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“I think the reality is that we truly believe that our future success and growth is going to come because the plumber or HVAC contractor will help get us there,” Frank Windsor, president of Rinnai America Corp., told us during our interview at the company’s Griffin, Ga., manufacturing plant. “And I think we are doing a few things differently than other water heater manufacturers to help contractors sell tankless equipment.”
Windsor joined Rinnai America Corp. in 2014 as general manager and was promoted to chief operating officer in 2016 and president in 2019. In that time, Windsor expanded the company’s headquarters in Peachtree City, Ga., including adding an Innovation Center and began the company’s initial U.S. manufacturing of product in 2018, which culminated into opening the 300,000-square-foot facility in Griffin.
We talked with Windsor and other Rinnai executives inside a spacious meeting room with a large window looking down at the production lines a floor below.
While we were not allowed to take pictures of the manufacturing floor, suffice to say that the plant has since added several lines since our initial visit at the grand opening last April.
PHCPPros: To start, please tell us more about yourself and your career at Rinnai.
Windsor: I’ve been at Rinnai now for eight years, after spending 24 years at Kohler.
When I got here, our North American sales were about $150 million, and we had about 150 team members. A few factors were very clear when I joined: We’ve got a great company; we’ve got great products; and we’ve got great third- and fourth-generation leaders much like I had when I worked at Kohler.
And what I saw was just the unlimited potential that is here in North America for Rinnai. I use this example all the time: We have a great business in Australia. And if you took that Australian business and divided it by the population of Australia, and then you multiplied it by the population of North America, our Rinnai business would be $3 billion to $4 billion in sales.
Today, we’re in the range of a half a billion dollars in sales. So Rinnai sees the North American market as really the largest growth opportunity in the world.
You can really see that recognition over the last four years in new capital investments here for North America. We opened up a new corporate headquarters. Our new Innovation Center represents about a $28 million investment. Then just last year we invested another $70 million in our new factory in Griffin.
And on top of that, in 2021, we acquired Industrias Mass, the leading water heater company in Mexico.
Our company is all in on the North American market, and we see great opportunities ahead.
PHCPPros: New investments are always what we can readily see. But I wonder if you can go into detail for the reasons behind what you see as these “great opportunities” for the growth of Rinnai’s North American market?
Windsor: Currently, the penetration of gas tankless water heaters is about 16% of the total gas water heater market. We think that should be in the range of about 30%. So we’ve got a substantial runway of growth when it comes to tankless water heaters. Tankless is by far the best solution.
Also, there’s a lot of discussion around the need for carbon neutral electrification of many plumbing and heating products overall. But the fact of the matter is that the water heaters that we make in Griffin are 82% efficient. The water heater that we bring from Japan is in the mid-90% efficient. And then there’s gas tank waters that are at 60% efficient.
In other words, there’s a huge opportunity to address the efficiency needs through propane and natural gas right now all while also moving toward a smart electrification solution where the grid can support everything that they’re throwing on it right now.
I want to talk more about your contractor readers and why we see them as a key component to this growth. But before we go into those details, let me tell you about the homebuilder marketplace. Right now, we have 12 of the top 14 builders sold on Rinnai tankless products, many of them on an exclusive basis.
In the past, we might talk to the homebuilder about the benefits of Rinnai tankless, and they’d say, “OK. We’d like to put Rinnai into this one division we’re building.” However, now they’re telling us, “We’d like to do this in our projects throughout the country.”
There’s basically a parity in price with tankless vs. tank in new construction. In some cases, tankless might be less expensive than a tank. So it’s a no-brainer for the builder to upgrade to tankless technology and then sell the efficiency story to the homeowner.
Plus, there’s ever-growing consumer awareness of tankless. Consumers know enough to ask now about tankless.
PHCPPros: That type of consumer awareness certainly goes a long way to help our readers in the replacement market. What can you tell us about educating contractors on tankless water heaters?
Windsor: Everything we’re doing from product design to training is focused on the contractor.
For example, we want to make our products as easy as possible to install and to service. We’ve been very intentional in every product that we’re designing. We’re making the RE series here in Griffin and that’s a hit right now with contractors. We’ve got other products that’ll be coming to market over the coming years that are going to have that same philosophy.
That way when contractors are providing solutions to their customers, they can lead with tankless because they understand the product, the technology and the value it brings.
It’s a tough proposition, too, because contractors are so busy that they don’t have a lot of time. But we also set a big goal for ourselves about five or six years ago when we set about training 50,000 contractors.
And that meant meeting contractors where they wanted to learn. We set this goal over a three-year period and put in place the infrastructure to do that.
For example, we knew we had to increase the number of people that we have in the field to train contractors, and we had to challenge our sales organization to become trainers.
We’re hitting it really hard on all facets of training now to bring our message to the contractor in several different ways.
Just this past summer, for example, we got our Try Rinnai Tour back on the road with seven vans traveling around the U.S. and Canada. That puts product right in front of contractors and, conveniently, right where they are.
