HVAC Market of St. Petersburg

HVAC market of St. Petersburg demonstrates now a steady growth . According to the common opinion of experts, the main reasons for this growth are: general stabilization in Russia growth of industry caused by technological modernization; increased requirement to engineering systems caused by development of the commercial real estate market. Besides, the governments of the city of St. Petersburg and the Leningrad (St. Petersburg) Region introduce tax privileges and other preferences to investors, and it makes both the city and  the region more attractive from investment point of view.

According to the Petrostat data, the average year  growth of gross regional outputsince 1999 is around 9%  (To compare: the year growth of gross domestic product of Russian Federation is about 6.8% at the same period).

The volume of investment into  the city of St. Petersburg and the Leningrad (St. Petersburg) Region has grown three times for the last five years. St. Petersburg was awarded by the independent rating agency “Expert RA” with the first position in main nomination “For the Minimal Investment Risk” two times running, in 2004/2005 and 2005/2006 years.  The investment attractiveness of St. Petersburg  and active policy of the City Government in attracting serious strategic investors also contribute to the economic growth of the region. In 2005 a number of big Russian and international companies signed investments agreements and memoranda with the City Government. Among them are “Shanghai Industrial Company”, “Toyota”, “Severstal”, “Tekhnopolis”, “Gazprom”, “Rautaruukki”, “Alcan Packaging”, “Bosch und Siemens”. The volume of projects to be realized according to these agreements is more than 2.5 billion dollar. The volume of foreign investment into the city in the first half of 2006 was more than 1.5 billion dollar, it is a 3.4 times increase as compared with the same period of 2005.

According to the data of the Report on socio-economic development of the city, the volume of completed works in construction reached 126.6% during the first nine months of 2006. The growth was caused first of all by intense development of commercial real estate: trade centers, hypermarkets, supermarkets, techno-parks and logistics centers.  St. Petersburg has a leading position in retail trading, about 45% of retail turnover is connected with trade chains. Since the beginning of 2006 more than twenty hypermarkets (with square of 10-15 sq. m each) and trade centers (among them two trade complexes “Mega”) were put into operation or were ready for service. As far as newly constructed or rebuilt business centers are concerned, the total offer of business real estate exceeded the level of 1 million sq. m in the first half of 2006. Experts say that it is far from over abundant offer: new office facilities   are sold or leased in a record short time.

Among the factors, which contribute to rapid development of the region, are: favorable geographical location of the city; closeness to European market; relatively high level of development of the local market; well-developed logistic infrastructure (well-developed road and railroad network, Baltic sea and river ports, air communication with all regions, communication system which corresponds modern international standards). An important role play availability of qualified working force and high  industrial and scientific potential of the region.

In St. Petersburg are situated the  St. Petersburg State University of Architecture and Construction with the faculty of Engineering and Ecological Systems, the St. Petersburg Academy of Cold and Food Technologies, and a number of chairs of military-engineering institutes. They are the main source of professionals in engineering in the city.

Presence in the city of the specialized educational base explains the fact that such well-known HVAC companies as “Aeroprof”, “Dac”, “Climat-Prof” and “United Elements”  started their activity exactly in St. Petersburg. “United Elements” was the first company, which offered to the customers video-examination and cleaning of ventilation systems using the technology VentJet. Ten years ago the company carried out for the first time a large scale cleaning and sanation works in the premises of big enterprises of the food industry and in the depository of the Central Bank. Examination and restoration of ancient ducts of natural ventilation is especially actual in the historical center of St. Petersburg, where restoration of historical buildings is the main construction activity today .

There is no lack of professional HVAC information in St. Petersburg. In the city take place numerous construction exhibitions, conferences and seminars.  You can encounter with  specialized magazines, such as “ABOK”, “Ingenernye Sistemy” (ABOK – North-West), “World of Climate”, “S.O.K.”. Besides there are dozens of editions in the city, which cover construction, real estate and, design. These editions have special columns about engineering systems. Some municipal business editions (“Delovoy Peterburg” first of all) also contain publications on this topic.

