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At some point in 2004, an executive recruiter called Mark Olson and asked him, “What does the word ‘hydronics’ mean to you?” It wasn’t much longer afterward that Olson joined Caleffi as CEO of its North American operations, which had just begun a few years earlier.
We caught up with Olson in early December to find out more about how the company is meeting the demands of the day.
PHC News: Let’s start by recapping some of the company’s sales and operational highlights for North America in 2021.
Olson: In terms of sales, 2021 was a great year and that was coming off a really good 2020. Of course, when the pandemic began, we saw a big dip. That was a highly challenging time for everyone. But, by June of 2020, things really did come back quickly and we made up a lot of lost ground.
I don't think it's a big secret that our business is up, and globally we are pushing 40 percent growth this year. For North America, we’re up almost 30 percent, but we saw more growth in 2020 than the rest of the Caleffi world did.
We're not even 20 years old yet in the North American market. We have room to grow. We're expanding faster into the Southern US. If some of your readers don’t know Caleffi today, they will soon.
PHC News: And do you think this good news will continue in 2022?
Olson: I see 2022 as another growth year, but it's not going to be the same rate we’ve experienced in the last two years. I’d be happy with 10 percent growth, but 12 percent would be my goal for 2022.
PHC News: Considering everything else the world continues to deal with, how do you account for the progress the company has made since 2020?
Olson: Residential products have been driving our business, whether that’s people building a home, remodeling a home or taking care of the mechanical room. We're seeing some of that trailing off now, but the residential business has been growing at Caleffi North America faster than commercial, which hasn’t happened in quite some time.
PHC News: What are some Caleffi products that are going into the residential market?
Olson: Well, if it’s a hydronically heated home, there’s going to be all the trim that we're strong in, separators and the like. But we have more and more plumbing products. We have an air vent, for example, that’s rated for plumbing. And there is also our popular pressure-reducing valve line. In fact, that’s one of our fastest-growing lines. And of course, our commercial side always remains interesting, too.
PHC News: That’s all good news, but what about the challenges the company has had to overcome to get to this point?
Olson: Product availability is the big thing. While it was a challenge, I also think this is one the company’s biggest successes to come out of the pandemic.
Soon after the pandemic began, factories in Italy shut down for two weeks as mandated by their government. Out of concern for the safety of our employees, our chairman had actually decided to shut down operations in Italy even before that mandate.
However in anticipation of a shutdown, we adapted quickly to two and three shifts at the plant, built up inventory, and we were able to coast through that long shutdown in 2020.
Afterward, the factories have continued with multiple shifts and I think we have hired 300 people or so in the last couple of years, primarily in our operations area in Italy just for capacity.
From a production standpoint, our guys in Italy have done a great job with material availability. And here in the US, our planners and expediters have been just fantastic in getting product here. Our staff anticipated accurately the best product mix to inventory. For example, I mentioned that residential products have been in demand. We stocked up heavily on those.
PHC News: We know, too, that you took some time in 2020 and 2021 to add on to your headquarters in Milwaukee. Walk us through that.
Olson: Yes, we added on to our second floor to create a new assembly area. By assembly I mean that we modify many of our products from Italy for the North American market. That could mean something simple like adding fittings or something more complex like assembling an AutoFill valve for a boiler or connecting up to a backflow preventer. We do all this light assembly work in Milwaukee and the activity has been growing so we had to create more footprint for it.
Our space for warehousing expanded, too. Basically, we added around 15,000 square feet by building upward; we didn’t knock down any walls.
PHC News: You’ve already mentioned how the company really made a priority to make sure that products were in stock and ready to ship. Tell us more about the inventory management operations.
Olson: We just had a sales meeting, and our reps reaffirmed that offering product details and training is something we’ve always done well, but we also need to keep pushing the message that we have the products that contractors need on hand. Over the last few months of 2021, we launched a publicity campaign called “Stocked and Loaded” to help spread the word. Through this we’ve been able to hit pretty darn close to 100 percent on time fulfillment.
