It has taken 18 months, a lot of confusion, some distrust and a lot of hard work, but now FG Eurofred is on track. Paul Braithwaite talks to Tony Gittings, sales director of FG Eurofred, about the partnership between Fujitsu and Eurofred and asks where the company is going.
It is nearly 18 months since Fujitsu Air Conditioning division linked with Spanish distributor Eurofred in a joint venture.

Tony Gittings, sales director of FG Eurofred, is the first to admit there was confusion about the partnership, especially among UK distributors of Fujitsu products.

'Many did not understand the strategy behind the joint venture and there was a lack of communication between Fujitsu and its distributors,' he admits candidly.

'When I moved to FG Eurofred, a year ago, the company had only just been established.
'In the beginning, the marriage was not an ideal one. An established and well-known Fujitsu General, with all its sales going through traditional distributors, was merged with the former Eurofred UK direct sales team which wanted to break into the UK air conditioning market.

'It is no secret that there was initially some friction between our two routes to market, with a direct sales team that was experienced in selling, but not in air conditioning, treading on the toes of our long-standing distributors, which still represented the majority of our sales.

'In many ways, the easiest thing to have done would have been to return to a purely distribution route.
'However, the industry was, and still is, changing, and experience tells us that those manufacturers without a direct sales team capable of talking to large end users and major consultants on the same level, are not going to thrive. Also, there is an undoubted trend towards distributors taking on a number of brands, in order to protect their own profitability, so we need a strong team dedicated to maximising the Fujitsu brand.

'The only real choice was to make both routes work; so that is what we set about doing - while also dealing with the worst global recession for 60 years.
'To achieve this, we needed to raise the skill level of the direct sales team and ensure it targeted the right market sector, while making sure our distributors receive the best possible service and all the help they need to maintain and improve their sales.

Now, he says, he and his colleagues have worked very hard to re-establish a clear identity, particularly with distributors, while maintaining a direct sales channel to the market.
'We have re-established the excellent working relationships we had with our distributors.'
But he could understand why those distributors were initially apprehensive. Whereas before Fujitsu had been its own supplier, it seemed to have put a lead distributor into play both to supply goods to other distributors and sell to the end user in competition with those other distributors.
Gittings adds that there have been and will continue to be companies which have seen the UK as 'a bit of a cash cow'.
The UK is a very different market from Spain. And, while Eurofred is a very successful distributor in Spain, its move into the UK market caused confusion. and even led to an internal price war.
'This meant our distributors were less profitable,' he admits.
Now, as far as the UK air conditioning market is concerned, only the 50:50 joint venture between Eurofred and Fujitsu exists.
'There has always been a desire to have a localised management structure within FG Eurofred consisting of local people who understand the UK market place, such as himself.'
And FG Eurofred has both a direct channel and a distributor channel.
'As far as the FG Eurofred direct sales team is concerned, we have reduced it from 15 to six, retaining the best of original team, doing some recruiting within the industry and investing heavily in training and its understanding of the market place. We have also changed the team's ethos, to ensure it targets the right sectors, without impinging on the markets of our distributors.'
And there is, Gittings insists, much greater compatibility between the two sales channels.
'It has been proved there is part of the market which expects to deal directly with the manufacturer and another part which demands to deal with a more localised service, the distributor.'
'We had to ensure that we did the best for our distributors, which, as a group, continue to be very successful at promoting and selling the Fujitsu brand within the small- to medium-sized installer market, mainly because of the Fujitsu product portfolio available to them.
'Since I joined the company, Tim Kaye, our distribution sales manager, and I have spent a great deal of time with our distributors, understanding their particular markets, customers and their individual requirements. Each one is different, with different needs and expectations. Our aim is to ensure they receive support from us that is tailored to them.
'What I have done during the last 18 months is set up various internal processes and procedures which allow both channels to sell to the market without the unnecessary competition which causes conflict,' says Gittings firmly.
'For example, I would not support the direct route to adopt a sales strategy which would knowingly compete with on of the
distributors.'
He admits that at the moment the bottom has dropped out of the air conditioning market in the UK. It is a combination of the economy - interest rates, credit facilities are harder to get, impact on small businesses - and nobody is investing in new builds or refurbishments or the services which are going into them. But while he offers nothing new on the causes, he does have ideas on how to lessen the impact.
'It is important for a business to be as efficient as possible. One of Fujitsu's successes has always been its flexibility. For instance, free of charge next day deliveries were the norm but not always necessary. Simple improvements in communication and internal processes dramatically reduced costs.'
This, he says, was just one aspect of the business' success. It could be payment terms etc. What is important is the efficiency.
Again, Gittings has been looking at other internal systems which have saved costs for the distributor. But while costs have been stripped out, Gittings insists service has become more efficient.
'What company hasn't been looking at cost control in this economic climate?' he asks.
And stripping out costs means savings.

'First we have held our 2008 prices into this year. There has been no price increase.'
And, of course, these prices have been helping distributors to sell out. But the economic downturn cannot go on forever.
'The actions we have taken so far mean we are a leaner, meaner company and will remain so for the future.'

The negative issues of the FGE partnership have been addressed and are now history, he adds.
'Our knowledge of our customers has improved and our relationships with our distributors has got better. Our systems, logistics and service has also moved ahead and we are in a strong position to be in the vanguard when the upturn comes.'

But for the present it is a case of being sensible in its operations.

'While we have achieved a great deal in the 18 months, there is undoubtedly still a lot to do. For example, we have an excellent, but much under-used, training facility at Elstree, we need to make much more of this to help our contractor customers continually improve their skill levels.

'We also acknowledge that FG Eurofred is a little behind its major competitors when it comes to providing a full product portfolio. Inevitably, this has had an impact on our chances of continuing to increase our market share over recent years. However, we are making great strides forward in addressing this, with the planned introduction of many exciting new additions to our product range.'

The air conditioning industry is going through huge changes and the companies that survive will be the ones who manage those changes the most effectively. The only thing we can be certain of is the industry of the future will be like nothing that exists currently.