 As a result, the customer in the Northern Capital is well-informed and demonstrates interest to the issues of micro-climate. Usually, developers in  St. Petersburg trust designers in the matter of bearing structure of construction, they also buy finishing material according to the recommendation of designer. As to the engineering equipment, developers thoroughly investigate themselves what is new in the market (including exhibitions abroad) and study the experience of exploitation of existing systems. Individual customers demonstrate the same approach. Many installation companies note the increased interest of their customers to the full-scale ventilation systems and zonal air conditioning. At the same time, creation of micro-climate with usage of duct split systems, forced draft ventilation units, chiller-fan-coil systems of little capacity, was available long ago, when the first serious projects were under way.  But some years had to pass before these technical decisions started to become widespread. The success came to these systems only when the number of users of ordinary room equipment: window and mobile air conditioners, wall split systems,  exceeded certain “critical mass”.

Taking into consideration the above mentioned aspects and  achieved by the city economy rate of growth in recent years, we can make optimistic forecast for the quantity and quality growth of HVAC market in St. Petersburg.

HVAC MARKET PLAYERS

The HVAC market of St. Petersburg has practically been formed. All types of modern equipment for ventilation and air conditioning are presented. The model lines are being renewed regularly. About 300 – 400 organizations, according to different sources of information, is engaged in the HVAC business. This number is, however, three times less than the number of companies, engaged in heat supply. At least 176 companies advertise their activity in different ways (data of the beginning of 2006). About 40% of them work with both room and industrial equipment, about 60% deal only with room technique.

There were about two dozens of small companies in the market 10 – 15 years ago. They had equal starting positions. Now the market is structured, and there are a few leading companies who sale the bulk of heavy equipment.

Such a company typically offers a full complex of service beginning from the start of its activity. It usually has from 300 to 1000 employees; a design department, which uses licensed modern software; an installation division; service division; regional representative offices; wide dealer network. Some of these companies are old-timers of the market, they have “ties” acquired for a long time of activity. Here are some of them: “Arktika”, “Aeroprof”, “BTK”, “Climat-Prof”, “Conditioner-Service”, “Petrospek-Holding”, “Sirokko”.   Some companies are relatively new, rapidly developing structures: “DAK”, “United Elements”. Big companies have great experience of work with high-tech equipment, stable practice of decision making, knowledge of specifics of regions, skill in forming reasonable price policy, good business reputation. The majority of serious companies work with the equipment of some certain world leading manufacturers and are the professionals of brand. It has some effect on the position of brands, represented in the market, and on the preferences of customers. The main customer of big companies is a corporative customer. The main goal of these giants now is  to win a general contract on the full engineering system of building, including heating and feeble current systems, up to realization of Building Management System (BMS).

So called installation companies are much more numerous in the market. As a rule, they have less than 100 employees. Such companies are usually established by high qualified installation professionals or managers with good experience of work in big companies. The advantages of big companies are reliability, complex approach and declared quality of service. The advantages of small ones are efficiency, flexibility and good for customer price because, mainly, of low overhead expenses. Besides small companies do not have restraining connection with some certain brands. They themselves are main customers of distributors and trade houses and have dealer’s discounts. So they benefit from low price of equipment. Small companies are often invited as sub-contractors to install equipment (the price of installation works can sometimes be up to 60% of the total contract value), or to maintain ventilation and air conditioning systems. Demand for such service grows along with the increasing of complexity of systems to be installed. The main field of activity of installation companies are medium and small-size projects, such as business centers of class B, cottages, offices, trading premises, flats, etc.

In contrast to other regions, the “market makers” in St. Petersburg are mainly local companies-distributors. Some of them offer full complex service from design to maintenance: “Arktika”, “Aeroprof”, “Climat-Prof”, “Petrospek”, “AirCool”. Other companies offer certified technical and information support because of their direct ties with manufacturer: “DAK”, “Legitim”, “Rosenberg North-West”, “Elite”, “United Elements”. Recently some Moscow companies-distributors came to the market of St. Petersburg: “Ventrade” and “Rusclimat”.

