Is our industry sustainable?

Over the last decade the HVAC industry has adopted practices that are clearly unsustainable. Some aspects of technical input and risk have moved gradually along the supply chain. Traditionally, a consultant would design the system, a contractor would size it up and schedule it and the manufacturer would then supply the equipment.

But as roles have changed and financial pressures have increased, the level of detail produced by consultants and contractors has reduced and it has become common place for equipment suppliers to fill the gap. Equipment manufacturers are very happy to provide this input, and some of the larger companies have gained a competitive edge by providing the expertise and resources to do this very successfully. But there are two major issues – risk and economic viability.

If an equipment supplier is to fill the gap there needs to be significant technical expertise in-house. We have responded by investing heavily in training of the workforce, and a wellknown name can recruit the highest calibre of candidates. So dealing with a supplier like this means that technical input can be moved along the supply chain without risk.

But many equipment suppliers have been unable to resource this level of expertise, and as a result, many customers are exposed to higher levels of risk.

The second point for consideration is financial viability. The value of the necessary technical input for projects is not acknowledged. This has led to an erosion of the consultancy role, and it also threatens the viability of the equipment supply sector which has no way of recouping these costs. Equipment suppliers can perhaps absorb the costs during a short-term slump, but, as we move into a prolonged period of austerity our industry needs to look urgently at whether business practices like these are endangering its sustainability.

One outcome is that equipment suppliers with the appropriate in-house capabilities are carrying-out the intermediary work free of charge as part of the tender, only to see the customer pass their schedules on to less technically-aware suppliers willing to undercut on price. This situation is exacerbated because multiple equipment suppliers are competing for the contract, so duplication of this technical input is frequent. And multiple changes throughout the design/specification stage make it necessary for equipment suppliers to revisit the technical input on numerous occasions before a contract is awarded.

If we dismiss this as being an equipment supply sector issue, we risk overlooking the significant cost this represents to our industry as a whole. It threatens the survival of some suppliers. And for larger industry players, having to live with this level of wasted technical resource depletes budgets that could be more effectively employed in research and new product development, or invested in manufacturing capability. These investments can actually deliver the on-going cost reductions and faster lead times that customers are looking for in a sustainable way. There will always be winners and losers in business, and large multi-national equipment suppliers such as ourselves could gain if the existing approach continues. But sustainability is all about looking beyond immediate benefit to find the best long-term solution. Sustainability from a technology viewpoint is being driven by external factors such as legislation but our industry has no external driver to unite companies behind joint aims.

A potential stumbling block is that our trade organisations represent different sectors/facets of our industry. Would their commitment to these remits and mandates conflict with the needs of the industry as a whole? Currently, I do not see any concerted effort across our industry to safeguard its survival.

I believe there is still time for common sense to prevail but this will require our industry to scrutinise current business practices with the same rigour we apply in life cycle analysis of HVAC systems.