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Amid this global pandemic, manufacturers of all shapes and strides find themselves adjusting and adapting to changing times. For the boiler industry, this is an especially critical time as the products and services that come from our manufacturers are not only essential, they are lifesaving.
With a keen focus on providing care for those working in and coming into hospitals, there is also a need to keep those staying at home safe and healthy, too. As the American Boiler Manufacturers Association (ABMA) put it: Boilers create steam and hot water. Without a boiler, a hospital would not be able to operate, a food processing facility would grind to a halt, as would many other critical manufacturing operations. Boiler manufacturers and technicians need to be available to address supply chain issues and ensure that critical infrastructure continues during these challenging times.
ABMA President and CEO Scott Lynch penned a letter emphasizing the importance of the boiler industry. He described it as, “critical to the infrastructure of this country and necessary to the health and well-being of our citizens.”
Although we began gathering information for this year’s boiler report well before COVID-19 met us at our doorsteps, the fact remains true today as it did then: the boiler industry was essential yesterday, remains essential today, and will be ever more essential tomorrow.
We reached out to a number of manufacturers—AERCO, Bosch, Bradford White Corp., ERC International, LAARS, Lochinvar, Miura America Co. Ltd., Navien, Noritz, NTI Boilers, Patterson-Kelley, Raypak, RBI, Slant/Fin Corp., Triangle Tube, U.S. Boiler Co., Velocity Boilers, and Weil-McLain—to get a better understanding of what the industry is doing and where it aims to go in the future.
They spoke candidly about the challenges they are facing, what they see as growth opportunities, and what each of their companies is focusing on now.
Where is the Boiler Market Today?
According to Global Market Insights, the U.S. boiler market is anticipated to be valued at $4.5 billion by 2025, a 3.3% increase since 2018. The report points to the adoption of stringent federal regulations to reduce GHG emissions from industrial and commercial establishments as fueling the adoption of advanced boiler systems. Additionally, rising government spending across the healthcare sector is accelerating the deployment of commercial boiler systems, while on the residential side, consumers are continuing to upgrade and replace existing systems in search of better technology and energy efficiency. Whether this holds true after the waves of this pandemic have settled remains to be seen. But all signs point to steady growth in the industry.
Ultimately, regulations, tariffs, and technology will drive demand—or perhaps hinder it, but the manufacturers we spoke with seemed mostly optimistic.
“We expect both the residential and commercial boiler markets to have slight growth—between the 2% and 4% range—in 2020, says Dan Moffroid, director of product management for Bosch.
Although a relatively mild winter throughout the northeast was a factor in last year’s heating season, the overall market conditions have been favorable for the residential business sector.
Noritz’ Marketing Manager Andrew Tran points to the high efficiency boiler segment that has been continuously growing for the last few years. “Early markers for this year continue that strong growth,” he says.
This is mostly market-driven as people become more aware of the effects of carbon emissions on the environment and rising energy costs. Another industry trend expected to continue in 2020 and beyond is the consolidation on the wholesaler side. “This in turn will impact manufacturers who will have to compete for their market share and will be forced to keep monitoring and adjusting their prices, accordingly, says John Kopf, boiler product manager of Navien. “With the U.S. economy facing potential recession, the homeowners might start opting for less expensive brands or fixing their existing equipment versus replacing with new boilers.”
As an industry, we’ll need to keep an eye on the economy and unemployment rates as this pandemic develops. Right now, it is too early to know what the impact will be.
According to the Global Market Insights report, the demand for commercial boilers, however, will witness substantial growth in the next four years mostly due to the upgrade and replacement of existing heating systems.
“The commercial boiler market has been growing steadily,” says Kal Osman, director of product management (Boilers) at Watts Water Technologies. “In fact, when looking at the commercial market from condensing and non-condensing market shares, there has been a slight decline in the non-condensing boiler market. This equated to a significant increase in the condensing boiler market. Part of it is attributed to the cannibalization of non-condensing boilers.”
