Fresh air from Fläkt Woods
Fläkt Woods, formed after the merging of two companies in 2002, is a global provider of solutions for ventilation and air treatment used in buildings as well as fan solutions for industrial and infrastructure applications.
Reliability, quality and technical leadership have allowed the company, with its tradition of innovation, new product development and successful business growth, to accumulate vast application expertise that benefits customers in 75 countries worldwide every year.
For buildings, the company provides added value air climate products and solutions to supply clean, fresh air at work or in public areas. For industry and infrastructure, it provides fan solutions that add value for cooling systems and increase efficiency and the safe operation of equipment and processes.
“Fläkt Woods acts in two market segments – non-residential buildings providing air climate solutions on for every building application, and air movement solutions for industry and infrastructure such as for the power and steel industries,” explains chief executive officer Didier Forget. “Around 60 per cent of our turnover is relative to the first segment of non-residential buildings and 40 per cent is for industry. We provide energy efficient solutions based on air technology and cooling equipment processes. Our air climate systems are more than one-dimensional air conditioning as they allow people to work in a comfortable environment. We focus on energy efficiency, which is why 80 per cent of our products are energy recovery solutions that optimise energy consumption from the system.”
As a leader in energy efficient air climate for buildings and air movement for industry, Fläkt Woods has a unique range of products for ventilation, air treatment and air diffusion that greatly improve indoor air quality and operating costs. It is one of the largest air handling systems and duct suppliers in Europe, with strong positions in selected countries in the Middle East, Asia and Australia. Currently employing more than 3300 people worldwide, it has a direct presence in 30 countries though its products and solutions are marketed in many more. Headquartered in Zurich, Switzerland, the company holds the forefront market positions in Scandinavia, the UK and a number of Asian countries such as South Korea.
Fläkt Woods was recently acquired by Sagard Private Equity Partners, Barclays Private Equity and ICG in a move that will allow the company an effective platform to grow through organic development and acquisitions in an industry that remains highly fragmented. Didier says the new owners will support the team in its projects with resources and networks: “In recent years we’ve successfully established ourselves as a global provider of air handling and ventilation solutions mthanks to the talent of our employees combined with the confidence of our customers. Sagard’s acquisition offers new opportunities to grow, expand our geographic footprint, develop new technologies and consolidate our market segments.”
In September 2007 Fläkt Woods made the important acquisition of Semco Incorportated, which extended its portfolio of air climate solutions worldwide. Didier explains: “Recently we acquired a SEMCO, a US leader for energy recovery products for buildings, with a 50 million euro turnover, which has raised our current overall turnover of 625 million euros,” says Didier. “We now have 26 operations, including the six our acquisition added, across Europe, the US and Asia and including the one we set up in 2006 in China close to Shanghai. The US acquisition is a key development because, although we were active in industry in the US, we weren’t in non-residential business. Now our sales are more balanced with 60 per cent of sales in Europe, 20 per cent in Asia and 20 per cent in the US with around half of our turnover comprised of air climate systems for buildings and half from industry. Semco is a niche player relative to energy recovery solutions, an area that the US will discover the advantages of soon. Northern European countries are more advanced in this respect and we think the US is going to start designing air ventilation and air conditioning solutions with emphasis on energy efficiency in order to catch up.”
Didier believes that energy efficiency is vitally important and the company has developed a concept called E3 in an effort to comply with the Energy Performance of Buildings Directive (EPBD) directive to reduce energy consumption for buildings by 22 per cent by 2010. “The consumption of carbon dioxide causes a problem of pollution and harmful emissions so all our solutions consume less electricity which will lead to less environmental problems,” says Didier. “We have developed a concept in Europe called E3, which represents energy, economic and environment, and is the most balanced solution. We develop this concept through designing, manufacturing and producing our systems in accordance with the principles.”
