STATE OF THE INDUSTRY
to that a minor retail resurgent and the ever looming F-Gas protocol dates, and we are in an industry that will struggle to cope with demand. Supermarkets have the ability to dictate the way in which the industry swings in terms of refrigerant selection through trials. The problem they have is that their industry, like all market places, has a volatility that the small refrigeration industry can struggle to cope with, and struggle to react at the speed with which the retailors need to adapt.”
“The supermarkets’ customer base means growth both regionally and nationally, along with development of local mini supermarkets and refrigeration distribution centres which are good for community employment,” adds Adam Bowey and Alan Selby from Integral’s industrial division. “They have market share to trade with and a guaranteed need for production, manufacturing, installation and service. But they also suffer from trade overload which results in price wars with low margins for contractors and service engineers. “A reluctance of European contractors to undertake work in the UK until the future becomes certain also leads to a lack of supply, lack of capacity and potential price rise in supply,” adds Mr Driscoll. “As labour costs exponentially rise through shortage, and, concurrently, materials costs rise because of uncertainty in currency rates, inflation and Brexit, we are no further forward. As the MEP sector runs behind the construction and FM sector due to frameworks and existing order books, the negative impact on trading positions may yet hit the building engineering services sector. “Worse still, the UK saw one of the greatest ever tragedies we will see in our lifetime as the Grenfell disaster unfolded and so many questions, at the end of 2017, remain unanswered, along with four concurrent public and industry enquiries set to confuse the process and outcomes for those who matter - the victims. How long can clients go on value engineering the true value of the built-asset down to their initial budget and
leaving the asset operators to pick up the costs of value engineering within poor procurement processes?”
Moving to factors within our industry, it is clear that F-Gas effects are being felt. “Undoubtedly the biggest challenge for the industry at large has come from the phase-down under F-Gas starting to bite, forcing prices of gas steeply upwards and causing a lot of concern among contractors,” says Graeme Fox, senior mechanical engineer with REFCOM.
Mr Piper adds: “As a key supplier to the hospitality industry, our biggest challenge in 2017 has been the impending phase out of the refrigerant R404a. Having been the predominant refrigerant for commercial refrigeration since the 1990s, the majority of our client’s refrigeration runs on R404a. The lack of stock has led to a major price hike. Within the last year, the price of an 11kg bottle has increased by 300%. This is also true of other higher GWP refrigerants. So far, we have tried hard to absorb price increases where we can, but this is certainly not sustainable. There isn’t one single solution to replacing R404a. Each client’s refrigeration systems will need inspection and in some cases alterations before implementing a new refrigerant.” “For REFCOM, 2017 has been mainly about reinforcing the brand. Most people in the sector have heard of us; not everyone knows what we do or who we are. Some people still seem to think we are the ‘F-Gas police’ and give us a hard time for not enforcing the rules. It would have been a lot easier all round if there was one certification body, like the gas industry has, so that we could effectively enforce the rules alongside the Environment Agency – but that hasn’t happened.”
It seems like a storm of negativity, but opportunities have appeared and businesses have been quick to capitalise on them. Mr Piper elaborates: “While the phase out of R404a has caused us many challenges in 2017, it has also opened doors to new opportunities within the
market. The same can be said for the phase out of R410a, which is giving us the platform to promote R32 AC equipment, the lower GWP replacement option. As well as supporting our existing clients, throughout the process, the R404a and R410a phase outs are giving us the pedestal to seek new business opportunities within the hospitality industry, as well as new sectors.”
Nigel Manning, managing director of Heronhill Air Conditioning adds: “We have grown our business by focussing on niche markets in low temperature air conditioning and specialist conditioned environments, which are not as price sensitive as the conventional split system and VRF market.”
Mr Marriott agrees: “A combination of F-Gas and maintenance regimes with large end-users has been an opportunity for us. Given that the bulk of retail stores are now 20-30 years old, a lot of equipment will need replacing to keep up with legislation and operation.” The current fluidity of policy making also allows associations to give industry a voice where it counts. “We have the opportunity to attempt to influence Government policy, for example Industrial Strategy, SAP consultation, and how best to carry forward F-Gas policy post Brexit,” says Russell Beattie, chief executive of FETA. “The phase-down is currently well underway and its consequences are being felt. Those who prepared for it deserve praise and those who haven’t need to wake up. On a different note, we have been working closely with DEFRA, and more recently the Environmental Audit Committee, on how the UK should approach the F-Gas Regulation post- Brexit.”
2018
With his sights set on 2018, Mr Beattie continues: “We will try to shape the Government’s negotiation over Brexit and will be maintaining the pressure on the Government to legislate to improve payment practices in Construction. We will continue to promote energy efficient
Axair
www.acr-news.com January 2018 41
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