• Staying Ahead of the Technology Curve

    June 1, 2007
    In an industry like HVACR where change is a constant, wholesalers can't afford to stand still. New products and technologies require continuous learning,

    In an industry like HVACR where change is a constant, wholesalers can't afford to stand still. New products and technologies require continuous learning, competition for business means reassessing and readjusting business plans, and customer demands continue to be, well, more demanding.

    In its more than 55 years in business, Kerr Controls Ltd. has used such changes to its advantage. This family-owned company based in Truro, Nova Scotia, built its business by understanding how HVACR was evolving and then supplying its customers with the products and the training that allow them to be successful with their customers. Kerr Controls has grown to about 85 employees at nine branch locations throughout the Atlantic Canadian provinces of Nova Scotia, New Brunswick, Newfoundland and Prince Edward Island.

    David Kerr Wilson began the company in 1949. As Atlantic Canada was transitioning from coal to oil as a heating fuel, he saw an opportunity in the HVACR business, says his nephew, Peter Henderson, the president of Kerr Controls. Wilson, who is chairman of the company, used a small loan from his mother to convert a milk truck into one that traveled the Atlantic provinces selling oil burners and related parts.

    Wilson's entrepreneurship is part of the Kerr family history. In fact, Henderson and his cousins represent the eighth generation to be involved in family businesses in Atlantic Canada. Henderson says his ancestors were sea captains. Their descendants were merchants, and that led others in his family into the construction business and, finally, the energy business.

    While Wilson developed his business based on products for oil-fired burners, Kerr Controls today has an expertise in all fuels and all of the related technologies. Henderson says the company is a very forward-thinking, progressive company. “We've moved our company towards what we call Smart Energy,” Henderson says. “Whether it's oil, natural gas, biomass-related products or geothermal, as the world has evolved, Kerr Controls is leading the way with new technologies.”

    But there is quite a bit of diversity throughout Kerr Controls' market area — right down to each branch location — on products that consumers use to heat and cool their homes. For Kerr Controls employees, that means there's no one-size-fits-all approach to business. Instead, it requires a lot of listening to their dealers and their customers, who are making the purchasing decisions. “We have to be pretty quick on our feet about where the individual markets are going,” Henderson says. “We've always worked closely with the installing contractors and made sure that they're not only aware of new technology but also well trained so that we're all providing what the market is demanding.”

    Kerr Controls has always been a market leader. Henderson attributes much of that to the foresight of Wilson, who has always looked ahead to how the industry was evolving. In the 1970s during the oil crisis, customers quickly shifted to wood as a heating fuel.

    It was Kerr Controls that developed the Jetstream boiler that burned wood very efficiently and allowed it to store the energy for use when needed. It did this while producing very low emissions.

    “To be doing that back in the late 1970s was quite revolutionary,” Henderson says. “We've seen the markets change, and we always want to be on the edge of that change.”

    The key is to stay just enough ahead of the curve to profit from these trends. Henderson calls it a balance that the company is always trying to achieve. While Wilson remains incredibly insightful about the trends in the energy markets, the entire Kerr Controls team is involved in keeping its ear to the ground. “We have an incredibly talented team that includes many long- term employees. In fact, at our sales meeting this month, we will be welcoming two more of our staff into the 25-year club,” Henderson says. It comes down to listening to their dealers, the installing contractors and the consumers. Kerr Controls continuously sifts through this information to look for ways it can better service customers and provide them with the products that they will benefit from. “We spend a lot of time looking at technology and deciding which are the right ones and how quickly we should adopt it and promote it,” Henderson says.

    For example, Henderson says consumers have become much more sensitive to the environment and are more likely to purchase energy-efficient and environmentally friendly products — even if the costs are higher. “I've seen an incredible change in the last two years of a willingness by customers to learn about what other options might be available,” he says. With that in mind, Kerr Controls has diversified its product line to include more energy-efficient alternatives.

    With so many specialized products on the market, Kerr Controls specialists spend more time with dealers and customers. For Kerr Controls, its technical expertise has always been an important part of the company. Today, it's more important than ever. Kerr Controls employs product specialists at its branch locations and within each of its market segments to service customers. At least twice a year, these specialists come together to share what they're seeing in their markets, trade information and learn — together — what the “next big thing” in the industry may be.

    In addition to the product specialists, Kerr Controls employs an outside sales team that focuses on the installing contractors and inside salespeople at its branch locations to service customers on a daily basis. Kerr Controls has also invested in e-commerce through its Kerr Smart Store. Henderson reports “steady growth” in sales and activity on the website since it became fully operational last year. In addition to ordering online, Kerr Controls recently added product photos and product information, and is in the process of integrating its product catalog on the site.

    Henderson sees e-commerce as yet another way in which to stay close to its dealers. In a competitive marketplace like Atlantic Canada, Henderson says making its dealers successful is the key to keeping Kerr Controls successful. As any wholesaler can tell you, the competition is not only the guy down the street, but it's the big box retailer or a faceless discounter on the Internet. “The ability for products to get into a market is so diverse that it's hard to name all the competitors that you have in any given market,” he says. “The competition is fierce, and it's coming from all directions.”

