The fans and blowers market is quiet, but stable. It is moving at an even pace. This would have been labelled “Average” on the report card a decade ago. But with the robust all-round growth experienced at the beginning of the new millennium making way for the global economic downturn in 2008-09, the market slump has now become the accepted frame of reference against which all progress must now be gauged. Judged in this context, the sector appears to have steadied itself. But the recovery is not spectacular.

THE STORY SO FAR …

Taking a quick recap, the economic slowdown, undoubtedly, hit the fans and blowers industry hard. The demand declined across most business sectors in the region. The petrochemical industry, the construction sector and, as a corollary, the HVACR sector saw cutbacks on new orders, and in many cases, there were no takers for the stock of components. Global MEP packages were reviewed downwards. There was a drastic reduction in the once frenetic pace of work. But now, the unanimous verdict of the main players in the fans and blowers market in the GCC, represented by Leminar Air Conditioning Company, Systemair Middle East and Maico Gulf is that things have stabilised.

SLOW AND STEADY IS THE KEY

Aboobacker Aslam, Technical Sales & Marketing Manager, Systemair Middle East, Dubai, believes that the market is recovering from the impact of recession. “It is compensating for the reduction due to the downturn by spreading out in more territories,” he says.

Rakesh Mistry, Assistant Manager, Leminar Air Conditioning Company, Dubai, dealing with Casals and Twin City brands, corroborates this view and adds, “In the post-global financial downturn scenario, the market is gaining some kind of stability, and so, we see the fans and blowers market becoming more steady and growing.” But he warns: “With a market getting more cautious towards investments, there are only a few pockets doing okay. But the competition is fierce. Strangely, rent, cost of electricity and other overheads have not come down despite the slow pace of things. But a fixed cost is better to work with than the sudden rise or fluctuations, as it happened earlier. The market has become more predictable. In terms of business, this year appears more or less similar to last year. But we can work with that. Predictability and stability is good news after the unexpected slump.”

Amit Ahuja, General Manager, Maico Gulf, (Dynair and Elicent), Dubai, gives a detailed analysis of the situation: “As the global financial crisis took hold, the GCC countries which thought they were decoupled were affected in trade and financial channels. The crisis triggered a collapse in asset prices and increased the spread on sovereign debt. The GCC countries witnessed a sharp decline in oil prices, and the recession, therefore, had an adverse impact on new investments, including in the hydrocarbon sector. Aside from planned investments in downstream oil projects, several large private projects were cancelled or stalled indefinitely. But in the second half of 2010, we started seeing projects springing back to life. There were movements in the construction industry in the UAE. In 2011, because of the strong growth in oil prices, the governments have started spending again. Qatar, Oman and Saudi Arabia have been leading the way in terms of spending relative to the size of their economies.”

The general feeling is that the sector in the region has now managed to recover from the substantial blow it had earlier sustained. But when it comes to an assessment of the size of the fans and blowers market in the GCC, the industry insiders think that it is difficult to get a clear picture due to different types of fans and different manufacturers and distributors. Also, there are various methods and approaches which can be deployed to evaluate market size, believes Ahuja. “However, we feel that the market size of fans and blowers in the GCC today is close to around $85 to $90 million, with the area under consideration being the UAE, Oman, Qatar, Saudi Arabia, Bahrain and Kuwait,” he says. He gives a rough breakup – Qatar pegged at close to $20 million, Saudi Arabia about $50 million and the UAE (Dubai + Abu Dhabi) at $20 million.

Mistry estimates the present GCC market to be worth around AED1 billion, with the UAE worth more than AED200 million and Qatar and Saudi Arabia over AED150 million each.

The figures, as can be seen, are not conclusive and are at best, ‘guesstimates’. But it is interesting to note that Mistry, like others in the market, clubs Qatar and Saudi Arabia together – one a mere speck on the map, and the other, a vast geographical entity. The common denominator between the two is that they are seen as target markets showing growth in business opportunities. The big players have tried to tap this by either setting up shop in these two countries or upgrading an already existing base.

“Seeing the opportunities in Qatar, we have set up fully Systemair-owned office there and we have our distributor with a strong presence in all the regions of KSA,” Aslam reveals. “The construction markets in Saudi Arabia, Qatar and Oman have been picking pace, and there are several new government-funded projects that are being tendered and are currently under execution,” Ahuja says. “Leminar has a stronger presence in Qatar with an office, a showroom and a warehouse, as we see an upcoming boom in Qatar due to FIFA 2022,” Mistry affirms. “Leminar has also opened up its new operations in Oman, with a warehouse and an office facility to meet the demand in the country, which is being perceived as a stable market.”

