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issue: June 2006 APPLIANCE Magazine

International-Heating Appliances
Diversification Heats Up

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by Paul Roggema, Europe Correspondent

European heating has always been a mixed industry. Now, technological varieties are compounding regional preferences to further diversify the markets.

Junkers, part of the Buderus Thermotechnik (BBT) group, is a leader in instantaneous water heaters. The company’s premium Celsius Plus model allows users to change water temperature while showering by using a waterproof remote control.

It may be the biggest single market for heating appliances, but Europe’s heating market has always been as diverse as its climates and cultures. Traditional floor-standing boilers, which heated many European households for decades, are being replaced by new-generation products that are increasingly energy efficient and even stylish in design. Condenser technology penetration is growing, and more Europeans are finding it economical to clear up floor space by installing a wall-hung boiler.
Heat pump use is growing. Solid fuel users, paying half the fuel costs of other users, are finding themselves at a major advantage.
Even solar panels are moving into
the realm of affordability and practicality for European consumers, in the temperate Mediterranean and even chillier Scandinavian markets

The Industry Grows

Mostra Convegno is the place to go to evaluate the European industry. Attendees at the Milan show are clearly focused on Italy, but the success of the growing trade show mirrors the growth of the European heating industry. Italy is a strong market for heating, as well as a important heating appliance manufacturing hub.
Figures from ANIMA (Federation of Italian Associations of Mechanical, Engineering and Related Industries) show total 2005 revenues of Italian production of air-conditioners, heating appliances, taps and fittings, pumps and valves, and water treatment will be about 8.6 billion euros (approx. U.S. $10.8 billion). That includes strong exports of approximately 4.6 billion euros (approx. $5.7 billion). Included in this total, heating appliances and system components registered growth of 3.1 percent in 2005, with a 4.4-percent increase in exports over 2004 and expected turnover of around 2.5 billion euros (approx. $3.2 billion). Increases are also expected in 2006.
One question much on the mind of Mostra attendees was how manufacturers can conquer the Italian market with a high-end product portfolio. Claudio Guerreschi, marketing coordinator for Buderus Italy, says his company does not sell to wholesalers, but to installers. “We do a lot of business with planners for medium or large projects. To provide this service, we have five divisions all over Italy,” he says. “We emphasize the high technological level of our products and the great service we can deliver. Buderus has a very wide product range, and everything is integrated. Not everything is produced by Buderus itself because we put the integration first. We are a systems supplier, and that is the difference with the Italian mass producers, which do have a cost advantage.”
MTS Group, formerly Merloni Termo-Sanitari, had the largest presence at Mostra. MTS has been working on European expansion in recent years, like many competitors. In Italy, MTS is a mass producer under the Merloni brand. In the global marketplace, the Thermowatt subsidiary is a leading manufacturer of electric and electronic components for water heaters, boilers and household appliances. It is said to supply all the world’s major producers, with annual production exceeding 30 million units.
The French operations of Chaffoteaux & Maury have been integrated in the Group, adding substantially to the revenue. Swiss subsidiary Elco, which includes German burner maker Elco Klöckner, has been reorganized in recent years, combining with other business units to form Elco Heating Solutions. Elco provides a complete high-end product line, including domestic boilers, industrial solutions and solar products. It has a full-service strategy, much like that of competitors Buderus and Viesmann.
“We offer all capacities up to 50 kW and are oriented toward the Germanic countries, with premium products,” notes Bernd Kempkes, product manager of boilers for Elco. “We focus as much on support for heating planners and extensive after-sales support, as well as selling the hardware itself. Because we have 800 service centers all over Europe, we can offer a 2-hour service. Even in Italy we are developing this full-service concept, independent from the Merloni organization.”
Elco is also focusing on the Russian market, and plans to build brand recognition in China through promotions during the upcoming Olympics. “We are convinced that we have the best full-service concept in the market, and that we can be successful all over the world,” Kempkes tells APPLIANCE. “There are always customers willing to pay for a complete and energy-efficient solution.