    So Kerr Controls works hard to support its dealers. You'll find Kerr Controls employees helping dealers at home and trade shows or through marketing support. “Whatever it's going to take,” Henderson says. “It's really helping them to market themselves.” Kerr Controls also advertises extensively throughout Atlantic Canada to keep its message in front of all audiences. The company also has an “energy van” that travels the region displaying new technologies and products to get to as many customers as possible.

    Communicating with its customers and employees is clearly a priority for Kerr Controls. Henderson says that it remains its biggest challenge. “You can never do enough,” he says. To facilitate communications among each other, the company established an internal communications portal, and all branches are required to have monthly meetings to ensure that employees are talking face to face about the issues that they are facing. Kerr Controls customers receive regular updates from the company through e-mails, newsletters and fliers. “It's not easy,” Henderson says, “but it's essential.”

    Close communications with its manufacturers is also important, Henderson adds. Kerr Controls enjoys close relationships with its manufacturers, and that has been good for both sides. When Kerr Controls sees a demand for certain products or for changes to current products, it will work with the manufacturers to get what it needs. Henderson cites “long-term relationships” with many of its manufacturing suppliers. A good example of this is the trend toward smaller, well-insulated homes and condominiums with large domestic hot water demands. “The traditional heating and ventilation products simply do not fit these new spaces, so we are working with our suppliers and launching new products this year to meet this challenge. Kerr Controls is also reaching out to architects, highlighting the HVACR products that they can incorporate into their designs.”

    Kerr also proudly displays its Atlantic Canada roots. As Henderson says, “We live and work in our market. We don't hide. So we're going to be sure to address your needs.” Kerr Controls is also an exclusive distributor of heating products manufactured by its sister company, Parrsboro Metal Fabricators. Sold under the Kerr Heating Products brand, the line is another way to keep the Kerr name front and center in the minds and hearts of customers.

    To keep up with the company's growth, Kerr has invested in a state-of-the-art, 47,000-square-foot distribution center at its Truro headquarters. Opened in March 2006, the distribution center gave the company more space and allowed the company to more efficiently fill orders. “Our fill rates and our service levels have increased dramatically since we opened this new distribution center,” Henderson says. “It really broke the logjam for us to grow.” As the company continues to grow, it can expand the distribution center to keep up with the growth. And, Henderson adds with pride, the distribution center is extremely energy-efficient.

    While business is very good for Kerr, Henderson is concerned that there are fewer new contractors and technicians coming into the industry. It's a troubling trend in Atlantic Canada and throughout North America. Henderson says Kerr Controls has always worked closely with local technical schools and colleges, providing classrooms with materials and offering training opportunities for students. When Kerr officially opened its distribution center, it also introduced the David Kerr Wilson Scholarship. Named for the Kerr Controls founder and chairman, the scholarship provides tuition to a student enrolled in the Nova Scotia Community College HVACR programs.

    “We'll do anything we can do to help them run strong programs and encourage young people or people reentering the workforce to pick the HVACR industry as their profession of choice,” Henderson says. “It's a great career industry, but unless we get proactive about getting people to come in, we all face a real threat.”

    As the company moves forward, Henderson says, it will continue to reevaluate all aspects of its business. Kerr Controls is unafraid of change. For example, they don't even stock some items that were once fairly significant portions of the company's annual sales because others were selling them through different channels. Kerr Controls finds the products that are right for the customers and can best support its method of distribution. This company, which made its reputation as a company on the leading edge of technology, intends to keep that position. “We recognize that technology can be your best friend or your worst enemy,” Henderson says. “And we intend to keep it our best friend.”

    Michael Maynard is a business writer based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at [email protected].

    Kerr Controls Ltd. at a GlanceChairman and Founder David Kerr Wilson President Peter Henderson Senior Management Trevor Pitcher, vice president, Finance Kevin Toomey, manager, Sales/ Purchasing Jamie Hutt-Semple, manager, Logistics / IT Headquarters Truro, Nova Scotia Operations Central Distribution — Truro Nine Branches — Atlantic Canada Employees 85+ Breakdown of Sales & Business Leading HVACR Distributor in Atlantic Canada Major Product Lines Kerr Heating Products, Emerson Full-Line, Imperial Manufacturing Group, DuPont, Fireplace Products International Annual Sales N/A Website www.kerrsmartenergy.com

    Best Practice

    Definition and Example: Our best practice is one that requires constant vigilance and discipline — the identification and integration of new products and technology. The number of steps that must be completed to get a new product into a home or business is not to be underestimated.

    Significance: The majority of our dead or slow-breathing stock was once a product that either an employee or a customer “had to have.”

    Benefits: Beating our competition to new products allows us to stay ahead and make profitable sales.

    Procedure: We have implemented a new product evaluation process. It requires that a technical, sales and profitability plan be completed for new products. One added benefit is that this discipline helps to ensure that other people in our company know about the product — both employees and customers.

    People Involved: We have product specialists that tend to identify opportunities. However, this process can involve any person in our company and customers.

    Timing: Spending more time at the front end will save us significant time and money at the back end. Depending on the product, the process may take as little as an hour.

    Cost: The only real cost is time and sometimes the frustration of the person trying to bring in the new product. We are not trying to discourage creativity within our company but must have a reasonable chance of success before we proceed.

    Contact: Peter Henderson, president