PM Profile: A.O. Smith Sees Benefits In One-Two Punch Of Mandates And Incentives
In mid-November, PM interviewed Ajita Rajendra, president of A. O. Smith Water Products Co., about issues facing the water-heater industry. Rajendra joined A. O. Smith Water Products as its president in January 2005. Previously, he was senior vice president and general manager of the Industrial Products Group of Kennametal, a manufacturer of cutting tools and related supplies. Rajendra also held a number of positions with Corning, including general manager of the Pyrex and CorningWare businesses.
PM: What innovation in water-heating technology excites you the most?
AR: It’s the collection of renewable heating products - heat pump and solar thermal products, for example. It gives our company the opportunity to show what’s different about our products and to leverage our technology. It helps us as a country and it helps the environment. People are starting to see the value of paying a little bit of a premium to be green. It’s exciting.
The government is helping with its combination of mandates and incentives. The government is saying to manufacturers that your product has to be better than a certain level of efficiency, plus it is giving consumers an incentive to use more energy-efficient products. This is a combination that will drive more technology.
PM: As someone whose company markets tank, tankless and hybrid water heaters, what trends do you foresee in water-heating technology?
AR: I see much more in the way of energy-efficient technology and products as a result of incentives and mandates. By 2015, NAECA [the National Appliance Energy Conservation Act] will require water heaters that are above 55 gallons to be either heat pump or condensing technology. DOE is getting much more involved in our industry than it has been in the past. It is looking at testing so that the efficiency level of products lives up to what they’re advertised to be.
That’s very positive. The charlatans will fall away. The good companies will prosper.
PM: Do you expect to see consumers paying more attention to life-cycle costs and less attention to first cost when considering their water-heating needs?
AR: Yes, I do. I definitely see their attitudes changing. Initially, some companies in our industry made claims about their products that raised expectations that are hard to meet. Customers are wising up to this. Government incentives make it easier for consumers to look at life-cycle costs when they choose a product, and then get a portion of their costs back rather quickly. Now we have the one-two punch of incentives and mandates; over time the incentives will go away.
PM: How can contractors position themselves as the “green” experts among their customers?
AR: We believe contractors are the ideal vehicle to bridge us with the consumer. Contractors have the knowledge, direct customer contact and aptitude to be the best source of information for their customers. As an industry, we have to make sure contractors are up-to-date on new technology. Training is important. PHCC and industry manufacturers have done a good job to provide the right amount of training. We have increased training for our new products, and the trade really understands the technology. We are developing a mobile showroom and will take it to contractors in the field.
PM: In what new ways is A.O. Smith connecting with plumbing and heating contractors?
AR: Our mobile showroom is in the development stage. It should be on the road in the first quarter of 2011. We will coordinate events with distributors and supply houses to reach contractors in major markets where we will have biggest impact.
We also started our Contractor Rewards program. We are building our databases and using social media to reach contractors directly at a much higher level than we have in the past. I encourage your readers to visit www.contractorrewards.com.
PM: What differentiates your Cirrex Solar Thermal Water Heating System from other solar thermal products?
AR: First, this is a complete system and fully integrated. The components are optimized to work together. With other systems, contractors or solar installers have to buy components from different sources and cobble them together. We know tanks, and we’ve also partnered with the leading solar company in Israel. We integrate the whole system, including the controls. This makes it easier for the contractor to buy our complete system and install it. Other systems will not work as well.
In addition, we have the infrastructure to support the contractor when he buys the system and afterward.
PM: What can plumbing and heating contractors expect to see from A.O. Smith Water Products Co. in 2011?
AR: A continuous stream of new products and technology. We’ve been doing this for 135 years as a company. Innovation is in our DNA. We will be out there with our highly energy-efficient products. We will continue to do a lot of communication with the trade on the residential and commercial sides of the business.
PM: Has A.O. Smith recovered fully from the impact of last spring’s flood on your facility in Tennessee?
AR: From a customer viewpoint, we’ve recovered completely. We’re back, and we have been a long time. Within eight weeks of the flood, we were back up to 99 percent of where we had been with filling orders.
PM: What do you see as A.O. Smith’s most distinguishing features?
AR: Innovation is in our DNA, and we are very customer-focused at every level. We have a saying internally that if a customer calls, you drop whatever you’re doing and take care of the customer.
PM: If you had one message to give to plumbing and heating contractors, what would it be?
AR: We’re the company to partner with because we’re focused on the customer and on innovation. I’d also say, “You ain’t seen nothing yet. You will see a continuous stream of products both on the commercial and residential sides of business.”
This really is an exciting time in our industry. The proliferation of products in the last five years has been amazing.