Laars Heating Systems uses synergies with its parent company, emphasis on customer service, and new technologies, to succeed in a construction down-turn
By Alison Diana
After all, the manufacturer of residential and commercial boilers has weathered several housing market downturns and been acquired three times since its formation in 1948.
The most recent acquisition was in 2005, by Bradford White Corp., a full-line manufacturer of residential, commercial and industrial products for water heating, space heating, combination heating and storage applications.
But this latest acquisition may well have been the most appropriate and successful in Laars’ history, says Mark Farrell, director of manufacturing, and a 19-year veteran at the company.
“There is a lot more synergy with Bradford White than with any other company – Allegheney Teledyne and Water Pik Technologies – that acquired us before,” he says. “They make water heaters and we make boilers. We’ve been able to brand water heaters as our products, and vice versa. We’ve both been able to package boilers.”
A wholly owned subsidiary of Bradford White, Laars can now offer customers bundled boilers and water heaters under its own logo, sales force and warranty, says Farrell. In turn, Bradford White taps its access to Laars’ long line of boiler offerings which it can then sell under either its or Laars’ name, he noted.
But the business benefits are not limited to product development, branding and sales.
“There are also synergies in the purchasing side of the business,” said Farrell. “We’re both in the same business. We either store water or heat water, so a lot of the components we need — such as gas valves and burners — are the same, so we can buy in greater bulk for a bigger discount.”
The Name’s the Same
Under terms of its acquisition by Bradford White, Laars kept its well-recognized name. During Water Pik’s reign, the manufacturer continued to operate under the Laars banner, despite being officially renamed Water Pik Technologies, says Farrell.
Keeping the same name has helped the company maintain its brand recognition in construction and contractor circles, he says, which has been critical to Laars’ ongoing success.
“We always kept the name Laars even though we were Water Pik Technologies,” he says. “Nobody really knew the name Water Pik in terms of boilers: People wondered what we had to do with toothbrushes.”
Having a recognizable name was a critical component of Laars’ sales approach, especially since one element of the company’s success rests squarely on the shoulders of its well-respected customer service and sales teams, as well as Laars’ customer-friendly warranty service, says Farrell.
“Our sales reps are — I believe — the best in the industry. They get to know the engineers. They get to know the sub-contractors. They know everyone,” he says. “We have a great reputation in the industry for customer service by doing whatever it takes to make the customer happy.”
This reputation also extends to Laars’ line of made-in-America boilers.
“All the time, employees hear me saying, ‘Build it as if it’s going into your own house,’” says Farrell. “Bradford White’s really strong on building American products. We take pride in the quality of our products.”
The combination of quality products, strong customer support and exceptional design expertise helped Laars win contracts with an array of customers such as the Mammoth Mountain ski resort, the United States Water Polo National Training Center, the Student Union at Boise State University, Sea World and the San Diego Zoo.
In addition to serving customers in the United States, Laars also sells its family of boilers in Canada, Korea, Russia, Mexico and Australia.
Privately-held Bradford White, does not publicly disclose financial data. Laars’ sales continue to grow, says Farrell.
Not Treading Water
Like time, boiler designs do not stand still, and Laars continues to invest in researching and developing new solutions for heating water.
“The whole market is moving to sealed combustion with higher efficiencies as opposed to atmospheric boilers,” says Farrell. We’re leaving the age of a plumber being able to install boilers and are getting toward the point of requiring a more technical person — an HVAC technician to install these products.”
In turn, this requires more education, of both installers and buyers, he says.
“Training the market has always been a challenge, but we do a good job of providing quality educational materials,” says Farrell. “There are a lot of challenges, too, with being competitive with other companies in areas such as maintaining margins.”
Another recent challenge is the slowdown in the residential building sector, he says — meaning a smaller pool of potential new buildings to heat.
Hot Commodity
Despite the down-turning real estate market, Laars’ continues to enjoy growing sales because of its new boiler designs, says Farrell.
Traditional atmospheric boilers — which the company continues to manufacture — have efficiency ratings in the low 80s, out of a possible 100, he says.
“The standard boiler is now in the mid- to high 80s,” says Farrell, “but if we condense the boiler, we can take the efficiency above 87 and can, in fact, take it to 97.”
In addition, these sealed units have extremely low noxious emissions and easily pass even the State of California’s stringent regulations, he says. Because of this, many contractors include Laars’ products in bid specifications, said Farrell.
“There is a huge replacement market because of these improved efficiencies, particularly with the higher fuel costs of today,” he says. “Most of our products are powered by natural gas, although we do also offer propane- and oil-powered boilers. The replacement market is huge and, even today the new construction market for commercial products is huge. The split between replacement and new installations is about 50/50 right now.”
With expectations high that it will ride the tide of today’s building bust due to its customer service, boiler design advances and quality products, Farrell says that Laars plans to keep its business — and its clients — in gallons of hot water.