Paul Braithwaite talks to the management team at Calorex, the UK heat pump manufacturer, about the disastrous fire at the factory in Maldon, Essex and how the team spirit of all the workers which stemmed from the aftermath turned into the will to succeed as everyone pulled together and turned the company into a formidible competitor as it pushes hard for more UK market share.
Essex-based heat pump manufacturer Calorex had a first quarter turnover equal to that of the first quarter of its record year in 2008.

Needless to say Tony Barnes, sales director, given the economic climate, is cock-a-hoop.

The more so because part of the company's manufacturing plant and largest warehouse went up in flames in February.

Nobody was hurt says Barnes as he recalls the scene with 100 firemen, 15 fire tenders, two control stations and a 500m exclusion zone. Well, the factory did have asbestos roofing, oxyacetylene cutting gear, refrigerant gases, etc.

More to the point, perhaps, six-months on, the manufacturer is back on track and expecting to beat its record year.

Barnes insists putting the company back on its feet after the devastating fire was largely down to operations and manufacturing director Phil Park, commercial director Michael Crichton and incredible support of office and factory staff, many of whom worked seven days a week for up to eight weeks to fit out the new manufacturing plant and warehouse, and boosted manufacturing so that it could supply all its clients.
Barnes adds there was a small, undamaged buffer stock of heat pumps which had built up during the bad winter and this helped too.

Worst of all was that virtually every piece of equipment needed to build the heat pumps was stored in the warehouse.

In all, some 20% of production and 35% of warehousing was affected.
As luck would have it, the company was able to rent new warehousing and manufacturing plant on the same industrial estate.

Pulling together

Suppliers helped too where possible, plus there was some stock in kit form waiting to be assembled in one of the undamaged warehouses.

With some swapping about, and some good will on the part of customers, all orders were filled and production never stopped.

The factory was back to full capacity within six weeks.

It might be said that the 'team spirit', which quickly turned the fire issue around, might be equally responsible for the excellent first quarter results and Barnes' prediction that the company, which has doubled its turnover since the 2004/5 financial year to £20million, expects to double the size of the company again in the next five years. And this is a conservative estimate.

BSRIA figures for the size of the market keep going up says Richard Carrington, the company's managing director.

For instance, in 2008 the UK market was worth around 3,200 units which rose to 8,400 in 2009 and it is expected to reach more than 40,000 units in 2013.

Carrington says that half of the market for ground-source heat pumps is for units of less than 7kW output and Calorex' share of the UK market is more than 50%. Some 45% of air-source heat pumps are under 7kW and Calorex has a 10% share of this sector but it is growing at pace.

With these growth figures, Calorex expects much more from the UK market and this is where much of its marketing effort will be concentrated.

'We will increase our share of the UK market,' said Barnes flatly. 'This year the first quarter figures are 30% up on the previous year. That will do nicely. The heat pumps are made in the UK for the UK.'

And it is gearing up its sales effort too.

Barnes is recruiting more area salespeople and regional technical mangers to support installations.

And he expects sales to grow substantially from April 2011 when the Renewable Heat Incentive kicks in.

He added that the provisional estimate of 7.5p/kW/h for 18 years for installing an air-source heat pump and 7p/kW/h for 23 years for a ground source heat pump should boost sales. The latter would mean the householder of a 4-bedroomed house would gain about £1,200 a year if an air source heat pump were fitted.

Barnes acknowledges other companies from Japan, China and Europe have been working hard in the UK market and have gained share of the new market but not at the expense of Calorex and now it is back on the marketing trail.

Calorex exports its ground- and air-source heat pumps to 43 countries across the world.

High humidity

Most of those heat pumps are a type of air source which work best in high ambient temperatures and high humidity and are sold into areas such as the Middle and Far East (yes, and even China).

Singapore is a case in point. High ambient air temperature and high humidity are ideal for heat pumps.

Conversely, says Barnes, the UK is temperate with average mean temperatures between winter and summer of about 10ºC with high humidity which is very challenging for heat pumps that are not designed to operate in these conditions!
'If we took the heat pumps we sell in the Far East and installed them in the UK, they would work but not as well as they should.'

And this is why the air and ground-source heat pumps which are made by Calorex for the UK market are bespoke to this country.

And, while some of the competitor heat pumps have been value engineered for the UK market, Barnes contends that Calorex' prices are competitive.
Barnes added that, as far as he knows, his company was the only one to manufacture heat pumps especially for the UK.

All Calorex heat pumps in the UK use R134A and consequently deliver hot water up to 65ºC without any back-up heating.

For domestic applications the company made only ground-source heat pumps until 2007 when it added air-source units to expand its portfolio.

The route to market for the company is via specifiers and then to supply into the merchants.

Complicated sell

'Selling heat pumps is a lot more complicated than selling, for instance, combi boilers. Most heating engineers can look at a house and think: 'I will need a 25kW combi for this'. What a heat pump installation needs is a proper heat loss calculation.'
And that is why Calorex is constantly training its installers.

When I visited the Maldon factory there was a training session going on in the temporary training room (the state-of-the-art training centre was lost in the fire).

Calorex charges for its training sessions.

'We used to offer the training for free but for some sessions fewer than half the trainees would turn up. Now that we charge, firms make sure employees attend our sessions.'

Conversely, says Barnes, there is a voracious appetite for knowledge among heating engineers.

However, he adds, there is no point training an installer unless he (or she) has heat pumps to install.

'He needs to be able to finish the course and go straight on to the job.'

Further, with the new technical support managers in place, Calorex will offer to support and commission the first installation of companies which have undertaken training and bought Calorex kit.

'We will go to site with the installer, help him with the heat loss calculations and work out what equipment and accessories he needs, order it, monitor his installation and commission it.'

Further, even though maintenance of heat pumps is minimal, Calorex is soon to offer a maintenance package for its installers and their customers to give peace of mind.

Calorex is a world-class brand, insists Barnes, witness the export sales.
It is, he says, the only non-Chinese brand which sells in China.

Indeed, the fire at the beginning of the year in Maldon may have done the company a favour.

Competitors should be warned. The new team spirit evident at the time of the fire could make Calorex unstoppable!