Interview with Constantin Hariton, General Manager of Saint-Gobain Construction Products Romania – Rigips Business Unit.
How do you view the year 2013 in terms of the construction materials industry and in what direction do you think it is headed?
Slight decrease in the market was also reported in 2013 due to a decrease in the construction sector that was generated by reduced state investments and a lack of attractive financing mechanisms and substantial demand, as well as a decrease in private investments (both foreign and domestic). After commercial banks have “unlimitedly” financed real-estate investments throughout the country for years, they are now left with a capital severely affected (almost 22 percent) by the impact of non-performing loans. This grim context has rendered necessary a series of harsh corrections– granting new loans either to companies or natural persons has become increasingly difficult and conditions are much less favorable for the investor. On the other hand, prospective interested parties are more cautious in taking on real-estate projects as a result of financial precariousness and lack of job stability. Moreover, transactions have had a bad evolution this year.
The state’s lack of development strategies in this field combined with the lack of strategies for promoting and supporting legislative projects aimed at stimulating the constructions branch, as well as the poor dynamic of aligning construction regulations with European Union guidelines are negatively impacting both the sector and Romania’s modernization process.
Likewise, insufficient familiarity with design and construction standards and, in particular, the fact that these are not being put into practice on construction sites, continue to create great problems for domestic market development and the goal of reaching EU performance indicators. The absence of a professional system by which to verify project conformity and ensure projects are being carried out in accordance with EU standards, in addition to labor markets with insufficiently qualified personnel, are other examples of factors that influence market evolution.
If we also take into account difficulties in financing current company activities and the alarmingly increasing number of companies that have declared insolvency, we then have the complete picture of years 2013 and 2014, which, as we can see, is not very optimistic. The branch specializing in plasterboard dry-lining systems will most likely experience an approximately 7 or 8 percent decrease this year to around EUR 90 million.
On the medium and long term, we still have hopes in Romania’s enormous growth potential in the construction sector, given the precarious condition of current buildings, the lack of public utility systems in over 50 percent of the country, and the necessity of speedy modernization to keep up with the European Union’s increasingly high-demanding standards and with the normal standards for any civilized state.
What can you tell us about building thermal insulation in Romania? Do you believe this problem can be solved in the near future? What are Rigips’s suggestions in this respect?
Building thermal insulation is a very serious problem that is being handled superficially in Romania. Romania has committed to very big obligations before the European Union by 2020. Thus, reducing energy consumption by 20 percent requires specific policies to be implemented, strict regulations and standards in line with EU guidelines to be devised, and measures to be applied by experts in order to ensure adequate management of design and execution. Because most building thermal insulation projects are poorly carried out by using low-quality construction materials, the 2020 target parameters will not be reached. Furthermore, the volume of executed work – around 770,000 of several millions of apartments insulated so far – is very small compared to the dynamic necessary to achieve Romania’s objectives. Another aspect worth mentioning is the fact that thermal insulation does not merely concern multiple-floor apartment buildings, as the case seems to be in Romania, but also individual homes and buildings used for other purposes (schools, hospitals, sports facilities, hotels, administrative buildings, commercial buildings, industrial buildings, logistics buildings, etc.). These segments are important as well and methods must be devised to both support and enforce their insulation.
A financing and management system for this program should be rethought, so as to allow owners to become financial contributors (of 20 percent of the work value, according to current obligations) and get involved in the technical and financial control and execution stages of the work, which would ensure the process is transparent and the target technical and financial parameters are reached.
Saint-Gobain Group offers an array of very efficient exterior thermal insulation solutions developed by Isover and Weber and promoted and presented to various categories of specialists through the annual marketing strategy. However, since the material implementation of these thermal insulation programs depends on financing resources – one of the program’s major shortcomings – lodgers/owners’ associations are unable to provide their side of the financing, which is why many of these initiatives are only in the project phase.
For this reason, Saint-Gobain Rigips has devised its own interior thermal comfort improvement solutions, allowing owners not to rely on associations finding necessary funds for the thermal insulation of the entire building. Saint-Gobain Rigips has created composite panels named Rigitherm®, made of plasterboard and EPS, of different types and sizes, which, depending on the area and climate, ensure higher inside temperatures and lower energy consumption (visible in case of homes equipped with individual meters). The application of such solutions offers multiple benefits: it is easy, as the board is fixed on walls with special adhesive mortar, Rifix Term, it is quick, relatively clean (as the work method is dry-lining) and efficient from the point of view of temperature, and it only depends on financing from the space owner. This is why we recommend it as an alternative to the exterior protection system.
What does the end of the year look like for Rigips Romania, both where reached objectives and business figures are concerned?
Despite a steady decrease in the market of the branch, a rise in raw material and energy prices, and therefore in production costs, and the Romanians’ tendency to opt for cheaper and more traditional products, Saint-Gobain Construction Products Romania, of which Rigips is a component, estimates a 2013 turnover similar to the one in 2012. The turnover is determined based on the contribution of dry-lining systems on the one hand – accounting for two thirds of overall business – and wet systems, on the other, which accounts for the rest. With a diverse portfolio of manufactured and marketed products, Saint-Gobain Rigips is among market leaders on each segment it is active on.
Annually, we invest between EUR 1.3 and EUR 2.3 million in improving process efficiency and modernizing production units. In 2012, we invested around EUR 450,000 in a quarry water collection, filter, and evacuation system, and approximately EUR 270,000 in a pilot plasterboard waste recycling unit, the first of its kind in Romania. In 2013, we opened a new warehouse and an administrative complex at the plaster factory in Turda, an overall investment of EUR 1.3 million.
What does 2014 look like for Rigips Romania? In your opinion, what innovations will the new year bring?
As mentioned before, we do not believe the market will experience significant growth in the coming year. Consequently, we only expect a slight increase in our 2014 turnover, primarily as a result of our concern with promoting new highly efficient products and solutions. The main objective of Saint-Gobain Group is to develop and launch innovating Habitat products, which cam meet the increasingly pressing challenges of today: energy efficiency, environmental protection, and sustainable growth. In line with this strategy, in the last couple of years, Saint-Gobain has built a duplex home in collaboration with University Politehnica of Bucharest and other construction and equipment providers, which meets the latest European demands in the field. In fact, the project has been approved by the Passive House Institute of Darmstadt, a European authority in the field, and since it was occupied in 2013, consumption is being monitored, various parameters are being assessed, and the data is to be periodically reported and used to evaluate and promote this project, which we believe will attract large interest on the market. Moreover, Saint Gobain Romania (Isover, Rigips, Glass, and Weber) has developed its own energy efficiency measurement program for buildings, entitled EnergySave, which was launched one month ago and will help promote Group solutions and products that meet the highest demands and standards.
We are confident in our Group’s mission to contribute to the creation of a sustainable Habitat. Thus, in 2014, we plan to develop the product portfolio in view of this mission by launching at least six new products that will meet a multitude of construction, functional, sanitary, aesthetic, and economic requirements while complying with high quality standards, and ultimately distinguish us from our competitors. In addition, we are also considering expanding client services, devising a marketing policy in accordance with the target growth strategy, increasing our efforts toward transferring detailed knowledge to our customers (specificators or contractors, professionals or amateurs) and last, but not least, acknowledging and awarding excellence in execution through the Rigips Trophey.