European heating has always been a mixed industry

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European heating has always been a mixed industry

  1. 1. European heating has always been a mixed industry. Now, technological varieties arecompounding regional preferences to further diversify the markets.It may be the biggest singlemarket for heating appliances,but Europe’s heating market hasalways been as diverse as its Junkers, part of the Buderus Thermotechnik (BBT) group, is a leader in instantaneous water heaters. The company’s premium Celsius Plus model allows users to change watertemperature while showering by using a waterproof remote control.climates and cultures. Traditionalfloor-standing boilers, whichheated many Europeanhouseholds for decades, arebeing replaced by new-generation products that areincreasingly energy efficient andeven stylish in design. Condensertechnology penetration isgrowing, and more Europeansare finding it economical to clearup floor space by installing awall-hung boiler.Heat pump use is growing. Solidfuel users, paying half the fuelcosts of other users, are findingthemselves at a major advantage.Even solar panels are movingintothe realm of affordability andpracticality for European
  2. 2. consumers, in the temperateMediterranean and even chillierScandinavian marketsThe Industry GrowsMostra Convegno is the place togo to evaluate the Europeanindustry. Attendees at the Milanshow are clearly focused onItaly, but the success of thegrowing trade show mirrors thegrowth of the European heatingindustry. Italy is a strong marketfor heating, as well as aimportant heating appliancemanufacturing hub.Figures from ANIMA(Federation of ItalianAssociations of Mechanical,Engineering and RelatedIndustries) show total 2005revenues of Italian production ofair-conditioners, heatingappliances, taps and fittings,pumps and valves, and watertreatment will be about 8.6billion euros (approx. U.S. $10.8billion). That includes strongexports of approximately 4.6billion euros (approx. $5.7billion). Included in this total,heating appliances and systemcomponents registered growth of3.1 percent in 2005, with a 4.4-percent increase in exports over2004 and expected turnover ofaround 2.5 billion euros (approx.$3.2 billion). Increases are alsoexpected in 2006.One question much on the mindof Mostra attendees was howmanufacturers can conquer theItalian market with a high-endproduct portfolio. Claudio
  3. 3. Guerreschi, marketingcoordinator for Buderus Italy,says his company does not sell towholesalers, but to installers.“We do a lot of business withplanners for medium or largeprojects. To provide this service,we have five divisions all overItaly,” he says. “We emphasizethe high technological level ofour products and the greatservice we can deliver. Buderushas a very wide product range,and everything is integrated. Noteverything is produced byBuderus itself because we put theintegration first. We are asystems supplier, and that is thedifference with the Italian massproducers, which do have a costadvantage.”MTS Group, formerly MerloniTermo-Sanitari, had the largestpresence at Mostra. MTS hasbeen working on Europeanexpansion in recent years, likemany competitors. In Italy, MTSis a mass producer under theMerloni brand. In the globalmarketplace, the Thermowattsubsidiary is a leadingmanufacturer of electric andelectronic components for waterheaters, boilers and householdappliances. It is said to supply allthe world’s major producers,with annual productionexceeding 30 million units.The French operations ofChaffoteaux & Maury have beenintegrated in the Group, addingsubstantially to the revenue.Swiss subsidiary Elco, whichincludes German burner makerElco Klöckner, has been
  4. 4. reorganized in recent years,combining with other businessunits to form Elco HeatingSolutions. Elco provides acomplete high-end product line,including domestic boilers,industrial solutions and solarproducts. It has a full-servicestrategy, much like that ofcompetitors Buderus andViesmann.“We offer all capacities up to 50kW and are oriented toward theGermanic countries, withpremium products,” notes BerndKempkes, product manager ofboilers for Elco. “We focus asmuch on support for heatingplanners and extensive after-sales support, as well as sellingthe hardware itself. Because wehave 800 service centers all overEurope, we can offer a 2-hourservice. Even in Italy we aredeveloping this full-serviceconcept, independent from theMerloni organization.”Elco is also focusing on theRussian market, and plans tobuild brand recognition in Chinathrough promotions during theupcoming Olympics. “We areconvinced that we have the bestfull-service concept in themarket, and that we can besuccessful all over the world,”Kempkes tells APPLIANCE.“There are always customerswilling to pay for a complete andenergy-efficient solution.The Market In EuropeBosch-Buderus Thermotechnik(BBT), which came into