The term “stable” being reiterated and Oman being added to the list of potential markets is indicative of a new trend – it is better to invest time and money in a slow and steady runner than someone who fizzles out after the initial spectacular fireworks. “Yes, the excitement has gone from the market. But the excitement was unreal. This is a realistic and, perhaps, a better picture. This is the reality we have to live with and easier to deal with,” Mistry advocates sagely.

STRATEGIES

New realities in the region warrant a change of game plan. Both manufacturers and dealers have decided to tread cautiously into uncharted territories, but have tried to remain nimble, hoping to inject life into the market. Adapting their products to meet customer demand, adding new product lines like AHUs and air distribution products while laying stress on products like air curtains and heaters and a more expedient after-sales service are few of the measures the major players have adopted in response to the changed market scenario.

Speaking on behalf of Systemair, Aslam says: “We have spread up further in other growth markets. Adding new product lines like AHUs and chillers is another strategy we have adopted. The applications we have catered to are, car park ventilation, tunnel ventilation, kitchen ventilation, staircase pressurisation, general ventilation and air curtains.”

Leminar has supplied its two leading brands mainly to commercial and residential buildings, warehouses, logistics facilities, pumping stations, electricity substations, sewage treatment plants, district cooling plants, schools, hospital and hotels. “After-sales service is the key behind the success of Leminar,” Mistry claims. “We have factory-trained technicians, spare parts for all the fans and a thorough knowledge of our products.” This, according to him, is why his company has been able to woo customers and keep them happy.

Maico Gulf, on its part, has ensured that it maintains a strong distributor network in most of the GCC countries, as it believes that it can serve its customer base and clients best this way, along with a diverse product range which caters to industrial, domestic and commercial ventilation segments. “We have the right strategies and resources in place for different markets in the GCC to counter and combat the current scenario, and we are executing them over time,” Ahuja says cryptically, not wanting to spell out the strategies at a time when everyone is vying for a wedge of a substantially shrunk market pie.

CHALLENGES

Cost is king

Keeping the prices competitive, while offering high quality products, has been the biggest challenge for the fans and blowers sector. Cost is the first criterion for MEP contractors, is the general impression. “Stress on efficiency and reliability is seen only on select quality projects; typically, it solely depends on cost,” concedes Aslam. Mistry seconds the view that price plays a major role in the GCC market. But Ahuja takes a stronger line. “Markets are governed by price is an understatement; the markets are ONLY governed by price,” he asserts. He thinks it is a cause for concern, as energy efficiency could become a casualty in the bargain.

Experts sound a general caveat that it is important for designers to understand that cutting corners can have a huge impact on the total energy usage, as chiller loads have the single biggest effect on energy costs in any building. They believe that it could be a proverbial case of penny wise, pound foolish in the long run. Also, undercutting could lead to an unhealthy competition and substandard products surreptitiously making inroads into the market.

How green is green?

With global focus on sustainability, it is an important element that needs to be factored into the equation. Cutting costs while offering energy-efficient products is, therefore, a balancing act for the sector, leaving very little wriggle-room for innovation. Given the current market climate, “green products” and “sustainability” are often mere buzzwords being bandied around, as they are the flavour of the month. Since sustainability and innovation go together, the GCC market also needs to address the problem of resistance to change.

Mistry stresses that the market is open and ready for new technology when it comes to fans and blowers. “Today, when the whole world is shifting towards green buildings, energy efficiency and reliability are the key issues,” he says. “Energy-efficient motor is now a standard feature for all our fans.”

However, Ahuja points out that consultants and designers have their own parameters within which they have to work. “Despite the fact that energy conservation and Green are the most extensively used words these days, a lot more needs to be done to create awareness and educate clients regarding energy-efficient products,” he astutely observes. “Our R&D and design teams are constantly working to make our products suitable to meet the demands of green building projects,” he claims.

Lack of awareness

On the issue of customer responsibility, the experts cry foul. They believe that while manufacturers and suppliers, on their part, are expected to follow stringent product certification standards, customers are not always held accountable and, hence, don’t do their bit. They point out that basic norms are routinely bypassed, product manuals are not read and compromises are made in the installation process. They bemoan lack of awareness, lack of maintenance and improper fan selection as other problem areas.

“In many cases, we have come across wrong wiring connection, and in some cases, wrong static pressure calculation,” Mistry reveals. He believes that fan design and the right selection are important. “Instead of going for two-speed motors, VFDs are a better choice in terms of energy efficiency,” he adds.

Low/high airflow due to improper ESP calculation, noise due to wrong installation practices, incorrect system design and inefficient control systems are few of the challenges that Aslam lists. Highlighting the issue of over-sizing, he observes that in the days of the real estate boom, it was a practice to allocate large safety margins, which led to over-sized fans that operated at flow rates far below their design values. He now sees a move to rectify this.

