Plumbing & Mechanical recently interviewed ECR International President and CEO Ronald Passafaro in his office in Utica, N.Y., about issues facing the hydronics industry. Before being named to his current positions in December 2010, he was ECR’s vice president of sales and marketing. Passafaro has been employed for 26 years at ECR, whose brands include Dunkirk Boilers and Utica Boilers. He also serves as chairman of the Hydronics Institute, a section of the Air-Conditioning, Heating & Refrigeration Institute for manufacturers of hydronic equipment and system components.
|ECR International President and CEO Ronald Passafaro. Photo credit: ECR|
PM: You currently are leading the Hydronics Institute. Do you see opportunities for the hydronics industry to grow its market share?
RP: I do. Hydronic heat is the most flexible source of heat available. Our industry’s base technology is extremely utilitarian and efficient, and we need to educate the market on both of these benefits. In addition to providing conventional radiant hot water heating, boilers can drive fan coils, radiant floor systems, towel warmers, snow melt and heat potable water, too. One heat source provides multiple temperatures that are efficiently zoned utilizing the heating energy only where it is needed. Boilers really are the beautiful heat.
Looking out five to 10 years, we may see more opportunities as the industry addresses efficiency levels. Combustion efficiencies for boilers and furnaces are at 95% and higher, so we’re nearing the end of the trail there. Electrical consumption is already being considered in the efficiency equation such as EPA Energy Star requirements limiting jacket losses and overall consumption. The next step after that will be system efficiency. That’s measuring the effectiveness of the heat generator and distribution system combined. This is already starting in the commercial area, but over time I’m sure this holistic approach to efficiency will be driven to the residential segment as well.
Hydronics is extremely well-positioned for comparative system measurement vs. other space-heating technologies. Basic heat transfer physics is in our favor. We know water is a far superior medium to transfer heat than air. Distribution is more efficient through a boiler’s zoned system and piping losses measure up very favorably vs. furnace ducts. Electrical draw to operate a circulator vs. a blower deck should also provide energy-saving advantages for boiler systems. Future regulatory requirements based on total system efficiency, currently under consideration, could buoy boiler growth in new construction and at the same time better serve overall energy conservation.
PM: Where do you see the greatest opportunities for heating contractors in 2015?
RP: The boiler market is mostly replacement and so in 2015 the foundation will continue to be cyclical “pull and push” boiler replacement sales for contractors. Where we think the incremental business can come from for contractors and ECR are in solution-based sales. Due to the economy and lackluster home building, the multifamily and rental properties have been in larger demand. These properties typically are space constrained and any amount of living space that can be reclaimed is a bonus for both renter and owner.
Contractors who provide products that save space are selling solutions. That is why we are offering a wider array of wall-hung boiler options in condensing, noncondensing and combi products all with modulating technology, which improves system efficiency. Other areas of solution-based sales can be found geographically. We have come through two recent years of major flooding in the highly concentrated boiler markets of New York, New Jersey, Pennsylvania and parts of New England. Wouldn’t homeowners in those areas benefit by getting the boilers up off the floor?
Again, this solution-based thinking is our rationale for expanding our wall-hung line of boilers beyond condensing. Floor-standing cast-iron boilers are our legacy and they will be with us and the industry for many years to come, but one size doesn’t fit all. We need to provide products and technology to contractors that solve market problems. We think contractors who understand their specific market needs and present customers solution-based products will differentiate themselves and increase their sales. We want to help them do that.
PM: How is ECR helping contractors take advantage of opportunities in today’s construction market?
RP: With any product category, you always have a good, better and best. We’re going through a condensing revolution right now. When it started, all condensing boilers were at the best level with no real stratification. That clearly has changed in recent years. The change started with mid-market models and now the segment includes entry level.
We filled in our condensing line by introducing two new entry-level condensing products: the SSV in the Utica brand and VX for Dunkirk customers. We’re also approaching the entry level with noncondensing space heat and combi wall-hung modulating boilers. We think a better way to hit the lower-end, combi market is with our copper wall-hung products. Contractors are embracing their flexibility, which is a balance between technology and ease of installation. Where else can you get a boiler with 85% AFUE efficiency that has 3:1 modulation, doesn’t need primary/secondary piping and can vent into a chimney?
PM: What other trends do you see in residential construction?
RP: An exciting area for us and an opportunity for our boiler contracting customers is consumer acceptance of ductless air conditioning. Our EMI ductless air-conditioning business has been serving the HVAC market since the mid-1980s, basically since the inception of ductless in North America. What once was exclusively a commercial-based product segment has now been experiencing incredible growth in residential cooling and is a natural match for a boiler-heated home.
We have expanded our residentially focused EnviroAir model line to help contractors take advantage of this opportunity. The EnviroAir product line is highly efficient, can spot cool or provide a whole-house solution, and contractors are selling the same efficiency concept of zoning as they do with boilers. If contractors are installing boilers and not offering a ductless cooling solution simultaneously, they are missing the boat.
Being a leading boiler manufacturer who also has more than 30 years of ductless air-conditioning design, manufacturing and market support experience puts us in an excellent position to help our customers with these moneymaking opportunities. Again, it’s all about recognizing market needs and providing solution-based products.
PM: What else can contractors expect to see from ECR in 2015?
