Baxi Commercial is coming to the end of a three year restructuring plan. Paul Hardy, managing director, talks to Paul Braithwaite about where the company goes from here.
IT IS good to hear some good news for a change, and the fact that Baxi is recruiting project managers works for me.

When I interviewed Paul Hardy, managing director of Baxi Commercial division, he was bullish about the future of the company.

It is in its last year of a three-year restructure plan and it has gone well.
It was three years ago that the Andrews Water Heaters, Potterton Commercial businesses moved into the Erdington offices and Wednesbury warehouse to form Baxi Commercial Division.

Things have changed and Hardy is philosophical about losing about 38% of the workforce in the move but these have been replaced. 'We first brought the Andrews Water Heaters and Potterton Commercial businesses together back in 2006,' says Hardy.

The company first had to make sure the right people were in place to deliver the plan with the right technical knowledge, the right structure internally to support the vision and the people to communicate the marketing strategy. And then it asked customers what they wanted.

For instance, says Hardy, Baxi Commercial has not launched a biomass boiler because customers were undecided about the technology. Last year the company started to promote its one-stop-shop philosophy - again after listening to its customers.

Hardy adds that it had to move on. 'We had hit the ceiling on the then current range of products. We had to go to the next level.'

Basically, he says, condensing technology has gone as far as it can. This year Baxi Commercial Division will be launching eight new products. Essentially, this means phasing out any products like the direct-fired water heaters which are not condensing, in favour of condensing versions.
And the new products will be near the price of existing model.

Hardy adds the industry has to follow this pricing regime now 'otherwise all this brilliant LZC technology will be ignored'.
'If we are to reach a certain level with the EuP (Energy-using Products) Directive, you have to make sure the market will buy these products.'

And, while he understands that, for many firms, survival is the name of the game for the next couple of years, often changing heating systems can help. 'If everyone is scrambling for price, then it is going to stunt research and development.' On the other hand, if developers are in it for the long term, then capital costs plus running costs equal the right solution for the environment and the building, he says.

Hardy and technical director Yan Evans are pleased their initial thinking has been backed by the draft EuP regulations. 'When we got a sniff of the draft EuP, we started to work on the equipment which would be the standard for the directive. We looked at our product range, figured out which products were needed - and then how they could be integrated.'
Baxi Commercial already has solar thermal systems, ground-source heat pumps and there is an air-source heat pump to come.

This, he says, is where the company is today. Now it is about how to ensure that these technologies fit together - or not.
First, it was a case of bringing together the sales teams. The sales force, after intensive training, now sells all the Baxi Commercial products. And they also trained in matching technologies and how they work together.

Plus there is a team of LZC applications engineers. And this is where the recruitment comes in. The company is advertising for more project engineers to join the team which makes it work. This means the sales force is not left on their own. 'If someone comes up with a wacky idea, we have got to make it work.' This means the client will get the right solution for the application, he adds.

In fact, Baxi Commercial goes further. 'We feel we are now helping with the design of the solution. And we give the client the reassurance that this boiler will work with this LZC solution.'
Further, if there were a problem, Baxi would go back and fix it or change it, Hardy assures. 'We are increasingly becoming involved with design consultants, making sure the renewables work well together and the bits in-between - the pipework and controls - are fitted correctly.'
And it is not just a case of telling the customer how the different technologies work together - or not - the gospel has to be spread internally too.

So how do you ensure the customer knows what LZC technology works with what and what doesn't? 'There are some consulting engineers and contractors who have grasped the concept of LZC working with existing technologies but not all.'
In a way, Hardy says that it is Baxi's job to give guidance. 'Manufacturers are best placed to do that.'

But one of the biggest challenges for the industry, says Hardy, is that all heating and cooling solutions are coming together. And how do you get the best from that? Baxi's philosophy is about doing its groundwork first. It did not want to be 'first into the market at all costs'. It is content to get its renewable technologies right before it launches - hence waiting this long to launch an air-source heat pump.

So has the sales force come across renewable technologies that do not work together? Yes, Hardy says simply. For instance, why have solar thermal hot water and a CHP unit where the by-product is hot water? The two technologies could cancel each other out.
And this is where Baxi Commercial personnel need to be involved. In fact, because the stakes are so high for customers, Hardy does not rule out Baxi Commercial becoming a full service supplier, consultant and contractor.
The company is already partnering with a contractor for servicing and commissioning. And this will increase.

For instance, says Hardy, for ground source heat pump installation, Baxi has links with a civil works contractor for the bore hole and excavation work. 'The supplier has the easy job on work like this. We supply a piece of equipment and essentially make sure it works correctly above ground.' And now he is exploring partnering with m&e contractors.

In this economic climate, there could well be consolidation of consulting engineering practices, manufacturers and contractors. 'It depends how far and how deep this recession goes.'




He suggests the model might be the packaged plant room where the supplier will design, supply and, near enough, install the full solution.
'We already do that. We've supplied large package plant rooms. It is a growing market for us.'

So, in fact, for Baxi Commercial, the full service contractor is here. It is merely whether the company chooses to extend this. But Hardy is adamant Baxi Commercial does not want to go beyond the boiler house envelope.

Another field where Baxi is extending its remit is in the residential sector. It is already working with private house builders who are building apartments for social housing. 'The domestic division already undertakes design for these apartments, making sure the right equipment is designed into the building's fabric.'

And this is where Baxi Commercial's Heat Box comes into play. This is an integral part of a district heating plant for the block. Each apartment has a box which distributes the heating and hot water to each dwelling and measures the hot-water use. The utility company can remotely monitor the hot-water (and heating) use and bill accordingly. 'The Heat Box replaces an individual boiler in each flat. There is no flueing and, if the box is just outside each door, no-one needs to gain access. This is a superb solution for a landlord. And a service engineer is able to access the box for repairs.'

Hardy says the sector is going full circle. He worked for a local authority before joining Baxi and was involved in the design of accommodation where district heating schemes were being phased out.

But 'now we have the technology to be able to bill each flat or house separately'. Landlords and tenants have the best of both worlds. 'When the heating and hot water is generated centrally, all LZC solutions can be integrated.'

But not with anyone else's. His sales force is not permitted to sell only the evacuated tubes for a solar system. 'We walk away from projects where, for instance, the contractor expects to make savings by buying stainless steel cylinders which are probably not best grade.'
He adds the reason is there is so much that could go wrong between our tubes and the cylinder. For instance, copper pipe has to be brazed rather than soldered or used with compression fittings because of the high temperatures.

And Baxi Commercial is also training its installer partners. 'We have had increased interest from the larger contractors during the last year. One contractor sent 16 engineers recently for individual product training.'
Indeed, Baxi is having to increase the size and number of its training rooms so that it can also demonstrate how these technologies work together.

Which is where I came in. How many heating and ventilation companies are considering expanding in this economic climate? I don't know but I do know that Baxi is leading the charge.