It began in September of 2013 and continued throughout 2014 – to greater or lesser degrees. We’re speaking of the roar of the rebound, the slap of foot traffic in the store, the pressure of performance as the time from sale to installation continued to increase.

It involved shortages of venting products and of pellets (once again). It also involved shortages of appliances as a number of manufacturers couldn’t keep up with demand even with three shifts going strong.

There were times during the past five years when those in the hearth industry – whether manufacturer, rep, distributor or dealer – had to wonder if business would ever return to what it was prior to the Great Recession.

Would Boomers remain this industry’s best customers?

Would the Gen X cohort ever make itself felt in the marketplace?

Would the Millennials – a generation weaned on all-things digital – even consider purchasing a hearth product?

Would there even be a hearth industry similar to that of 2005-2008?

The answer, as gleaned from the following six Fireside Chats held during the month of January, is an unequivocal YES! In fact, it’s now clear that many manufacturers have just concluded the best year of their long careers. That’s right – 2014 was the number-one year for many manufacturers in over 30 years of effort.

The future that lies ahead is bright and exciting – as long as government regulators abide by that wonderful phrase: “First, do no harm!”

Quick Links

Holly Markham	Paul Erickson	Anastasia Marcakis
Chris Green	Fran Amkraut	Nick Bauer

 

Holly Markham with the Tenore 240, a 95-in. see-through from European Home.

In 2004, with an appreciation of European design, Holly Markham jumped into the very mature North American hearth industry with her first fireplace, the Vision. It was a design licensed from a UK firm, but manufactured entirely in the U.S. Over the past decade, she and her husband John have paid their dues, enlarged their line, and are now experiencing strong growth.  

Hearth & Home: In what year did you start your business?

Holly Markham: “I started my business in 1999. It was called Europa Ja (Europe Yes), and I was importing small European home goods such as tableware, vases, cutlery and home accessories. My background was doing international sales for software companies. I was a territory manager covering Germany, Austria, Switzerland and Benelux (Belgium, Netherlands and Luxembourg).

“Through that experience, I knew I liked sales and I liked interacting with people, plus I loved European design and I knew I wanted to do something on my own.”

So you picked fireplaces, one of the toughest areas to work in.

Markham: “I didn’t pick fireplaces at first. It was through doing the small goods that I found it was going to be a lot of work just to sell a $20 vase. I realized I needed bigger, and more expensive, home products. I started with a solid-surface material, similar to Corian. Plastic. I got into mailboxes and then into fireplaces.

“My first fireplace was from Gavin Scott Design in the UK; it was the Vision, and it appeared on the cover of Hearth & Home back in 2010.

“I realized that I couldn’t just import the product because of the Code issues over here. Folks at the HPBA got me in touch with Omni-Test Labs and John Voorhees, who is the nicest man in the world. He explained the issues I faced and what I had to do. I then licensed a design from Gavin Scott and had it manufactured here in the U.S. and listed through Omni.”

I’ve always had the impression that you were doing what most people do, which is simply importing from Europe.

Markham: “That had been my intention. Because Gavin Scott Design was not capable of doing any type of redesign for what we needed, it wasn’t worth it trying to teach them how to do that.

“So we redesigned the fireplace to build in an outer cabinet so that it could now go into a wood-framed construction, and then work with vent pipe available here on this end. We were working with the main brands, Selkirk, DuraVent because we wanted it to be standard. We manufactured the entire product here, from soup to nuts.”

Boy, you’re a brave lady.

Markham: “That’s so funny, because that’s exactly what Pat Moynihan called me at Progressive Manufacturing (West Lebanon, NH). Pat does all our manufacturing, and he has from the beginning.

“We started shipping at the end of 2004, so we were quite early into the modern contemporary market. In 2008 we came out with our own 52-in. linear, direct-vent fireplace that Pat manufactured; it’s called the Halcyon. At that time we had about 20 dealers.

“I didn’t have the resources to design a whole product line and direct-vent is a lot more complicated. That’s when I started working with Montigo and we rebranded their L series fireplaces and called it the DV series. As both companies have grown, we started to step on each other’s toes a bit. So we have backed off from that because we don’t want to create confusion in the marketplace.

“In 2011 we started to explore a relationship with Element4, a company in the Netherlands; they are the company that makes the multisided trim-less fireplaces. We found Element4 to be a really good fit with us because they are very professional. That whole Element4 line has helped us to grow quite a bit.”

Does that product come in fully formed?

Markham: “Yes. We are a pure importer from them. We don’t do any manufacturing. We import them fully formed.”

Do you still have Pat Moynihan create other products for you?

Markham: “Yes. As products from Element4 were building up, we began to get more requests for a linear unit. I mentioned the Vision was our first fireplace in 2004. Around 2007 we offered that as a vent-free. By 2011 we were getting more requests for that fireplace, but in linear. I didn’t want to do a B-vent linear. I felt like we had the Halcyon and the Montigo. So we did the vent-free version linear. Pat makes all of those. That’s called our H series. Now we’re working on taking the H series and turning it into outdoor products.

“I’m really proud of all that we have made in the U.S. But I now realize how much is involved in being a manufacturer. That’s why when Element4 became an option, I knew it was a way to expand our product line without the effort of all that manufacturing.”