Ahuja, alluding to the problem of improper fan selection points out that this could not only lead to an overuse of energy, but also to the ductwork getting seriously damaged, and in the long run, affect the entire system balance. “The working life of the fan is drastically reduced when the right fan is not chosen for the right application,” he warns. He stresses that lack of good and recommended installation practice is the major cause for performance-based issues. “We find contractors installing fans based on the limited space that they have at sites, resulting in lack of performance of the units,” he says. “Our trained engineers visit such sites and educate the clients to help them install the fans as per the recommended standards to achieve the desired performance.”

Space and design constraints are generally cited as excuses. Experts believe that these two aspects have to be factored in by architects at the tendering stage itself, which, unfortunately, does not always happen.

In a nutshell, following are a few of the challenges the fans and blowers sector faces:

Many designers do not incorporate fan efficiency requirements in their design in a clear statement.

• Incorrect installation practice is due to lack of experience of contractors and improper fan selection.
• The suppliers are blamed for bad performance of the equipment.
• Designs that have a negative effect on energy usage due to unnecessarily high static pressure requirements and lack of timely maintenance could have an adverse effect on the cost and environment.

Leminar, Systemair and Maico Gulf use seminars, trade exhibition platforms and ASHRAE events in the GCC region to educate designers and clients on the benefits of choosing the right product for the right application. Visiting designers, consulting engineers and end-users to raise awareness about energy-efficient products is another route they follow to raise awareness. Though these have yielded positive results, Ahuja, Aslam and Mistry concede that it is unrealistic to expect a positive transformation overnight.

REGULATIONS AND STANDARDISATION

When it comes to quality, the three spokespersons agree that equipment in the sector is manufactured to international standards and there are new and more stringent environmental regulations in place, Regarding certification of products, they adhere to a strict testing regimen, based on either American or European standards. The ASHRAE standards are the most commonly used for design.

While Leminar follows ISO, BS, EN, Dubai and Abu Dhabi Civil Defense and Applus Standards for Casals fans, Systemair products go through their testing facilities in Skinnskatteberg, Sweden, and Windishbuch, Germany, and are checked for flow, pressure drops, power consumption and noise/vibration. Maico Gulf claims that since ambient conditions in the GCC are different from Europe and the rest of the world, its products are designed and tested to withstand these harsh conditions. Though the spokespersons of these companies think that having region-specific testing would be welcome, they are not sure if it is possible or practical, at least at present. They do see European and US standards being tailor-made to suit the GCC countries in future.

RETROFITTING

The three spokespersons echo the view that the concept of retrofitting has not taken roots in the region. This is possibly because the market has till now focused on new constructions. “The retrofit market is a very small percentage of the total market,” admits Ahuja. “We have been involved in some retrofit projects in the GCC. However, most of the replacements do not involve choosing energy-saving units. The trend is to go for similar older replacements.”

Aslam believes that energy-saving retrofit assignments involving changing of the impeller or incorporating VSDs might happen in the next couple of years.

CONCLUSION

The general mood in the fans and blowers sector is that the worse seems to be over and the best way to keep afloat is by cautiously expanding the customer network, enhancing product range, and improving service and raising awareness.

The trade winds seem to be blowing in the direction of Saudi Arabia and Qatar. But though things might look good on paper, it needs to be remembered that the mega projects in these two countries are working on a long time-frame. So, be it the Doha World Cup which might bring cheer or the massive housing projects in Saudi Arabia, they are not the instant panacea the market is looking for. While its gaze is set on the distant future, a market can collapse in weeks.

It is significant that business has become even more competitive on price, which raises the concern that energy efficiency might become the victim, which offers long-term gains, when what the sector wants is a quick-fix solution.

“But the potential of this region is amazing, as it is the third biggest HVAC market after the United States and India,” Aslam says, optimistically surveying the scene. Ahuja, while agreeing with him, warns: “Private sector spending continues to be slow and cautious. Banks have been quite reluctant to extend credit to this sector. The recovery has been uneven across the countries in the region, as governments are tapping their sovereign wealth to varying extents to cushion the blow to their banking systems and to compensate for the weakness in private sector demand and investment.”

“Yes, nobody is willing to burn their fingers anymore,” concedes Mistry. “The golden period of big investments is over. It will, perhaps, not come back. But that was a fairy world of make-belief. We lived in a fool’s paradise. It was unrealistic. Now that we have woken up to the reality, we are better equipped to deal with it. Thankfully, we have entered a more stable phase, which is a healthy sign. It is poised to become even more stable in the coming years.”