The other thing I would just say is we do have a great Rinnai contractor program. It allows them to get access to the leads that we generate. We’ve got thousands of leads that come every month. And we’ve also developed a turnkey marketing solution, whether that’s TV, radio, truck wraps, print, website development, basically, everything that they need to run their businesses.
We now have that available in our PRO Network program, and we see a number of contractors who are tapping into those tools to help them.
We also recently partnered with Matt Risinger from the Build Show Network, on our new Tankless Truths Campaign to address common misunderstandings about tankless water heaters. We launched that video program on our website and within two weeks it had received 200,000 views.
We’re also producing a lot more video content where we’re trying to develop specific training around the contractor so that they can do it when they want to and where and when they choose. Any device, any time, any place.
PHCPPros: We know you just started another interesting training program for contractors called the Rinnai Academy. What can you tell us about that new program?
Windsor: The Academy is a one-day seminar for contractors that actually has nothing to do with Rinnai products.
Rather, it’s about what contractors can do as leaders of their businesses to become “talent magnets” in their local markets. Every contractor everyone talks to always says the biggest challenge is hiring techs. But the fact of the matter is that in every market there are great techs out there. So we spend a day discussing how those contractors can lead the way, attract top talent and treat their team members so that they will never have a shortage of people from preventing them from growing their businesses.
A lot of contractors get so caught up in the day-to-day tasks of running their businesses that they’re playing checkers when they should really be stepping back and looking at their businesses and playing chess. The Academy helps teach contractors to look beyond the walls of their businesses and have a bigger vision.
We’ve only done two classes to date. Our first class was in Peachtree City with about 40 contractors in attendance. I’ll just give you one story. At that Academy was a woman who had run her plumbing company for 40 years. And at the end of day she walked up to our presenter and said she was going to completely change the way she ran her business going forward.
If contractors can change the way they go to market and grow their businesses, Rinnai wins.
PHCPPros: We were here in Griffin where Rinnai held the grand opening of the factory last year to produce the new RE Series tankless water heaters. What’s different now on the factory floor?
Windsor: When we opened in April, we basically took our old production line from our Hudson facility and moved that to our Lakes facility, also in Griffin. From that one line, we now have three production lines and a third shift working in Griffin. We also moved our distribution from Peachtree City to Griffin as well. This building is completely full now and within a couple of weeks, we’ll hit a huge milestone of making 100,000 units.
What I love about what I see here today is the focus on quality, safety and just the energy when we walk into this plant. I mean, I see team members who are just excited to be here.
We’re also bringing in more and more wholesalers and contractors to tour the facility. So if you’re working here, you’re actually meeting many of our customers.
It just builds so much confidence and excitement within our sales organization to see what’s going on.
PHCPPros: Considering your factory is bursting at the seams – and you’ve only been in operation barely a year – do you have any plans to expand?
Windsor: We have 60 acres so we do have room – we can double what we currently have. The way this building was designed and constructed, it would be easy to add another building.
While I can’t say we have any plans to do that, I can say that we’ve got some substantial investment coming in 2023, which will support the growth of our North American business. We’ve held discussions on what products we may bring from Japan to make here in the U.S. because we’re having such success right now. I have a vision where you’ll see 80% of our product made right here in the North American market, whether it’s here in Griffin or other manufacturing facilities.
PHCPPros: What can you tell us about employment here at the factory, in particular, since you had to staff up during what most dubbed “The Great Resignation” when it became very hard to hire.
Windsor: To entice new talent to work for Rinnai, we had to go about recruiting more aggressively than ever before. We worked with a local recruitment company and advertising agency to discover unique ways of attracting skilled talent.
For example, we invested in two billboards, one specifically targeting highway traffic heading into the Griffin area, which was estimated to have more than 1.9 million impressions. During that same timeframe, paid social media was able to target the local Griffin area, receiving over 9,000 clicks, 1.4 million impressions and a conversion rate of 41%, which is well above the industry standard.
Keep in mind, however, our brand promise is “Creating a healthier way of living.” And that’s not only about our products, but it’s around our people. So we’ve always been very intentional about that.
I mentioned how we’re trying to get contractors to become talent magnets in their markets. But that’s an offshoot from one of our own corporate priorities.
As with contractors, there is plenty of top talent around. They’re just working at other companies, and we need to create a company, an environment and a culture that says, I want to work for Rinnai.
And I think the other thing is it’s fun to work for a company that’s aggressively looking to grow its business. We’re investing in the market, and we know there are plenty of opportunities for our team members. I think we’ve had more than 40 promotions in the factory, and we’ve only been open since April. We invested about 37,000 hours of training for new team members as they join the company.
The final piece that I would say that’s been really important for us is we developed an internal leadership development program called Leading the Rinnai Way.
We started this a couple of years ago. Currently, we’re on our fourth class, and we’ll have more than 100 frontline managers go through what’s an 11-month training program.
The program has already had a huge impact and that will only continue as we invest in our frontline leaders.
People can see that they’re working at a place where we’re far from perfect, but that the company really cares about our team and where we’re going.
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