PHC News: And how do you see this all working in 2022?
Olson: Getting the products we need will be an ongoing challenge. Just like so many other companies, we’ve seen our shipping containers sitting on the ground waiting to clear customs or they're getting rerouted because it's backed up at a port. We've had containers sitting in Chicago for six weeks. We joke that everyone who has a pickup should drive down after hours and bring back what they can.
We think it’s getting better, and all types of manufacturers and suppliers are catching up to the demand out there.
I think in the second quarter, we’ll see logistics improve. In order to get what we need on time, however, we’ve had to bite the bullet and, for example, buy ahead on electronics and pay five times the amount that we used to pay.
On a related note, raw materials like steel have gone up three times in 2021. Resultantly something we're doing differently is printing our product catalog without our list prices, to allow some flexibility moving forward in this inflationary environment.
In the meantime, we're very aggressive on ordering from our factories. If we end up with more inventory sitting in the barn here then we'd really like, well, it's just a cost in the name of availability.
PHC News: As you mentioned a moment ago, product availability is key, but training is, too. When I think of Caleffi, I automatically think of your popular Coffee with Caleffi webinar series. But I know you do more when it comes to training. Let’s unpack how the company educates the PHCP community.
Olson: Coffee with Caleffi is a great story. One of the strengths about Caleffi being an international company is that we spend time understanding what is successful elsewhere and then figure out how everyone one else can put what works into practice. While a lot of that has to do with products, training comes into play, too.
We created Coffee with Caleffi here, and I think we were the first company in our industry to have this nationwide webinar open to engineers, designers and contractors. Now, Caleffi has adopted Coffee as our platform for training worldwide.
Our idronics technical journal has become a primary platform for our education efforts. In trying to explore and communicate best practices on a wide variety of industry related topics, we don't claim ownership of every solution in the world. We’ll include information about competitors and even include some competitive products in the magazine, if it helps illustrate the point and we get permission to show it.
The publication actually started in Europe, as idraulica, before we adopted the idea for North America. idronics is not a commercial for us. It's not a sales brochure. It’s actual training. Every six months we come out with a new issue. If there is a delay by even two weeks, we get phone calls. Where's the new issue? Am I off the subscription list? We've been producing them for 15 years and have printed and reprinted thousands of copies of each edition. idronics No. 12 for example has had tens of thousands of copies. It’s a Hydronics 101 edition and illustrates so many basics that are still current.
We also do regular training of all kinds, including podcasts. But really our training story goes back to our start in the US. A lot of competitors had training centers, and we were too small to do that. So, when we got in front of a group to tell them about Caleffi, we had to be not just memorable, but remarkable. Because four months down the line, when the engineer is putting together that mechanical room and must decide which separator to put in, we want Caleffi to come to mind. If the recollection of Caleffi is blurry, then we don’t stand a chance of being specified.
Standing out might be buying the biggest box of donuts that the world's ever seen. Or it might mean teaching that engineer about the intricacies of a spring disc mechanism in a QuickSetter.
PHC News: What other ways does Caleffi stand out to the PHCP community?
Olson: A focus has always been to explain how a Caleffi product can improve both the contractor's work and the designer's work. If we can't satisfy one or the other, then we don't have a product. We shouldn't even be talking about it because then we’re just a commodity.
We continue to hone our training, particularly in light of how everyone has to safely conduct themselves right now. We offer what we call training “snippets”, meaning instead of a two-hour webinar, what can we package in a half hour, maybe, or even less time.
We also offer hybrid training. A regional sales manager goes to a customer’s office with demo products and cutaways and a Caleffi technical trainer remotely performs a webinar tailored to them. There are attendees in person, while others might dial in from their home office. Flexible!
Training and education is a Caleffi cornerstone. The PHCP community should expect us to continue evolving this legacy.