving a sense of the HVACR market outlook for the year ahead, Scuderi admits that the HVACR industry is in part affected by the current economic conditions. “The maintenance and replacement activities provide a solid base, so that the industry does not have to rely only on new investments and projects,” he says. “The economic conditions vary across the globe, so it is also a question for the industry to move around on the positive waves. In Europe, we are confident that the outlook is and will remain positive. The economic conditions are providing some changes due to mergers and acquisitions, indicating that there is a strong belief by investors in the future development of HVACR industries.”
The market – cued for signals
Amidst such optimism, organisers of the MCE 2016, feels that ascertaining the exact size of the HVACR market in Italy is difficult, given the variety of sectors that form the entire industry, not to mention the uncertain economic situation. However, “The Italian scenario is very different from the one in the UAE,” he concedes, and explains, “Here [in Italy], the landscape is peculiar, as it is characterised by a high density of old residential buildings and, therefore, with a limited possibility of structural change in terms of HVACR product renewal and the application of new technologies.”
Despite this, Pierini believes that the industry foresees positive signals of recovery. “In 2016, the production in Italy is estimated to grow, especially due to export, which alone covers 62% of revenues,” he says. “This can be explained as the entire HVACR world in Italy that represents the highest standards of quality and technological excellence, both for residential and for non-residential buildings, from heating to cooling, from water treatment to bathroom taps and accessories, valves, etc.”
All roads lead to Milan
Mostra Convegno Expocomfort (MCE), which is purportedly one of the world’s leading HVACR exhibitions, will be a four-day event this year, and will be held from March 15 to 18 in Milan, Italy. Massimiliano Pierini, Managing Director of Reed Exhibitions Italia, the exhibition organisers, believes that excellence is a concept that is intrinsically related to research and innovation, and this is the key to Italy’s development. “In this respect,” he claims, “MCE 2016 will present itself as an important business platform and a privileged meeting place for demand and supply at an international level, facilitating new relations and strategies.”
He gives details to support his claims, “Just to give a few figures, the last edition registered 155,987 qualified professionals from all over the world, 774 registered journalists, 144 workshops and 24 partner conferences promoted by associations and partners.” Stressing that energy efficiency and innovation were, and will be the cornerstones of the show, he says: “The intensive conference programme would consist of technical seminars on HVACR innovation systems dedicated to designers from all over the world.” MCE readies itself to take up the challenges driven by market requirements in a state of continuous change.
Michele Paccagnella, Country Manager at Lindab and MP3, says that MCE is a widely awaited biennial event, where companies represent themselves at their best. “Today, given the size of our company,” says Paccagnella, “the commercial presence in many countries and the direct relation established with the biggest customers,
MCE represents for us an important time to personally meet and interact with our main references. It represents an occasion to place our new products and, in particular, present new strategies; we are pushing the company even more in the spotlight and ahead of the competition.”
For others, innovation is of fundamental importance at the event.
Based on the data given by ANIMA (Federation of Italian Associations of Mechanical and Engineering Industries – the trade organisation within Confindustria representing companies of the mechanical sector), Pierini says that the production output registered an increase of 2.2% in 2015, compared to the previous year, reaching USD 11 billion, with a forecast of a further increase of +1.4% in 2016. Pierini digs out some more statistical data to help us understand the size of the HVACR sector in Italy from a study by CRE SME Research Institution, which reveals that the HVACR sector is worth one-third of the total construction industry, with 188,000 companies, 760,000 employees and USD 114 billion in production value. Putting the data into analysis, Pierini says, “Now, let’s take a look at the future scenario for the HVAC industry. Considering that in 2014 revenues overcame USD 70 billion, a forecast by Frost & Sullivan reveals that almost USD 100 billion is expected to be generated by 2020.”
Speaking specifically about the sector of aeraulic components, which includes all plant components for ambient climatic comfort, Michele Paccagnella, Country Manager at Lindab and MP3, says, “A recent analysis conducted in our company Lindab/MP3 produced an image of a market worth USD 220 million capable of reaching USD 300 million by 2020.” He, however, thinks that the HVACR market share is scattered due to several segments within the industry, such as ducting, filtration, ventilation and air diffusion.
So what drives the market?
As is with the case in the GCC region, in Italy, too, it is the construction sector which is the prime mover, say experts. “It goes without saying that all installation products are doubly linked to the world of construction – a sector that has experienced a rather significant period of contraction, leading to a similar effect on companies in our market,” says Paccagnella. He goes on to explain this at length: “It is interesting to note how a recent enquiry by Euroconstruct has highlighted a substantial anticyclical behaviour in the world of construction, compared to the general economic trend and the GDP situation. This phenomenon is partially explainable with the long-breathing period implying long-term planning, like those linked particularly to large projects. In fact, in the non-residential sector, the data appears to show a timid growth, especially in the health and school sectors. For residential constructions and subsequent installations, the dynamics are different, often linked to the economic possibilities of very small customers, for whom government incentives play a big role, and which, evidently, represent an important means of business for companies.”
In Pierini’s opinion, a few of the main drivers for growth for the HVACR sector in Italy are the requalification of the Italian housing market, the new regulations for NZEB (Nearly Zero Energy Buildings) and the recent incentive plan approved by the Italian government for those who decide to remodel their homes and properties. He says, “The structural crisis of the housing market highlighted the necessity of a change, of a new paradigm for the sector development, such as the ‘re-use’ of spaces, which includes an array of different trends – from the process of making private housing more energy efficient to the requalification of whole urban areas, to the remodelling of single- housing units.”