The distinguishing feature of St. Petersburg is the presence in the city of big HVAC manufacturers. Among them are: OOO “Arktos”, ZAO “Ventiliatsionniy zavod Lissant”, OOO “Zavod Ventiliator”, OAO “NPF Teplomash”, OOO “Zavod teploventiliatsionnogo oborudovania” and many other. The market of industrial local ventilation systems is divided between two main manufacturers: “Sovplim” and “Ecourus-Vento”. Manufacturing of ventilation equipment becomes more and more attractive for investment because of growing demand. Some Russian brands of ventilation equipment are created (“Arktos”, “A-Clima”) recently. New factories have high-technological production facilities including laboratories for acoustic and air-dynamic research. One of advantages of new manufacturers is that they are oriented to fulfill requirements of a local customers (construction, engineering and installation organizations). They also benefit from scientific potential of the scientific and research institutes, situated in St. Petersburg. Among manufacturers  there are also some rather small companies, who specialize on production of components for ventilation systems: air ducts, shaped elements, different filters, equipment for purification of ventilation exhaust, flow-measuring equipment, sensors and other.

It’s difficult to assess the influence of big  chain stores on the HVAC market of St. Petersburg. Some respondents believe that chain stores sell each tenth air conditioner. According to information from installers, in summer 2006 there was no problem in St. Petersburg with covering the demand on split systems, as it was the year before. Most likely, the distributors in St. Petersburg had inventory big enough in 2006. The climate technique is offered in a lavish scale in supermarkets: “M-Video” (Bork, Daewoo, Daikin, DeLonghi, Panasonic, Samsung, Sharp); “Telemax” (LG, Panasonic, Sumsung, Mitsubishi Heavy); “Tekhnosila” (DeLonghi, Sharp, Polaris, Samsung); “Tekhnoshok” (Polaris, Bork); “Eldorado” (General, Elenberg, DeLonghi, Sharp, Daewoo, Climate, Daikin, LG, Samsung).

MAIN BRANDS OF HVAC EQUIPMENT

In accordance with assessment of representatives of HVAC market, the following brands prevail in St. Petersburg:

• RAC: AEG, Ballu, Daikin, Fujitsu General, Gree, LG, McQuay, Midea, Mitsubishi Electric, Mitsubishi Heavy, Panasonic, Samsung, Toshiba;
• PAC: Airwell, Carrier, Daikin, Fujitsu General, Gree, LG, McQuay, Midea, Mitsubishi Electric, Mitsubishi Heavy, Panasonic, Toshiba, Trane, Uniflair;
• Multi zonal split systems: Daikin, Fujitsu General, MDV, Midea, Mitsubishi Electric, Mitsubishi Heavy;
• Chillers and fan-coils: Carrier, Clivet, Daikin, Industeh, Koya, McQuay, Polar Bear, Royal Clima, York;
• Heated floors: CEILHIT, Nexans, Thermotech, "Teplolux";
• Water heaters: AEG, Electrolux, "Ariston", "Termex";
• Oxygen concentrators, air cleaners:  Boneco, Air-O-Swis, Daikin, Gree, Mitsubishi Heavy;
• Air dehumidifiers: Aerial, Calorex, Danterm, Gree, Mitsubishi Heavy, Polar Bear;
• Ventilation equipment: Danterm, Danvent, Hoval, Lennox, O ERRE, Ostberg, Polar Bear, Remak, Rosenberg, Shuft, Swegon, Syståmair, VTS-Clima, WegerKorf, Wesper, "Arktos", "Veza", "Lissant", "Moven";
• Heaters, convectors, electric fire-places: Ballu, De Longhi, Noirot, Polaris, Siemens, Thermor, Teplomash;
• Heat curtains: Frico, Olefini, Pyrox, Thermoscreen, "Arktos", "Meteor", "Teplomash", "Tropic";
• Air humidifiers: Boneco, Air-O-Swiss, Axair, Ballu, Carel, Scarlett, Scarlett, Air Comfort, Bionaire.

ADVERTISING ACTIVITY AND MARKETING

Among professional associations of St. Petersburg are Association of Engineers of Ventilation, Air conditioning and Heating “ABOK North-West” and “Energy Section of St. Petersburg Society of Construction Companies” (Souzpetrostroy), who unite professionals of ventilation, air conditioning and heating. Company “DAK” initiated the creation of new and for the present moment the only climate movement of the club type – the  “DAK Expert Club”, society of professionals in ventilation and air conditioning.

For more than ten years in St. Petersburg function the “Construction Center of St. Petersburg”  and Information Center of the leading designing institute of the city “LenNIIProyekt”, where the information materials on modern construction technology, including systems of ventilation and air conditioning, are collected and available for public. The both centers also organize conferences and seminars.