  5. 5. existence as a result of the 2003merger of Robert Bosch GmbHand Buderus, attracted muchattention during the Milan tradeshow with its recent “MarketReport Energy Use” report.The report says there are morethan 350 heating brands in theEuropean market, 250 of whichoperate only regionally. BBTclaims it is the largest Europeancompany, with 2.6 billion euros(approx. $3.2 billion) in revenue.Second in line is Vaillant, atapproximately 1.5 billion euros(approx. $1.9 billion). BBTestimates Viessmann (Germany),MTS (Italy) and Baxi (UnitedKingdom) come in third, withrevenues around 1 billion euros(approx. $1.2 billion) each. Agroup of five companies all havearound 500 million euros(approx. $622 million) inrevenues: Riello and Ferroli(Italy), Atlantic (France),Remeha/De Dietrich (Holland),and Weishaupt (Germany).BBT estimates the world heatingmarket at 24 billion euros(approx. $30 billion) in 2005.Europe is the largest market forthe industry, representing 42percent or 10.1 billion euros(approx. $12.6 billion), followedby Asia at 29 percent and theU.S. at 26 percent.Heating systems (includingcombi boilers) account for 65percent of European revenues.Domestic hot water (DHW)heaters represent 24 percent ofthe sector, and alternative energyproducts like solar equipmentand heat pumps account for 11
  6. 6. percent.One recent industry trend is thegrowth of condenser technology.According to BBT, open-flueproducts were down from 28percent to 23 percent, andcondenser products were up from12 percent to 17 percent. Somebelieve this is because of newUnited Kingdom regulations thatseem to favor condenser systems.In 2005, condenser productstotaled 7.5 million units, ofwhich 5.6 million were wall-hung. By country, the UnitedKingdom sold 1.65 million, Italysold 1.3 million, France sold 0.8million, Germany sold 0.7million, and Russia sold 0.8million. In terms of wall-hungboilers, condenser units dominatethe markets in Switzerland andHolland, with the technologyrepresenting 100 percent and 89percent of sales, respectively.Spain leads in DHW heaters with0.7 million units, followed byRussia, Portugal and Italy. Thetrend for this sector is thereplacement of separate DHWboilers with combi boilers.The Swedish market continues tolead in heat pumps. The countryhas a 38-percent share (63,000units) of the total European unitsales (160,000). Other bigmarkets include France with24,000 units and Germany with20,000.Solid-fuel burners are popular inMiddle and Eastern Europe,where gas prices have soared,and solid fuel costs are about halfof gas and oil. Total industrysales are 345,000 units, with
  7. 7. Poland leading at 21 percent ofsales and the Czech Republicfollowing at 12 percent.Central Heating BoilerContrastsAn industry report from Dutchresearch firm VHK uses 2002data to compare unit productionand monetary value of centralheating boilers in differentcountries of Europe, revealinginteresting national contrasts.• Italy: 2,322,000 units producedat an average value of about 505euros (approx. U.S. $628) perunit• France: 942,000 units at anaverage of 755 euros(approx$939) per unit• Germany: 641,000 units at anaverage of 1,260 euros (approx.$1,568) per unit• Finland: 13,00 units at anaverage value of 1,460 euros(approx. $1,817) per unit• Denmark, Sweden and Austria:average value of more than 1,000euros (approx. U.S. $1,244) perunitGreen Building In EuropeEnergy efficiency efforts extendinto the European constructionindustry. Several MostraConvegno conferences werededicated to energy-efficientbuilding techniques. With aninitial cost increase of just 2percent to 4 percent and usingexisting technology, buildingscan be constructed to achieveenergy savings up to 60 percent.
  8. 8. The same philosophy can beapplied to heating appliances, butsome European markets makeenergy efficiency more difficultthan it should be. ClaudioBianchini, president ofAssotermica, the Italianassociation of heating equipmentmanufacturers, points out thatItaly is the largest manufacturerand exporter of heatingequipment in the world, butdomestically it still uses basictechnologies.“In Italy we use the sametechnology that we export toRomania because there are nocontrols and the regulations arecomplicated,” Bianchiniexplains. Even so, he says thatenergy savings of up to 30percent can be achieved by themore intelligent use of existingand known technologies.One initiative aimed at savingenergy is the EuropeanCommission’s (EC) Eco-DesignProject. The EC states that eco-design, the integration ofenvironmental considerations atthe design phase, is the best wayto improve the environmentalperformance of products.However, a coherent frameworkis needed to preventuncoordinated measures. Moreimportantly, national or regionalmeasures that limitcompetitiveness should beavoided. The EC project focuseson uniform rules for eco-design,resulting in an eco-label, whichallows for a fair comparison ofproducts with uniform criteria.
