Great, big world out there
Perspective of the industry through a global lens.
When plumbing, heating and cooling professionals want to learn about the latest-and-greatest offerings in the U.S., they travel to events like AHR Expo, KBIS, Greenbuild, PHCC CONNECT, Aquatech USA, HARDI Conference or Network ASA. Some of these events have been around for nearly 100 years, attracting tens of thousands of attendees and thousands of exhibitors.
Looking at the numbers, it’s hard to think that there’s “more.” And yet, there is.
Nearly five decades ago, ISH debuted as the biggest exhibition of water and energy offerings. How did it earn such a title? By expanding its reach to an international scope in which bathroom, building, energy and air-conditioning innovations are showcased.
Show Host Messe Frankfurt reported that in 2015 there were 2,465 manufacturers that launched products at the event, 61 percent of which represented countries outside the host country Germany. Many of the manufacturers included in that number are household names in the U.S. but have origins in other countries. For them, globalization is not just a political ideology or social phenomenon. Globalization is a business strategy.
“Having traveled myself to Europe and Asia many times, I have heard it said over and over, ‘In another 20 years we will see that in that states,’” said Brian Fenske, Specialty Channel sales manager at Navien.
“Most trade professionals are amazed at the technology gap between energy-efficient products in Europe and North America,” said Barry Campbell, vice president of marketing at Aquatherm North America. “They can’t believe how many products have been used in Europe for years but haven’t yet made it to North America. And in some cases, those technologies never make it to North America.”
No manufacturer wants to be left behind, which can be easily done if one is not aware of and involved in global innovation.
“What we hear most often is, ‘What’s next?’” explained Dalyn Cantrell, vice president of sales and marketing at Viega LLC.
Professionals and consumers alike want access to offerings that save money, resources and time.
“Contractors, builders and especially architects globally say they’re excited to have us positioned in all of the major market areas where they work because when they’re doing a project they can be supported for product in the building as well as after service requirements,” noted Bill Strang, president of operations for the Americas at TOTO USA.
More and more, globalization has become a business game of supply and demand.
Who’s in the game?
Plumbing manufacturer TOTO was founded in Japan in 1917. The company’s founder created the company out of the realization that Japan needed a centralized, sanitary system like those used in Europe at the time. Today, TOTO has more than a 60 percent share in the Japanese bathroom market, as well as a strong presence throughout Asia with subsidiaries in Indonesia, China, Thailand and Vietnam. The company has 13 additional subsidiaries in the U.S., Mexico, Brazil, Singapore, the U.A.E., Philippines, Malaysia, India, Taiwan, Korea, Germany, the U.K. and France.
“It’s quite interesting to me that TOTO took the approach of not just being a sales company,” Strang said. “It was important that we have a manufacturing presence, capability and capacity to produce products within the regions where we do business.”
In 1958, SFA Saniflo, a global pump manufacturer, was founded in France. After making strides with its grinding technology and macerating systems, the company opened its second subsidiary in the U.K. during the 1970s. Today, Saniflo has 24 subsidiaries around the world including Sweden, England, Poland, Russia, Brazil, Germany, Holland, Ireland, the U.S., Canada, Italy, Spain, Portugal, Romania, Austria, the Czech Republic, Switzerland, New Zealand, Australia, Turkey, Japan, China and South Africa.
KyungDong Navien (KD Navien) was founded in 1978 in South Korea. In 1988, the company gained fame for its efficient, environmentally-friendly condensing boiler. In 2006, Navien, Inc. was established for the company to open new markets in the U.S. and Canada for parent company KD Navien. Today, KD Navien offers zone control, ventilation, and home network systems. The company exports HVAC products to more than 30 nations worldwide, with offices in the U.K., Russia, Beijing and Shanghai.
With roots spanning nearly 12 decades, Viega’s first product offering was a brass beer tap. In 1899, Franz-Anselm Viegener founded the company in Germany. By 1901, Viega was manufacturing home plumbing products. Today, the Viega Group’s 17,000 products include copper, stainless steel, black iron, PEX, and pre-wall and drainage technology. The company has locations in Austria, Canada, Croatia, Czech Republic, Denmark, Finland, France, Hungary, Italy, Mexico, the Netherlands, Norway, Poland, Russian, Sweden and the U.S.