Two construction exhibitions are held annually in St. Petersburg in the exhibition center “Lenexpo”: “INTERSTROYEXPO” in April and “Baltic Week of Construction” in September. Dozens of HVAC companies are gathered within these specialized expositions. The exposition square is not less than a pavilion. Specialized international conferences and seminars on the issues of heating, ventilation and air conditioning take place within the exhibitions as a rule. 

DIFFICULTIES FOR HVAC BUSINESS IN THE REGION

The main problem of the market is the problem of growth. Small HVAC companies sometimes can not manage the volume of demand, mainly because of lack of qualified personnel. Big companies cope with this problem training installation personnel in their own training centers. Movement of employees because of salary difference from one installation company to another is a common thing. Another process  – managers with  experience and acquired professional ties  resign from big companies and establish their own installation companies. This process helps the market  to go on enlarging.

The  detailed information about the HVAC market of St. Petersburg and interviews with representatives of HVAC companies of St. Petersburg you can find at the site of APIC: /.

Editors of  the magazine "The World of Climate"  gratefully acknowledge the help and assistance of the Information Agency HVACNEWS, and the top managers of companies:

Oleg DROBININ, OOO “AEROPROF”,  Marketing Director:

“Many experts note now the growth of investment into the construction industry of the city. This growth is connected with creation of more favorable economic conditions for big companies and with influx of both federal and foreign investment. Also should be noted the technological competence of representatives of customers and officers of HVAC companies. New technologies come into the city because of it. Demand for multi-zonal systems was increased in 2006. It caused the fact that only Toshiba SMMS equipment of cold was installed with total capacity of 1 megawatt.”

Mikhail MOLCHANOV, OOO “Company DAK”, Deputy Director:

“Company “DAK” is an official distributor of DAIKIN. We offer equipment, adapted to exploitation under hard climatic conditions of the North-West.  “DAK” has gained the respect of the dealers of the region not only because of high quality of equipment delivered, but also because of high quality of service offered by the company, creative approach to the tasks and because of the work with dealers, oriented to the achievement of common goal. In order to assist designers ant professionals who work with delivered by us equipment, company “DAK” has opened a specialized consulting department and also training center, where employees of our dealers and partners can be trained free of charge.”

Oleg KOVALCHUK, Head of Representation of “Rusclimat” in St. Petersburg:

“As a result of study of progressive development of the North-Western region and growing demand for quality service, our company has strengthened our engineering service in the systems of ventilation, central air conditioning and heating. Our service includes design, installation and commissioning. We put special attention to the work with sub-contractors.

Both energetic construction activity and investment support provoke demand for high professional offer of HVAC equipment and service. We see good prospects of the development of HVAC market.”

Vladislav PLATONOV, North-Western Branch of  “United Elements”, Director:

“Among specific features of “United Elements”, I believe, is the will and capacity for changes, aimed to improve the forms and terms of co-operation with the business partners. Another distinguished feature of the company is the spectrum of equipment delivered. With the equipment of our range it’s possible to resolve all tasks in creation the required temperature-humidity conditions in any premises”

Georgiy LITVINCHUK, “Litvinchuk Marketing”, General Director:

“The market of HVAC equipment in  St. Petersburg is one of the biggest in Russia. The region has the second place after Moscow in sales of industrial HVAC equipment and the fourth after Moscow, Krasnodar and Rostov-na-Donu in sales of RAC. It’s necessary to note that St. Petersburg is one of traditional leaders in creating of the high quality and sophisticated  technological decisions. It’s not just a good luck. Still in the time of the USSR the best research specialists in ventilation and air conditioning were concentrated in the Northern Capital. This fact had a great influence on the development of both local market and the whole Russian climate industry.”

Serguey IVANOV, OOO “TopClimat”, General Director:

“TopClimat.ru is the portal of HVAC technique. There visitors would always be able to find the answers for two main questions: what climate equipment exactly they need and what company can help them to buy and install it. We also give the  possibility for the HVAC companies – members of the portal, to inform customer about themselves and their equipment, to enlarge the circle of customers, to find dealers and distributors of equipment and components. Positive comments of both our visitors and member-companies are the best evidence of the effectiveness of our project”.

Survey by Tatiana REYTER