  9. 9. Solar Heat in Cold Climates Buderus offers a range of oil- fired heating solutions, like thisLogano G115 floor-standing oil- fired combi boiler with a Logalux LT direct water heatertank. The company makes boiler sections from special, low- temperature-adapted, flexible and corrosion-resistant GL-180M cast iron sections. Profiled and beveled steel push nipples are designed to ensurelong leak-free life. The G115 is a modified three-pass boiler engineered to achieve a high level of efficiency without leaving residue. Combustion is optimized through the use of positive pressure-fired boilers and optimum chamber geometry without a heat- consuming refractory or targetwall. Stack losses are minimized with the modified three-pass flue, designed with large heat transfer areas. Low standby losses are achieved with thehelp of a 7.5-cm (2.95-inch) layer of thermal insulation constructed around the unit’s entire block, including underneath.Solar panels are clearly in
  10. 10. demand,” says Guerreschi ofBuderus Italy. “For markets suchas Italy and Spain, we offerspecial medium-priced solarpanels.”Other companies catering to thetrend include Elco, whichsupplies high-efficiency solarpanels using vacuum tubes,designed specifically for theNorthern European climate. MTSoffers a new solar collector withintegrated storage tank. Thedesign is less complex comparedto the Elco panels, and a warmerclimate in the Mediterraneanmeans high efficiency levelsaren’t needed. The product cantherefore be made moreaffordable.Another industry trend isunderfloor heating, according toRoberto Rossi, field marketingmanager, Southern Europe atheating components supplierHoneywell. “In France,electricity provider EDF ispromoting heat pumps heavily,so sales have almost doubled,”he says. “The Spanish market ismoving faster toward innovation.There are less condensing boilersthere.”The European heating appliancesindustry has consolidatedsteadily in recent decades, evenas Europe has merged itscurrency and lifted trade barriersbetween its member countries.Still, regional preferencescontinue to be strong marketforces. As fuel prices continue todrain the pockets of consumers,the variety of heatingtechnologies in Europe will keep
  11. 11. growing, and the drive toinnovate will continue to run hot.AHBL & PSO Strengthening RelationshipsArif Habib Bank (AHB) and Pakistan State Oil (PSO) signed an agreement to place AHBs ATMs at selected PSO petrol pumps locatedthroughout Pakistan.The document was signed at a ceremony at PSO House. The Managing Director, Pakistan State Oil, Mr. Kalim Ahmed Siddiqi andExecutive Director, Arif Habib Bank, Mr. Saleem Chamdia represented their respective organizations.Also present at the occasion were Mr. Yacoob Suttar, Executive Director Finance & IT, PSO, Mr. Kalim ur Rahman, Chief OperatingOfficer, AHBL, Mr. Rustom H. Mavalvala, Deputy General Manager Non Fuel Retail, PSO, Mr Haider Rizvi, Consumer Asset Head,AHB, and several other members of both the organizations.Speaking on the occasion, Mr. Kalim Ahmed Siddiqui highlighted PSO’s initiatives aimed at continuously delivering enhanced serviceto its customers and described the joint venture as futuristic and highly customer oriented. PSO’s corporate vision extends to wellbeyond the realm of fuel. Company’s ‘Non Fuel Retail’ (NFR) initiatives like ‘auto car wash’ project namely ‘Wash Express’, ATMs and‘Self-service Banking Centers’ as well as the ‘Quick Service Restaurants’ in addition to its convenience stores called the ‘Shop Stop’, offerstate-of-the-art facilities in terms of flexibility and convenience to the customers when they visit PSO’s forecourt.Mr. Saleem Chamdia stated that Arif Habib Bank was looking forward to diversifying operations across Pakistan and saw PSO’s retailoutlets as a convenient platform to proliferate its business. He further added that this agreement is part of the Banks strategy tocontinuously provide its customers with the best services.PSO and AHB value their relationship with the customers and are striving hard to offer a variety of innovative Banking products andservices to suit the needs of their customers through AHBs ATMs and Branchless Banking Centers at selected PSO Retail Outlets.

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