Are you the sole owner of your company?

Markham: “Myself and my husband. His name is John. He tends to be more out in the warehouse and he works with our tech department, so he’ll go out and do training. The dealers all know him. If there’s an issue in the field, he’ll hop on a plane and take care of it.”

Let me move into sales and ask first about the United States. How well did you do in 2014 compared to 2013?

Markham: “We had a 63 percent increase from 2013 to 2014 in the U.S., and 58 percent in Canada. It was our best year so far.”

On a per capita basis, Canada might be a better market for you just because of the European influence, particularly in the eastern part of the country. Is that what you’re finding?

Markham: “Yes. It’s always been a really great market for us. For 2014, it makes up about 28 percent of our sales. I think it’s because of the influence of, maybe not just Europeans, but the international population.”

Are you going dealer-direct, through distributors or a combination of the two?

Markham: “We do dealer-direct everywhere, except in Quebec it is through a distributor. The reason is that we have no one here who speaks French.”

What requirements do you have for a retailer to become a dealer?

Markham: “To be a displaying dealer they would need to have a burning unit on the floor. Most of our dealers have either one or two units burning. We also have some other, more subtle requirements. We ask them about how they support the product. We don’t say you have to have your own installers, but we do require that they have the feeling of being responsible for the product. If a customer calls with an issue, it must always be, ‘We’ll work and we will find a resolution.’”

Which channels do you sell through? Clearly specialty retailers, but how do you handle builders, architects and designers, for example?

Markham: “We get leads from builders, architects and designers and what we do is we have a zip code lookup on our website for where the dealer is in their area and so we will do that for them or have them do it themselves. It’s really just referring it out to the local dealer. If we have no dealer we try to find someone who could help them, perhaps another dealer.”

Are there any other channels that we haven’t mentioned that you go through?

Markham: “We sell some of our older products through ‘Woodland Direct,’ but we don’t sell our newer products through them. The new products are all through the dealers.”

How many reps do you have?

Markham: “We don’t have any reps. That’s an area that I need to work on this year. Not having come from the fireplace industry, and not knowing enough about the channel, I felt as though we were doing a good job working with our dealers. Now the next step is to start working with reps.”

Are there any key trends you see that are affecting, or could affect, the hearth industry?

Markham: “The trend that I see, which is good for the industry, is that new homes never seem to have just one fireplace. We are always hearing between four and six fireplaces in a home.”

Well, you’re dealing at a very lofty level of income, correct? What do you have that will be new at the Expo this year?

Markham: “We will have a 95-in. fireplace, an Element4 direct-vent. It’s super long and we’re going to have it in a see-through version. We’re also going to have our outdoor fireplace. It’s called the J series and that is stainless steel and it’s vent-free, but outdoor.”

You’re coming off an incredible year. What are you forecasting for 2015?

Markham: “I would say we’re going to increase at least 30 percent, and if I can do 40 to 45 percent, that would be really nice. The reason I say that is because I still feel as though people are building. There is consumer confidence. The banks are lending. We’re on the upswing.”

Back To Top

Paul Erickson with the Mirage 18.

Paul Erickson and Pacific Energy are coming off their best year of the 35 in which they’ve been in business. We’ve heard similar words from other manufacturers, but what no one seems able to explain is, what caused such a great year?

Hearth & Home: How well did you do in 2014 compared to the prior year?

Paul Erickson: “It was a good year. We had a big, big uptake and 2014 actually was our biggest year in 35 years of being here. We were up in excess of 30 percent. Of that increase, the bulk of it came from the wood- burning side of Pacific Energy. There was an increase in Town & Country, but not nearly as aggressive as on the wood-burning side.”

That’s an enormous increase, isn’t it?

Erickson: “It is. It put us to a level over 2008, which was, for most people in the wood-burning/pellet side, their biggest year. In tracking the price of oil to wood stove sales, we found they generally go in lockstep; this year we had quite the converse going on. We had oil heading down and wood stove sales increasing. It was an interesting thing.”

What percent of your total business is in Canada versus the U.S.?

Erickson: “I would have to say roughly 50/50. Our market share in Canada, being on this side of the border, perhaps is a little bit higher than it is in the U.S., but there is so much more population in the U.S. We seem to always end up 60/40, 50/50 for overall sales.”

That must tell you you’ve got tremendous upside potential here in the U.S.

Erickson: “I think it would probably lead to that, yes. It was a good year for us. Market conditions were good and we had created a lot of new skus and new wood-burning products – new products right across the board, but especially new contemporary lines of wood-burning. I think our market share probably edged up a bit in 2014 as well.”

The new stuff is what retailers want to sell, isn’t it?

Erickson: “It seems so. Yes. Our old workhorse, the Super 27, and some of the old traditional units that sit on pedestals or legs, continue to fill a need and sell well. But retailers seem to gravitate to our new Neo line, the contemporary line that we’re doing in freestanding and inserts, and we’re also coming out with a zero-clearance fireplace version. Five years ago I didn’t see Neo really having the attention on the floor that it got this past year. We were basically sold out of them by August.

“Back in the day, the wood stove ended up in the basement nine times out of 10 and the aesthetics were not as high a priority as price and function. The fact that the aesthetic now is becoming so important tells me that people are perhaps not relegating them to the basement, but actually putting them in a living space where they belong.”