VP of Sales & Marketing at Patterson-Kelley Michael Shrigley says they are expecting growth from within the commercial market. “While many segments show growth, we feel the education and hospitality segments present the strongest opportunity for growth as they look to expand, replace, or upgrade existing equipment,” he says.
Miura America’s Rick Gaston echoes that sentiment. “Our outlook for the commercial market is positive,” he says. “Due to the regulation changes and international tariffs that focus on domestic job creation, we have seen an uptick in businesses building new construction, renovating old outdated infrastructure, and maintaining the current infrastructure with a goal of increasing efficiencies.”
The boiler industry is ever-changing, and so is legislation pursuing higher standards in efficiency. Robert Wiseman, commercial boiler product manager for Lochinvar says, “We are focused on continued innovation. Our teams work to create product and componentry enhancements that address the needs of customers and lead the way for future trends.”
How current and future regulations help shape those trends is yet to be known, but what we do know is that they are shaping the way manufacturers produce and plan.
Keeping Track of Regulations and Compliance Across the Board
It’s not easy keeping up with regulations, especially as they seem to be a moving goal post. Manufacturers need to be aware of and comply with new and more stringent regulations within the commercial and residential markets, as well as more local and regional markets.
With awareness of heating system efficiency rising, the Department of Energy (DOE) is adopting a more stringent energy conservation rule for commercial packaged boilers with capacities up to 10,000 MBH. The amended standards prescribe minimum thermal and combustion efficiencies effective January 2023.
For gas-fired hot water boilers, these rules increase thermal efficiency for boiler capacities from 300 MBTU to 2500 MBH to 84%. For boilers greater than 2500 MBH and up to 10,000 MBH, a combustion efficiency minimum is now 85%. “What that does,” says Osman “is push the efficiency envelope toward semi-condensing and condensing boilers, driving a move to phase-out non-condensing boilers.”
The DOE adopted these measures as of March 10, 2020 with its compliance set for Jan. 10, 2023. The EPA, on the other hand, has decided not to pursue a revision of the ENERGY STAR boiler specification. Instead, it will continue monitoring future market, new developments, and technology trends.
Boiler manufacturers, specifying engineers, contractors, and building owners had been invited to provide the EPA additional information regarding new technology developments or market shifts toward energy savings. “Developments in controls, alternative fuels, and other energy savings initiatives have always been of EPA’s interest, especially when it comes to boilers operating in condensing mode allowing building owners to capture additional energy savings,” Kopf says.
Across North America there are various regulations for NOx reductions. “A vast majority of the combustion systems at Lochinvar are designed to inherently reduce NOx levels,” Wiseman says. “We have made a concerted effort when it comes to reducing emissions and maximizing efficiency standards, and we will continue to put sustainability at the forefront of product innovation.”
The DOE also has new minimum efficiency standards for residential boilers that will go into effect Jan. 15, 2021. The revised national minimum AFUE requirements and new maximum standby and off-mode electrical consumption standards include 84% for gas hot water boilers, 82% for gas steam boilers, 86% for oil hot water boilers, and 85% for oil steam boilers. Although compliance with these new standards will not be required until 2021, most manufacturers have already addressed these new regulations requirements as they were introduced in 2016.
Other regulations are more focused on local or regional mandates. “There has long been discussion over PVC being used as a venting material for boilers with some municipalities banning its use,” says Triangle Tubes’ Director of Sales Mark Avron. “There has also been talk about banning fossil fuels in new installations in a number of markets within North America. California, for example, would be the front runner proposing a ban by 2045.”
NTI Boilers’ VP of Sales, Dave Walsh says NTI is mostly keeping an eye on the ban of PVC as a vent pipe option. “While we are sensitive to protecting our climate, actions by local, state, and federal officials must be measured, realistic, and keep in mind the many employees that serve all facets of our industry,” he says.
Manufacturers also need to monitor the ongoing negotiations or status of the various trade policies. “These tariffs will affect the industry as a whole,” Shrigley says.
