For domestic and overseas manufacturers that want to break into the lucrative and well-established North American HVAC market, the barriers to success can be daunting. Establishing a distribution network, creating a supply chain to supply warehouses and ship its products and developing the brand and marketing programs are among the challenges that a new manufacturer faces when coming into this market.
What if there was an organization that could provide all of these services and act as the “virtual factory” for a manufacturer? It would have to be a business that understood HVAC distribution, had the resources of a national professional sales force and have an established supply chain operation that could position the manufacturer for success. In the traditional HVAC distribution world, no such organization existed. Until the creation of Tradewinds Climate Systems.
A subsidiary of Watsco Inc., Tradewinds is unique in HVACR. It serves as the entry point for manufacturers into the U.S. market, creating new business opportunities for them while offering wholesale distributors the opportunity to participate and sell new and differentiated HVAC products. Tradewinds’ focus is on exclusive products, technology and national brands for the HVAC market, and it serves as a pathway for new business opportunities for Watsco.
“We think we provide the best entry point for a manufacturer that is looking to get their product into the U.S. We provide everything from the warehousing to the inventory management to the marketing creation to the sales output,” says Gene LaNois, vice president of marketing and sales for Tradewinds.
Tradewinds once operated under one of Watsco’s subsidiaries, before itself becoming a standalone subsidiary. Today Tradewinds benefits from deeper corporate-wide focus and greater directional guidance. Watsco is the largest HVAC distributor in the industry with more than 570 locations in North America and $3.4 billion in revenue in 2012.
Tradewinds, which is headquartered in Jacksonville, FL, is led by existing Watsco leadership. Eric Benishek, Tradewinds’ vice president and general manager, is from the business development side of Watsco and remains involved in many corporate Watsco initiatives today. Chris Campbell, vice president of operations and product management, is a legacy Tradewinds employee with industry experience with Whirlpool Corp., and LaNois comes from Carrier Enterprise and was formerly with Honeywell and owned his own HVAC contracting business.
While Watsco is a well-known name within the HVAC industry in North America, its joint venture with Carrier Corp. forming Carrier Enterprise LLC, distributing Carrier, Bryant and Payne products throughout more than half of the U.S. as well as in the Caribbean and Latin America not only doubled the size of Watsco but created greater global visibility for the company. That, in turn, led to increased interest by other manufacturers about what a company like Watsco and Tradewinds could do for them.
LaNois says the joint venture agreement with Carrier served to educate manufacturers around the world about the capabilities that Watsco could bring to the North American market. “Due to the size of the Watsco business, it creates the perfect situation for any manufacturer who is trying to get themselves positioned for success and traction in the industry,” LaNois says.
Having the brands associated with the Watsco name allows Tradewinds to see what those businesses are doing to promote and market their brands and learn about what works and what doesn’t. “You get to see what everyone else does,” LaNois says of the Watsco subsidiary companies. While manufacturers often work in a vacuum, Tradewinds interacts with different manufacturers by virtue of being part of the Watsco family. “We really understand what’s trending in the market. We get to have those conversations on a daily basis and get a pulse of what’s happening in the marketplace.”
To understand what Tradewinds can do for manufacturers, take a look at Gree. Primarily known in Asia, Europe and other parts of the world, Gree positions itself as the world’s largest specialized air-conditioning manufacturer. When one takes the manufacturing under the Gree brand along with the enormous amount of OEM manufacturing with other brands, Gree says one out of every three air-conditioning units in the world is a Gree system.
With its exclusive distribution agreement with Gree, Tradewinds is the “virtual factory” for professional Gree-branded products in the U.S. “We’re not making it here, but everything else you’re seeing is happening here in the U.S.,” LaNois says.
With the success of the Gree partnership, other manufacturers have begun to recognize the value that Tradewinds can offer them in the North American market. “It’s broken the seal,” LaNois says. “They see that this is a clean way for them to get in and link up with distribution and have an instant sales force, instant warehousing, instant logistics, and their cost of entry comes down.”
Another brand that is exclusive to Tradewinds is TradePro, a line of essential parts and supplies used in the HVAC business. “These are products that are specified by us and, based on the requests and demands of our customers, matched with opportunities that we see,” LaNois says. “They all have unique features and benefits that will provide that differentiation in the marketplace and a true value to all of our customers.”
There are no true Tradewinds locations beyond its corporate office in Jacksonville, FL. Instead, Tradewinds makes use of the existing real estate of its sister businesses. That means millions of square feet of warehouse space and thousands of delivery mechanisms to ship products and talent – from logistics to sales and finance – to tap into for advice. Tradewinds is bringing its products to market to its own subsidiaries as well as to third-party independent distributors.
Because Tradewinds is closely tied with Watsco contractors, it creates marketing materials that speak to them and can help them grow their business. Gree also taps into its extensive marketing resources to develop brand and create segmented lines of products. A manufacturer might have the ability to engineer the most innovative products in the world, but if they aren’t segmenting their lines and making products that are easy for the contractor to sell, install and service and that appeal to customers, then it’s all for nothing.