In 1943, Poul Due Jensen started Grundfos in the basement of his home in Denmark. The company expanded throughout Europe and into the U.S., with production starting in Fresno, California in 1973. Today, the company manufactures circulator and centrifugal pumps and pump systems used in homes, commercial buildings and industrial processes. The Grundfos Group employs nearly 18,000 people globally, with 80 companies in more than 55 countries, such as Australia, Thailand and Kenya.
Aquatherm was founded in 1973 by Gerhard Rosenberg in Germany. The company evolved from humble beginnings as a radiant floor tubing manufacturer to a leader in polypropylene pipe systems. Today, the company’s offerings are featured in PHVAC and industrial applications in more than 75 countries worldwide, including Italy and the U.S.
Placing the profits
This past December, Forbes released the list, “The Best Countries for Business 2015.” Denmark ranked No.1 on the list of 144. “European countries represent two-thirds of the top 25,” according to Forbes Staffer Kurt Badenhausen’s article that was published in conjunction with the list.
Europe is the leading market for Viega, Grundfos and Saniflo. The companies have found this to be the case largely because they have history there that affirms longevity and credibility for professionals and end users. Germany is where Viega has its greatest market share, and Denmark represents Grundfos’ core market.
“The European subsidiaries were opened between 1970 and 1990, so they’ve had more time to develop and we have a better market share,” explained Regis Saragosti, CEO of Saniflo USA. “The top three subsidiaries for us are in France, Germany and the U.K.”
TOTO has similarly seen market share success on its home base, hovering between the No. 1 and No. 2 rankings in the Asian marketplace. In addition, the U.S. market has proven fruitful for the company, as in 2015 TOTO USA was in the No. 3 spot behind their U.S.-founded competitors American Standard and KOHLER. The U.S. has also been a strong market for Viega Group’s U.S. subsidiary Viega LLC, which with 470 employees is now the company’s largest subsidiary. Saniflo, too, has seen significant progress in the U.S. with its subsidiary’s continued growth in 2015. Dominance in its home market of South Korea, as well as neighboring market China, has resulted from more than home court advantage for Navien.
According to Fenske, “With larger dense populations with small housing footprints, along with the acceptance and use of compact wall hung units, the market demands large quantities of heating products that we produce.”
Going red, white and blue
Deciding to enter the U.S. market is sometimes a no-brainer for global businesses, as more and more research surfaces about American consumer habits. According to the aforementioned Forbes article, “The U.S. is the financial capital of the world and its largest economy at $17.4 trillion.”
Yet, for some businesses, entering the U.S. market hasn’t been about what the U.S. can give them, but instead about what it can gain from them.
Fenske said, “We saw a big opportunity to bring over our tankless water heating units and introduce North America to high efficiency domestic water heating at a comparable standard efficient system cost. In our less than 10 years in the U.S. and Canada markets, we have expanded into boilers and controls also with an abundance of accessories. Navien Inc. releasing our first generation of combi boiler in 2010 in North America started and continues to lead the evolution of sales and installations of combi boilers here in the U.S., and in Canada.”
“We brought our most popular products over with the introduction of Aquatherm Green Pipe and Aquatherm Blue Pipe,” said James R. Paschal, P.E., LEED AP, chief technology officer at Aquatherm North America. “Trade professionals often ask about our other products, such as Aquatherm Red Pipe for fire protection and the Aquatherm Black System radiant panels, and we’re offering these on a very limited basis now in North America.”
Staying abreast of global trends while assessing their relevance to the U.S. has been an important part of TOTO’s growth in the market.
“Majority of the world today lives in or is in very close proximity to an urban center. That urbanization process means that more and more people are moving into multi-story vertical high rises. Those multi-story verticals are now looking at a much smaller footprint for the living space than what you would have if you were living in the suburbs,” Strang noted. “We have actually been able to bring in-wall tank flushing systems and wall hung bowls with dual flush solutions, and have seen architects and builders embrace that technology. We feel comfortable being able to do that because we have so much experience in the European market with that kind of product and using those kinds of designs.”
