A few have diversified into other areas of work such as repairs and maintenance (where there had been under-capacity in any case) and some have increased their expertise in the installation of renewable energy products (solar thermal, ground and air source heat pumps and biomass heating systems).”

The impact in South Africa is less than in Europe, however, there have been some effects worth noting, including the effect that hosting the 2010 World Cup is having on the economy there.

The editor of Plumbing Africa Publication , Rory McNamara, believes South Africa is having a much better time of things than Western developed countries, but problems existed before the GFC took hold.

“We have had increased unemployment particularly in mining (gold and platinum price fluctuations), textiles (cheaper prices from China) and manufacturing (less demand from mining), so much of this was there beforehand but probably heightened by the GFC.

However, construction is relatively buoyant due to the World Cup in 2010 so contract plumbing is in line with this, while maintenance plumbing has slowed marginally.”

Back to business
American Society of Plumbing Engineers (ASPE) president Julius Ballanco, along with global venting supplier Studor’s CEO Franz Arnold, say business has been slow.

Ballanco has seen a downturn in fees for the first quarter of the year, with very little new work coming through the door, meaning tight cash flow and a personal pay cut to ensure the bottom line didn’t bottom out.

“One of the comments that has been heard from a number of developers and clients is that the money is tight and there is no funding available for projects,” Ballanco says.

“The banks and lending institutions have closed off the available credit such that new projects cannot receive financing.”

Ballanco says that many plumbing firms have had to lay off good employees.

“Other firms have cut the pay of employees, cancelled vacation, cut back the hours, and tightened their belts. It appears that most firms have been affected by the global financial crisis.

“In speaking with many manufacturers of plumbing products, this has been one of their worst years ever for sales. This has made it difficult for the manufacturers to introduce new products.”

According to Arnold, Studor has suffered a decrease in sales, but is slowly climbing out of the recess.

“The 2008 calendar year was a bad one. It is the first time in our company history that we had a decline in sales, but this was mostly driven by the US market. The first half of the calendar year 2009, however, is much better; sales are up over 10%, with very good results in Europe and the USA. The Middle East is quiet, Dubai is especially flat. Other Middle East markets (Qatar, Bahrain, Abu Dhabi, Egypt etc) are doing okay.”

Arnold lists the lack of building activity as the obvious catalyst for the decline in plumbing and plumbing related employment. Less building activity means less plumbing work. And with more and more competition to win the business that is left, margins are shrinking.

“Sometimes there is no benefit just to keep some businesses going,” Arnold says.

To counter the downturn, Studor is entering new markets both in territory and application and proactively seeking the OEM (original equipment manufacturing) market, meaning they will rebrand products to their own name, offering, warranty, and support and licensing of the product.

Being creative is one thing Arnold says is necessary for companies if they are to survive.

“Be more creative and open minded for money saving technologies,” he says.
Arnold believes that Studor is already coming out of its darkest days.