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146•


CandidConversation


Building customer relationships


(Continued from page 144.)


pride to our workers. As you walked around the plant today, I’m sure you saw several American flags. They were actually hung by our workers because it was important to them. [Editor’s note: In addition to the


flagship Ashland City plant, A. O. Smith has domestic operations in McBee, S.C.; Johnson City and Franklin, Tenn.; Renton, Wash.; Charlotte, N.C.; Norcross, Ga.; Flo- rence, Ky.; and Irvine, Calif. They employ more than 5,000 in the U.S. and approximately 10,000 world- wide.] MJM: How would you describe


the direction that A. O. Smith is tak- ing its business today? Parker: We are building our line


based on what we believe are the demands of the future. We see the market evolving into high efficiency and new technologies, and we want to be a leader. The Cyclone was a groundbreaking high-efficiency unit in the commercial category, and we felt it was time to use that technol-


tech center in Milwaukee. It’s an in- cubator of ideas for new innovation. A. O. Smith continues to invest in and nurture new ideas, which acts as catalyst throughout our organiza- tion. MJM: Are you pleased with the


reaction you are getting from cus- tomers? Margoni: Contractors are ex-


pressing greater interest in high-ef- ficiency products than in years past. There seems to be a high level of excitement about our new product introductions, and the direction we are going. They see it as an oppor- tunity to help their customers, en- hance their business and grow their margins. Parker: There is a longer learn-


ing curve for gas tankless models than traditional units, and it has taken a while for contractors to get comfortable with that technology. But our new heat pump water heaters are pretty straight forward, so we believe that will lead to much quicker acceptance.


A. O. Smith’s High Efficiency Mobile Marketing Vehicle hit the road last month and will be making stops at its wholesaler customers throughout the U.S. over the next two years.


tion techniques. Warren: Training is one of our


core strengths, and we have tradi- tionally spent a lot of time training our reps so they can go in the field and properly educate our customers. Now thanks to our joint venture with Takagi, we have factory train- ers in the field, which really strengthens our position. And our entry into the solar market also re- quires a focus on training to ensure that contractors are very comfort- able with selling and installing these new systems. We have that support in place to educate contractors, and


rather than acquisition? Rajendra: We did acquire Tak-


agi’s U.S. business, but Takagi Japan remains independent. We have taken over the management of their U.S. sales and distribution or- ganization, headquartered in Irvine, Calif. We are jointly developing product for the North American market, and after just seven months, I think both parties would say it is a partnership that is working very well. When the sales volume in the U.S. builds up, it is our goal to build a joint manufacturing operation in this country.


customers’ viewpoint; they always come first.”


we expect more and more to jump in as solar grows. MJM: Why is it so important to


you to be so hands-on in your lead- ership and in building customer re- lationships? Rajendra: We try to think of


The specially designed RV for the mobile tour showcases many of A. O. Smith’s innovative high efficiency products in an interactive environment.


ogy in the residential market. We’ve also added solar, heat pump and tan- kless options. Another thing we should mention


are the controls we’ve developed in- house. They provide more options and information to users and con- tractors. Just about every new prod- uct we’ve come out with is equipped with these proprietary controls. Warren: We are developing


products that are designed to cap- ture the renewables market. Much of this begins with our corporate


Getting contractors on board is


one of the primary reasons we are rolling out our Mobile Showroom this year. This will be an excellent way to get product in front of cus- tomers, and allow them to gain fa- miliarity with these new water heating technologies. We will be co- ordinating with our wholesalers to schedule training sessions in con- junction with the Mobile Showroom stops. These will help contractors get a better feel for selecting the right product for every application, and teach them the proper installa-


• Be sure to visit www.thewholesaler.com for web exclusive articles and videos! •


things from the customers’ view- point; they always come first. I will excuse myself from any meeting I am in to take a call from a customer — the only exception is if I’m with another customer. Being responsive is ingrained in everyone throughout our organization. That doesn’t mean we are always able to say yes, but it does mean we will listen and re- spond. One of our cardinal rules is “Don’t make a promise to a cus- tomer that you can’t keep — and if you do make a promise, make sure you keep it.” MJM: Of course, one of the


biggest announcements that you made in 2010 was your new joint venture with Takagi. What was it about Takagi that made it a good fit for you? And could you clarify why you used the wording joint venture


Takagi has been a pioneer and


leader as the first manufacturer to bring tankless technology and later condensing models to the U.S. They are also a company that has very similar values and core competen- cies as A. O. Smith, which was very important to us. The chemistry be- tween our organizations is very strong, which has been very helpful in working well together and re- specting each other. MJM: How did your discussions


with them begin and then evolve? Rajendra: It was a long process


that took more than a year and a half. We held a lot of discussions to carve a mutually beneficial path that we both were comfortable with and saw value and value creation in. This was a big step for them as well as us. They are entrusting us with their brand name in the U.S. market. MJM: What does this mean to


A. O. Smith as an organization, and to your customers? Warren: There are certain appli-


cations where tankless units are (Turn to Recovery... page 148.)


“We try to think of things from the


•THE WHOLESALER® — MARCH 2011


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