The heat exchanger industry is recovering – but it’s a peculiar kind of spring

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This post was last edited by wiseboy on 2018-1-3 at 13:30, version 1. At the end of the 1990s, the chemical industry was experiencing rapid growth, and the demands for expansionistic, rapid development created an unprecedented opportunity for the heat exchanger industry. The heat exchanger manufacturing industry grew like mushrooms after rain, taking root everywhere; it made a significant contribution to the foundation of China’s industrial sector and also enabled those working in this field to accumulate initial capital. During this period, China’s industry was in its infancy; people relied on coarse grains for food, and there were no high demands regarding product quality – as long as something could be manufactured, it would find buyers. The heat exchanger manufacturing industry is mostly based on processing orders received from clients; some of these companies are actually former machine repair shops that were separated from state-owned enterprises. There are hundreds of heat exchanger equipment manufacturers alone in the Wuxi area, and a large proportion of these are repair shops that operate on a \"make-to-order\" basis – many of them don’t even know what a heat exchanger is; they can simply manufacture products as long as they have the blueprints, and that’s how they make money. 2. The situation of universal happiness lasted until 2012; as overcapacity and environmental degradation led to a decline in demand for heat exchangers, those good times came to an end. During this period, companies relied mainly on visiting design institutes, using connections, and seeking drawings, as they were enterprises that carried out processing based on provided designs. By 2014, demand in the heat exchanger industry had reached its lowest point. Some companies went bankrupt ； Some companies manage to hold on out of necessity ； A few companies, on the other hand, are continuing to build their strength and strengthen their foundations in an effort to make a comeback. 3. In 2016, as capacity reduction measures began to bear fruit and industrial projects were scaled back over several years, approvals for new projects increased, leading to a recovery in demand for heat exchangers. However, for many heat exchanger manufacturers, the spring they have long awaited brings no warmth – the spring of old is gone: relying on processing based on provided drawings, bidding low to obtain those drawings, or approaching design institutes anymore doesn’t work. In the past, it was this way: the owner set the requirements – the designer created the original designs – and then the heat exchanger manufacturer bid to produce them; the heat exchanger manufacturer was at the end of the process. And this New Year, a considerable number of property owners follow this approach: the owners set conditions – the heat exchanger manufacturer is responsible for both designing the drawings and carrying out the production, completing everything in one step. Thus, the heat exchanger manufacturers, still immersed in the business of processing orders received, found that the new spring brought no warmth. 4. In 2017, the industry experienced a significant recovery. During this year, a few heat exchanger manufacturers increased their investment in intangible assets; starting from the requirements of their customers, they adopted an integrated approach that combined design and manufacturing. Although their capabilities may not have been comprehensive, they achieved good results and were able to define their own direction for development. However, about 50% of manufacturing plants are still operating on a \"make-to-order\" basis and are struggling to survive. Summarizing the overall situation of heat exchanger manufacturers in 2017, it can be said that those manufacturers who invest in the calculation and design of heat exchangers perform significantly better than those that produce products based on provided drawings. Moreover, their soft and hard strengths have laid the foundation for a bright future for them. 5. You can show off your CNC machines, you can show off your other advanced equipment, but today, this full score is only 50 points: hardware capabilities. For thermal calculations and design, you don’t have the capabilities for that; you can only go to a design institute and wait for the drawings to be prepared. Quite a number of clients prefer to give their projects to heat exchanger manufacturers that possess both thermal design and manufacturing skills – in other words, you get bypassed!