RUSS LEAVITT, S.E.T., C.F.P.S. | Telgian Corporation

Eight years ago I wrote an article for Sprinkler Age regarding the globalization of the fire sprinkler market and the opportunities for fire sprinkler contractors. The opportunities still abound along with the challenges. Even though the slowdown of development and new construction with the growing recession are felt in virtually every region of the world, the demand for risk protection is increasingly on the minds of corporate stewards everywhere.

For example, the impact of the Sarbanes-Oxley Act on U.S. companies has created an environment in which the fiduciary responsibilities of executive leadership is not just about financial reporting but extends to all areas of risk management. We are currently working with a company that experienced a large fire loss due to inadequate fire protection for the hazard. The CEO stated to the organization’s risk manager that such an event “can never happen again during his [the CEO’s] tenure.” His concern was driven in no small part by management’s accountability to the shareholders regarding all business risks, of which fire is certainly one of the most potentially devastating. As a result, this firm is investing millions of dollars to evaluate and correct deficiencies in the fire protection for its facilities with particular attention paid to those locations where fire fighting infrastructure is weak.

As a result of increased global investment, fire protection utilizing automatic suppression systems is expanding as never before. The National Fire Protection Association (NFPA) is extending the use of its standards well beyond the United States. I, personally along with others in our firm, have been involved with educating business leaders, facility managers and fire professionals concerning NFPA standards and other best practices in such diverse locations as the Middle East, China, the European Union, along with Latin and South America. What we find is that in most parts of the world, there is a growing desire and commitment to fire protection but a dearth of expertise in the utilization of both passive and active protection and particularly in the design and installation of fire suppression systems.

Keep in mind that the global fire sprinkler market is still in itsinfancy. Great Britain and the European Union still rely heavily on passive systems and smoke control. However, the acceptance of fire sprinklers is growing. As an example of the progress, Reliable Sprinkler has distribution facilities in London and Manchester England, with logistics warehouses in Germany and Sweden.

Latin America is experiencing rapid growth particularly in Panama with many of the new high-rise condominiums specified to have sprinkler protection. The installation of sprinklers in Mexico contin­ues to expand. The growth is to a large extent fueled by the investment of U.S. and Canadian entities that view fire sprinklers as an essential component for protecting their physical assets. The growing demand for sprinklers in Mexico and Latin and South America has prompted NFPA to issue Spanish versions of NFPA 13, Standard for the Installation of Sprinkler Systems, and NFPA 25, Standard for the Inspection, Testing and Maintenance of Water-Based Fire Protection Systems, along with other NFPA codes and standards such NFPA 101, Life Safety Code® .

Most in the industry have heard about the intense construction in the Middle East particularly the United Emirates (Dubai and Abu Dhabi) where many of the high-rise buildings are constructed with sprinklers. The same goes for the Far East in regions such as Macau Eight years ago I wrote an article for Sprinkler Age regarding the globalization of the fire sprinkler market and the opportunities for fire sprinkler contractors. The opportunities still abound along with the challenges. Even though the slowdown of development and new construction with the growing recession are felt in virtually every region of the world, the demand for risk protection is increasingly on the minds of corporate stewards everywhere.

For example, the impact of the Sarbanes-Oxley Act on U.S. companies has created an environment in which the fiduciary responsibilities of executive leadership is not just about financial reporting but extends to all areas of risk management. We are currently working with a company that experienced a large fire loss due to inadequate fire protection for the hazard. The CEO stated to the organization’s risk manager that such an event “can never happen again during his [the CEO’s] tenure.” His concern was driven in no small part by management’s accountability to the shareholders regarding all business risks, of which fire is certainly one of the most potentially devastating. As a result, this firm is investing millions of dollars to evaluate and correct deficiencies in the fire protection for its facilities with particular attention paid to those locations where fire fighting infrastructure is weak.

As a result of increased global investment, fire protection utilizing automatic suppression systems is expanding as never before. The National Fire Protection Association (NFPA) is extending the use of its standards well beyond the United States. I, personally along with others in our firm, have been involved with educating business leaders, facility managers and fire professionals concerning NFPA standards and other best practices in such diverse locations as the Middle East, China, the European Union, along with Latin and South America. What we find is that in most parts of the world, there is a growing desire and commitment to fire protection but a dearth of expertise in the utilization of both passive and active protection and particularly in the design and installation of fire suppression systems.

Keep in mind that the global fire sprinkler market is still in itsinfancy. Great Britain and the European Union still rely heavily on passive systems and smoke control. However, the acceptance of fire sprinklers is growing. As an example of the progress, Reliable Sprinkler has distribution facilities in London and Manchester England, with logistics warehouses in Germany and Sweden.

