The A/NZ managing director of Heatcraft, Bill Moltner, isn’t afraid to admit that these are challenging times.
He willingly says times are tough and in the past year industry has seen its fair share of consolidation and downsizing.
“Whenever market conditions are challenging there is a shakeout and some players don’t make it, which is what we have seen in the past year,” Moltner explains.
“We are all looking forward to a recovery but I think we can expect more of the same in 2013.”
The good news is that Moltner believes the myriad of challenges that hit the industry in 2012 have actually peaked.
“I don’t think we will match 2012 for a while,” he says.
His concern is that the mining sector is slowing down but other sections of the local economy don’t seem to be picking up.
“One area that is encouraging is the housing market which has been under-served and that pent-up demand will eventually be realised,” Moltner says.
“As a result I think housing will be a driver moving forward.”
When it comes to spending, he says customers remain “cautious” but this
isn’t “unexpected”.
With spending tight the focus is on system maintenance rather than replacement.
“A big issue for customers is increased energy costs,” he says.
“In times of change customers want to know how best to position themselves.”
Heatcraft sales director, Leon Miller, says managing energy costs has been a priority for customers.
Miller says customers want to know what it means for their business, how to protect themselves and most importantly, they want to know how to manage those costs.
“Customers want solutions and answers,” he says.
Fortunately rising energy costs and the federal government’s clean energy bill have been a part of the company’s planning for a number of years.
Marketing director, Gavin Tory, says today’s low carbon environment had been on Heatcraft’s radar for years.
“We have been tailoring our products to suit this new environment for a number of years,” he says.
“We have been working to make our products more energy efficient, it has formed the basis of our development plans for a while.”
Tory says in addition to energy efficiency other hot button issues include the HFC levy and the phase-out of R22.
“We have a solid local presence and a strong global parent; this gives us access to a global footprint allowing us to share an international perspective with customers.”
Moltner says CO2 systems are an excellent example of how Heatcraft is utilising technology and experience from across the globe.
“CO2 is big in Europe and we can liberally borrow from our sister companies overseas and share solutions locally; CO2 has a big future,” he says.
“CO2 is a great example of where the market is heading. This is where we have seen a lot of success.”
As customers move to lower GWP solutions and prepare to migrate from systems that will soon be outdated, Heatcraft has been doing a lot of work optimising its products for this new environment.
This has involved some tweaking and product development to ensure its extensive product range from its microchannel condensers through to its Titan and Kirby range are effective solutions in this new environment.
Heatcraft is also working to ensure its products are optimised for lower GWP options such as R134a.
Heatcraft’s national sales manager Jatinder Masson has seen plenty of evidence of this changing market.
“Solutions with a low refrigerant charge are in demand, customers want expert advice and knowledge which we can provide utilising our global manufacturing footprint to support local needs,” Masson says.
As Moltner points out it really is much more of a global market which is why “we need to stay up to speed with technologies from around the world.”
While Heatcraft is a well established industry player in a broad range of industry segments it is relatively new to the chiller market.
Tory admits “chillers are new to our portfolio” but believes there is always room for quality.
“We think we have a good quality product, it is energy efficient and has been very well received by the market,” he adds.
What about 2013, what are Heatcraft’s plans for the year ahead?
When asked about the federal election, Moltner says it will have minimal impact on company plans.
“We don’t spend time fixating on things we can’t control; there isn’t a lot of political debate around the water cooler here,” he says.
But Heatcraft does think in terms of legislation and how the regulatory environment impacts customers.
And while there has considerable change, Tory says the market is adapting. “Industry is getting on with the job,” he says.
On the topic of infrastructure replacement and the need to move to lower GWP refrigerants, Moltner says there isn’t much of an appetite to replace a good working system. “Replacement happens when there is catastrophic failure or its reached the end of its working life,” he says.
“People don’t replace working systems there needs to be an event to force change that’s when it’s time to take a look at the sustainability story."
Economics is always a factor, as Miller points out.
“How quickly the market moves really depends on capital, if the enduser has the resources to undertake replacement; the technology is certainly here,” Miller says.
Masson says the market is looking to make smaller changes with minimal spend.
“This is a minor spend for a quick Return on Investment (ROI), it’s all about short term investment for a quick return,” he says.
“A section of customers are trying out new refrigerants on existing systems to get efficiency gains and they are investigating lower GWP solutions, those changes are definitely happening.
“Astute customers are looking at leakages, there is a strong focus on making systems leak proof.” This isn’t suprising considering the rising cost of refrigerant gas.
Masson said refrigerant containment very big right now with a lot of testing being undertaken to improve systems.
“We sell a range of leak protection tools. Once a leak is detected, customers can do maintenance or replace pipes.”
By taking these steps, the ROI can vary widely, but the results are “very favourable”, according to Moltner.
“We are talking double digit reductions here,” he says.
Market estimates claim the leakage rate is north of 20 per cent.
“Therefore, double digit improvements are significant,” Moltner says.
With the rising cost of refrigerant is not surprising that system integrity has become a priority.
Another challenge that continues to shape market conditions is access to qualified tradesmen. “Despite low unemployment it is tough getting qualified technicians to fill roles,” Moltner says.
“This is an area that our customers are feeling too, the battle to find good labour.”
Miller says the skilled labour shortage has been around for many years, but it has certainly intensified in the past 18 months. He admits it isn’t an easy problem to solve but believes its important for the industry to be vocal about its success stories, to look more attractive to young people considering their career options.
Moltner says it comes down to education, to remove misleading preconceptions.
Despite all the challenges, Moltner says he is excited by the changes as it presents opportunities.
“Australia has always punched above its weight,” he says.