Was it primarily with your wood and pellet products that you just couldn’t keep up?

Erickson: “Oh, everything, really. Even with Town & Country we were having some difficulty, but primarily it was the cordwood. As I said, with the Neo we were basically sold out in August; had we been able to build more, we could have doubled our sales in the Neo line. I have extra equipment on the floor and we are using job shops in another town and buying laser time, and lots of it, there and still not keeping up. It’s a mixed blessing having more demand than supply.”

On the pellet stoves again, it’s clear that’s the product that went through the roof. Ballpark, the shipment data out of HPBA for the end of the third quarter showed that whether it was gas or cordwood or whatever, it was up about 10 percent and pellets were up about 68 percent. Did they finally take off in Canada?

Erickson: “Not as much as in the U.S., but we haven’t been much of a player in the pellet market. We hit that mid-market, maybe a little upper mid-market, and I don’t think we really nailed it as far as the price point versus the product.

“As you probably recall, a couple of years ago we brought in a Piazzetta line. It covers the upper-middle to high end and that has done tremendously well for us. Our increase on Piazzetta 2014 over 2013 is probably more like 70 percent.

“We’re going to try and cover the pellet market more effectively by coming out with a True North lower price-point, freestanding pellet stove and insert, and covering the middle and higher end with our Piazzetta line. That should help us become more of a player in the pellet end of it. But this past year we certainly got a piece of the market with our Piazzetta product.

“It sold very well in Quebec. It probably outsold Ontario three to one on the pellet side. I think that having it manufactured in Italy with such a design-driven aesthetic is very much an advantage.”

From what I hear about Italy and pellets, they go hand in glove, right? Apparently Italy ranks number one in pellet stove sales in Europe.

Erickson: “My understanding is that the Italian sales are around 200,000 units a year. That, of course, eclipses all North American sales.”

Here’s an easy one for you: What was the trigger that created such a very strong year for the hearth industry?

Erickson: “Oh, that’s an easy one! How about, I don’t know (laughs). I guess the industry has been flat long enough and maybe it’s pent-up demand. I wish I could put my finger on it. Being inconsistent with oil just kind of blows all my history right out the door as far as why it was busy. If I looked at every other time we’ve been busy with solid fuel sales, we were tied up in the Gulf War, Y2K, Saudi Arabia – it was the price of oil, generally, that caused the demand.

“Maybe it’s demographic. I call Piazzetta contemporary. I call the Neo contemporary. I call Town & Country contemporary. I think a lot of it is the demographic. It could be people of a younger generation that are renovating, and new construction is up in the U.S. But I believe a lot of it had to do with new product. If I look at the skus that we carried in 2013 in wood-burning, we would not have enjoyed the kind of increase we enjoyed with those products. We probably would have been flat to maybe +10 if we were running the same skus as the year before.”

How many employees do you have?

Erickson: “We have roughly 200 now. That’s up from our average. It’s probably our highest sustained level of employees here at the one site.”

Is there a difference in how well the Town & Country line does in Canada versus the U.S.?

Erickson: “In the U.S. we’re probably 70/30 versus Canada. Quite a large percent are specified by architects or designers. In the beginning, we – Tom Pugh and I – tried going to our traditional dealer network, which is strongly weighted to wood-stove people, and in most cases there was no traction there. But when we took it to Pete Dines in Colorado, he quickly was selling more product than we were doing in half of Canada. The reason was that he was heavily tied in to high-end builders, architects and designers. The light bulb went off. That was the way we needed to go to market.”

How well are you doing with your outdoor Town & Country?

Erickson: “We’re still filling out the category, but it’s become a nice incremental product line. The indoor/outdoor product we’re just coming out with now is kind of a refined version. It seemed to me that would always be a real fringe version, but it’s not. It’s going very well and growing.

“You would think that consumers would look at an Outdoor Room they can use for only four or five months of the year and say, ‘Why would I bother?’ But that trend is huge in southern Ontario. Everybody wants an Outdoor Room.”

How is Europe going for you?

Erickson: “It’s not overwhelming yet. We’ve certainly got some things going on where they are cautious and we’re cautious. The Euro is always of interest. Where a Euro now is nice and low, and that’s great for our imports here, but it’s not so great for our exports. So we’re taking baby steps on it, but between Europe, eastern Europe and Australia, the export market is growing for us. We’ve made some great strides in Australia. We’re shipping containers right now to Australia getting ready for their season.”

What do you have for new products this year that you’ll be showing?

Erickson: “Well, I guess our new D series with screens that are integral to the construction. They are not apparent; they are very, very well concealed. We are releasing that right across the Town & Country line. The C series, which we’ve run on now for four years, probably is going to be replaced by the D series and we’ve put in an enhanced control set on that, which recognizes the ever-increasing need for the smart home interface that we’re finding in the high-end market.

“In our mid-market gas line we’re coming out with a double-door, cast-iron, freestanding version, which is something we’ve done before. That one is called the Trenton and that will be at the show.

“We’re also coming out with a small firebox and this was instigated by the European and the UK markets. So we’re doing a 1.2 cu. ft. firebox, which is a funny little thing, but in certain markets the small, cute little stove is definitely what sells; the UK is one of those markets.

