Thriving in a challenging environment with a quality-driven approach and Uponor's complete solutions
The Romanian construction sector is in a paradox.
On one hand, high, short-term metrics from 2022 lead us to think the industry is recovering. But a deeper look into the numbers reveals that growth is not what it looks like at first glance. The sector is challenged with high expenses and labour shortages, resulting in a low survival rate amongst construction companies.
Still, despite this challenging environment, there are Romanian firms in this industry that take a smart business approach and report steady growth. Before we get into the details of their success, let's look at the trends and unveil what's really happening in the Romanian construction market.
On one hand, high, short-term metrics from 2022 lead us to think the industry is recovering. But a deeper look into the numbers reveals that growth is not what it looks like at first glance. The sector is challenged with high expenses and labour shortages, resulting in a low survival rate amongst construction companies.
Still, despite this challenging environment, there are Romanian firms in this industry that take a smart business approach and report steady growth. Before we get into the details of their success, let's look at the trends and unveil what's really happening in the Romanian construction market.
1. Construction works growth
According to the Romanian National Statistical Institute, in 2022, the construction business increased 12,9% compared to 2019[i]. Last year alone, the Construction Works index increased 29% from January to September 2022 and 34% from October to November[ii].The market demand for new buildings and renovations is still high, especially in the residential segment. In addition, there are plans for projects within the European Union programs. The Romanian National Strategy and Forecast Commission even predicts increases of between 6% and 9% over the next four years.
However, a closer look into the current stats reveals the not-so-popular truth behind these impressive metrics; a big part of it can be attributed to the higher prices of materials used. When factored into the service equation, higher prices boosted the overall revenue numbers in comparison to those from previous years. However, that doesn't mean investors' profits had a similar growth curve. On the contrary.
2. Crumbling profitability
The overall increase in expenses pumped up the construction works index, but it had a negative effect on builders and their businesses. The construction materials price index jumped by 55% since 2019, and energy prices skyrocketed.All that, combined with the workforce challenges, resulted in crumbling profits for many Romanian construction companies. Some of them even had to close their doors.
3. Labour shortage
In addition to the market's newer challenges, the Romanian construction industry struggles with a chronic need for more workers, engineers, and architects.For years, builders have watched the workers they’ve trained leave to work in other EU countries. In addition to these workforce migrations, companies struggle to recruit new people.
Construction workers are in high demand. The government enables access to different funds for investments in infrastructure and digitalisation. However, builders and investors don't have enough people to carry out the development plans.
4. Solution performance issues
The entire sector relies on a limited number of workers, and that's posing an increasing threat to current and future projects. What’s more, this issue affects the quality of installed products and solutions."In Romania, investors cannot afford to be picky when trying to find skilful workforce, such as plumbers or HVAC equipment designers and installers," explains Vlad Weber, MEP Design Manager and co-founder of one of the biggest HVAC design company Allied Engineers Group and also turn-key company Framapesa.
He adds: "They are left with a small number of people to choose from, and unfortunately, that situation often results in poor service and installation of low-quality products."
The main issue with cheaper offerings is that they soon transform into more expensive solutions due to frequent repairs and high maintenance costs.
Quality over price
With so many challenges and pressures in the sector, it's becoming increasingly difficult to maintain a profitable construction business in Romania, let alone to grow and thrive.
However, Weber and Allied Engineers have seen steady growth year over year.
Their secret?
An approach that prioritises professionalism and quality over price, and that offers complete, turnkey solutions.
"Cheaper products always cost more in the end. Typically, HVAC installers combine disjointed elements from different brands, which cannot provide warranties. As a result, investors end up having complex maintenance problems, and installers are the ones to blame," Weber confirmed.
During his HVAC career, he witnessed many times when designers and installers took an approach that combined cheap products from different brands but offered their services at the same price. They traded quality for short-term opportunities to earn more on higher margins. He also saw how this approach could end up: with a bad reputation and lawsuits.
Leaking systems
The installation of PPR (Polypropylene Random Copolymer) water pipes is a typical example of this questionable approach.
Like in many other countries, Romanian plumbers like to use polypropylene pipes over steel pipes for their ease of use, good performance, resistance to varying temperatures, and an affordable price.
However, many try to save even more by combining different brands of PPR pipes and fittings. In theory, that can be done, but in practice, this approach only brings problems.
Different brands use different types of polypropylenes, which results in different physical, chemical, and mechanical properties of their pipes. They come in different weights, sizes, connections, and tools.
So, when these different pipes are joined, they don't fit properly, and that results in leakages.
Uponor’s perfect pipe fitting
Vlad Weber has been in the HVAC sector long enough to know that cheap and disjointed products are not a good foundation for starting or maintaining a business.
After working in different larger HVAC companies, he founded a company with a partner based on a simple philosophy: to exclusively use reputable HVAC and plumbing brands with high-quality products and complete solutions.
Said Vlad, "I have worked with Uponor's solutions before, so I knew they would be my number one choice when becoming a business owner. There are three main reasons why I choose to work with Uponor:
- High-quality products. With Uponor, I can be 100% sure I'm installing products that are top-of-the-line, that last, and are safe for users.
- Complete solutions. In Uponor’s solutions, each element fits perfectly, and everything works properly.
- Fast and easy installation. I've tried some competitors' solutions and, while they can also have good quality products, they always take more time and more steps. Uponor systems are the quickest to install, plus they don't require long or complicated staff training."
Doubling revenues with Uponor
Vlad and his company started small seven years ago. While they manage to maintain a boutique approach with the SMB profile, their profits show rapid growth.
By working together with Uponor's solutions, and taking a quality-driven approach based on fairness and work guarantees, his business revenue grows every year, anywhere between 30% and 50%.
Allied Engineers creates designs with Uponor's water systems, as well as heating and cooling solutions, in both the residential and industrial markets.
"We are very pleased with how things work for us, and our partnership with Uponor is a big part of our success. In the forthcoming months, we're planning to focus more on the radiant heating and cooling market needs where, again, we count on Uponor systems," Vlad announced.