Moisture Control Services (MCS) DivisionWorld leader in damage restoration<strong>Munters</strong>’ MCS Division offers services in damage restoration following water or fire damages forprimarily insurance companies, and humidity and temperature control for the construction industry andother sectors. Operations are conducted on a global basis with a strong local presence throughapproximately 300 service depots. MCS has quick response times and efficient, environmentallyfriendly technology. MCS generates value for insurance companies by primarily minimizing costsrelated to scope of the damage and its management, but also by dealing with the damage professionallyon behalf of the insurance holder. With temporary humidity and temperature control, value is createdmainly through high quality services and by shorting the time of a customer’s project.Services and offerings<strong>Munters</strong> has a long and proven record of dealing with damagecaused by water, humidity or fi re. The division has a stronglocal presence in many geographic markets through its 300service depots and 1,845 employees, and is therefore able tooffer a high degree of availability.MCS offers services in the areas of dehumidification,restoration, technical reconditioning, odor control andsmaller refurbishment projects. Insurance damages are oftenmuch less expensive using dehumidification and restoration,rather than resorting to demolition and rebuilding. For waterdamage, time is a critical factor and the flexibility of MCStechnology enables a rapid response, limiting the scope of thedamage. There are also major environmental gains comparedwith rebuilding, since the amount of both materials and wasteis reduced. MCS offers a comprehensive solution and oftenserves as a project manager for the insurance company, coordinatingother subcontractors involved at the damage site.MCS also offers services for temporary humidity andtemperature control for the construction industry and othersectors. Efficient drying of concrete and other constructionmaterials make projects faster and less weather-dependent.MCS also offers climate-control products for preventingcorrosion on cleaned steel surfaces, in shipyards, for example,thereby ensuring quality, which will reduce the risk of damageand associated warranty problems.CUSTOMER CASEDetecting humidity using thermographyThe UK’s Companies House was having problemswith moisture that was creeping into the building fromthe roof. A <strong>Munters</strong> damage restoration expert washired to localize the source and suggest a course ofaction. The 3,500 m 2 fl at roof was investigated usingthe latest infrared thermography technology. The testrevealed several moisture penetration locations,including damaged seams and cracks in the cement.Following completion of the renovation, the customerhas entered into an agreement with <strong>Munters</strong> forannual inspections and testing.Customers and marketThe global market for damage restoration after water andfi re damage is estimated to be worth approximately SEK 40billion. Underlying growth is stable and estimated to be inline with GDP trends. Demand has, however, varied sharplyfrom one year to the next due to the need for major efforts inconjunction with natural disasters of various kinds.Both the insurance industry and the market for suppliersof water and fi re restoration have traditionally been very fragmented,with over half of the contracts going to small, localcompanies. The current consolidation within the insuranceindustry has resulted in large insurance companies, such asAXA, Norwich Union, If, Zurich and FM Global, seeking, toa greater extent, framework agreements at centrally negotiatedterms and fi xed prices with national, and in some cases internationalcompanies. These customers also want to purchase acomprehensive range of services, which smaller damage restorationcompanies are seldom able to provide. The developmentof framework agreements has progressed the farthest in theUK, and is predicted to spread to additional markets. Thistrend will benefit <strong>Munters</strong> since the MCS Division is one ofonly a few damage control-fi rms that operate globally. Witha well-developed system of professional key account management,<strong>Munters</strong> is well-equipped to meet this trend. <strong>Munters</strong>estimates that framework agreements will eventually accountfor about 40 percent of MCS Division’s sales, up from approximately25 percent currently. During the year, MCS reached aglobal framework agreement with AXA and several nationalagreements, including with the Swedish insurance companyTrygg-Hansa. <strong>Munters</strong>’ methods for damage control instead0 M U N T E R S A N N U A L R E P O R T 2 0 0 6
“The development of framework agreementshas progressed the farthest in theUK, and is predicted to spread to additionalmarkets. This trend will benefit <strong>Munters</strong>since the MCS Division is one of only a fewdamage restoration firms that operateglobally.”of demolition and rebuilding, results in both environmentalgains as well as cost-savings for insurance companies. The twolargest competitors are Belfor and ISS.Developments during the yearDuring <strong>2006</strong>, both earnings and market share improvedwithin the European operations, despite difficulties in Germany.The German operation has been turbulent for severalyears and measures to break the negative trend were in focusduring <strong>2006</strong>. The cost basis has been reduced and the organizationstrengthened, resulting in profitable operations duringthe second half of <strong>2006</strong>. Work to further improve margins atthe German operation remains a high priority.Acceptance measures and advances were made during<strong>2006</strong> in regard to all strategic initiatives, with the aim ofimproving competitiveness and margins. Among othermeasures, MCS implemented a project leadership trainingprogram, whereby approximately 80 people received proficiencycertificates. The training program will continue to bedeveloped in 2007.Another high-priority strategic initiative at MCS is the newmobile IT platform. The ambition of MCS is to greatlysimplify and improve everyday communications, both internallyand between technicians and administration, as wellas externally with customers in regard to insurance matters.The development of a mobile IT system has been started inorder to reduce the amount of time used to administer variousprojects, such as the completion of forms, damage reports andaction plans. <strong>Munters</strong> service technicians in the field will beable to more efficiently report and communicate both internallyand with insurance customers. Experience from the UKmarket, where the system has been in use for more than twoyears, has shown significant reduction of costs, while simultaneouslyincreasing service to all customers, especially throughmore straightforward on-line information flow and fasterhandling and service of key accounts. The mobile IT platformwill be launched widely within the Division in 2007.Projects resulting from larger natural disasters havebeen a recurring part of operations in recent years. Between2000–2005, such projects accounted for roughly 5 percentCASEProject manager trainingWithin the framework of the MCS Growth Academy,<strong>Munters</strong> initiated a global training program for projectmanagers in <strong>2006</strong>. The goal is for participants to developtheir ability to oversee increasingly large and complex damageprojects, resulting in higher project profitability. Morethan 80 people participated during <strong>2006</strong>, and another 200project managers will receive training during 2007. Many ofthese will also complete the program’s supplementarycourses 2 and 3.According to one project manager: “We recentlycompleted a damage restoration assignment following a firein a 20-storey building, where large portions of the buildingwere damaged by fire, smoke and water. With my recentlyconcluded training, I felt more secure and had a betteroverview of the situation, which enabled me to quickly makethe right decisions in the right order. I also believe that I havebecome better at dealing with the expectations and opinionsof various interest groups.”M U N T E R S A N N U A L R E P O R T 2 0 0 6 21