Changes in regulations are always part of the conversation for most manufacturers. This isn’t anything new. And the conversations can be just as broad as they are narrow. “We are always cognoscente of the ever-changing dynamics in our segments,” says Matt Kleszczynski, director of marketing for RBI. “Electrification is a hot topic throughout certain regions in the country and we are actively developing solutions for this segment.”
One thing is for certain; regulations aren’t going away, and requirements will continue to shift and adapt to consumer and industry demand.
Barriers and Drivers of the Boiler Market
In the face of any challenge, lies opportunity. The industry is faced with barriers—whether it be the regulations outlined above or a kink in the supply chain due to a national emergency. But what comes out of these challenges is what continues to drive manufactures forward, even during a time of uncertainty.
Boilers will always be in demand. That won’t change. What is evolving is the role of technology as companies begin to think about integrating digital and IoT systems that offer effective system monitoring and control, as well as better efficiency.
According to Global Market Insights, industrial facility owners across the U.S. are replacing legacy systems with new boiler units to offer reliable and efficient performance. The report also notes, however, that “low initial cost and easy installation are some of the key underlying factors driving the demand for non-condensing boilers.”
So, it begs the question: what’s really driving the market and in what direction? The most discussed responses led to efficiency and cost.
“The drive across the U.S. and Canada toward other renewable energy sources does create a barrier,” Osman says. “In many cases, however, the solution comes down to selecting the proper high-efficiency condensing boiler. This becomes apparent in large cities where the heating energy requirement may be challenged when the electrical solutions may not be a viable option due to an aging grid, limited floor or roof space, or simply cost.”
According to LAARS’ Director of Marketing Chuck O’Donnell customers are looking for the most efficient, reliable, and cost-effective heating option that solves their needs. “While customers seek reliability and efficiency in boilers, they are also increasingly seeking out products with easy-to-use advanced controls.”
David Hansen, product manager for U.S. Boiler thinks an ongoing trend in the market is the rapid growth and proliferation of combi boilers. “As growth continues in this sector, contractors are seeking domestic hot water recirculation strategies that reduce the time required to deliver hot water on demand. Another factor is the implementation of the DOE-2021 standard and the effect that it’s having on the cast iron boiler market. We feel that this change will likely alter purchasing decisions, opening additional opportunities within the industry.”
Hansen counters that by adding, “one of the barriers that the industry is facing, however, is tied to the DOE-2021 efficiency standards; as cast iron systems are being asked to perform at higher efficiencies, the possibility of condensation within the system increases. Condensation is highly destructive to a cast iron boiler, so vigilant consideration of the individual heating system must be made at the installation level.”
While most manufacturers callout efficiency—or the lack of it—as both the biggest driver and biggest barrier, others brought up different ideas.
“There are several factors driving the boiler market growth,” Kopf says. “We know efficiency is important, but beyond that there is IoT, new control platforms, an aging installed base, and more focus on the environment. Other factors outside of our control include the economy and more people having disposable income putting more focus on comfort and custom homes.”
As far as barriers, Kopf points to the steady decline in federal, state, and local incentives. “Another limiting factor is a lack of skilled labor force,” he adds.
ECR International’s Director of Sales and Marketing Michael Klas adds that, “unusual weather pattern can also negatively impact the boiler market.” Velocity’s National Sales Manager Lee J Ensminger agrees noting, “The lack of a cold winter for the East Coast has dampened demand for the start of the year.” He adds, however, that Velocity is watching to see how the conversation on electrification and reducing GHG will play out and potentially impact the future.
Velocity is not the only one looking to see what happens with electrification. Weil-McLain points to a trend toward electrification as many jurisdictions have increasingly been establishing policies to shift home heating to electrification, especially heat pumps. “Over the coming years, this could cause shifts in demand from gas and oil boilers to heat pumps,” says Mike Boyd, product manager (Residential), at Weil-McLain. “A high efficiency gas boiler is still a low emission option for effective and comfortable space heating, especially in colder climates.”