RP: In 2014 we launched our Hydronic Boot Camp, which is a little different than other training programs. We talk about more than just our product technology and how to apply it. It’s a “how-to” in application, troubleshooting and solving commonly seen problems. We cover piping arrangements, zoning and controls. We talk about how to overcome nucleate boiling that causes noise in low-mass condensing heat exchangers, the impact of debris in system water and what to do about it, condensate neutralization and other challenges contractors face applying condensing boilers to American systems.
To do this more effectively, we maximize live-fire interaction time and we bring in professionals from other companies to train on system application of their components such as pumps, cleaning materials, controls and burners. It’s not a sales presentation. Boot Camps are held at our factory training center in Utica as well as around the country. A full schedule for 2015 will be available shortly on our websites.
PM: In what new ways is ECR connecting with contractors?
RP: Contractors will see a dedicated, protected web portal that will give them access to all the technical data they need for our products as well as commercial and marketing support. We think contractors will align with manufacturers that not only provide them with a high-quality, reliable product at a fair price but also are there for them when they experience problems. We want to be a true business partner to our dealers and distributors.
In the last 12 months, we have been investing in field-service technicians as a local resource when installers need support. When other companies are reducing overhead, we’re investing in more resources at point of use. Our field-service technicians are former contractors who have been a terrific addition to our family. People will do business with people who have their backs. I like to say we aren’t in business, we’re in relationships, and this is another commitment we are making to our customer relationships.
PM: What is the most exciting innovation you’ve seen during your career with ECR?
RP: I’d have to say it is our current stainless-steel heat exchanger technology. We manufacture ductless air conditioning, oil furnaces and hydronic controls but boilers are our main game here. I don’t know of any other North American boiler company that designs and manufactures its own condensing heat exchangers. We are committed to owning our critical-to-success technology.
The other choice that so many make is to source a heat exchanger in Europe. The difference, in our opinion, is the market we’re serving. In North America most people live in single-family homes and each one is different. Different number of zones, multiple temperature loops, baseboard, radiant floor, standing radiation, well water, hard water, snow melt; you name it, our boilers see it. We just don’t have a high confidence that we’re going to meet the needs of contractors with a cookie-cutter heat exchanger that was designed for European apartment living in a single-loop, low-temperature system that has consistent water quality and annual service.
Our goal is to open up the operating window of our products so they can fit a variety of installation site challenges with forgiveness so contractors can overcome the challenges they face every day. What really drives us to own our critical-to-success technology is our desire to provide the best technology to our customers for this market, not Europe.
PM: What is ECR’s most distinguishing feature as a company?
RP: Our company was founded in 1928 when Earle C. Reed started our Dunkirk and Utica companies. Just one year later, the country experienced the great stock market crash and fell into the Depression. Mr. Reed worked hard and gave all he had to build this company for our shareholders and employees, and he did it even though it took his life in 1935 at a young age.
The distinguishing feature about ECR is that we care. Mr. Reed’s commitment to this company and our customers during the most trying years of the country’s history is woven into our cultural fabric. We care about our customers, our employees, our shareholders and our communities. I could share hundreds of examples with you but I’ll share just one.
Each Thanksgiving or Christmas, typically all factories in the industry are closed the day after the holiday. We are too, but we have three people who come in that following day: tech support, customer service and shipping. Our people take turns doing this because we know contractors are in basements taking emergency calls and they might need us. We send out maybe two or three shipments on those days, and clearly not a cost-effective proposition, but we take care of customers in trouble. That to me is caring and I thank our employees for that commitment because that is what makes us different.
PM: When contractors look at ECR, what do you think is their perception?
RP: We’ve struggled with that. When we survey contractors, they always describe us as “a good company, reliable products, fair value, accessible and nimble.” They always seem to forget we are innovators, too. We introduced the first 95% efficiency boiler to North America in 1996, which many people don’t realize. Most people don’t know we introduced the first integral draft diverter to gas boilers, the first swing-out out burner door on oil boilers and our wall-hung condensing boilers came with the first primary/secondary pumping on board.
To my knowledge, we still are the only American company that designs, manufactures and ASME certifies our own condensing heat exchangers. We have cast-iron, a patent-pending stainless-steel, cast-aluminum and copper boilers; nobody has that array of technology under one roof. We need to do a much better job of telling people about the innovations of our company and the fact that we have brought to market many industry firsts.
These innovations directly tie back to the fact that a third of our salaried people work in engineering and technology development. That’s on purpose and goes right along with our commitment to owning our critical-to-success technology. Contractors may not realize it, but many of the features they are buying in other products started here in Utica.
PM: If you had one piece of business advice for heating contractors, what would it be?
RP: I simply would ask them this question: Do you ever wonder why the contractor who charges the most is always the busiest contractor in your community? People have money and are willing to spend it but they want to feel good about the product they get. The whole selection process is so important because it’s when the value of the solution you are providing is demonstrated. Even in this day and age with the Internet and all the research consumers do before the sale, they still rely on the heating professional and they must have confidence in the guy they’re doing business with.
That confidence is built by showing up on time, providing a professional proposal and taking the time to walk through the system with customers and making them a part of the proposed solution. It’s the basics. When we’re in a rush, rather than take the time to explain the value offered, a contractor will say, “I’ll do it for 5% less.” I don’t think the customer is looking for that. Just look at the products being sold: more condensing boilers than ever. They’re buying high-ticket product because Americans want the best.