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issue: April 2005 APPLIANCE Magazine

Zamil Air Conditioners
Success in the Desert


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by Adite Chatterjee, India correspondent, APPLIANCE magazine

Thirty years ago, the Al Zamil family ventured into a project that many believed would be a non-starter. Setting up a manufacturing facility for air-conditioners in the middle of a desert in Dammam, Saudi Arabia was not going to be easy.

Zamil Air Conditioners is headquartered in Dammam, Saudi Arabia (pictured). The manufacturer also has plants in Grunabach, Austria and Monfalcone, Italy.

The area was only then beginning to see some initial development. At the time, the tallest building in the area was five storeys high. But the Zamil family had persuaded Robert Butler, the American manager of the Friedrich operation in Bahrain, to take up the challenge. In 1975, Arabian Refrigeration Industries—which is now known as Zamil Air Conditioners (ZAC)—began its operations under a licensing agreement with Friedrich. Thus was born the first air-conditioner plant in Saudi Arabia.

“In the first few years of operation, there were doubts about the plant’s viability. After all, most households in the region were still using ceiling fans, few had desert coolers, and an-air conditioner was considered to be a luxury item,” recalls Abdulla Al Zamil, COO, Zamil Industrial Investment Company (ZIIC). But the Zamils correctly assessed that as the economy grew, there would be a huge demand for products that provided cooling comfort. The 75,000-sq-m plant started with a daily production of just 15 window-type units. Today, it produces more than 2,200 units per day. Current production capacity is in excess of 600,000 units per year.

ZAC currently employs 2,300 people in its facilities in three locations—Dammam in Saudi Arabia, Grunabach in Austria, and Monfalcone in Italy—and caters to a market that has grown beyond the boundaries of Saudi Arabia, encompassing the Middle East and North Africa (MENA) and even in pockets of Europe, Australia, and the U.S. In 2004, ZAC announced eight new projects in the Kingdom of Saudi Arabia, China, Pakistan, Bangladesh, and Portugal. These projects range in scope from mini-split air-conditioners to large-scale chillers and air-handling units for highly specialized applications. Saudi Arabia and the other Gulf Cooperation Council (GCC) countries, which include Bahrain, Kuwait, Oman, Qatar, the UAE, and Saudi Arabia, are the main markets for ZAC, making up nearly 75 percent of the company’s sales revenues of U.S. $225 million. Every fifth window-type air-conditioner sold in the MENA countries is a product that has been manufactured in a ZAC facility.

Zamil Air Conditioners is said to have the largest manufacturing capacity of window-type air-conditioners in the Middle East region. Pictured is the company’s assembly line for window-type units in Dammam, Saudi Arabia.

Home and Beyond

Over the years, ZAC has focused on upgrading its technology and launching products and services that cater to different segments of the market. It designs, manufactures, tests, markets, and services a comprehensive range of air-conditioning products, from compact room air-conditioners and mini-splits to large-scale central air-conditioners, chillers, and air handling units for highly specialized commercial and industrial applications. These are marketed under the brand names Classic, Cooline, Cool Care, Clima Tech, Kessler Clima Tech, and Geoclima, depending on specific markets.

ZAC also manufactures units for other air-conditioner companies under private labelling agreements. Most of these are for window units, though the company expects to expand its OEM offering in the mini-split category and other residential and light commercial units, as well under the unitary range. Says Osama Bunyan, ZAC vice president: “The OEM business enables our engineering and manufacturing departments to sharpen and keep their technical abilities updated. By supplying to well-known corporate names and brands that have a premium image, we are reinforcing our management efforts to maintain cost, quality, and delivery competitiveness by benchmarking against global competitors.” Among ZAC’s current OEM customers are reputed names such as Sanyo and Supra.

Perhaps one of the most prestigious collaborations for ZAC is its joint venture partnership with GE Appliances Europe. The joint venture, Middle East Air Conditioners (MEAC), was forged in 1997 for the manufacture and marketing of GE-branded air-conditioners. The shareholding between ZIIC, which is the holding company for ZAC, and GE Appliances Europe is in the ratio of 51:49. MEAC
was awarded the license to manufacture window, mini-splits, and ducted split air-conditioners under the brand names GE, Hotpoint, and RCA.

“Today, MEAC enjoys extensive coverage in Saudi Arabia, GCC, and the MENA markets, including Iraq. There are plans to extend operations to India as well,” says Nasser Al Dossary, executive manager for MEAC. “In an ever-changing market, MEAC continually strives to blend new technologies with stylish integrated design, optimum performance, and reliability, offering great value to customers.”

Together with Intertek Testing Services (ITS), Zamil Air Conditioners built a U.S. $10-million Air Conditioning Technology Center (ATC). The 30,000-sq-ft building is said to be the only facility in the Middle East capable of testing products to local and international certifications.

The ZAC Brand Portfolio

ZAC’s flagship brand Classic was launched in the late 1970s and today, Classic and Zamil are synonymous with each other in the Saudi Arabian market. The brand has seen a slew of product offerings and technology upgrades, and it has successfully targeted both residential and commercial customers in the region. Performing in temperatures of 54ºC (129.2ºF), the air-conditioner has set performance standards in the harshest of environments. Not surprisingly its positioning statement—“No one knows summer like we do”—has struck a chord with consumers.