“One other thing we’re adding to our line this year is our soapstone wood stove. That’s something we’ve never even come close to before. The Northeast is the farthest away from home for us and it’s a huge market in our industry. We never felt that we were getting our full, reasonable share from that area  compared to other geography.

“The soapstone idea has been under our radar for a long time. Our question was, ‘Is that a niche product?’ But in that area it’s not. It seems like there is a fair amount of it sold.

“We’ve taken the contemporary chassis, the Neo chassis, and put soapstone on it. We didn’t want to jump on someone’s back leg indirectly, and my understanding is that HearthStone and others have more of a traditional-looking stove with soapstone. We’re going to do contemporary with soapstone, which I think is branching out just a bit from the status quo. We’ll see if it works.”

How far afield do you have to go to get your soapstone?

Erickson: “We’re actually bringing it in from Brazil. The Brazilian soapstone gives us a little bit of a uniqueness from everyone else who is already in this.”

What about forecasts for 2015? What are you thinking right now?

Erickson: “We’re predicting 10 percent over 2014, and, as you know, that was an incredible year for us.”

Back To Top

Anastasia Marcakis with the Galaxy zero-clearance fireplace.

There’s always something unique about products that come out of the Supreme Fireplace R&D lab – patriarch Emmanuel directs new product development, siblings Anastasia, Katherine and Alexander work in Sales, Engineering and Production, respectively. Together they have produced the only see-through EPA-approved fireplace and stove, and the only fireplaces with a built-in barbecue grill.

Hearth & Home: How well did you do in the U.S. in 2014 compared to the prior year?

Anastasia Marcakis: “It has been an exceptional year. I don’t think any of us had planned for such a great year, but for us, especially in the United States, it has been a really good year. We experienced a 48 percent increase in sales and then a 34 percent increase in Canada.”

That’s just great.

Marcakis: “I know. We have been so blessed and so lucky. It has been exceptional for the most part.”

Tell me what caused such an exceptional year.

Marcakis: “I think no one could forget last year’s winter. It was really cold and really long and actually harsh. I think it’s also due to the economy, the increase in new construction and the fact that we still sell new products that are so unique and different. We’ve expanded our product line. All these factors definitely have contributed to the increase in sales.”

The good news is that we’re having a pretty cold beginning to this year as well, aren’t we?

Marcakis: “I know. It’s been crazy. Yesterday it took me 15 to 20 minutes to defrost my car. We’ve been getting a lot of ice so a lot of people have been out of power. Of course, it’s always nice to have a high-efficiency fireplace in your home so you can rely on it to heat.”

With at least one of your units, you also can rely on it to cook some food, right?

Marcakis: “Yes, that has actually been a really popular feature. Our built-in barbecue grill is definitely a sales point and a nice feature to have.”

Cooking over live coals is a nice experience, isn’t it? It’s fun.

Marcakis: “It’s a nice experience, and the food is so much more flavorful. We’ve started cooking pretty much anything you cook on an outdoor grill inside our fireplaces. My favorite is steaks. It just makes the meat so tender and very flavorful. I’m really a big fan of cooking inside the fireplace.”

Can you tell me which areas in Canada did the best?

Marcakis: “Eastern Canada, in particular Ontario, Quebec and the Maritimes.”

What about the U.S.? Where is your strongest point?

Marcakis: “New England, for sure, and I would have to say all North Central states. But we have seen an increase in all areas.”

What percent of your business is in Canada?

Marcakis: “I would say 65 percent of our sales are in Canada.”

How many dealers do you have in North America?

Marcakis: “Well, some dealers are not very active, but they are still dealers. I would have to say 800, close to 900 dealers. We are a manufacturer of see-through fireplaces that are EPA approved, so it’s a very unique product. Sometimes we have dealers that buy that niche product because their current lines don’t offer it. Our active dealers are more like 400.”

Were your sales strong every month of 2014?

Marcakis: “No. It started off really slow. I would have to say January, February and March were really, really slow months, and then we experienced a slight increase in April and May. For us, the turning point had to be in June and July. Then, of course, this fall was really exceptional.”

You have a zero-clearance fireplace, a see-through fireplace, a see-through stove and a fireplace insert. You have four different products?

Marcakis: “Five, because we have two see-through fireplaces – the Opus and the new one, the Duet. All of our new products have the grill built-in, so that’s the Galaxy, our zero-clearance fireplace, our see-through stove and our see-through fireplace. Three out of the five products have the built-in barbecue grill.”

Which one of all your products is your best seller?

Marcakis: “I would have to say the Galaxy, our new zero-clearance fireplace, mainly because of its versatile design. This product has three different configurations, which makes it ideal for different applications and different designs.”

Were you able to keep up with demand this year?

Marcakis: “We did have some hiccups, but for the most part we were really pleased and proud of ourselves. There were a couple of back-orders, but at the end of the day we were able to keep up with the demand.”

How many employees do you have to help you with all this work?

Marcakis: “We are still a fairly small company. We have currently 24 employees working for us. We do invest heavily in modern equipment and innovative production methods that help increase our productivity and decrease our labor costs.”

Is new construction a major factor for you?

Marcakis: “Yes, the increase of housing markets and new construction has definitely helped us, in particular with our Galaxy, the zero-clearance fireplace.”

