issue: April 2006 APPLIANCE Magazine
Appliance International - Domotechnica 2006
Big Talent, Smaller Stage
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by Paul Roggema, Europe Correspondent, APPLIANCE magazine
Small- and mid-sized appliance companies were the stars of Domotechnica 2006.
APPLIANCE magazine went to Cologne (Köln) Germany to attend the latest incarnation of Domotechnica, held Feb. 13-16, 2006.
The name is the same, but the scale was certainly smaller in Cologne, Germany. Domotechnica was once the world’s largest fair for white goods appliances, small appliances and suppliers to the appliance industry. Domotechnica 2006 was a different kind of event, occupying only two halls with two floors each in the expansive KölnMesse exposition facility.
Still, 1,041 companies were represented, attracting more than 18,000 attendees. None of the biggest appliance names were on exhibit, and that gave the small- and mid-sized appliance companies a chance to take the spotlight.
The organizer of Domotechnica, the KölnMesse organization, emphasized the importance of the fair for small- and medium-sized business. In fact, these exhibitors did impress visitors with their innovation potential. The general feeling was that the show gave the trade the opportunity to be exposed to the kinds of products that are not provided by the large, well-known appliance makers. Many smaller appliance exhibitors, especially makers of high-end cooking products, were kept noticeably busy by plenty of visitors to their stands.
Ilve, an Italian manufacturer of high-end ranges, cooktops and ovens, was happy with the quality of the visitors at Domotechnica, judging it to be smaller in numbers but with better-qualified attendees. “We meet people here who might become distributors in countries where we need new representatives,” says Antonio Ruffatto, export manager. “Of course we are also happy to meet our existing distributors and demonstrate all the new products.”
Another happy exhibitor was Alessandra Coderoni, export sales, with Italy’s kitchen hoods maker Sirius. “For us, the exhibition is very successful,” Coderoni says. “Visitors here are more focused, although it is less crowded. We prefer this situation, and are happy to meet our distributors in person. This is still the best event for us in Europe.”
Turkish appliance maker Vestel had the largest stand at Domotechnica 2006. Vestel is the second-biggest white goods producer in Turkey, after market leader Arçelik, and like Arçelik, its parent company is not a white goods firm. Vestel belongs to Zorlu Holding, which is active in electronics, textiles, finance, energy, and tourism.
Vestel has five primary appliance factories. Two refrigeration plants make about 3.8 million units annually. A washer factory makes about 2 million units per year. A cooking appliances factory produces 1 million units per year. An air-conditioning factory makes 750,000 units annually. All the factories are in a complex called Vestel City, in Manisa, not far from Izmir in southwest Turkey, a region where BSH and Indesit also produce appliances. It is also in this region that Vestel’s dishwasher factory, with 500,000-unit-per-year capacity, is scheduled to open in March 2007.
Vestel exports about two-thirds of its production to Western Europe as a private-label OEM supplier—Vestel terms it Original Design Manufacturing (ODM).
“We only started 5 years ago in white goods,” Regional Sales Manager, White Goods Ìlkar Ãzhan tells APPLIANCE. “Many of our products are our own designs; still, in the beginning we used a few Sanyo designs.”
Vestel’s current turnover in white goods is about U.S. $600 million, and about 50 percent is exported. The company has an ambitious growth plan of 25 percent in 2006.
“We have a high productivity compared to the competition. In our washer factory, one worker produces 10 washers a day, where the industry average is about seven,” Vestel General Manager Nedìm Sezer tells APPLIANCE. “We achieved this partly by using more high-knowledge system suppliers and a higher ratio of supplied vs. self-produced parts. In the redesigned washer factory, which has a much smaller surface than the industry average, the whole layout was changed [to address such] factors as transport distances. We use a lot of project teams and our culture is not very hierarchical. Top managers are involved as advisors and will talk to everybody. Also, the relations with our suppliers and logistic partners were modernized; we wanted more same-level cooperation.”
Vestel offers a wide range of products—it must, to satisfy its many private-label arrangements and the variety of international markets served. It makes no-frost refrigerators in 60-cm, 70-cm and 80-cm widths. Refrigerators are produced in 40 cabinet models and more than 750 product iterations.
Washer models are manufactured with load capacities from 3.5 kg to 7.5 kg, in slim to full-size depths. Vestel is unique in that it offers electronic controls on low-spin-speed washer models (400 rpm and 600 rpm), and it can produce front washer panels in 14 different designs.