No matter what the drivers or barriers, RBI’s Kleszczynski says competition is fierce. “At one time it was just a handful of us manufacturers in certain segments. That is no longer the case. Essentially all manufacturers have the latest and greatest technologies from heat exchangers to control platforms. We just have to be better where we can and provide the ultimate customer service to our partners.”
Looking Ahead and Developing for the Future
Competition really is fierce, and manufacturers are playing for the long game. We asked all who participated in the report to tell us how their company is helping the professional channel market and sell their products. Here’s what they had to say:
Watt’s Osman says, “AERCO was the first manufacturer to introduce condensing boilers to the North American market 30 years ago. With that experience, AERCO has built a strong knowledge base within its engineering community. This expertise is provided as training to our representative companies who then offer it to the different groups."
“Education is the key to success,” says ECR International’s Klas. “Our company offers an exclusive web portal for both our wholesale and contractor partners. Both sites include content to assist our customers on selling and servicing our products with tools such as videos, ads, technical bulletins, and promotions. We offer both year-round and seasonal national programs, as well as collaborate with our partners in regional marketing efforts.”
O’Donnell says, “Laars is committed to providing training for our customers and representative partners. The Laars Customer Center located at our Rochester, New Hampshire, headquarters offers training courses across our residential and commercial product lines. These courses include installation best practices, boiler commissioning, troubleshooting, and repair on live-fired equipment where attendees can conduct hands-on learning. We also offer training at various locations across the country all year long or via our series of installation and service training videos.”
Lochinvar’s Wiseman says, “There is a significant need for additional training resources in the industry, and at Lochinvar, training programs are a priority. Lochinvar University and LochinvarU.com are dedicated resources that offer contractors and engineers hands-on classroom courses with product experts, as well as web training and video tutorials for on-the-go education. Additionally, the Lochinvar VIP Contractor Program offers our partners an opportunity to register product installations and submit product imagery in exchange for cash rewards and the potential to win an all-expenses-paid trip to Nashville, Tennessee for CMA Fest.”
“Miura is deeply engaged in the thermal energy industry,” says Marketing Manager Andrew Eklind. “We offer many resources to the industry such as CEU generating webinars, educational learning blogs on our website, whitepapers, industry articles, as well as local support and educational seminars ( learning symposiums and lunch & learns) through our seven branch locations around the U.S.”
Navien’s Kopf says the company understands the importance of residential and commercial boilers to be installed only by fully trained professional installers. “For this reason alone, Navien does not offer its products through the internet, but rather made the commitment to work with its trade partners through the investments in the training programs, promotional incentives, and continuously improving its training academies across North America. We are dedicated to growing our partners’ businesses and providing the highest quality products backed by the industry leading customer support and warranties. The contractors who attend our training programs become the Navien Service Specialists (NSS) and benefit not only from gaining an extensive knowledge of hydronics but also by having preferred access to Navien customer technical support centers. Navien also has an extensive sales organization assisting consulting engineers in their product selecting and specifying efforts, as well as supports its wholesale partners by providing onsite training and assisting in their promotional efforts.”
Walsh says, “In addition to many of the traditional support mechanisms we provide our customers throughout the sales channel, NTI has an ever-increasing digital presence. We live in a connected world and information must flow fast and be accessible to installers, wholesalers, engineers, and consumers. NTI has always prided itself on its technical support and training. We have a very deep bench in our technical support department, which is open for 7 a.m. to 8 p.m. (EST) and we have availability after hours. Tech support is the true backbone of NTI and is our commitment to our contractors. We also provide extensive training throughout North America. We conduct technical training in group settings often using one of our several live-fire training vehicles. We also conduct in person training right at the contractors’ shop. We feel it is our responsibility to product top-notch technical training to our contractor and wholesale partners.”
