Hydronics - A Profitable Non-Growth Business

Published: June 26, 2016 - by Dan Holohan

Categories: The Business of Heating, Educational Opportunities

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Over the years, I've asked friends in this business where the hydronics industry is located. They shake their heads and look confused. "I mean if you had to get in your car and drive to it," I'd say, "where would you go?"

            That usually prompts a laugh.

             "No, seriously," I'd say. "Would you go to a particular manufacturer? And if so, which one? And why? Or would you drive to the headquarters of an industry association? Which one? How come? How about a trade show? Any of those really specific to hydronic heating? Maybe a Web site? Which? Where exactly is the hydronics industry?"

            Most of my friends tell me I have way too much time on my hands, which is probably true, but still, If I asked you to drive to Search, you'd probably head for Google's headquarters in Mountain View, California, right?

            But what about the hydronics industry?

            No one has ever given me a definitive answer to this, but I like to keep asking because while I'm thinking about where it may be, I'm also thinking about what it is, and why it never seems to grow.  

            We all used to look forward to spring, and not just because the air smelled so sweet, but also because spring was when the trade shows in the Northeast that focus on hydronics kicked in. Spring is the shoulder season between heating and air-conditioning, and a good show was a place to get together with old friends and make new ones. It was also the place where we learned about what the manufacturers had come up with since last year. Those shows were exciting and they were fun. You could feel the hydronics industry there. All those boiler people showing us what was new. All the tubing manufacturers, controls guys, burner people - they were all smiling and showing off. It was spring, a time of rebirth.

            But that's changed. Nowadays, we get our news instantly through Web sites, chat rooms, e-newsletters, and social media. And because of this, fewer people are going to the trade shows. Everyone's busy, and we're treating each other differently these days. We've never been more connected, and we've never been more alone, and all at the same time. We've changed our focus.

            For instance, a trade association, focused on hydronics and struggling to hold members, will suggest that heating professionals get certified for themselves and for the overall good of the hydronics industry. This requires lots of study and a rigorous test, and I think this is a noble plan. Not everyone can be the best. But since the Great Recession, more and more people seem to be looking out only for themselves rather than for an industry to which they can't drive or call on the phone. They don't seem to want hydronic certification. They want to be left alone to do it their own way. There's no time for study. If they have questions, they Google. This, they say, is the modern way.

            Years ago, my old boss in the rep business was talking to me about one-pipe steam air vents, of which we sold tens of thousands. "How long can this go on?" I asked back then. He smiled and said, "Dan, as long as there are painters, we will continue sell radiator air vents." I also smile when I remember him, and even though he's gone, his company continues to sell plenty of those air vents.

            He is the man who first mentioned that hydronics is a very profitable, non-growth business. I smiled at that, too, and I think back, once again, to what my father said to me during the summer of 1970. "Get into heating, kid. It's a great business, the next best thing to Civil Service. You'll never be out of work because people are always going to need heat. Especially in the winter."

            Simple truths.   

            The people I've met who have been most successful in the hydronics industry are the ones who figured out how to stand out, and how to market themselves. They don't sell the equipment. They sell what they equipment does.

            My Canadian friend, Robert Bean, who is one of the brightest minds in this elusive business, talks about how describing hydronics is like trying to nail Jell-O to the wall. "If I ask you to describe a furnace," Robert Bean says, "you immediately get a picture in your head of what that looks like, right?"

            "Absolutely."

            "And if I said refrigerator, or fire extinguisher, or Harley Davidson motorcycle," he continued, "you see pictures in your mind of each of those things, don't you?"

            "Yes, I do."

            "SUV, smart phone, white bread?"

            "Got it," I said.

            "Okay, what does a hydronic-heating system look like? What is its defining model?"

            How's that for a question? I'm thinking that if you and I built an empty house and asked a hundred heating contractors to install a complete hydronic-heating system, there would be more than 100 ways to get that job done. I say more than 100  because some of those contractors will change their minds on which way to go right in the middle of the job.

            Oh, and each of those contractors will find fault with the way the other 99 planed to go about it, which is a big part of what makes hydronics a profitable, non-growth business.

            Someone like Bob Villa is on the TV, looking at a hydronic-heating system on one of those TV shows so many Americans love to watch, "Boy, that looks complicated!" he says. The contractor on the TV smiles and tries to explain it all to an audience of Americans sitting on couches, listening to their furnaces rumble. "It's not that complicated," he says, and then goes on to explain how the turboencabulator works.

            Huh?

            Bob Villa shrugs and goes upstairs to talk to the guys installing the marble countertops. Got a picture in your head of those countertops?

            See what I mean?

            Too many people in the hydronics industry go out of their way to make it more complicated that it has to be, and they take pride in that.

            It's a profitable, non-growth business.

            The number of boilers sold today in the U.S. is about the same as it was in 1970 when I crossed the threshold into the industry. It never seems to grow. It just sits there being profitable. I do believe hydronics provides the most comfort and convenience for the dollar spent, and there are many people who also believe that. They're out there, telling stories and doing good business. They're successful because they understand the value of being able to explain things. They know how to sell what the thing does, not what the thing is.

            And even though we can't get in a car and drive to it, the hydronics industry, when you come right down to it, is more about sociology than it is about engineering.       It's about people, their needs, their problems, their comfort and their health concerns.

            And even though its U.S. market share is relatively small, hydronics' history is large and delicious and filled with wonderful stories that make people want to own it. What's lacking, and what's holding it back, is that many of those who love it, are also indifferent to standards that could make hydronics as understandable to consumers as a refrigerator. Or a furnace.

            I think that having those North American standards in place is the key to making this a profitable business that also grows.

            But more important, what do you think?