Latin America is experiencing rapid growth particularly in Panama with many of the new high-rise condominiums specified to have sprinkler protection. The installation of sprinklers in Mexico contin­ues to expand. The growth is to a large extent fueled by the investment of U.S. and Canadian entities that view fire sprinklers as an essential component for protecting their physical assets. The growing demand for sprinklers in Mexico and Latin and South America has prompted NFPA to issue Spanish versions of NFPA 13, Standard for the Installation of Sprinkler Systems, and NFPA 25, Standard for the Inspection, Testing and Maintenance of Water-Based Fire Protection Systems, along with other NFPA codes and standards such NFPA 101, Life Safety Code® .

Most in the industry have heard about the intense construction in the Middle East particularly the United Emirates (Dubai and Abu Dhabi) where many of the high-rise buildings are constructed with sprinklers. The same goes for the Far East in regions such as Macau (China). Even these regions have slowed with the retraction of the global economy. However, as stated at the beginning of the article, even though the construction pie is shrinking, the fire sprinkler portion of the pie continues to grow.

As a result, the adventurous (the best description I can think of) contractor will find numerous avenues to expand one’s business but these opportunities are varied and challenging. We have all heard stories of contractors making obscene profits as compared with those domestically and even though many of these stories are exaggerated, the opportunity for an exceptional return on invest­ment is real. However, keep in mind that it is not simple or easy to work in another country – just ask anyone (contractor or other) who has ventured from the United States to conduct business in Canada or Mexico much less to a different continent or hemi­sphere. For example, my company provides contracting and inspections and testing services in both Mexico and Canada and each presents unique challenges which are varied and require attention to detail. If your business strategy is centered on the concept of “it is better to ask forgiveness rather than get permission” international business is not for you.

However, if you are open to taking a risk which can be mitigated by making an investment in forming the correct business structure and in finding and developing partners, the rewards can be exceptional. Some of the things that we have learned over the years include:

  • It is much easier and poses less risk to venture into foreign markets partnering with a U.S. firm in which you have an established relationship. Contracts can be executed under terms that are familiar and you can usually be paid in U.S. dollars. Be aware though, many firms have foreign entities and you must be prepared to deal with cultural and business issues that may not be familiar to you.
  • In many areas of the world, you will need to ship system equipment and materials from the United States. You must find a good export/import partner that understands the taxes and fees that may be associated with your products and the logistics of exporting and importing. It is also important to recognize the need to send extra materials as it may be very difficult to find products if something is damaged, for field changes, and other issues that arise on virtually all projects.
  • It is typically most efficient to contract the installation with a local entity and as a result excellent project management is essential. In almost all situations you must plan on having fulltime technical expertise on the job. This includes installation supervision and in many cases onsite design.
  • You must take time to learn and understand local regulations and customs regarding labor. If you decide to hire employees direct, there are major differences between countries regarding compen­sation, taxes, and benefits. For example, when hiring in Mexico, it is customary to negotiate the salary with the understanding that the employer pays all income taxes and other required fees. As a result, you must be very clear about communicating what you offer includes.
  • Retain good legal, tax consultants, and labor consultants. If someone works illegally in the United States, the penalty is usually simply deportation. If a foreigner works illegally in Mexico, it is heavy fines and/or prison. It is very important to understand the rights and protections that we are accustomed to in the United States and Canada do not exist in most countries.
  • Last of all – Don’t take shortcuts! Make the investment necessary to ensure the best chance that your venture will be profitable.

Okay. If this has not frightened you away from investigating international opportunities, then you may be of the right mindset. As with most things, once you become familiar with how the “system works” you will find less competition that is more sophisti­cated which can lead to much higher margins than a contractor typically enjoys in the domestic market. Just be prepared to make the investment in learning how to “do it right.” n

ABOUT THE AUTHOR: Russ Leavitt is the Chairman and CEO of Telgian Corporation. Under his direction, Telgian provides a wide range of fire protec­tion and life safety services including fire systems engineering and design, code consulting, loss control engineering, construction management, and the inspection and testing of systems. He is a graduate of the University of Nevada, Las Vegas, holds a Level IV certification from NICET in Fire Sprinkler Layout, and is a Certified Fire Protection Specialist. He serves as a principle on the NFPA 13 and NFPA 5000 (building code) Technical Correlating Com­mittees and the NFPA 25 Technical Committee. Russ conducts seminars for AFSA and NFPA on a variety of fire sprinkler subjects and has authored a number of articles and training materials including the AFSA study guide for NICET certification in Inspections and Testing and the AFSA online hydrau­lics course. Russ is a member of AFSA, NFPA and SFPE.


Article Published on Sprinkler Age. Vol 28/02. Issue February 2009.

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