Laars acquisition fits Bradford White's strategy

AMBLER, PA. When Bradford White Corp. announced last month that it is buying Laars Heating Systems Co. from Water Pik Technologies, it was the culmination of an effort that began all the way back in the last century. Bradford White wants to be a company that heats water, said President and CEO Robert Carnevale, and the lack of a boiler company was a hole in its line. "Acquisition was the best path,"

AMBLER, PA. — When Bradford White Corp. announced last month that it is buying Laars Heating Systems Co. from Water Pik Technologies, it was the culmination of an effort that began all the way back in the last century.

Bradford White wants to be a company that heats water, said President and CEO Robert Carnevale, and the lack of a boiler company was a hole in its line.

"Acquisition was the best path," Carnevale told CONTRACTOR. "We've been looking for about six years, but nobody was available. We tried to look at Laars as long ago as 2000, but they were not ready to sell. Then the opportunity presented itself in January of this year."

The announcement by Water Pik in January that it was selling Laars sent shock waves through the company, said Laars Vice President Sales/ Marketing William R. Root. Many employees no doubt worried that the company might be sold to a private equity firm with a management style similar to fattening the calf for the slaughter.

"We were very excited to be bought by a company committed to the heating and hot water industry," Root said. "We ended up on the sunny side of the street."

Root noted that Laars has been in business since 1948, but it has been an rather small part of large conglomerates since the 1960s. The Bradford White purchase marks the first time since then that Laars has been owned by an entity that really cares about the heating business, he said. All Laars Heating Systems Business employees have been offered jobs with Bradford White.

The executives continually emphasized-that the combined company will exist for the benefit of contractors. Neither firm has ever sold retail.

" The success of this is totally dependent on the contractors," Carnevale said. "That's where we live. We don't sell retail. We built this company around contractors' relationship with us."

In addition, all wholesaler relationships-will remain the same.

The contractor focus will also influence product development, said Bradford White Executive Vice President Nicholas Giuffre.

"There will be a growing and continuing role for unique applications in the radiant market," Giuffre said, "along with growth of tankless heaters and applications for wall-hung condensing boilers. The role of indirect water heaters will continue to grow. The growth in all of these avenues is why we need a complete product line so that a contractor can come to Bradford White and get all of the product he needs."

Carnevale noted that he believes that storage water heating will be the dominant way to heat domestic hot water in the U. S. market, even 10 years from now, despite inroads from tankless heaters.

The executives noted that the Bradford White and Laars product lines complement each other with virtually no overlap. Both are in the commercial water heating market, but Laars' offerings tend to be higher input and more on the condensing side. They explained to their employees that if it's round, Bradford White makes it, and if it's square, Laars makes it.

Bradford White plans to make plenty of investments in Laars' machinery and equipment. The company is opening 30,000-sq.ft.-plus distribution center in the Simi Valley area of California to handle order entry, a marketing department for Laars and finished goods inventory for the Western states. In addition, the company's New Hampshire facility was short on inventory space, so floor space has been added to that building. Bradford White has also purchased a distribution center in Oakville, Ontario, Canada, to provide finished goods for Canadian customers.

Laars' small Moorpark, Calif., office and plant will be closed and the functions and people moved to Rochester, N.H. Root said Laars employees are pleased that they will be getting product development support so that the company can be a leader in low NOx boilers for the California and Texas markets.

Bradford White will operate Laars as an independent subsidiary, Carnevale said. The firm will use its combined muscle where it makes sense, such as buying steel, but both operations are happy with their support staffs and have no plans to integrate other functions. He noted that such changes are dictated by need, and right now there is no need.

"Contractors are constantly challenged by unique applications, so we want those contractors to look to Bradford White as the leader in innovative products to be used in those unique applications," Giuffre said.

As Carnevale simply puts it, "If it heats water, we'll supply it."