Patterson-Kelley’s Shrigley says, “We work very closely with our network of professional manufacturers’ representatives to provide the services and support that is required at the engineer and contractor levels. In 2019, we upgraded our training facility to accommodate the strong demand for education that we have been experiencing. Just as importantly, we’ve expanded the number of seminars and courses that are available throughout the year in which engineers, contractors, and manufacturer’s representatives can participate in.”
Raypak’s Senior Product Manager Peachie Maher Hytowitz says, “We have five Innovation Learning Centers across the U.S. and Canada where we offer comprehensive trainings, as well as trainings at remote locations. Raypak has also introduced an intranet system to provide easy access to market assets and information to our sales team and reps.”
“We train, train, train,” Kleszczynski says. “For technicians, RBI offers in-depth training on all aspects of our equipment. Whether on a specific jobsite or in our corporate training center, we provide detailed knowledge to the technicians on our equipment. We also offer application training for engineers. Application training is not specific to our equipment; it is training we feel is vital in helping our engineers design the best systems possible. It also provides attendees with up to 8 hours of professional development hours towards their annual certifications.”
Slant/Finn’s VP of Marketing and Admin Services Stacey Droogan says the company hired a new director of engineering and product development who has worked on the development of the company’s new VGH boiler line. “We are excited to have him work on our products down the line as well as helping with mechanical contractor trainings,” she adds. “We continue to update our website making it easier to navigate. We maintain catalogs, sell sheets, specifications, and continue to add BIM objects, just to name a few things. We are also looking to develop webinar trainings and continuing with onsite and factory trainings with support from our independent reps, factory sales team, and our technical support team. We continually support our wholesale base by limiting our distribution and offering individual programs and trainings to create pull through with contractors. For contractors, we have our Hydro-Master program, which is an exclusive program offered to selected honest and knowledgeable contractors. When a contractor partners with Slant/Fin we support them with the usual training classes, continual promotions throughout the year, and lead referrals through our website.
Audrey Fish, marketing manager for Triangle Tube says, “We’re focusing on more visibility in digital media, use of videos, social media, and a diversified training approach.”
U.S. Boiler’s Marketing Communication Manager Mike Hook says, “Our company continues to offer comprehensive training sessions at our facility in Lancaster, Pennsylvania, but we have also implemented similar programs by using our fleet of boiler display vehicles nationwide. While these vans are typically used as a mobile showcase for our high efficiency condensing boilers, they also can function as a mobile classroom. We take the classroom to the worksite to help educate contractors and distributors.”
Velocity’s Ensminger notes, “We have always placed a strong emphasis on training and continue to do so both on the distributor level as well as the contractor level. We think that this is the best way to help our customers so that they know which of our products will fit a particular application and how to best apply that product to maximize its performance.”
“Weil-McLain works closely with our channel partners to provide education to improve the technical skills needed to install and maintain equipment, as well as application knowledge to ensure correct product selection,” says Boyd. “On the product side, we continue to develop equipment that is easier to install and troubleshoot, resulting in higher field productivity and reliability. In addition, we work with engineers to keep them on the forefront of education and training in the industry.
Senior Product Manager (Commercial) John Miller adds, “Our commercial boiler products portfolio is supported with regionally based commercial specialists that are available for boiler and boiler systems site training or factory sponsored training at our Michigan City, Indiana or Eden, North Carolina facilities. We offer CEU content, which provides industry leading boiler education and tangible value to participating audiences. Weil-McLain conducts regular technical, service, and sales training sessions throughout the year.
Weathering the Storm
As all Americans continue to weather the current storm, and as boiler manufacturers learn to navigate this new business landscape, we all find comfort in the fact that this essential industry is keeping things moving.
Everyone we spoke to is dedicated to producing a product that delivers comfort, security, and convenience, while remaining mindful of the most effective and efficient way to do it. Thank you all for your commitment and for your readiness to work through these uncertain times.
DISCLAIMER: The interviews for the 2020 Boiler Report were conducted prior to the national emergency being declared on March 13, 2020.
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