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Cohesion funds for thermal rehabilitation programs
English Section Publicat de AG&F 14 Iun 2012 08:00
Solutions - lately this has been the watchword for all insulating joinery company managers. Even if suppliers themselves face difficulties in terms of activity profitability, the respective companies’ specific problems are much less significant than those of companies specialized in windows manufacture. The stubbornness displayed by the managers of certain smaller or bigger companies in their efforts to identify new clients and opportunities allowing them to continue production, even in conditions of minimum profitability, stands proof that this sector still has real recovery possibilities. Unfortunately however the demand’s descending trend has not ended yet and short-term prospects are not optimistic enough to justify the most insignificant relaxation. In fact, most sector market analysts express their reserves in relation to a potential recovery in 2012 and even in 2013, the main reason being represented by the lack of new projects, against the background of the almost complete absence of financial support.
 
This is why the most innovative business men in the sector focus their attention on identifying viable solutions, absolutely necessary for supporting crediting lines (contracted during the years before recession, in view of working capital acquisition), keeping professional employees, in short - on all those elements ensuring, for a quite limited timeframe, the company’s „survival”. The initially identified outlet was represented by the foreign market. In certain European Union countries, there is a solvable demand of insulating joinery, which is not met by local companies precisely due to the quite prohibitive prices practiced thereby. Considering the flexibility of certain local producers in these terms, and particularly the technological capacity to ensure the required quality level in regions where beneficiaries have a clearly higher level of information as against the usual Romanian clients, some companies have managed to obtain significant turnovers for the respective segment. Unfortunately, the niche is much too small to allow the inclusion of the wide range of local producers. This is the reason why viable recovery solutions are still highly researched.
Unused production capacities due to the inaccurate demand sizing
Unfortunately, the chaotic development lacking professional management coordination having defined the timeframe 2000 - 2008 generated anomalies difficult to explain. At the beginning of the economic crisis, in Romania there were companies which, even at a maximum demand level, did not use more than half of the held equipment. This truly excessive trend, whose only role was that of feeding the megalomania of certain managers with a serious lack of business good-judgment, lead to the appearance of a real „bubble”, upon whose disappearance the main losses were born by suppliers. The good part is represented by the fact that most of the previously mentioned anomalies were automatically annihilated by the natural economic mechanisms - the most efficient of which being recession - thus leading to a tough selection that spared very few companies with management and marketing flaws (and their chances of resisting until the end of the economic crisis are almost null). Moreover, the current period, defined by a series of obstacles and difficulties, has represented an optimum opportunity for the most performing managers to improve their business management skills and increase their competition abilities. Also, the challenge has been and continues to be that of finding and exploiting the most profitable opportunities.
The concept of gratuitousness is equivalent to waste
One of the possible solutions is represented by the prevailing orientation towards rehabilitation works. Unfortunately, the process is complex and difficult to approach. According to expert opinions, the government strategy implemented in the previous years, providing the performance of wide renovation works with almost exclusively public funds had an extremely harmful effect on the sector industry. As a sector member almost cynically pointed out, „a product offered at no cost destroys the industry promoting the respective economic asset”. This also happened in the analyzed case, most of the honest companies operating on this market not being able to align their offer to the very competitive level imposed in the technical specifications (we might even say prohibitively or in the worst cases, suspect of dumping), except perhaps by paying the price of completely sacrificing the respective products’ quality and even functionality (this being the situation in which the chances of incompatibility with the use intention increase exponentially). However, the faulty system has worked for now, it remaining to be seen what the effect of made compromises will be in time. Basically, the small rehabilitation market was suffocated by the intention of the line ministry and of certain local authorities, and the works quality dropped dramatically. Also, in the given conditions, we cannot even talk about the implementation of a mechanism similar to that applied in Germany (which only implies subsidizing from public funds the interests related to credits contracted for performing thermal rehabilitation works), as less informed beneficiaries have already been inculcated the unprofitable idea that insulating windows should be included in the gift category.
European money for correctly performed projects
Upon a first analysis it seems that the presented issue has no viable solution, the branch members having to wait for the unblocking of credits in order to take over new building contracts. The error of such an approach is obvious, the main counterargument being provided by current statistics carried out at a European level, which indicate a dramatic shift in the ratio between new works and rehabilitations, in favour of the latter. If the two activity types held a sensibly equal share four years ago, it seems that the renovation market currently holds a volume twice as high as that of new buildings, both in terms of quantity and value. Therefore, abandoning the respective segment means not only lack of information but also the management incapacity to provide medium and long term forecasts. In fact, the solution or at least a beginning of problem solving was defined in the spring of this year, but came however from the outside. To put it in a nutshell, we are referring to the European Commission decision to allow a part of the cohesion funds earmarked to the current period to be redirected in 2012 and 2013 to rehabilitation activities for the current housing unit stock. Obviously, due to the clear discrepancy with the West European countries, Romania could be an important beneficiary of this decision. The allotted amounts total several million EUR, which - even if they may not immediately save the joinery industry - would represent the impetus it needs to face the last part of the economic crisis, even in relatively safe conditions.
The control of funds allotment and works contracting could be very strict
The main difference, which will render the respective program functional, and performances technically acceptable, is that of eliminating the idea of gratuitousness. Basically, when we talk about non-reimbursable structural funds, the direct beneficiary’s contribution is obligatory, which means it will undertake, according to the characteristics of the area where the work is carried out, a share of approximately 20% of the works value. The first effect will be that building owners’ attention to the used materials’ quality and conformity will grow, thus leading to a resumption of an accurate competition on the respective market.
 
Article published in the May/June 2012 issue of the FEREASTRA Magazine. For detailed information click here!
 
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