Cooline was launched as an international brand in 1989 in response to a growing demand for ZAC products in the overseas markets. Today, it is a separate business unit—Cooline Products Ltd.—and has expanded to nearly 40 countries. The marketing and distribution system for Cooline is a combination of centralized and regional strategies, aimed at responding swiftly to changing market needs and providing efficient solutions to local markets. Cooline is supported by a distribution network of 25-plus international distributors in as many countries. Besides the head office in Saudi Arabia, eight regional offices in the U.S., Australia, Lebanon, UAE, Kuwait, Qatar, Morocco, and Iraq look after Cooline’s overall operations.

To keep itself aligned with U.S. specifications, Cooline has been focusing on high Energy Efficiency Ratio (EER) units. The room air-conditioners are certified by the Association of Home Appliance Manufacturers (AHAM), and the company stresses the development of heat pump units with increased overall Coefficient of Performance (COP). Cooline’s mini-split systems, for example, are now available with the Telesmart feature, which enables the unit to be controlled remotely through a telephone.

The Eurovent Certification, which is a capacity/performance certification that has been made mandatory in Europe, has also been awarded to Cooline for its air-conditioners with a cooling/heating capacity up to 12 kW. The products include window-type, mini-split, and ducted split air-conditioning systems. This is the only certificate for 50-Hz cycle units and has close resemblance to ARI/AHAM standards for 60-Hz units. Cooline is the first brand from Middle East to receive Eurovent certification and in 2003, it received the Best GCC Brand of the Decade Award.

ZAC is looking at different markets and niches to grow its international business. In 1999, ZIIC acquired a reputed brand name in the European market, Clima Tech, when it purchased the facility in Austria. Clima Tech specializes in the development and manufacture of technology-based air-handling units and related high-quality components for special environments. These systems are installed in high sterile areas such as hospitals, pharmaceutical clean rooms, electronic clean rooms, power plants, and other industrial buildings. Says Petri Gunther, general manager, Clima Tech, “The acquisition of Clima Tech has greatly enhanced ZAC’s product line while also helping us to position our products closer to the new and expanding markets in Europe and Latin America.”

The other power-packed brand name in the ZAC portfolio is Geoclima. The Geoclima range of chillers is manufactured from the facility in Monfalcone, Italy, which was set up in 1994. The plant manufactures air- and water-cooled chillers and fan coil units for regular commercial applications. In addition, the plant supplies systems for special applications, such as units required in hazardous areas and applications with unusual specifications.

The Italian facility is equipped to cope with flexible production capabilities, design specifications, and a wide range of accessories, which has helped Geoclima to create a niche for itself in the European market. The design component at Geoclima—be it thermodynamic, mechanical, or electrical—is developed in-house with the help of sophisticated computer systems.

In early 2002, ZIIC’s third acquisition in Europe added the Kessler Tech brand, a well-known name in air handlers and ventilation units in Germany. The 50-year-old German brand enjoys a unique position for air-handling solutions as well as in the specialist area of integrated refrigeration and control systems. Following the Kessler Tech acquisition, Kessler Clima Tech GmbH became responsible for the sales activities of ZAC in Germany, while production of air-handling units is now done at the Clima Tech factory in Austria. The major customer segments for the Kessler Clima Tech products are pharmaceutical, chemical, automotive industries, and power plants.

Zamil CoolCare is the region’s leading air-conditioning equipment service and maintenance provider brand. Through Zamil CoolCare, which is an independent business entity and has more than 600 qualified technicians spread across 12 branches in Saudi Arabia, ZAC offers maintenance and service solutions to all types and makes of air-conditioning systems and equipment. These solutions are delivered through a team of technicians, and the client list includes industrial and commercial establishments such as banks, retail outlets, and also private homes.

A full-fledged Zamil CoolCare Training Center offers a range of courses for the company’s technicians and engineers as well as for Zamil dealers and large corporate clients. Last year, CoolCare entered into a strategic extendable 5-year contract worth $1 million to maintain and service more than 4,500 room air-conditioners at various locations throughout oil company Saudi Aramco’s extensive premises and properties. CoolCare’s operations are now being expanded to other countries in the GCC market and the Middle East region. It has already opened a branch office in Dubai.

Focus on R&D

ZAC’s emphasis on R&D has resulted in a slew of products that are aimed at offering customers improved appliances that meet their changing lifestyles. It was among the first companies to introduce the anti-bacteria filter in the regional market for window and mini-split air-conditioners. ZAC has now introduced the Nano Filter, which has filter mesh coated with a silver powder. This strengthens the sterilization function against most common bacteria. The environmentally friendly and non-toxic filter is also said to enhance the efficiency of the unit.

Research on energy-saving air-conditioners led to the introduction of the new WMC series of mini-split units, which retain the operational “mobility”—a function that was pioneered by ZAC 3 years ago. Now, customers are able to “talk” to their air-conditioners via their mobile phones and can remotely switch units on or off, activate the heat/cool mode, or set a unit to a particular temperature.