Now let me ask about a topic that you love, which is the EPA and its NSPS. Has that affected your Research and Development? Did that slow Emmanuel (her father) down from creating new products?

Marcakis: “No. Definitely not this year. We plan on introducing new products at this year’s show in Nashville. All our current products have emissions less than 4.5 grams per hour. So for now we feel like we’re safe at least for the next five years. However, they are talking about the proposed standard of 1.3 grams per hour in 2020, which will make it very challenging and difficult for a lot of wood manufacturers to keep developing new products. It’s making us a little nervous. We’ll see what happens.”

Has anything changed on the island of Montreal regarding its ban on wood-burning products?

Marcakis: ‘There is still the ban, but in 2020 they plan on implementing a law that will allow consumers in Montreal to buy a wood-burning fireplace as long as it meets the 1.3 grams per hour standard. That’s better than nothing at all (laughs).”

Beyond the EPA, are there any other key trends that are affecting the hearth industry in general?

Marcakis: “I think that, in general, buyers are looking for simplicity. They want a product that is user friendly and simple. We do see a major trend of clean and contemporary design. People are looking for something with more modern appeal.”

Are the people who are leaning in that direction mainly in Canada or also throughout the U.S.?

Marcakis: “Throughout the U.S. For a lot of manufacturers, that’s surprising. If they take an older trade magazine out and go through the pages, they will see that everything has changed within the last five years. A lot of manufacturers are really going for more clean, contemporary-looking products.”

What new products are you going to have for 2015?

Marcakis: “We plan on introducing two new fireplace inserts at this year’s show in Nashville. These inserts are, of course, very unique, but one thing in particular is that they are tested and certified to be installed with a five-in. liner, which facilitates the overall installation. No other insert, to my knowledge, is approved with a five-in. liner. I’m really excited about these two inserts.

“We also plan on introducing a high-end builder fireplace, a smaller fireplace than the Galaxy, but more of a builder fireplace. It’s more affordable. Then, based on the success of our see-through stove, we hope to introduce a single sided stove. So we’ve been keeping very busy.”

What would your forecast for the coming year be in terms of sales? How well do you think it’s going to go?

Marcakis: “We had such a great year in 2014, that I think we will continue having a great next couple of years. We’ve experienced a real strong demand for wood this year and that demand should keep on growing. I believe wood is a great and reliable source of heat and, for me, nothing beats the beauty, comfort and heat of a wood fire. So we’re extremely optimistic.”

Back To Top

Chris Green.

Chris Green and Kingsman Fireplaces are coming off a strong year of double-digit growth; their forecast for 2015 is another double-digit increase. One caveat is the low price of a barrel of oil, which could negatively affect the Canadian economy.

Hearth & Home: How well did Kingsman do in 2014?

Chris Green: “I’m going to say right at 10 percent up. Most of it would be coming through growth in the States.”

Which regions of the U.S. were the strongest for you?

Green: “The northern regions, of course, anything on the northern side and your coastline. The northeastern coastline is strong, and the western side is strong all the way down to the southern coast.”

Where is your strength in Canada?

Green: “Sales have been pretty flat in Canada. The biggest growth is probably in Ontario. That Province is coming back nicely, whereas the other Provinces were pretty flat. In fact Canada is probably down.”

Is Canada still strong with new construction?

Green: “It is, but I think we’re going to feel the repercussions of this $50 a barrel oil because they need to have it at $75 for the oil sands to work.”

What about in the U.S.? Can you feel new construction coming back fairly strongly?

Green: “In the U.S. we’re a bit more diversified now and not as heavily into new construction as we once were. That’s probably a good thing. So our growth is coming through growing territories, adding new distribution, and building up our dealer network.

“It’s now the turn of the United States to shake off all that has happened. It will be interesting to see what happens in your election, but right now upsetting the apple cart is something both economies don’t need.”

Did you fall behind in 2014? Were you able to keep up and have your dealers smiling?

Green: “For the most part. Every once in a while you get caught on a certain part. That’s just the way it goes in the manufacturing side, especially if it’s something that you didn’t forecast and you’re scrambling to get material or glass or some type of other component.”

DOE is now angling for regulatory control over all gas hearth products and HPBA seems to think they are going to start by saying, ‘we want a ban on standing pilots.’ How would that affect you?

Green: “Well, it’s going to affect the whole industry because a direct-vent appliance needs a warm chimney to vent properly, especially in cold climates. So for anybody in Canada or the northern states that get below freezing, they’re going to have issues on certain types of appliances that are becoming more efficient. The more efficient you are, the less heat you’ve got going up the chimney, so the more issues you’ll have with a product that’s efficient.

“Everything we sell is available with a standing pilot or electronic ignition, and I would say 70 percent of our customers choose standing pilot. People love it because it works. There are fewer parts. It’s less finicky. So some of those items you just don’t want to take away unless you have to.”

Do you have a good portion of your product line that is heater rated?

Green: “Yes. Since the DOE stuck its nose in our business over the last few years, anything we come out with now has a heater-rated version and a decorative version because we know we’ve got two sets of customers. We’ve got customers that want the ambiance, not necessarily the Btus, and others who do want the heat.