Cookers (ranges) are made using all fuels to meet the needs of consumers in Europe, Russia, the Middle East, and North Africa, and the company will begin producing induction cooking appliances this year.
“In dishwashing, we designed our own platform, so we have no licensing costs,” Sezer said. “The platform allows for normal width (60 cm) and slim line (45 cm), and of course freestanding and built-in models.”
Vestel worked cooperatively with designers outside the company, many of them Italian, and the dishwasher prototypes were on exhibit at Domotechnica to be shown Vestel customers. Vestel’s long-term plans include expanding its white goods offerings further—after dishwasher production is ready, the company plans to build a dryer platform. “But,” Sezer says, “we are still discussing this with our customers.”
Kelon showcased its compact, semiconductor wine cooler holding up to eight bottles.
Italians know about style and Sirius is no exception, as its sleek Domotechnica stand proved. Sirius’ newest hoods are mostly modern designs, using stainless steel combined with glass.
“Our newest innovation is the SLTC-48 wall hood with an extractable filter. This model has automatic start/stop operation, as well as speed control,” Alessandra Coderoni, export sales, tells APPLIANCE. She explained that the unit monitors the kitchen temperature. When cooking starts and the temperature goes up, the hood reacts automatically.
Another attractive model is the Downdraft S-DD1. The system rises automatically from the cooking surface, bringing motion detectors into play to sense unusual movement that could block the unit. The ventilation motor, Coderoni explains, can be situated independently in the system to reduce noise levels in the kitchen.
In the over-the-counter model SLTC 46, the ventilation openings are closed when not in action. “This gives a more sleek and unified look,” Coderoni explains. “The double filter system and all other parts can easily be reached so there is no need for de-mounting the hood for maintenance.”
Sirius designed the SLTD series with unique triangle shapes in the design. Four models come with and without a display and remote control, and the unit is designed with side openings allowing for extra suction power over a larger surface.
Design trends in the high-end cooking segment, according to Italian OEM Ilve, includes the ever-increasing popularity of stainless steel and less use of color.
Ilve has been in business more than 40 years and has about 200 employees. About 15 percent of its sales are in Italy, and Holland and the United Kingdom are big export markets, but the company also does business in Germany, France and Scandinavia. Australia is also a substantial market, thanks to the efforts of a very active distributor. “We ship 10 containers Down Under per month,” says Antonio Ruffatto, export manager.
Ilve produces appliances ranging from a standard 60 cm in width to a spectacular 150 cm. Most products are made in stainless steel, but also in colors such as red, green and yellow. Products include a Tepa Yaki plate on a 90-cm model, and a new large (100 cm) cooker comes with a large oven, small oven and a grill. A new 60-cm model comes with full electronic controls and a large display.
“Our current top model is the Majestic, a 150-cm model with all options,” Ruffatto says. “This is for large villas and mansions.”
The Midea brand is known in Europe mostly for commercial air-conditioning products, but the Chinese appliance OEM hopes to change that with aggressive promotional efforts and expansion of its product line. It will expand into clothes dryer production in 2006 and into front-load washing machines in 2007. Shown is Midea’s new induction cooking unit with a porcelain surface and electronic touch screen controls.
Chinese OEMs in Europe
Numerous smaller Chinese parts suppliers were exhibiting at Domotechnica, and there was a large stand from the Chamber of Commerce from the Shunde region of China, where much manufacturing is located. Refrigeration OEM Kelon, which is now a part of Hisense, and appliance maker Midea also had large stands.
Kelon’s severe corporate troubles came to a climax in 2005, but business is getting back to normal after its takeover by Hisense. Kelon is China’s largest producer of refrigeration appliances, and, despite a temporary work shutdown, it made 13 million refrigerators, 10 million air-conditioners and 900,000 chest freezers in 2005. The United Kingdom, France and Germany are the company’s most important European markets.
“We want to expand our European business in 2006 by 50 percent,” Product Engineer Zhong Yong tells APPLIANCE. “We have much more to offer than basic tabletop (refrigerators).” He points out the company’s top-of-the-line, side-by-side refrigerator models with high-tech features like touch screen controls, icemakers with small or large ice cubes and ice-water mixing dispensers.
“We are especially proud of our IMCR (Independent Multi Cycling Refrigeration) feature,” Zhong Yong says. “This patented technology offers up to four temperature zones, for the cooling compartment, the dry/moist (zero-degree) compartment, and a normal as well as a fast-freezing compartment. To save energy, any compartment can be switched off independently.”