ZAC has also been working on improving its own coil technology. It has introduced new fin patterns and new designs that increase the cooling capacity of the coil and reduce energy consumption, leading to an increase in overall efficiency of the unit. Currently, ZAC is testing 7-mm condenser coils that lead to better heat transfer in both window and mini-split units. Once the testing is completed and approvals are received, all ZAC window and mini-split units will have the 7-mm condenser coils in future.

Similarly, in the unitary and applied products category, ZAC has introduced Scroll technology that is aimed at improving overall efficiency of medium-size air-conditioning plants. For packaged units and air handlers, the company has introduced indoor air quality (IAQ) systems. Most ZAC units incorporate state-of-the-art controls, carbon dioxide monitors to activate fresh air in case of increased presence of carbon dioxide, and a UV light source to destroy bacterial growth inside the air-conditioning equipment.

Continuous research has led to an improvement in the energy efficiency ratio (EER) of ZAC units. The ZAC screw-compressor chillers offer a package named Economiser for improving the cooling capacity by 8 to 12 percent in the range between 40 to 500 tons, without any extra power consumption.

ZAC’s prowess in engineering development is perhaps embodied in its $10-million Air Conditioning Technology Center (ATC). Built by Intertek Testing Services (ITS), the 30,000-sq-ft facility is said to be the only one of its kind in the Middle East, making ZAC the only air-conditioner OEM in the region capable of testing products to local and international certifications.

The ACT center’s capabilities include:

• performance testing of consumer as well as commercial air-conditioners with capacities ranging from 1/2 to 500 tons.
• ability to support finer research and development initiatives through implementation of state-of-the-art computational programs.
• digital and online processing of tests, thus speeding up new product launches.
• offering local and international certification programs such as SASO, ARI, UL, and AHAM.
• ability to enhance the reliability levels of components used in ZAC products.

Technology Initiatives

While IAQ and energy matters remain at the heart of ZAC research, other initiatives are also being vigorously pursued. For instance, new microprocessor controls and a new generation of programmable logic controllers have been added to ZAC’s unitary range of equipment and large packaged plants. These new controllers make it easy to monitor and control the air-conditioning plants even from remote locations using GSM technology or the Internet in some instances. After a successful introduction in Europe, ZAC is gearing up to launch GSM monitoring in Saudi Arabia as well.

The company has switched to environment-friendly refrigerants and regularly produces R134a chillers and air-handling units. It has also completed the design and testing of all consumer products up to 5 tons, including window, mini-split, and ducted split air-conditioners with scroll compressors using R407C refrigerant.

In the Middle East markets, ZAC’s rotary compressor units have gained a leadership position. These units were developed 3 years ago in collaboration with Sanyo Compressors, and they were the first of its kind for tropical areas. The rotary is now used in a wide range of products, thus enhancing the efficiency and performance of the units while making them more cost effective for the end user.

ZAC has also introduced specially designed vertical package units for the telecommunication sector in 3-, 4-, and 5-ton capacities for both the 60-Hz market (the PV series) and 50-Hz market (the PF series), complete with standard and lead lag controllers. To cater to the U.S. market requirements, ZAC has developed a new RAC heat pump unit with an auxiliary heater. The unit is a heat pump with a resistance-type electrical heater installed inside it. The heating is normally done through a compressor in the winter months. The PCB in the unit is programmed to enable automatic switching to electrical heater mode when the ambient temperature drops below the -5ºC. At this temperature, the compressor is turned off.

Flexibility and Growth

“We see a two-fold increase in our revenues over the next 5 years,” says Mr. Al Zamil. “Our immediate aim is to maintain and even enhance our leadership position in the MENA market.” Iraq and Egypt are “high on the agenda” for ZAC’s growth plans, and internationally, ZAC expects to strengthen its position in Europe, Australia, and the U.S. Achieving these outcomes would require putting in place management mechanisms and tools that enhance ZAC’s overall efficiency and market leadership. In 2003, ZAC adopted the “Balanced Scorecard” tool to enable it meet its ambitious targets. The implementation of the tool has cascaded down to the Strategic Business Unit levels by setting out “strategic paths” and “strategic thrust” areas. Workforce motivation and communication are other means that ZAC is employing to ensure that ZAC’s employees are in sync with management goals. As Mr. Al Zamil says: “The aim is to look for our own internal strengths and weaknesses, rather than react to external forces.”

On the operations front, flexibility is the mantra that ZAC is chanting. In some markets, ZAC has gained volumes and market shares through a direct presence, whereas in others it has tied up with distributors to form joint ventures with them. Product pricing is another major challenge. Given rising material costs, ZAC has decided to adopt a flexible approach so that when necessary, it can outsource some of the products for select markets instead of supplying them from its factories.

Over the past 30 years, ZAC has not just emerged as a global enterprise boasting of high-tech facilities, products, and services, but by catering to different markets and consumer needs. It is today a force to be reckoned with in the world of appliances.

 

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