“We can take the same product, give them the same look with fewer Btus and make them decorative. If they want the extra heat they will have to pay for it because it’s going to have ceramic glass versus tempered glass. There is a big price difference between the two.

“Even as we designed our two new products that we’re launching as we speak – our new peninsula and our new see-through – we have both a heater-rated and a decorative version. You’ll find the decorative in the new construction market.”

Are you finding that more and more builders are doing Outdoor Rooms, outdoor fireplaces or outdoor kitchens as options?

Green: “We’re seeing that more on the West Coast than anyplace else. I sell more fire pits and outdoor fireplaces along the West Coast than anywhere else in North America.”

You probably sell a heck of a lot more fire pits or fire bowls than you do fireplaces, correct?

Green: “Yes, it’s probably a three or four to one ratio. The fireplaces are in D.C., Washington, Oregon, California. Our guys who are playing in those areas are having good success.”

What key trends, if any, do you see that are affecting the hearth industry?

Green: “I think the big thing right now for all manufacturers is trying to figure out exactly what the DOE is going to be doing to us. It might not affect us for five years, or it might be quicker. We’re hoping not, but when you start talking about eliminating pilots, manufacturers have to figure out which company to choose as their supplier for ignitions. There are only a few of those around. What’s that going to do for capacities, volumes, how fast do we have to make the move and that type of thing. So there are a lot of variables to examine.

“The screen standard is interesting in itself. When you’re walking the Expo floor this year, it will be interesting to see who has got everything screened up per the standard, and does it look like something that consumers can stomach.”

I think a few people will knock it out of the park and everybody else will jump on and do something similar.

Green: “But there will be an impact because, of all the gas stoves that are made right now, three-quarters of them or more have been discontinued. There won’t be a stove on the market that was built in 2014 that will have a screen on it unless it was designed and tested in 2014, because at that point we all knew what the standards were.

“Both of our stoves are gone and we’ve got to redesign a new one. So you’re going to see a lot of holes in the stove lines this year. Even cosmetically, you’re going to see a lot of redesigns, whether it happened in 2014 or it’s happening in 2015, just to make them more palatable to the consumer. Can you stand to look at it? Is it going to be accepted with this screen? So there is going to be a bit of a shift through 2015. There will be a lot of showrooms torn up and new product going in. That will provide opportunities for people who are ready.”

Do you feel ready?

Green: “We’re probably good overall, because the way we had designed our appliances with our clean view, and set the glass back 2.5 inches, that’s an easy fix for us. That was basically tested and put in there and it looks good and it disappears. The louvered units? Not so good. I think you’re going to see, even for us, a big swing away from louvered units because I don’t think the screens for the louvered units will be accepted as well as they are on the clean units.”

What about design trends? Do you see anything there? Is there a stronger move toward a contemporary look, the European look?

Green: “The contemporary linear look is here to stay. More of the competition is getting into it, so I think everybody is going to be chasing it. The next thing is some of the European countries that are coming over with some of their designs that are a little bit more radical, maybe even more contemporary than what we’re used to. They are pushing the envelope to see which North American company will dare to try to get to their level in the playing field, and whether or not those units are as sealed and built as well as they say they are, and if those appliances do meet the Code over here.”

What about new products? Can you describe your two new products?

Green: “One is a peninsula unit, called the Atrium, and that is a clean face; it’s something our customers have wanted for a couple of years now. It was tested and approved with the screen so they are shipping with the appliance. We’re building both a heater-rated version and a decorative version for our customers.

“We’ve also taken our largest Bentley, which frames out around 42 in. and is more of a square unit, and now we have a see-through version, again both decorative and heater rated.”

What is your sales forecast for the coming year?

Green: “We’re hoping for 10 to 15 percent growth. But the way the Canadian economy may go this year, we could take that on the chin a little bit. Coming out with some of these new appliances that are not inexpensive, we could be in for a dogfight. However, they are going to help drive sales.

“We also have screens going on everything, so there’s another $100 to $200 increase in list price. We’re definitely looking for a double-digit increase going into 2015. That’s optimistic. I’m just a little worried about oil prices. If they stay down too long, it’s going to affect Canada not in a good way; they’ve already cut the bank rate a quarter percent. That’s what sent our money down for another little tailspin.”

Ed Note: At this writing, the Canadian dollar was worth about 80 cents vs. the U.S. dollar.

Back To Top

Fran Amkraut with Ortal's Clear 110 LS showcasing the new corner screen barrier.

Ortal USA was launched at the 2011 HPBExpo. It is co-owned by Fran Amkraut and Gil Ben Zion, director of Sales and Marketing. The company’s products are manufactured by Ortal Israel and shipped to a warehouse in California. Contemporary styling and exceptionally clean looks are hallmarks of the brand.

Hearth & Home: Are Ortal products shipped to the U.S. completely finished, or is some work required at this end?

Fran Amkraut: “Yes, they arrive completely finished. The big difference today is that we have significantly increased our landed inventory. That was a challenge for us, obviously. How do you balance your supply with a demand that is unknown because you’re new? Where do you put your resources?”

Tough calls. You’re one of the few hearth companies that does custom work. Do you create your own designs with input from customers? How does that work?