The company has recently won a contract for its largest turnkey project to date with Middlesbrough’s new state-of-the-art college in the UK on the Tees Valley regeneration site. The £68 million project, due for completion in 2008, will have 17 air handling units from the company’s EU2000 range as well as chillers and chilled beams and fans. Most units are fitted with the Fläkt Woods thermal wheel energy recovery system, working in combination with a CoolMaster evaporative humidifier, which is a unique configuration that will reduce the peak cooling load on the chiller by as much as 40 per cent. Didier reveals more: “This is a remarkable project as we can provide a competitive advantage due to our extremely broad range of products and solutions. The UK market today is fairly fragmented and what is interesting about this project is that we worked with consultants in order to optimise the layout and the design of the project.”
Cultivating long-term partnerships is essential to the company, as is attracting new contracts, and Fläkt Woods has enjoyed a long relationship with Genesis Cruise ships through the provision of air ventilation. “We have been serving Genesis Cruise ships for around 20 years so we have excellent experience. Cruisers are challenging because there are constraints in terms of space so it’s a good platform for stretching our R&D capabilities in order to develop our products. We’re also currently completing a contract with Dubai International Airport, which is an interesting project that has taken some time to be specified, and are optimistic to get this order before the year ends.”
R&D is an integral aspect of the company’s operation as it strives to provide high-tech solutions that will positively affect the environment, says Didier: “Rather than push our products to the best capital price, our model is to provide the best total life cycle cost solution. When our customers are looking at it, energy consumption is a big part of that so it means we’re working upstream in the project with a consultant to demonstrate innovation and R&D capabilities in order to convince customers that we guarantee good value for money. R&D has always been imperative in ensuring that we’re at the forefront of technology relative to air climate solutions.”
Didier believes that Fläkt Woods’ ability to progress globally whilst managing its local interests has proved to be the key to its ongoing success: “Most of our competitors are either very local and find it hard to compete with global competitors because the market is fragmented or they’re big companies who are mainly active in air conditioning. We’re in the enviable position of being global whilst respecting local requirements so our key success factor is being able to function as a fleet of small ‘boats’ with each country or product line being a boat. We can rely on the energy of this boat, which is part of a fleet that is constantly moving. We have a good balance between synergies that allows us to gain a competitive advantage over local players and it’s important that we’re also agile enough to understand local matters.”
Manufacturing efficiency is a key concern, as the company must maintain a high level of productivity in order to continue its success long into the future. “At the beginning of the merger between Fläkt and Woods our agenda was focused on restructuring due to overlap between the two organisations, so we employed lean manufacturing,” explains Didier. “Now this restructuring is complete we have entered into a new period where we’re using techniques such as Kaizen and vision management in order to improve punctual deliveries. We have made considerable progress, having also improved our UK facility tremendously, although there is room for improvement. Efficiency is always a journey because every year we need to identify new pockets of productivity and improvement.”
Growth is led by innovative products that meet the increasing demand for comfortable, highquality indoor air and more energy-efficient systems. “The market is booming and there is no sign of it slowing down for the time being,” says Didier. “We’re at a peak, which we want to maintain, and our factories are fully loaded which sometimes can create problems due to extending the lead-time. We prefer to extend the lead-time though than to compromise deliveries as it’s our way to behave with our customers. Looking forward, we see, at least for our air climate solution relative to buildings, a convergence of the market between players with ventilation player moving towards to air climate and with traditional air conditioning companies moving more towards air climate. Our core business is already in the air climate with energy efficient solutions. On the industry side we feel that the customers are becoming more global and we need to be with our customers making new investment outside Europe. Therefore the way in which we’re organised and the way we process and share information needs to become more global.”
Didier is positive that the company can achieve highly in the future and fulfil its ambition to increase its international presence: “We’re aiming to become a one billion euro company by 2010 through a combination of internal and external growth with acquisitions to drive convergences on the building market. We want to become the major player in air climate solutions with more of a system view than a product view, operating worldwide and maintaining the balance between Europe, Asia and the US. In order to be more global and grow in a balanced way, we want to fulfil two parts of our strategy – progression in air climate and focus on movement – which will allow us to reach the magic number of one billion euros.”
Products: Air climate solutions