Air-Con Engineering Ltd

Source: Exec Digital UK

Date :31/05/2007 16:00:12

A BETTER CLIMATE

Ten years can be a long time in business. In that time Ireland has changed radically not once but several times as it has attracted industrial investment because of its high levels of education and the low cost of labour, subsequently moving again to develop the highest living standards in Europe and transforming from a manufacturing to a service economy

Written by John O’Hanlon & produced by Ben Weaver

Recent changes in Ireland have proved opportunistic for Air-Con Engineering since its foundation in 1966 as a provider of ventilation services. At the time, says the group’s commercial director Seamus Murphy, most ventilation work was done by mechanical services firms – plumbers basically. Air-Con’s founders John Dempsey and Jim Mullett saw that these companies would welcome a specialist in systems design and fabrication to supply the expertise they lacked. “The business grew with the work we got from these companies. We were not competing with them so they saw us as an honest broker,” he says.

Air conditioning was soon added to the offering, and the company quickly identified the niches in which it is now a dominant player. You might think that means industry. Certainly Air-Con has the capacity to meet the needs of industry, and is developing that as we shall see later, but in general that market has not been the most buoyant. “We have done clean rooms and other work for pharmaceutical companies like Inamed and Servier here in Arklow. But the problem with manufacturing in Ireland is that it has become less competitive over the last few years and as a result investment has been subdued.

Right from the beginning, the business started to develop relations with the country’s cinema operators. “We are particularly strong in that business today, as new cinema projects spring up all over Ireland,” says Murphy, who estimates that 90 percent of these projects bring Air-Con to manage the vital air conditioning and ventilating aspects.

And cinema complexes are getting ever more sophisticated. In the Dublin region, two projects stand out. “The Movies@ Dundrum, which has twelve screens, is a prime example,” says Murphy. “We did all the work there. Then the same client developed Movies@Swords, another Dublin site. It was specified to the highest standards both as to the finish and the electrical controls for the system – a truly high-end project.”

Leisure Opportunities

Currently Air-Con Engineering is currently involved in cinema projects at Waterford, Arklow, and at Tralee for Ward Anderson, Ireland’s largest cinema chain. A lot of work comes through referral now, says Murphy: “We have very strong links in the business and the cinema groups know we are strong in the field. Increasingly they call us a build and design specialist provider, and we’d develop the project in tandem with the client from the earliest stages to deliver what they want.” However much of the work has still to be gained by competitive tender, and here too the company’s experience and professionalism stands it in good stead. A case in point is the multiplex cinema in the €2.5 million Bachelor’s Quay development in Cork. The services engineering contractor Martin Buckley awarded the ventilating and air conditioning contract to Air-Con following a tendering round.

Cinemas led naturally into the related leisure and hotels market. The hotel business in Ireland has developed driven by increasing disposable incomes, but there’s an important secondary driver according to Seamus Murphy. “Because the construction industry has been doing very well and builders have made a lot of money, many of them have diversified into hotel development because they have been given tax incentives to do that. We spotted that as an opportunity a couple of years ago.”

In addition, the hotel business has grown to a level where new projects include a high level of services for the customers, he says. The provision of health and leisure facilities, sports centres and swimming pools, saunas, treatment centres and the like is almost expected by international travellers. And as new complexes are designed with these, some of the older established hotels are refurbishing to give their clients that sort of choice as well. This all adds up to a healthy market for the Air-Con group, which is setting itself a target to increase its turnover by 25 percent over the next three years.

Growth at this level will require more of the entrepreneurial thinking that Dempsey and Mullen have shown over the years. Much of it will come organically, as the company’s existing clients in the hotels, leisure and cinema sectors expand their operations. This is the behind announcement expected shortly of only the second UK contract and the first in England, a hotel project. In another ten years Air-Con Engineering may be as familiar a name in the UK as it already is in Ireland.

An edge in the market

However a more aggressive stance is being taken in respect of a completely new market – for Air-Con and everybody else too. This is the biofuels industry which is developing strongly in Ireland. “It will definitely grow, and we want to be there at the ground level. There is some process work involved but also a great deal of work that is not dissimilar from what we have done in hotels and the leisure industry. It involves mechanical services, ventilation, ductwork, boilers and hot water. We have taken on board a specialist consultant to work with us on the process and take us into another area where our specialist knowledge will give us an edge.”

Air-Con is good at developing that ‘edge’ in the market. The biofuels focus will do much to advance the company’s green credentials, in an industry that is not always seen as environmentally friendly. Another new project could be the start of something big, and is outstandingly green into the bargain. Air-Con has installed a Daikin water cooled heating and air conditioning system for three separate businesses on a single site at Enniscorthy. Two car showrooms and a computer company share the site, explains Murphy. “We have six wells there, two for each business. Water is pumped up at 11 degrees, fed to the condensers and returned down the second well.”

This is the first such installation in Ireland, he says, but it is unlikely to be the last. Though only at present on the domestic scale, geothermal systems installed by Air-Con are already providing 80 per cent of some householders’ heating and air conditioning requirements, and that includes hot water. Imagine the size of that market when the technology can be installed in hotels, the enthusiasm with which it will be taken up, and the quantity of business it will generate for Air-Con engineering!

Daikin is one of two principal vendors to the Enniscorthy business. The other is Mitsubishi. The importance of Ireland as a market was acknowledged last year when Daikin, which has its main European manufacturing plant at Ostend in Belgium, opened a sales office in Ireland last year. Both are determined to capture this market, and to contribute to the eclipse of American suppliers like Carrier which don’t do well in Ireland however strong their global position. The problem for the US manufacturers, says Seamus Murphy, is that they are perceived as old fashioned, still continuing with refrigerants that are banned in Europe.

Air-Con buys in components from both Daikin and Mitsubishi, and manufactures it own ducting from sheet steel at its new €4 million production plant at Kilcannon, where 12 of its 140 employees are located. It operates a flexible sourcing policy. “Two of our directors recently travelled to a trade fair in Dallas where they found opportunities for plastic ducting components that give us an advantage because they are more flexible in their applications. That’s just one example. We keep a constant eye on the market and the supply chain.”

It is interesting to see how the business has come in something of a circle. Having grown on the design and build model it is now adding mechanical services to its portfolio, something that will make it a one stop shop in projects such as the Carlton Hotel at Dublin Airport, opened in 2006. For this, which must be the company’s sexiest project judging from the four star hotel’s website, Air-Con Engineering undertook the whole of the ventilation and air conditioning as well as what Seamus Murphy calls the ‘wet side’ of the construction including the plumbing to the kitchens.

Ends