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issue: April 2008 APPLIANCE Magazine

Europe Report
Domotechnica 2008: On Location in Cologne, Germany


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by Paul Roggema, Europe Correspondent

APPLIANCE magazine was in Cologne for the latest Domotechnica, February 18–21. The 2008 event for appliance industry OEMs and suppliers was smaller than in previous years, but that was good news for exhibitors, as well as some newcomers to Europe.

A familiar name in German appliances, Fakir-Hausgeräte GmbH, was at the show. “We still attend Domotechnica because of our export business,” general manager Jürgen Nürnberger told APPLIANCE.

Fakir is known for vacuum cleaners and small heaters. “Additionally, we have a full range of small kitchen appliances and air treatment products (fans, air purifiers), supplied from China, but German quality,” Nürnberger said. “Chinese manufacturers are raising their prices and consumers have higher expectations, so a handheld vacuum for €19.95 is less popular. Chinese prices have risen something like 20% in two years.”

Fakir’s flagship products are made in Europe, Nürnberger noted. One top model is the S-Class vacuum, engineered with a unique sensor switch for power on/off and speed,
a 2300-W motor, and an autoretract cord.

Also present was Dutch small appliance maker Holland Electro (HE), and general manager Hans Veenemans said, “The exchange of ideas is the main reason I am here. You want to get together with customers, designers, and suppliers even more because the small appliances need more innovation. You can’t do that at a consumer fair.”

Innovation on the Domo Floor

“A way to innovate is to add more intelligence to your products, such as RFID or Bluetooth,” Veenemans explained. Holland Electro will soon introduce the Wave TV, a microwave with a TV/DVD combo built in the door.

HE’s core product is the vacuum cleaner, where the company engineered a unique semibagless model. “Larger dust particles end up in the first cyclone phase, but the smallest particles are caught in a paper filter to protect the expensive motor filter,” Veenemans said.

Among the exhibitors not so well known in Europe was RamCo Air Conditioning & Refrigeration Industry Co. (Damascus, Syria), producer of fans, air-conditioners, water coolers, and other small appliances. Chairman Ghassan Al Kasem said the company started in 1993 and today has a staff of 600. “We want to expand into international markets, and that is why we visited Cologne,” he explained. Currently the company’s markets are mainly in the Middle East, including Jordan and Lebanon. Iraq has also become a RamCo market.

“Since the liberalization in Syria, around 2002, our market has been booming, with growth as high as 10%—which also means more competition for local brands,” Al Kasem said. “In regional manufacturing in general, Syria is third behind Turkey and Egypt. Turkey is leading in quality, and Egypt offers very good prices. Manufacturing is somewhat less popular in Middle Eastern societies, which are traditionally geared towards trade. Investors often prefer real estate over manufacturing because the former is seen as more stable and low-risk. Many exports are routed via Jordan, one of the most liberal countries in the Middle East. They have good banking and transport systems, and free trade.”

He adds that manufacturing in Syria enables the company to offer European-quality products at extremely competitive prices.

Soviet-Era Manufacturers Surviving

Exhibitor Greta came to Domotechnica from Ukraine, where it is a leading brand in gas and electric cooking appliances. The company started out in 1959 under Communism. When the Soviet Union dissolved and Ukraine began the tough transition to a market-based economy, Greta was privatized.

“The 1990s were a nightmare for us, business-wise,” explained Roman Pylypenko, international sales manager. “After Communism fell, all the rules and legal regulations were unclear and changing all the time. Now we have much more stability and we are clearly heading for integration into Europe; we signed the WTO agreement.”

Greta has cost advantages in its home market, where wages are not as high as in much of Europe. “There are 50 million consumers there…but industry is still rebuilding; many companies did not survive the fall of Communism. Back then, having a single factory providing a product for the whole country was not uncommon.”

Greta not only survived after Communism; it’s now expanding. “Since 2006 we have (installed) all-new production lines, including the enamel lines, and have an ISO 9001 certificate,” Pylypenko said. “Happily, we can find a lot of good workers with ‘golden hands’ who really like and understand manufacturing, because this region always was industrial.”

Today, Greta has 680 employees and exports half its finished products to former Eastern Bloc countries. “Now we want to develop business with Europe, and we are very busy here at Domo,” Pylypenko said. “The biggest challenge here is the competition from the Turkish industry. They understand European demands very well, and can deliver quality for a very good price. Still, we are geographically and culturally closer to many Central European countries, and we can label our products ‘Made in Europe’.”

Components from Russia

Many of the changes that affected Ukraine in the past years were also seen in Russia, the powerhouse in the former Eastern Bloc. Orlex, a Russian component manufacturer, also made it through the transition from Communism and is now a leading supplier of temperature and pressure controls with quality certification from ISO, Intertek, VDE, and Lloyd’s Register. Orlex is in Oral, 350 km south of Moscow, and has a staff of 3000. The company places itself third in the Russian market, behind global suppliers Danfoss and Invensys. About 90% of Orlex production is for customers in Russia, and domestic refrigeration is its most important category.

“In recent years we experienced a lot of Chinese competition. Many of our products were copied,” said Michael Borodulin, sales manager. “But now most of our customers came back to us, because we can deliver European quality.

“Russia is a growing economy; many new factories (automotive, consumer goods) are opening,” Borodulin said. “And they usually buy Russian components to avoid customs tariffs. The attitude towards manufacturing needs improvement; government does not always see the relevance for the general economy. They still impose many unnecessary rules and regulations on us.” An example: One type of export license requires someone from the company to apply in person in Moscow; no fax applications are accepted.

Like Greta in Ukraine, Orlex believes much of its strength as a company comes from its people. “Happily, the region has an industrial background,” said Borodulin, “and we have a lot of young workers who want to get ahead.”

 

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