“The Italian HVACR [sector] is dynamic, innovation-driven and export-oriented. This is proven by the fact that only in a few other markets, such a broad range of HVACR corrosion protection solutions are readily available. They primarily focus on protecting the heat exchangers, the core of the unit, which is subject to wear, and limiting its deterioration is vital to maintain units. In addition, complementary solutions for structures, grids, casing, piping and vents have been developed to prevent corrosion even in harsh environments, identified as C5 by ISO 12944. Accurate definition of adequate corrosion protection systems results from scenario evaluation, environmental analysis and, if necessary, ad hoc salt spray tests to replicate the atmosphere, where units will operate. Increased care to maintenance protocols will enhance equipment durability.”
– Luca Donelli, HVAC/R Corrosion Protection Specialist at Donelli – Heresite Applicator and Licensee of Sakaphen, Blygold and Thermoguard technologies.
Pierini also points out that there has been a cultural and economic change that now considers a building as an ensemble of HVAC systems surrounded by bricks, instead of just walls and bricks. “This means that attention is being diverted from the envelope to the importance of HVAC products,” stresses Pierini. Admitting that it’s the HVAC systems which determine the real energy-efficiency levels of homes, offices and factories, he says: “Let’s go from macro to micro: Single products, such as HVAC plants, valves, pumps, and so on, are subject to constant new evolutions and new law regulations, such as ‘Energy Labelling’ and ‘Ecodesign’, and, therefore, our technologies are often at the highest rankings at an international level. So this is a fundamental driver for this growth!”
Pierini succinctly summarises, “Research and innovation, the gradual increasing attention to energy efficiency as a distinguishing factor, and the fact that HVAC products are considered as strategically important for new buildings, have all contributed to be fundamental drivers for growth.”
Scuderi adds to this by saying that a long-standing tradition of R&D projects and success in innovation being witnessed is due to the cooperation of leading industrialists, which has led to high-performing energy-efficient products. “The Italian HVAC industry is strong and advanced enough to face the global challenges,” concludes Scuderi.
Fine-tuning the Middle East ethos
Apart from the knowledge-base from which to learn, there are several practices and strategies that can be adopted from the Italian manufacturing ethos by their Middle East counterparts, especially in the GCC region. “In my opinion, one of the most important methods to do business in the UAE is to take advantage of our style,” explains Claudio Poli of Tecnoventil. “The Italian style is always much appreciated in the world. Creating efficient components with an interesting design is an important combination to do business in the Middle East.”
Indicating that it’s a two-way street, Scuderi says: “The manufacturers are firstly trying to understand the cultural and climatic conditions in the UAE. It is important to understand the people, so one can grow the business. Knowing the climatic conditions will help the industry to provide equipment suited to the local needs. Here, the industry relies on the good relations of its embassies and consulates in the region. This is where R&D and adaptations of equipment to suit markets play a role.” Pointing to another aspect, he adds: “The HVACR industry relies very much on international ISO standards that provide great help when discussing technical aspects of projects. There is an ever-increasing interest in the lifecycle costs pushing clients to think more long-term beyond the initial investment.”
Talking about addressing the needs of the people in the GCC region in terms of operations, maintenance, backup and support, Scuderi says that the very fact that within Europe, product legislation is often accompanied by requirements for technicians to be trained and certified, itself provides a sound rationale to extend the approach to the GCC region. Highlighting one of the work ethics worth emulating, he adds, “Also, Italian technicians are known to support and respond at a very short notice when a problem should arise. This quality is very much appreciated.”
Paccagnella reveals that Lindab/MP3 currently has its own commercial and technical establishment in the UAE. He says, “For us, the [UAE] region remains strategic, the objective is to consolidate and grow this presence by aiming to establish local production units.”
In the final analysis, Paccagnella believes that it is the quality of products and companies, together with ethics, which make a successful business. It’s an ecosystem which could well be recreated and nurtured in the Middle East region.
Innovation holds the key
We asked: What is the culture of innovation and R&D for the HVACR market? And they answered…
Michele Paccagnella, Country Manager at Lindab and MP3:
“Innovation in the HVACR sector is absolutely fundamental in guaranteeing a future for businesses. Only by innovating can one be competitive in a market. The alternative is to plummet in a price spiral, which surely represents a dangerous road for structured production entities like ourselves. Nevertheless, companies must be able to approach innovation in a wide spectrum, thinking differently and without remaining fixed in the area of technical, technological and product developments.
“Innovation must also concern production and company processes, to a point where it brings change in the way organisational and business models are thought about. Today, the product itself is not enough. Companies must be structured in relation to services, customer care, vicinity to increasing international customers and marketing.”
Francesco Scuderi, Technical and Regulatory Affairs Manager and Team Leader (Process Cooling and Food Cold Chain), at Eurovent:
“There is no future without innovation. Without innovation it is not possible to face the new market’s challenges and development. This is something very clear for the Italian HVACR industry.
“Just to give some figures: Patents – In 2015, around 5,500 patents covering the HVACR fields have been published, and more than two per cent of these patents have been developed by Italian companies.
“Investment in R&D – The Italian HVACR companies invest around five to eight per cent of their turnover in R&D. Taking into account that the Italian companies are, for the major part, small and medium enterprises, both figures represent a very high level of commitment in innovation.”