In October, Rinnai Corp. appointed former Jacuzzi President Phil Weeks as general manager of its North American operations spanning the U.S. and Canada. “Phil was the driving force behind the Jacuzzi brand becoming one of the most recognized in its category,” said Rinnai America President Yuzo Yoshida. “His deep experience in strategy, operations and sales, as well as his familiarity with our distribution channels, will be invaluable to us. We are confident that under his leadership, Rinnai will transform the way America heats water.”
After beginning his 27-year career at Jacuzzi as a district sales rep, Weeks rose steadily through the ranks all the way up to the presidency. While vice president of sales and marketing, Weeks expanded the company’s distribution channels beyond wholesale and created a multi-channel business strategy that garnered Jacuzzi more than 40 percent market share. He also developed and implemented strategies for expansion into new markets that included Mexico and Asia.
Weeks left Jacuzzi in 2003 and created Zenith Enterprise where, with Clarke Products, he developed private label products for major plumbing wholesalers. In 2005, Weeks was recruited back to his post as president of Jacuzzi and returned the company to profitability after three years of operating losses and declining margins.
I spoke with Weeks a month after he began his new job with Rinnai, a Japanese company that Weeks said is the world’s largest gas appliance manufacturer. Rinnai began marketing in the U.S. during the 1970s offering direct vent and radiant heating products. These days it is best known as a leading producer of tankless water heaters, whose energy savings have propelled sales growth rates of between 15-30% in recent years. Weeks estimated the tankless market at some 400,000 to 425,000 a year, compared with around 9 million storage tank water heaters. His job is to narrow that gap considerably.
I asked Weeks to identify the biggest challenges he faced in achieving this goal. “Rinnai is still relatively new to this market, so there is an awareness issue we need to overcome with both consumers and the trade,” he replied. “Another is training the trade to install our products and make sure they understand the technology. One of the things that impressed me in taking this job is the vast training resources invested by Rinnai. We operate a fleet of 12 mobile training centers that travel around the country, and have trained tens of thousands of trade workers.”
While acknowledging that “the current housing environment limits our upside” for the time being, Weeks noted that as with storage tanks, the replacement market is the largest part of the business for tankless heaters. Issues here include premium pricing and the frequent need for associated plumbing work to increase pipe size to accommodate tankless flow. Hence, the emphasis on trade training. Though upfront costs are more expensive, tankless heaters typically have much longer life spans than storage units, which make them more economical in the long run.
While traveling for Jacuzzi in the late 1980s and early ’90s, Weeks noticed how popular tankless heaters were around the world. This was a problem for Jacuzzi, whose products typically required large volumes of heated water. “Unfortunately, at the time tankless technology couldn’t support the bathing habits of our domestic market,” he said. By the late 1990s, Rinnai and other tankless manufacturers had developed the capability of greater flow rates. “Now, we even have products geared to commercial markets such as hotels, motels and health clubs.”
Weeks told me that growing Rinnai’s tankless sales bears a lot of similarity to his early challenges with Jacuzzi, which involved selling the American public on a lifestyle change toward whirlpool bathing and relaxation. Similarly, “I’m excited about this opportunity to make a substantial change in lifestyles toward less gas usage, environmental sensitivity and making peoples’ lives better,” he said.
How much opportunity is there? Weeks recalled that when Rinnai first started marketing in Australia during the 1980s, that country’s water heater market consisted virtually 100% of storage units. Now it’s almost entirely tankless.
“I’m not saying we can enact the same dramatic turnaround in North America, but it’s something to think about,” said Weeks. “We are bringing an opportunity to plumbing supply houses to better service their customers and improve peoples’ lifestyles.”