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Cool environments, low growth

Although the negative impact has not been as strong as in other sectors of the economy, the air conditioning industry in Latin America has had low growth in the last year. The key to staying afloat has been innovation in service and market diversification.

By: Héctor Gómez Pérez

The figures and the reality itself cannot be disputed: we are in the midst of one of the strongest economic crises in recent years. If we compare the current situation with the climatic effects, we could say that in some countries there have been thunderstorms with hurricane-force winds, while in others there have been temporary rains and some fog banks. But that the crisis has been felt, to a greater or lesser extent in Latin America, is a phenomenon that does not admit discussion.

One of the last countries to recognize that the economy is not on the right track was Colombia, which did so at the end of June. Figures provided by the National Administrative Department of Statistics (DANE) on June 25 reveal that GDP growth was -0.6% during the first quarter of 2009, bringing the country into what is known as a recession. Something that was considered unthinkable, because since the beginning of the year the government said that the Colombian economy was "shielded from the crisis."

But when comparing Colombian GDP with that of other countries in the same period of time: the United States (-5.7%), Mexico (-8.2%) and Brazil (-1.7%), we see what was said at the beginning and that refers to the fact that the onslaught of the crisis is felt differently depending on the country. In the case of Mexico, for example, this is due to the great economic dependence on the United States: a very telling figure is that 90% of the country's exports are destined for the American Union.

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The crisis and A/C systems

Undoubtedly, the air conditioning industry has a close relationship with that of construction, one of the most affected by the crisis. ACR LATINOAMÉRICA wanted to know what has been the behavior of the air conditioning and ventilation industry in the last year, the impact it has had with the decrease in construction, the strategies that some companies have implemented to face these difficult times and the prospects that the industry has for the future.

To this end we wanted to invite representatives from two different markets. On the Central American side, Salo Ponchner, general director/CEO of Multifrío, from Costa Rica, accepted the call of this publication. For the Andean countries the guest was Adán Cruz Lauriano, general manager of Cold Import S.A of Peru. Although a broader call was intended, it was not possible to establish effective contact with representatives of other markets, but this exercise will serve to compare the realities of countries and companies themselves, adopt good practices and work for a tomorrow in which the future of the A/C industry is not so uncertain.

According to Salo Ponchner, while the growth trend in Costa Rica's A/C went down, it never stopped completely. "The year 2009 has been quite complicated in terms of sales and the growth projections we wanted. In Multifrío we have not fired staff, but we have worked to achieve innovative formulas to sell more, strengthen our sales force, marketing strategies and mass communication, "he said.

For his part, Adán Cruz Lauriano, said that the trend in Peru in 2009 has been for the acquisition of new air conditioning equipment and not the repair of used ones.  This has been leveraged, albeit paradoxically, by the construction of new shopping malls, supermarkets, movie chains, department stores and hotels.

As for the equipment used, Cruz Lauriano said that in his country the trend has been the change of window or mini-split type equipment, due to the cost-benefit factor. "Generally, the customers who demand the most maintenance service are those who have realized that preventive maintenance produces significant savings in energy consumption and also avoids expensive repairs," he said.




The balance and the new movements

The sales growth of Cold Import S.A. in 2008 was 30%, due to the expansion in several cities of Peru and its consolidation in Lima. Growth in these first six months has been 10% and is expected to continue until the end of the year.

But in times of crisis we must rearrange the chips and rethink the strategies to stay afloat. For example, Ponchner mentioned that what Multifrío has done in recent times is to increase the portfolio of products and representations, strengthen the sales force, implement promotions in newspapers and hold fairs.

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Adán Cruz, said that the strategies of his company have been aimed at adjusting policies to cover other market niches, in addition to the improvement of the infrastructure of the premises and the acquisition of new ones in strategic cities to seek consolidation.

The times of crisis are the ones that leave the most lessons, as Ponchner said, "this crisis taught us that we must work with the different segments of the market (tourism, real estate, hospital, commercial and university), in addition to all channels (retail, distribution and dealerships). " He also pointed out that the crisis definitely taught them that after-sales programs, maintenance, the sale of spare parts and other complementary activities that alleviate cash flow in the company must be strengthened.

For the Peruvian guest, the crisis has not had the strong impact on the air conditioning sector that it has had in other countries. Hence, he believes that the remainder of 2009 will not be a dramatic year because they believe that there will be a slight growth compared to the previous year.

Trends and the future

Something that caught the attention of the General Director of Multifrío, is about the tendency of customers to acquire air conditioning equipment of high electrical efficiency, with ecological refrigerants, low maintenance and high quality. A trend that will continue to increase due to the growth of concern for environmental citizenship, undoubtedly a business opportunity for all those involved in the A/C industry.
So what's next for the air conditioning industry in the remainder of 2009 and 2010, which is just around the corner? For Adán Cruz Lauriano this industry in Peru will continue to grow, although not in the same proportion that was evident before the arrival of the economic conjuncture. This growth will be around 10% and will depend on the dynamism of the agro-industrial and construction sectors.

"It gives the impression that the sector is going to reactivate a little. We need to see if the banks are going to expand the possibilities of credit and if the North Americans and the Europeans go out to invest internationally again," said Salo Ponchner, adding that "I hope that Central America works more united and that the opportunities for international direct investment will be taken advantage of more."

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