Contractor ’ s Corner
WHY A PRICE WAR IN OUR
INDUSTRY WILL HURT THE CUSTOMER
By the South African Refrigeration and Air Conditioning Contractors Association ( SARACCA )
Recently driven by small fly-by-night businesses , the industry has entered a price war between compliant and non-compliant companies which ultimately has cost the customer .
Established in 1961 SARACCA has seen steady growth in membership to become one of the most prolific associations within the Heating Ventilation Air-Conditioning and Refrigeration ( HVAC + R ) industry .
Global warming has made temperature control a central part of our daily lives and with the increased demand in HVAC + R , a large portion of the industry , including SARACCA members , maintain global standards in compliance while offering customers an array of key skills .
Covid-19 has not made our lives any easier , but the use of air-conditioning has . It continues to do so , positioning the global industry to grow by just under 4 %*. By 2030 the HVAC market is projected to reach 367.5 billion US dollars .
Locally our market has seen its fair share of growth . This growth in South Africa is under threat by customers choosing to use non-compliant gas practitioners . By cutting prices at the cost of compliance , non-compliant HVAC + R businesses have undermined the growth of the industry and hampered South Africa ' s participation in the global growth rate .
THE COST OF A PRICE WAR A price war can be seen as a strategic move by local companies to ensure survival in a tough economy . Essentially if practised correctly and in line with the law , a price war could offer an ideal opportunity to realign prices . However , when the price war comes at the cost of compliance , the customer will bear the brunt and become the ultimate loser . Ultimately the cheaper the quote the higher the risk of that company not being compliant .
SARACCA as a key player in the industry views the current price war as a major blow to the industry . While SARACCA members operate within the law and practise global standards non-compliant businesses have eroded the industry value by undercutting prices at the cost of compliance .
What is the real-time cost of this price war ? In this case , the cost sits between 25 % -39 % of the project value . In essence , once the installation has been completed by a non-compliant practitioner a Certificate of Compliance ( CoC ) cannot be issued . The customer would have to enlist the help of a compliant practitioner to rectify the installation and issue the CoC . In some instances , the cost has bypassed the initial budget by 40 %.
" It is in the interest of every business owner to use a compliant practitioner when installing , repairing , or servicing an HVAC + R system . If you choose to go the non-compliant route , it will hit your pocket !" says Barney Richardson , director of SARACCA
THE VALUE OF COMPLIANCE HVAC & R companies that remain compliant will ultimately succeed in an industry governed by global standards . Customers serious about long term savings will see the benefit between choosing compliance over non-compliance .
This has ultimately been the success story behind SARACCA . SARACCA has seen steady growth in membership numbers and continues to drive global standards and compliance levels amongst members .
The HVAC & R industry is heavily regulated in South Africa . A non-compliant installation , service or repair leaves a customer without the required certification . Homes cannot be conveyed to new owners , larger installations cannot claim from insurance policies in the event of damage , explosion , or theft . Only registered gas practitioners can issue certification for installation , service , or repair .
SARACCA encourages all HVAC & R companies to join the SARACCA family and benefit from the many support elements needed to improve compliance . SARACCA ‘ family ’ members remain committed to compliance and offer the highest standards of work .
* source : www . statista . com RACA
52
RACA Journal I September 2021 www . hvacronline . co . za