Hydronic, radiant sales still on the rise

BY ROBERT P. MADER Of CONTRACTORs staff MANUFACTURERS of hydronic and radiant heating equipment are optimistic about business in 2003, with most predicting sales increases in the double digits. Much of the optimism is founded on the continued growth of radiant heating, which has such a small share of the market that it has plenty of room to grow. In addition, housing remains strong and interest rates

BY ROBERT P. MADER

Of CONTRACTOR’s staff

MANUFACTURERS of hydronic and radiant heating equipment are optimistic about business in 2003, with most predicting sales increases in the double digits. Much of the optimism is founded on the continued growth of radiant heating, which has such a small share of the market that it has plenty of room to grow. In addition, housing remains strong and interest rates low.

On the other hand, there’s an air of uncertainty hanging over the market.

“You can sit there and do all the forecasting you want, but it’s a crap shoot at this point,” said David Laursen, director of radiant and plumbing systems for Weil-McLain. “We’ve seen the stock market contract so much and the only area of strength right now are new homes. But with the big home builders, some analysts are saying that the big home stocks are starting to contract as well. Then there’s war with Iraq and oil prices and stock market jitters — we have a lot of uncertainty all at once.”

Despite an economy in 2002 that was mediocre at best, hydronic manufacturers all had a good year, with most reporting double-digit increases.

“We were, sales-wise, a little better than expected in 2002 but close to forecast,” said Joe Pauley, president of Uponor Wirsbo. “The traditionally strong markets for both plumbing and heating were good.

“We expect similar sales growth as 2002 and in line with where we’ve been for the last three to four years, with double-digit growth. I’d say the upper teens, at least, is where we’re planning to be.”

David Garlow, national sales manager for Stadler-Viega, noted: “2002 was right on the money. We were targeting the low teens for growth.”

Garlow explained that forecasting for Stadler-Viega is complicated because the company has established territories, such as New England, and then rapidly growing new locales, such as Michigan. Nevertheless, the company is forecasting double-digit growth for 2003.

Sales for 2002 were up 10% to 15% for Ipex Inc., said Ted Lowe, Kitec sales manager and past president of the Radiant Panel Association.

“I’m the eternal optimist,” Lowe said, “but I’m anticipating 20% to 25% growth again.”

Weil-McLain is unusual because it’s selling new products, including PEX-aluminum-PEX pipe and the new Ultra high-efficiency boiler that it introduced at the ISH North America show.

“Our business alone increased by 100%,” said Laursen, who expects a similar increase in 2003. “What RPA tends to report is about 20%. We have a PEX-Al-PEX product, so we’re taking different tack.”

Laursen said that Weil-McLain has seen good market penetration with its PEX-Al-PEX product, which is made in Europe by a unit of Uponor. In Europe, he said, sales of PEX-Al-PEX have outpaced sales of single-wall PEX.

Ed Nordstrom, who runs North American operations for Viessmann, said he’s “optimistic” for 2003 and expects strong sales across the country, but with Western states being stronger for his firm than Eastern states. Higher sales in the West come from the number of high-end homes being built there, he said.

John Miles, director of product development for Quietside Corp., a manufacturer of wall-hung combination units, said his firm is optimistic about 2003. The company makes a fully modulating high-efficiency product.

“I think we’re seeing a growing trend or movement from major manufacturers toward higher tech boilers, which will lead to better acceptance of that type of boiler,” he said.

One of his better markets has been Northern California, Miles noted. The Northeast is the best boiler market in North America, he said, and his firm is doing well in Vermont, Massachusetts and Pennsylvania.

“I would say that 2002 was a very good year due to the stability of the Watts name, the introduction of new products and expansion of present product lines,” said Watts Radiant Sales Manager Russ Rose.

Rose said the predictions he has seen indicate that the commercial market will be weak, the mid-range residential market will improve and the ultra-high end “starter castle” market will retreat slightly because of stock market woes.

“The nice thing about the radiant floor heating industry is that it has proven to be relatively recession-proof up to this period,” Rose said. “It remains to be seen if it will stay that course, but most of us in this business continue to be, if not strong, at least steady.”

All the manufacturers reported that they have seen declines in the ultra high-end market — except Viessmann, Nordstrom said. The other manufacturers also said that attracting qualified installers was a problem. Nordstrom said that recruitment was a problem for the industry in general, but that Viessmann has the best contractors who employ the highest paid and most skilled installers.

The only way to combat the shortage of qualified people is with factory training, the manufacturers said.

“We’ve got to have factory training, or else we’re going to get into a rut of market share competition, and that’s not necessary,” Pauley said.

Stadler-Viega conducts both basic and advanced training at its Bedford, Mass., facility either once or twice a month, said Garlow, who noted that Stadler-Viega has just hired a full-time training manager.

While the radiant side of the industry has seen consistent double-digit growth since the RPA started in the mid-1990s, Lowe said, it’s time to look outside the heating industry.

“We’re limited now by the number of contractors and the talent pool, and we have to get better at outreach to related trades, “ he said. “We have to do a better job removing the fear factor from builders and the concrete flatwork people and the tile people who have input and who can adversely affect the growth of the industry.

“All live in fear that the schedule will be disrupted or that variables get out of control.”

Despite that resistance, demand created by well-informed customers can still drive the market, he said.