With Gree, for example, Tradewinds created four different lines of Gree products and the associated brands and logos. “Each one hits different demographics – either in price point or SEER levels,” LaNois says. For example, its single-zone product line includes the Terra Series, Evo+ Series, Neo Series and Rio Series.
The paradigm has shifted, LaNois says. No longer is the sales channel strictly black and white. More manufacturers are doing business with other manufacturers – whether it’s buying from one another or sharing technology. As Watsco evolved and continues to grow, the opportunity to establish this hybrid organization was a business opportunity that no one had done before. “This is one of those unique business arrangements that has evolved, but it has a very clear path available to it,” LaNois says. “It’s just a matter of putting together the right people at a leadership level, back office and, of course, our front line sales force to carve our way through.”
LaNois reports that dealer response to Tradewinds has been “very, very positive.” He thinks the timing is right for new, differentiated brands that aren’t the same old products. Of course, Tradewinds also understands that dealers are traditionally risk-averse. “We get that,” he says of dealer skepticism to new brands. “I think knowing that is a key element to building all the tools and resources to help create the confidence. We are doing that today and will only continue to get better.”
Tradewinds continues to look for relationships with progressive distributors and manufacturers who see the value of partnering with them. “We are looking for nimble, progressive-thinking companies that can understand and ration-alize how this unique organization can bring profitability and spark new business avenues in their already successful companies today,” he says.
Its story to distributors is about the value that it brings: buying power larger than any buying group in the industry and a dedicated sales force that provides one point of contact to a vast array of items and needs. With Gree, Tradewinds has been able to offer distributors what they call the “biggest and most outstanding line of specialty air-conditioning equipment in the world – from ductless split systems, PTAC units, through-the-wall and window units to dehumidifiers and spot coolers. “We think we have tremendous value to offer that has not been seen before,” LaNois says.
Tradewinds is laying the infrastructure for its dealer programs, beginning with a brand awareness campaign that LaNois expects will lead to greater awareness of Gree and TradePro by the end of the year. Tradewinds is bringing new products to market as well.
While those details are not yet public, LaNois said Tradewinds “loves” the use of more technology, wireless communicating control systems and differentiated IAQ technology.
“You are sure to see some great merchandise from us that will quickly show the heritage back to our ultimate customer – the contractor,” LaNois says. “We want them to have the easiest time installing, servicing and selling this to their customers, so they need to have the best benefits to articulate when having that conversation at the kitchen table or the boardroom table about why these solutions are the best choices all the way around.”
While the distributor is Tradewinds’ direct customer, its sales force works closely with contractors to create the pull-through to the dealers. LaNois says Tradewinds will have regional sales managers in place who are “belly to belly” with contractor customers as well as the distributor customers – “sometimes both at the same time.” Everything from ride-alongs to product presentations and sales trainings are part of Tradewinds’ commitment to getting the pulse of the contractors and understanding what they want.
LaNois equates the contractor to a doctor. Patients rely on their doctor for medical advice and recommendations for prescription drugs. In the same way, the end customer relies on the contractor to maintain HVAC systems for homes and businesses. “What the contractor thinks will be the solution, realistically,” he says. “Our marketing focus is really on what is best for the contractor in the field who is selling to the homeowner or the building owner.”
|Tradewinds at a Glance|
|Tradewinds is a subsidiary of Watsco (NYSE: WSO) and operates as the virtual factory for any company desiring to enter the HVAC industry in the USA, Canada, Mexico and South America, providing access to a full coverage sales force, marketing, technical training, warranty support and more. Products are sold through its own physical locations and subsidiaries as well as through other independent distribution.|
|President & CEO:||Watsco Chairman – Albert Nahmed|
|Vice Presidents:||Eric Benishek, Tradewinds general manager; Gene LaNois, vice president, sales and marketing; Chris Campbell, vice president, operations and product management|
|Operations:|| Warehouses located in Jacksonville, FL; Katy, TX; |
Durham, NC; Chatsworth, CA; Fort Worth, TX
|Employees:||9 employees currently|
|Major Product Lines:||Gree, E-TAC, TradePro, Pro1 IAQ and more|
|Websites:|| www.twclimate.com, www.greecomfort.com, |
- Figure out what you are good at…then learn and practice on how to do “that” even better.
- Definition and Example: Define what you and your company do the best. Rather than chase business that is unproven or a weakness, focus on the items that you could do that make your “core” even stronger and expand out from there. Watsco grows its business while staying focused around HVACR and distribution business.
- Significance: Keeps you focused and gives you “Jedi” capabilities in that category.
- Benefits: Be the leader rather than the follower. People and companies like to align with the best.
- Procedure: Before doing any new business, ask yourself if it is an integral part of your core business.
- People involved: Everyone involved in the business.
- Timing: Every day
- Cost: None
- Other considerations: Every business evolves and the ways of doing business evolve. If you never change or consider the other ways that it can be accomplished, then you will be left behind.
- Contact: Gene LaNois, vice president, sales and marketing, Tradewinds Climate Systems, firstname.lastname@example.org, 407/473-8645
Michael Maynard is a contributing editor based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at email@example.com.