The Market In Europe

Bosch-Buderus Thermotechnik (BBT), which came into existence as a result of the 2003 merger of Robert Bosch GmbH and Buderus, attracted much attention during the Milan trade show with its recent “Market Report Energy Use” report.
The report says there are more than 350 heating brands in the European market, 250 of which operate only regionally. BBT claims it is the largest European company, with 2.6 billion euros (approx. $3.2 billion) in revenue. Second in line is Vaillant, at approximately 1.5 billion euros (approx. $1.9 billion). BBT estimates Viessmann (Germany), MTS (Italy) and Baxi (United Kingdom) come in third, with revenues around 1 billion euros (approx. $1.2 billion) each. A group of five companies all have around 500 million euros (approx. $622 million) in revenues: Riello and Ferroli (Italy), Atlantic (France), Remeha/De Dietrich (Holland), and Weishaupt (Germany).
BBT estimates the world heating market at 24 billion euros (approx. $30 billion) in 2005. Europe is the largest market for the industry, representing 42 percent or 10.1 billion euros (approx. $12.6 billion), followed by Asia at 29 percent and the U.S. at 26 percent.
Heating systems (including combi boilers) account for 65 percent of European revenues. Domestic hot water (DHW) heaters represent 24 percent of the sector, and alternative energy products like solar equipment and heat pumps account for 11 percent.
One recent industry trend is the growth of condenser technology. According to BBT, open-flue products were down from 28 percent to 23 percent, and condenser products were up from 12 percent to 17 percent. Some believe this is because of new United Kingdom regulations that seem to favor condenser systems.
In 2005, condenser products totaled 7.5 million units, of which 5.6 million were wall-hung. By country, the United Kingdom sold 1.65 million, Italy sold 1.3 million, France sold 0.8 million, Germany sold 0.7 million, and Russia sold 0.8 million. In terms of wall-hung boilers, condenser units dominate the markets in Switzerland and Holland, with the technology representing 100 percent and 89 percent of sales, respectively.
Spain leads in DHW heaters with 0.7 million units, followed by Russia, Portugal and Italy. The trend for this sector is the replacement of separate DHW boilers with combi boilers.
The Swedish market continues to lead in heat pumps. The country has a 38-percent share (63,000 units) of the total European unit sales (160,000). Other big markets include France with 24,000 units and Germany with 20,000.
Solid-fuel burners are popular in Middle and Eastern Europe, where gas prices have soared, and solid fuel costs are about half of gas and oil. Total industry sales are 345,000 units, with Poland leading at 21 percent of sales and the Czech Republic following at 12 percent.

Central Heating Boiler Contrasts

An industry report from Dutch research firm VHK uses 2002 data to compare unit production and monetary value of central heating boilers in different countries of Europe, revealing interesting national contrasts.
• Italy: 2,322,000 units produced at an average value of about 505 euros (approx. U.S. $628) per unit
• France: 942,000 units at an average of 755 euros (approx$939) per unit
• Germany: 641,000 units at an average of 1,260 euros (approx. $1,568) per unit
• Finland: 13,00 units at an average value of 1,460 euros (approx. $1,817) per unit
• Denmark, Sweden and Austria: average value of more than 1,000 euros (approx. U.S. $1,244) per unit

Green Building In Europe

Energy efficiency efforts extend into the European construction industry. Several Mostra Convegno conferences were dedicated to energy-efficient building techniques. With an initial cost increase of just 2 percent to 4 percent and using existing technology, buildings can be constructed to achieve energy savings up to 60 percent.
The same philosophy can be applied to heating appliances, but some European markets make energy efficiency more difficult than it should be. Claudio Bianchini, president of Assotermica, the Italian association of heating equipment manufacturers, points out that Italy is the largest manufacturer and exporter of heating equipment in the world, but domestically it still uses basic technologies.
“In Italy we use the same technology that we export to Romania because there are no controls and the regulations are complicated,” Bianchini explains. Even so, he says that energy savings of up to 30 percent can be achieved by the more intelligent use of existing and known technologies.
One initiative aimed at saving energy is the European Commission’s (EC) Eco-Design Project. The EC states that eco-design, the integration of environmental considerations at the design phase, is the best way to improve the environmental performance of products. However, a coherent framework is needed to prevent uncoordinated measures. More importantly, national or regional measures that limit competitiveness should be avoided. The EC project focuses on uniform rules for eco-design, resulting in an eco-label, which allows for a fair comparison of products with uniform criteria.

Buderus offers a range of oil-fired heating solutions, like this Logano G115 floor-standing oil-fired combi boiler with a Logalux LT direct water heater tank. The company makes boiler sections from special, low-temperature-adapted, flexible and corrosion-resistant GL-180M cast iron sections. Profiled and beveled steel push nipples are designed to ensure long leak-free life. The G115 is a modified three-pass boiler engineered to achieve a high level of efficiency without leaving residue. Combustion is optimized through the use of positive pressure-fired boilers and optimum chamber geometry without a heat-consuming refractory or target wall. Stack losses are minimized with the modified three-pass flue, designed with large heat transfer areas. Low standby losses are achieved with the help of a 7.5-cm (2.95-inch) layer of thermal insulation constructed around the unit’s entire block, including underneath.

Solar Heat in Cold Climates

Solar panels are clearly in demand,” says Guerreschi of Buderus Italy. “For markets such as Italy and Spain, we offer special medium-priced solar panels.”
Other companies catering to the trend include Elco, which supplies high-efficiency solar panels using vacuum tubes, designed specifically for the Northern European climate. MTS offers a new solar collector with integrated storage tank. The design is less complex compared to the Elco panels, and a warmer climate in the Mediterranean means high efficiency levels aren’t needed. The product can therefore be made more affordable.
Another industry trend is underfloor heating, according to Roberto Rossi, field marketing manager, Southern Europe at heating components supplier Honeywell. “In France, electricity provider EDF is promoting heat pumps heavily, so sales have almost doubled,” he says. “The Spanish market is moving faster toward innovation. There are less condensing boilers there.”
The European heating appliances industry has consolidated steadily in recent decades, even as Europe has merged its currency and lifted trade barriers between its member countries. Still, regional preferences continue to be strong market forces. As fuel prices continue to drain the pockets of consumers, the variety of heating technologies in Europe will keep growing, and the drive to innovate will continue to run hot.

Suppliers mentioned in this article:
Robert Bosch GmbH
Buderus Heiztechnik Gmb

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