Supply House Times recently interviewed Dr. Michael Luz, president and CEO of Viessmann Manufacturing Co. (U.S.), in his office in Warwick, R.I., about issues in the hydronic heating business. Before joining Viessmann in 2011, he was vice president of engineering and quality at Vericor Power Systems, a subsidiary of MTU Aero Engines and has more than 20 years’ experience in the gas turbine and aviation, and aerospace industries. He holds a doctoral degree in aerospace engineering from the University of Stuttgart, Germany, and an MBA from Arizona State University.
Supply House Times: Where do you see the greatest business opportunities for plumbing and mechanical professionals in today’s construction market?
ML:I see them in the residential market and increasingly in the commercial market. Most of the opportunities we are hearing about are replacements, change-outs and retrofits. Many buildings still have very old equipment with very low efficiencies that can be replaced easily with modern, condensing-type boilers. I have visited several boiler rooms that are very big and very empty because the old equipment is gone, and they have small condensing boilers in the corner.
Supply House Times: Do you sense pent-up demand for commercial projects that is ready to break loose?
ML:I’d like to say that we do. We had a slow start to the year mostly related to the tough winter the entire Northeast and most of the Midwest went through. When that was gone, our business really jump-started. We’ve seen a tremendous increase in our commercial sales this year over last year, probably for two reasons. No. 1, we brought into the market some products that are attractive to our customers. At the same time, I have heard that many projects that were conceptualized three years ago and never realized finally came to fruition. All of a sudden, we’re seeing purchase orders and we’re digging out drawings we worked on a few years ago.
Supply House Times: On the commercial side, do you see activity in any particular market segments?
ML:Education is a segment where we are seeing activity across the entire country. Funding is still not necessarily available but in many instances we see energy saving performance contracts coming into play that provide school districts with energy savings by installing modern heating equipment with much better efficiencies and lower fuel costs.
Supply House Times: How would you compare the technology of modern heating systems with rocket science?
ML:In my prior life as a gas turbine engineer in the aerospace industry, I actually had to do a lot with combustion, which is pretty much what we do with our boilers. So, I have found many parallels I really didn’t expect. When I look at some of the materials we use for gas turbines, I find similar
high-quality materials in the boilers that Viessmann makes. If you look at our heat exchangers, you will find a stainless-steel material that is titanium-infused. Our heat exchanger is unique in the boiler industry, and the material for it comes from the aerospace world.
Other parallels come with controls, some of whose displays do not look that different from aerospace. They have similar functionality and capability to alert the user about what is happening with the system. The boiler industry is not low-tech. We have evolved into a pretty high-tech industry. The parallels with aerospace are there, absolutely.
Supply House Times:What technological innovation in heating products excites you the most?
ML:The biggest development in recent years has been the introduction of condensing heat exchanger technology, which now is well understood. Most manufacturers have extracted all the efficiencies they can.
In the meantime, what is happening now is about how the user interacts with the boiler. It’s about whether a contractor can dial into a boiler from wherever he is on the road to see what fault codes are shown and troubleshoot the problem remotely.
Supply House Times: Where do you see the future of renewable energy sources such as wood and solar thermal for building comfort systems?
ML:Renewables are new technologies and I am very excited about them. But they are not inexpensive, and as such they need help to get out of the gate. As long as that help is available, we see them catching on. As soon as that help disappears, using them becomes challenging.
I see a future for renewables, but I don’t know how close we are to that future. Today, their success is mostly related to incentives provided by either utilities or governments. We have incentives for renewables such as solar, which has a 30% federal tax credit that everyone has access to. The incentive does help but it really doesn’t drive sales as much as you would think.
Supply House Times: What can we expect to see from Viessmann in the next 12 months?
ML:Next year is the 25th anniversary of Viessmann in the United States, which is a milestone for us. We’re excited about the new products in the pipeline for 2015. We just launched a new website [uncompromise.us]
that will provide contractors and engineers with some great access to all of Viessmann’s technical information where they can find solutions for their customers’ heating needs. We will have more robust sharing of information and technology with our new website, videos and social media. We will be more visible, literally, with the Vitomobile around the country. That coinciding with our 25 years in the U.S. is very exciting for us.
Supply House Times: If you had only one piece of strategic business advice to give, what would it be?
ML:The most valuable thing you have as a business person is trust from your customer. If you can develop a reputation where people start recommending you, your phone will be ringing, and you won’t have to spend a lot of time on marketing and generating sales leads.