Sometimes deciding which product will help or benefit the U.S. market is the easy part. The hard part is gaining the shining star of legal approval for the design of and technology behind the product.
“We do a lot of work with inspectors about our products,” Saragosti explained. “Introducing new products, new technology, or new approaches in plumbing is hard to do.”
In addition to getting inspectors up to speed, manufacturers oftentimes face roadblocks with pleading their case to legislators and lawmakers.
“We have a very good relationship with Plumbing Manufacturers International (PMI), and have had it for many years,” Strang said. “PMI works as a very good advocate for consolidation of our industry to move forward with an initiative to support standardization and harmonization across the U.S. so that we don’t get any particular part of the country leaning in a direction that does not align with what is available to the marketplace or can be provided.”
Strang continued, “An example is California’s mandate of 1.28 gallon toilets, pint urinals, and 1.2 gallons per minute flow rate faucets with the new California Energy Commission (CEC) requirement. TOTO, with all of the rest of our faucet competitors, came together and advocated for time to procure, manufacture, distribute and put those products into the marketplace before the requirement was made law. The CEC said it made good sense and that they would actually hold off for six more months. So, the CEC requirements went into effect in January, but the 1.2 gallon requirements for faucets don’t go into effect until July.”
Viega, too, has benefited from membership in industry organizations as it relates to U.S. manufacturing. The company is a member of the Plastic Pipe and Fittings Association (PPFA). In 2015, most of the code proposals made through PPFA were successful including a proposal to gain code acceptance for using compressed air to pressure test PEX hydronic systems during and after a concrete pour. Viega also actively participates in the International Code Council’s (ICC) code development.
“Most recently, Viega attended the 2019 ICC development cycle for the “A” group of codes, consisting of commercial and residential plumbing and mechanical codes, as well as general building codes,” Cantrell said. “In total, Viega prepared and submitted approximately 20 code proposals, either directly or indirectly.”
Code development has been integral to the U.S. market for Aquatherm also. The process could improve for manufacturers as green building continues to increase as a part of code decision-making.
"Aquatherm has long advocated for more reasonable codes that would lessen forced air heating in favor of more energy-efficient radiant heating and cooling. This is much more common in other areas of the world, such as Europe and Southeast Asia, where energy costs can be much higher," Paschal said. "The lower energy costs and a focus on initial installed cost rather than long-term operational costs in North America have slowed the adoption of these newer, substantially more efficient and comfortable systems. This, however, is changing with adoption of some of the green building and energy conservation codes, along with owners, architects and engineers looking at long-term sustainability and life cycle costs."
Down the road
“The plumbing industry in the U.S. is seriously 20 to 25 years behind,” Saragosti said.
Yet, Saragosti predicts that in the near future the U.S. will begin to adapt some of Europe’s approaches to residential plumbing, specifically in the bathroom.
“The wall hung toilet is still considered kind of weird in the U.S. But, it’s a big deal in Europe right now. If you are a European remodeling your bathroom, you’re going to get a wall hung toilet. Also, having a dual flush function on the tank of a toilet is not something that’s very popular in the U.S., even though it could help save the country water,” Saragosti commented. “I have started to see a change in design in the U.S. market over the last 10 years. And, that’s what it’s all about.”
Fenske said that technology will be a major influencer in changes to both residential and commercial plumbing in the states.
“Wi-Fi and smart controls have been in use and on display for a few years overseas, and just recently many manufacturers, including Navien, are developing and beginning to release these items here,” Fenske noted. “Boiler control systems, increased boiler/burner modulation and turndowns, efficient hydronic zoning, efficient circulators, efficient domestic hot water circulation all come to mind.”
Sustainability was top of mind as Strang made his prediction for what is coming stateside.
“Most Americans tend to do very poorly with maintenance on things like air filters in HVAC systems or water filters in ice makers. But, I’m starting to see a trend toward larger wastewater municipalities centralizing and becoming smaller neighborhood, building or homes based rain water treatment systems,” Strang said. “As we look at opportunities for greywater in the U.S., it’s very important that we understand where the impacts are, from an installation standpoint as well as a maintenance standpoint, to make sure that the product is viable and truly going to be successful in the market.”