With manufacturing plants around the world and more than 13,000 employees, A. O. Smith Electrical Products Company is truly a global player in the HVACR industry. Even with its worldwide presence, the company stays strongly focused on its local markets, ensuring that distributors have the motors — and the support — that they need to serve their customers.
“One of the factors for our success has been our strategic business unit orientation, which provides the specialization and a commitment to aftermarket distribution,” says Dave Hacker, A. O. Smith Electrical Products Company's manager of strategic accounts. “Our commitment is reflected in both internal and external resources. A. O. Smith has the largest HVACR sales force in the market.” The company designs many of its motors specifically for the distribution channel and has a dedicated sales force for distributors, says Jim Mosman, the company's global marketing manager.
It was 1940 when the company entered the electric motor industry by purchasing Sawyer Electric of Los Angeles, CA. Today, there are two divisions of A. O. Smith Corporation: A. O. Smith Electrical Products Co. is one of North America's largest manufacturers of electric motors, while the A. O. Smith Water Products Co. is the world's largest manufacturer of residential and commercial water heaters. After purchasing Whirl-A-Way Motors in Tipp City, OH, in 1950, A. O. Smith consolidated its electric motor operations there. Tipp City remains the headquarters of the operating unit today.
The Electrical Products and Water Products units operate separately, and each maintains strong engineering capabilities as well as separate sales and marketing organizations. Both companies have been aggressive in making acquisitions to supplement “organic” growth; in fact, A. O. Smith Electrical Products Co. has bought eight businesses worldwide since 1997. “This is a mature industry,” Hacker explains. “Size is critical to ensure engineering resources and to make sure that you're current and that you have the engineering capabilities to bring the most current technologies to market.”
Today, A. O. Smith has approximately 1,800 accounts at more than 4,000 locations throughout North America. The company also enjoys partnerships with many of the largest distributors, such as Grainger, Johnstone Supply, R.E. Michel, United Refrigeration and Watsco. Because of A. O. Smith's focus on distribution, it goes to great lengths to stay connected with its distribution partners. The focus on distribution customers carries through all levels of the company — from the corporate headquarters to the sales counters, Hacker says. “It's important at the corporate level that we make sure we understand what our strategic partners are trying to accomplish and make sure that is communicated and supported.”
Communication starts with the A. O. Smith sales force. “Our sales pros are the first line of contact with distributors,” Mosman says. Because the salespeople are A. O. Smith employees and not manufacturers' reps who handle a variety of products, they have an extensive knowledge of the motors that they sell and can provide their clients with technical expertise. “We train all of our salespeople and give them the tools and materials to be successful with our distributor partners,” according to Hacker. If the salesperson doesn't have an answer, A. O. Smith offers a dedicated customer service group for additional information and two highly trained support specialists for technical questions.
Distributor training remains an important component of A. O. Smith's sales and marketing effort. Through its Motor Mastery University, distributors have access to a formal on-site training program that can range from one to three days. Distributors also receive interactive CD-ROMs that they use on an ongoing basis for their employees and their customers. From there, distributors are able to do their own training. “We recognized how critical it is for counter- and salespeople to be trained, so we started a program focused on training the trainers,” Hacker says of Motor Mastery University.
The company also has tailored the product literature that it provides its distributors to better meet their needs. Central to this is A. O. Smith's distribution catalog, says Warren L. Doney, marketing manager for HVACR motors, which contains product descriptions, dimensions and technical specifications. The A. O. Smith Electrical Products Co. website www.aosmithmotors.com contains a searchable cross-reference database that matches A. O. Smith motors with those of its competitors. The catalog conveniently divides the motors by category: HVACR, general and special purpose, pool and spa, fan and blowers, direct current and hermetic.
A. O. Smith designs all its educational and marketing initiatives to better align the company with the goals of the distributors, emphasizes Hacker. “A better understanding of what our partners are trying to accomplish allows us to direct our resources to help them be more successful. What are they trying to do from a growth standpoint and what do they expect from their vendors in terms of service, educational support, product innovation and helping them to differentiate in their local markets?”
Mosman says the company has built solid relationships with its partners over the years because of the alignment of goals between manufacturer and distributor. Hacker observes: “The sales force and the complete management team at A. O. Smith are involved with our distributor partners.” This involvement often brings A. O. Smith's management directly to its customers. For instance, Hacker noted that members of A. O. Smith's management team recently addressed a board meeting at one of its distribution customers, sharing its assessment of the industry and offering suggestions to better support the customer's growth.
