Hydronics Market Expects Good 2002

BY ROBERT P. MADER of CONTRACTOR’s staff

WHAT RECESSION?

"According to most indications we are in a recession, but the business hasn’t shown it," said David Garlow, national sales manager of radiant heating supplier Stadler-Viega.

Manufacturers and contractors interviewed by CONTRACTOR, especially those involved in the radiant heat market, unanimously expect 2002 to be an up year.

Even the traditional hydronics industry is not expecting much of a downturn. Ken Niemi, vice president/marketing for Weil-McLain, said the boiler industry is about 340,000 to 350,000 units per year, which is around its historical high. The Gas Appliance Manufacturers Association is predicting a decrease of 5,000 units, Niemi said, which is less than 1.5%, an amount that’s so tiny that it may not be statistically accurate.

On the radiant side, people in the business expect double-digit increases, especially the contractors. Nobody in the radiant business would go so far as to call it recession-proof, but it’s close to it.

"We’ve been projecting growth for 2002 and still are," said Ed Nordstrom, who heads North American operations for Viessmann. Nordstrom would not, however, quantify how much growth.

Similarly, Buderus Vice President Lou Vorsteveld said he expects the general hydronics sector to be "level" with the radiant portion of the industry to be up.

New England independent manufacturers representative Paul Ross said the vibes he’s picking up in the field are upbeat.

"Radiant floor heating is continuing to cook along hand-in-hand with high-efficiency boilers and heating equipment," Ross said. The feeling I’m getting from architects and engineers is that 2002 is going to be a good year. I think new construction will be down a tad, but people will still invest in the home of their dreams and retirement homes.

"There may be more large city flight in the next few years," Ross said, noting the Sept. 11 attacks. "With a modem and a phone you can conduct business from anywhere. I’ve been making a living out of New York City flight for years."

Steve Weiland, national sales manager for PEX tubing supplier Roth Industries, said: "The last half of 2001 has been extremely busy. It amazed the daylights out of me."

He added that most radiant companies are merely seeing their explosive growth rates cool down a bit. The market may grow 10% in 2002.

"The 40%-50% increases in years past — I think those times are gone," he said.

While his 10% growth forecast is good for most markets, Weiland’s prediction actually is one of the more pessimistic ones in the radiant industry.

Stadler-Viega’s Garlow predicts 15%.

Wirsbo President Joe Pauley noted, "We’re going to meet our sales objectives for 2001 where we anticipated that we would grow sales 15%-20%, and expect the same for [2002]."

Larry Drake, executive director of the Radiant Panel Association, said the contractors he’s talked to have more business than they can handle. Boy, do they.

"I don’t really see a slowdown for us," said Al King of A.T. King Jr. Inc., Perkasie, Pa. "It’s been very busy up until now and I can see it continuing for six months to a year."

Michael Luttrell from Warm Floors Corp., Napa, Calif., said, "I expect it to be great. I don’t expect there to be any slowdown at all."

Elwin Mauer of Evergreen, Colo.-based Aztec Radiant, said his firm expects to install its typical 50,000 lineal ft. of tubing per month for the foreseeable future, "which equates to a million-dollar house a week."

Small contractor Enhanced Living, Troy, N.Y., will only install Viessmann boilers and its typical sale averages $20,000 to $25,000. Owner Ed Bishop budgeted $600,000 for 2002.

"And right now we’re at 43% to target in signed contracts," Bishop said.

Not every one agreed on what their "bread and butter" market is; it depends on their geographic location and target market. In the Northeast, for example, much of the area is already built up, so much of the business is retrofit.

"Most of the business is in the upper scale homes from $200,000 and up, but that has been creeping down," Drake said, noting that more upper middle and middle-class houses are being retrofitted.

Electric systems have been making significant inroads in space heating bathrooms, family rooms, kitchens and entryways, Drake said.

"If you look at the number of houses they go into, it’s equal to the number of houses that get full hydronic systems," he noted.

The hope is that the comfort will influence homeowners to install whole- house radiant systems when they build their next house.

The big numbers, however, are in middle-market housing, Drake said, and the industry has to find a way to capture that market.

If contractors can sell big jobs, however, they jump at them. Luttrell said Warm Floors installs radiant in 12 to 15 houses a year in the $5 million to $15 million range.

"Years ago a guy I knew sold Volkswagens and later he switched to Mercedes," King related. "I asked him why and he said that when the economy goes south, people stop buying VWs but they keep buying Mercedes."

That’s why King focuses on the higher income bracket.

The commercial/industrial market is the one that has lagged behind.

"I think that finally radiant is being recognized as a great alternative for other heat sources in commercial buildings," Weiland said. The problem is that architects, engineers and builders are still afraid of radiant, he said, because it’s easier to drop in a couple unit heaters.

Radiant manufacturers need to do a long-term sales job to crack the commercial/industrial market, Wirsbo’s Pauley said, starting with the architects, then the engineers.