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Energy Solutions Center Inc.

400 N. Capitol St., NW 4th Floor
Washington, DC 20001

Voice 202-824-7152
E-mail dweiss@escenter.org

 

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Dettson Industries Executive Interview

1. What new products are you bringing to the market this year?

Our complete line of Chinook gas furnace which ranges from 15,000 to 120,000 BTU achieves over 95% in AFUE. Our furnace line was developed in collaboration with a gas lab in order to offer a well-integrated system for low emission operation at low, mid and high firing rate. 
 
Major homebuilders (some of the top 10 in the U.S.) said they are looking for package solutions that will advance projects with an improved performance and a good total cost. They also realize that cost of the appliance alone will slow down or disable new technologies to be integrated, if we focus only on the appliance cost. The HVAC system needs to be reconsidered and doing so they know we can offer the home buyer a more comfortable home and also help the builders deal with issues such as humidity which can lead to mold. 
 
Builders in the end do or don’t have to fight humidity but most do need a system which offers longer cycles of operation rather than simply on and off.  Builders are also looking for a system that offers a competitive total cost. 
 
Working directly with builders as manufacturers rather than focusing on distribution needs and moving boxes, allows for technology to meet new standards and make that new offering more competitive since it brings differentiation to the table in performance and total cost impact for the builder in a positive way with a holistic approach also involving building science know how. 
 

2. What are the primary markets for the Chinook technology?

We see the primary markets as:
 
  • the new, traditional construction market, 
  • the replacement market,
  • the emerging market for new construction of tighter homes or low load homes.
For the new, traditional and also for the replacement market we’ve developed a full line which offers from 45,000 BTU to 120,000 BTU on three platforms as follows: -- 1. The single stage with a 2 stage PSC motor, 2. The 2 stage Variable speed motor, and 3. Modulating. The replacement market is more oriented to offering the consumer overcapacity or over-sizing of the BTU but we feel we have a very good product for that key segment which represents approximately 33% of the gas furnace market in the US and 50% of the market in Canada. The new, traditional construction market is also oriented more along the lines of overcapacity and best price possible so mainly single stage units are offered to the customer.
 
In contrast, the emerging market for tighter homes and low-load homes in new construction is really going through major paradigm shifts which have created an opportunity for new technologies to be considered.
 
The multifamily market represents approximately 60% of new construction in most markets in North America. For this new construction segment we have designed a 15,000 BTU as well as a 30,000 BTU unit under the modulating platform. Keep in mind that all modulating units can perform in a tighter home with the right-sized approach, meaning having a unit with an input that matches the calculated heat loss of the home.
 
 

3. How can your product impact the environment and help get more gas heating equipment installed?

 
We are achieving lower than 30 ppm (NOx) right now with our equipment.  Our goal is to continuously improve that performance, having a well-integrated system that includes the controls, the gas valve, and the burner.  We will achieve this goal by selling the equipment at a competitive cost.
 
Our units are 20% smaller in footprint than any product actually offered in the market.  Being quieter and smaller allows builders to bring our units into living space.
Please keep in mind that Dettson is the first manufacturer of a right-sized central system for the residential market. The right-sized system, meaning in capacity and footprint, also allows builders to use a gas furnace for the multi-family segment which is actually challenged by electrical solutions. 
 

4. What are the competitive advantages of your product compared to other heating technologies?

We offer an operation of 180 to 350 CFM with our 15,000 and 30,000 BTU units. Offering such low CFM means noise comfort for the home owners coupled with longer cycles of operation.  This performance is achieved both in heating and cooling mode.

In Pittsburgh, PA, for instance, in a 2,700 sq.ft. home which meets the performance requirement of the 2015 building code, we’ve installed a 15,000 BTU furnace, while the home required an 18,500 BTU unit.  The Dettson furnace was able to continuously meet the thermostat set temperature last winter, even during a few cold snaps.
 
Over-sizing is common in both cooling and heating.  Tighter homes across the 8 climate zones in North America require less BTU’s since they have less heat gain and heat loss. Having a longer cycle approach, which builders love, can decrease humidity issues.  Longer cycles also reduce the off shoot approach caused by shorter cycles and over capacity.
 
In January 2015 we will also offer a compact version of our Chinook 15,000 BTU unit which should be approximately 10" wide by 22" tall. This unit has a reduced fan speed providing for quieter operation.  Also, by coupling equipment with smaller ducts, it is possible to install the package in locations inside the living space, for example in a closet, rather than in a garage or unfinished basement.  This allows for more installation options, especially in multifamily units.
 

5. What misconceptions do you deal with when talking to potential customers about your product?

If we compare apples with apples, our units are competitive with other manufacturers.  The issue is that single stage is still being pushed in the new construction market even if it doesn’t fit the requirement; 2 stage units are better than single stage but can’t achieve the quiet operation and comfort of the modulating or right-sized system.

The "Right-sized approach" will gain market share both in the single and multi-family, the builders do have a provision for warranty on each home.  Mold is one of the major issues on call backs, having a proper central system will reduce warranty and call back cost. Too much emphasis is put only on the unit cost rather than the system cost, a lot of labor is involved in duct systems which do represent a cost opportunity to introduce technology, thus value added to the builder and home owner.  Of course this is not popular in the trade. 
 

6. Who is your direct customer – a property/homeowner, a contractor or a distributor, and why?

The builder is our direct customer -- they are influencing the building codes, and building their brand.  Contractors, in many cases, want to develop a business model and stick to it. Changes in their cost model bring risk, thus potential negative impact to their bottom line. 

The builder drives changes while the contractor feels the pain of those changes but adapts.  As for the distributor, in many cases, he wants to move boxes rather than participate in the deployment of new technologies.  Some do believe in technology but most distributors are looking for products that bring people through their front door asking for it.
Builders are definitively the change agent, along with the building science community and the gas distribution companies.
 

7. What are your strategies to communicate with and educate these customers?

We work with the builders.  They bring in their mechanical contractors and from there we build a relationship with the contractor as well as duct designers.

8. What are the market barriers to greater deployment of your product?

We are a totally new brand.  Once we will have been tried and trusted our future innovative product development will be more efficient. I would not go as far as saying easier, but one of the obstacles we face is being a new player to the new construction market, although we’ve been in business since 1952.
 
The other problem is that there are not enough players or layers in the industry which embrace or promote needed technology; contractors are not proactive enough and distribution is becoming an issue when the only angle they consider is moving boxes without having a share of their strategy around new technology development – contractors differentiate very little one from the other.  
 

9. What could gas utilities do to promote the deployment and acceptance of your product?

Some gas utilities who are ESC members are introducing us to builders who strive to meet or exceed code requirements. Some builders across North America are committed to building their brand and also understand the economics of doing it right; most of those builders who are leaders work closely with building science consultants who facilitate also risk management analysis without sacrificing cost competitiveness.
 
It is up to us the manufacturer to deliver on site expectations and earn the builder’s trust for deployment of our solution within their organization. This also brings back intelligence to our company since we invest in a significant way in R&D but we work in a "pull" approach, meaning we develop products that the builder is looking for in addition to including the economics in concert with the building science consultant and builders.