Amkraut: “All of the custom work that we’ve done in the North American market so far has basically been a variation on an existing model. For example, we have our equivalent of a peninsula model – three-sided with two long sides and one short side. We had a client who wanted it taller. So we used an existing length and just made it taller.

“It wasn’t something that would fall within our existing certification so we had to create it. We had the same thing with a corner unit. Somebody asked for something a bit different. Basically we haven’t been reinventing the wheel. We find that, with such a broad catalog, often people who thought they needed a custom unit are able to go into a standard or a semi-standard model.”

How well did you do in 2014 compared to 2013, first of all in the United States, then in Canada?

Amkraut: “We have significantly increased sales from our inception. Our first period of sales was in 2011 – it really was eight months because we started after the Expo. The next year, 2012, was a full 12-month cycle during which we grew by 2.6 times. From 2012 to 2013 we doubled sales, and from 2013 to 2014 the factor is 1.3.

“Canada, by the way, now represents 20 percent of all sales.”

You must be very pleased with the way your business has grown.

Amkraut: “I think we got lucky. First we audited the Expo in 2010. Then we launched in 2011 and, at that time, most of the market was still sullen, slow, sad, whichever descriptive word is best to say, ‘Hey, it’s down. People aren’t building. People aren’t spending money. People aren’t remodeling. What’s going on?’

“The mortgage market and the banks were still figuring things out. So we were coming in with all the odds against us. But the product was so innovative and so unique that we were poised to have a good position. Also, when you consider the other changes that were made just before, or came about since our launch, the product is well positioned to handle those things.

“Canadian efficiency requirements, we met those. We didn’t need to make any changes to comply. We did need to deal with the glass screen, but it hasn’t really compromised the aesthetic of the product. Then, as the market turned, we were able to grab that momentum and ride that wave as people started building and started going back to real estate again.”

In 2014, were your sales consistently strong from the beginning of the year, or were there periods that were slow?

Amkraut: “We noticed some trends. We have an incentive program, which is particularly good for some of our newer dealers. It’s kind of a rewards credit if you reach a certain amount of business. About two-thirds or so of the dealers that reached that level had already achieved it in the first six months of the calendar year, but didn’t necessarily double it in the second six months.

“We noticed that there was a majority of sales driven, or orders placed, in the first six months as opposed to the second six months of the calendar year. Ours is a high-end product, and it’s typically not the type of product that is bought without forethought and planning.

“Now this is just speculation. What I’ve heard is that the building from springtime into early summer is when people are planning ahead for projects. They’re thinking, ‘Where do I need to be in three or four months?’ Then, once you reach the middle of summer, there is little room left for planning, and it’s more the, ‘I need this right now’ mentality.”

If I were to purchase one of your best-selling products, what would it cost?

Amkraut: “If we took the clear, linear 130, which is 51 in. before barriers, it would be just under $7,000. But now we have the screen barrier, the double-glass barrier and so on, which add to that cost.”

Were you able to keep up with demand this year, or did you fall behind a bit?

Amkraut: “When we started the conversation one of the things I mentioned is that we significantly increased our landed inventory. There was one small delay, but I don’t know of any instances where there was a real lag. We’ve tripled our landed inventory. We also moved to a facility that can better accommodate the needs of our clients, to have more administrative infrastructure and, of course, have more physical space to get units ready to receive, to reship, and do all of those activities. We feel we are in a really comfortable place right now to meet the needs of our clients.”

Do you go dealer direct or through distribution?

Amkraut: “We are dealer-direct, and we have some territories that are served by reps. Those relationships with reps are really important. They represent multiple products and try to put together a menu of complementary items. When they go in to meet with their dealer and provide updates, or provide training, or provide new marketing material or strategies, it makes sense for them to show all their wares, not just one.”

Which channels do you go through?

Amkraut: “The transaction is through the dealers. We want to make sure the dealer is educated enough, trained enough, and knowledgeable enough to be able to present our product to the right customers in the best way possible. But we are definitely working on creating demand through decision makers, such as architects and designers.

“Because of the way it’s designed, because of the contemporary look and a very clean finish, it’s not just a fireplace we’re selling. It’s all the options that go around it. It’s the ability to hang art above it and not have it get overheated. It’s the ability to work with a variety of different finishes. It can have a very minimalist look, a very concrete and steel appearance, or something that is finished with marble and bling and glitz and everything in between. From a design standpoint, it is very important to make sure those decision makers know about our product.

“From a building standpoint, it’s the same thing. We want to make sure builders know how to work with our product, how to relate it to trade coordination. It’s not just about getting a picture of a fireplace up and hoping somebody sees it. As you know with marketing, it’s about touches. Rarely does somebody see something once and that causes them to take action. We can’t be everywhere, but we’re trying to be in places where we are really impacting different decision makers along the way.”

How many dealers do you have in the U.S. and in Canada?

Amkraut: “From 2011 to 2014 we built relationships with 257 dealers throughout North America. We estimate that about 35 percent of them are active on a daily/weekly basis and another 30 percent are at least 1x/quarter. This is an estimate.”

Some of the manufacturers I’ve spoken with recently feel that the contemporary style of fireplaces, particularly the linear models, have really caught on, and that consumer interest in those products is much larger than they ever thought it would be.

