From your point of view, how hard was your industry hit by Covid 19 crises compared to others?
The impacts of the COVID-19 pandemic on the European HVACR industry are complex. They have evolved over the course of the pandemic and will continue to evolve in the months and years to come.
The first impact was on the supply side during the initial lockdown in March and April of this year. In several countries, manufacturers had to temporarily shut down their production facilities to comply with the lockdown orders and there were disruptions in the supply chain. These issues were mostly resolved by April. The HVACR industry was quickly recognised as an essential industry with reasonable exemptions from the lockdown orders in most countries, and manufacturers were able to adapt their workspaces so that production could resume.
A deeper impact is on the demand side. There has been a slowdown in sales almost everywhere in Europe because of the postponement of many construction and investment projects. The slowdown varies from country to country, which will have a lasting impact on the competitive landscape. Companies from countries with stricter lockdown measures may lose market share relative to other companies. However, this change may be short-term. Everything will depend on the reactivity of the manufacturers and their ability to respond to the evolving requests of their customers.
We expect more lasting changes in the demand structure sector by sector, at least for the next 2 or 3 years. The sectors which were most hardly hit by the pandemic (e.g. hotels, leisure, retail, commerce and offices) will generate much less demand for HVACR products than before. Some sectors might never quite rebound to pre-COVID-19 levels, as the pandemic may have provoked long-lasting or even permanent changes in social behaviour. We might see fewer business trips and more people working from home for example, even after the pandemic subsides. For other sectors, the COVID-19 crisis has accelerated growth. Those include the digital and health sectors. The digital sector was already on the rise when the pandemic started owing to global developments in digitalisation, but the lockdown has boosted growth as more and more activities switched to online, and demand for cloud services increased. Manufacturers supplying the digital and health sectors might manage to minimise or even completely avoid a drop in their turnover in 2020.
What are the new challenges and opportunities in short- & long-term?
Sooner or later the pandemic will subside and so will its immediate effects. Our industry will have to be ready for the new challenges and opportunities that lie on the horizon. Notably, the HVACR industry will need to reckon with the European Union’s benchmarking ambition to become the first climate-neutral continent by 2050. The implications for our industry are significant but complex. It means unprecedented investment in building renovation and energy sector modernisation, for example, but also a much stronger focus on sustainability aspects of products beyond mere energy consumption. With the end of the post-Brexit transition period and upcoming presidential elections in the US, there are also big question marks around the fate of international free trade on how European companies can compete on the global market.