Kelon’s current top model combines IMCR with cold-storage technology to enable the unit to make better use of cheaper nighttime electricity. This helps guard against power outages in locations where electric power can be scarce, such as China, and it is an environmental benefit as well. Kelon has received accolades for its environmentally friendly products.
“The Global Environment Facility (GEF) is a UN- and World Bank-related organization that provides grants to developing countries for projects that benefit the environment. We were awarded the title for the most energy-saving refrigerator,” Zhong Yong says.'
Chinese OEM Midea is also established in Europe and has an office for the European market, in Düsseldorf, Germany. Midea said it expects to become the largest Chinese manufacturer in ventilation, air-conditioning and white goods.
“Of course anybody can open an office in Hong Kong and import Chinese appliances,” Sales and Marketing Director Raimund Zündorf points out. “That is called Direct Import and the importer is fully responsible for…complying to WEEE regulations, fee management and payment, warranty, printed matter, product liability, and other [responsibilities]. But there are still a lot of companies that want to purchase locally in their own country, having the manufacturer with its subsidiary responsible for the importing procedures and all related legal matters.”
Midea supplies products to various sales channels, including distributors, electrical chains, do-it-yourself retailers, buying groups, and even as an OEM supplier.
“The Midea brand itself is very well-known in European commercial air-conditioning, but we are planning to use the brand for all white goods as well and to make it popular as a consumer brand,” Zündorf says. “Next to cooling products, we also supply small heating appliances, microwaves and dishwashers. In 2006, we will start dryer production, and for 2007 we plan to manufacture horizontal-axis, front-loader washers. Our company was large enough to acquire other, specialized manufacturers to expand the product-portfolio.”
In from Russia
The Russian appliance industry presence at Domotechnica was more modest than that of the Chinese. The Russian market is developing fast, but still Russian income per capita is about one-tenth of that in many Western countries.
The Russian market share leader in white goods is Indesit Group. In small appliances, the Russian brand Vitek is fourth behind Tefal, Moulinex and Philips. Vitek offers a broad product line that includes brown goods (consumer electronics) and small appliances, mostly Chinese imports.
One of the most popular products in Russia is the teakettle, and Vitek offers 32 models. Sales are more than 10 million units annually, and the company employs about 400 in four countries.
The Vitek brand was created in 1999 by the Golder Electronics group, which sold European consumer electronics in Russia. An-Der Products GmbH helped market the products and build the brand, and did so successfully: the company was awarded the Effie Brand of the Year Award in 2003, 2004 and 2005.
“We assemble a few products in Russia itself: DVD players, microwaves, vacuum cleaners, and some oil-filled electric heaters. Sadly, current Russian production cannot compete with Chinese and Turkish manufacturing,” Yaroslav Trukhanov, Vitek commercial director, tells APPLIANCE. “Sophisticated [and expensive] production is no problem [our fighter jets are excellent], but the Communist tradition of neglecting cost issues still is a big problem. Politicians also seem to care more about the oil business than the small and mid-sized enterprises, although in Western economies about 80 percent of business is in these smaller companies.”
Trukhanov points out that Russians like to drink tea, and the company sells about 1 million teakettles a year. Blue or green translucent-look kettles, which are illuminated from the inside during heating, are successful currently. Glass and stainless steel models are also increasingly popular.
Food preparation products, like meat grinders and food processors, are much more popular in Russia than on Western markets. Trukhanov explained that, as a result of the cold climate, Russians like heavy foods, so there is a need for meat-grinding appliances. A lot of eggs are used, so Russian refrigerators have storage areas for up to 40 eggs. Energy saving is not a popular selling point. Russians, often living in small apartments, put the emphasis on low-noise and low-vibration appliances.
A Valuable Venue
Domotechnica 2006 was certainly not the large industry event it was in its heyday, but for those who attended, it was a valuable venue to show off their innovation and design talents. Attendees found themselves exposed to the kind of innovative thinking that can come from small companies with an entrepreneurial spirit.
Midea Marketing Director Raimund Zündorf happily reports that the purchasing managers were at Domotechnica. “Because so many competitors are absent, we get extra attention. We are enjoying successful business,” Zündorf says. “I still can’t understand quite precisely why the others all stay at home, as we are doing so well.”