Distributors appreciate A. O. Smith's commitment to distribution, especially in an era in which the distribution channel has become murkier due to the entrance of big box retailers into the HVACR industry. Hacker says such inroads should be a concern. “Obviously, The Home Depot® has bought into this industry for a reason,” he says. “I certainly wouldn't underestimate the resources that they have available.”
A. O. Smith Electrical Products has had the opportunity to go through retail channels, “but our commitment is to the distribution channel. Our relationship with our distributors is very important,” Mosman says. This is evident in the long-term relationships that A. O. Smith enjoys with many distributors. “Even though we recognize how important it is to be current in terms of system products and engineering, what hasn't changed is our accessibility within the organization. It's still about dealing with people,” Hacker says. In fact, A. O. Smith continues to count as a customer Sta-Rite Industries of Delavan, WI, (now part of Pentair Industries), the first customer that Whirl-A-Way Motor Co. shipped electric motors to in 1947.
The big box retailers' entry in the HVACR industry is not the death knell for distributors and two-step distribution, these A. O. Smith managers say. In fact, it should serve to inspire distributors to redouble their efforts to stand- out within their local markets. “The nature of HVAC is still going to be a two-step program, and that is still going to be a local business,” Hacker says. A contractor will continue to rely on a distributor who can get him parts and equipment easily and quickly, and can answer his technical questions. “There will always be changes, but the core success factors will remain the same,” he adds.
A. O. Smith's most successful distributors build upon these core success factors, but are flexible enough to react to changes both at a local and global level. Like A. O. Smith, they focus on their customers, always looking to add value to what they sell, and focus on what sets them apart from competitors. “They continue to challenge themselves, and they turn to their vendors as partners, working together to develop programs that make it easy for the customer to buy from them,” Hacker says.
While education and marketing are important to build a manufacturer-distributor partnership, the continuing innovation of A. O. Smith's electric motors has helped to keep the distributors loyal. Their customers have come to expect quality from A. O. Smith. For example, A. O. Smith recently introduced its HeatMasterTM line of motors. HeatMaster motors use UL- and CSA- approved, nonhygroscopic Class F insulation systems to achieve superior dielectric strength for longer thermal life. These motors are UL- and CSA-rated for 70°C max ambient temperatures and are capable of withstanding the toughest applications. The motors are energy-efficient, and the design is contractor-friendly with extra mounting fasteners and long, high-temperature power leads.
Likewise, A. O. Smith also is an industry leader in introducing electronic load-sensing module technology into its pool and spa pump motors to address some of the new pool industry safety standards. This electronic load-sensing module, known as eModTM, provides pump-overflow detection, shuts off if the pump is dry and protects in the event of a locked rotor situation, all of which prevent motor failure.
“We're developing these new technologies and investing in research and development specific to the distributor segment of the motor industry,” Mosman says. The company has invested extensively in its Product Engineering Center in Tipp City, which is specifically designed for research and development and testing. The center recently became one of a few test facilities accredited by the National Voluntary Laboratory Accreditation Program, which is part of the National Institute of Standards and Technology. The center tests customer products and systems as well as electric motors, which has helped to save development time and streamlined regulatory approvals. The center features a full suite of test labs and equipment including sound and vibration analysis, wind tunnels and sophisticated automated data-acquisition systems.
A. O. Smith Electrical Products Co. understands that results matter. Its long history in the electric motor business is a big accomplishment, but the company knows that it must continue to perform for its distributors and their customers. With its Product Engineering Center developing and testing a new generation of motors, A. O. Smith demonstrates that it takes its leading position in the HVACR marketplace seriously. By focusing its extensive resources on distributors, it demonstrates a strong commitment to distribution. Says Mosman: “In the long term, it shows that we really care about what's important to our customers.”
Michael Maynard is a business writer in Providence, RI, who writes on issues related to HVAC, construction and architecture. Contact him at [email protected].
Definition and Example: Utilize our corporate-to-counter relationship to build value in the distribution channel.
Significance: Aids our customers in maximizing their potential in their respective markets.
Benefits: It builds valued partners in the industry.
Procedure: Sales management maintains contacts with customers' corporate locations with local/regional sales calls at branch locations.
People Involved: All levels at A. O. Smith and our distributor partners.
Cost: Time invested.
Contact: Heather Scaggs, 937/667-2431, or e-mail [email protected].