Amkraut: “I would agree with that. When I look at our competitors and the different products they are either holding or launching, they’re in that direction. From a consumer’s standpoint, whether you want it or not, the rules are forcing you to go in that direction. So is that a trend or a requirement? I don’t know.

“The DOE hasn’t finished whatever it’s going to do. That will have an impact. Obviously all the glass fronts have an impact. Anything that requires a sealed combustion unit has an impact. Well, how many sealed combustion units are either contemporary or quite similar to contemporary?”

What do you have for new products coming out for the Expo this year?

Amkraut: “Our real focus this year, and I think it’s similar for many other companies with the glass fireplace issue, is really educating our dealers and our consumer clients on our barrier options, making sure they can see them, ironically, they can touch them, and they can understand what options they have. That’s really what we’re focusing on. The line as a whole has not changed tremendously.

“One of the things that Ortal has always brought to the market is that element of choice. Whether it is choice in size and variety, or choice in where it can be installed in the home, or in how to finish it, and now you have a choice with the barriers as well. The supplement to that is that we have our own unique power-vent system. You can now go over 100-ft. runs, with up to six 90-degree bends. Is it brand new? No.”

What are you projecting for sales in 2015?

Amkraut: “We would like to continue the trend that we’ve already established, so we’re hoping for another 20 to 35 percent increase. I think the whole market is waiting to see what happens with all this barrier stuff. Before, it was something people wanted and now it’s something you need. You don’t have that choice.

“Is that going to drive consumers into different products? Will they choose screens over glass, or glass over screens? We are not the only company offering choices. I don’t have a crystal ball and I don’t like to make assumptions, but I think we’ve already established our brand and our product as one of the top models and I think that will continue.”

Back To Top

Nick Bauer with his dog Arlo and the Premium Clean-face Contemporary Direct-vent Fireplace.

Only three weeks after graduating from college, Nick Bauer joined the family business. That was in 2007. Eight years later he’s 30 years old and president of the company (established in 1932) and a seasoned veteran of the hearth business.

Hearth & Home: I know you’re always a little reluctant to give me sales numbers, but I’m never going to give up trying. So how well did you do in 2014 compared to the previous year?

Bauer: “Our hearth business these last few years has seen phenomenal growth; it’s been really strong. I think the hearth market overall will be up between 20 and probably 25 percent in 2014, and we were up substantially over that. Additionally, our space heater sales were still up, but our grill sales were down. So it wasn’t a perfect year, but it was pretty close.”

In terms of the strong year you just had, was it straight through all 12 months or were there some periods during that year that were not as strong as others?

Bauer: “It was pretty crazy. The first quarter was extremely strong and I kept expecting the overall percentage to decrease as the numbers got bigger. But they stayed pretty consistent. In the second quarter we had our biggest preseason we’ve ever had. It maybe trailed off a little bit in the third quarter, but not much. Then the early cold in the fourth quarter really carried us through year-end where we now have the biggest backlog that we’ve ever had.

“We had the biggest October we’ve ever had, the biggest November we’ve ever had, the biggest December we’ve ever had. We hired a new vice president of Manufacturing 12 months ago, and every month I’ve told him, ‘All right. It’s going to eventually slow down. It’s eventually going to slow down.’ Well, it never did.”

If this cold weather persists, hearth products will continue selling, won’t they?

Bauer: “Yes. We still sell a lot of vent-free and vent-free is really dependent on the cold. Several years ago we had a couple of warm winters and vent-free got hurt more than direct-vent, and this year it has been extremely cold and we got that cold twice. We got it early. We got a Polar vortex in January and then it got really cold in late October, early November, which is perfect for us right before Thanksgiving and Christmas.

“So vent-free has been really strong and I expect, in the next couple of years, we’re going to have another warm winter compared to this year and it will pull back a little bit. All you can do is prepare for the worst and hope for the best.”

Fortunately, we’ve got a cold snap right now going across the country.

Bauer: “Yes, that’s not going to hurt. I’m pretty optimistic about the first three quarters in 2015, because inventory is extremely low in the field. So they’re not going to have very much carry-over inventory at any level in distribution, or even from manufacturers. I’ll bet if you ask most of the manufacturers they are going to tell you they have very low inventory. So it should lead to a good nine months.”

Most of the retailers are still trying to catch up with installs, aren’t they?

Bauer: “Yes. I’ll only speak for us, but we definitely got caught flat-footed and we’ve been hiring people the last 13 months and still need to hire more. We worked twice as many production hours in October than we did in March and we’re still behind. So I definitely want to apologize to our customers that our on-time delivery wasn’t what it needs to be and we’ll get better at it.”

What were some of your biggest challenges this past year?

Bauer: “One of our biggest challenges is the people in the process because our business has completely changed. We went from 300 or 400 skus 12 years ago to 4,000 skus today. I joke that my title last year should have been CRO, Chief Recruiting Officer, because that’s pretty much all I’ve done for the last 12 months.”

That’s an incredibly important chore, isn’t it?

Bauer: “It’s the most important thing I can do. In my position the only job I have every day is to put people in the right position to be successful. If I hire the right people and put them in the right positions with the right skills and right abilities then I shouldn’t have to do anything, and that’s my goal.”

Talk to me a bit about the Department of Energy (DOE). Last year you were pointing a finger at the industry, perhaps rightly so. Some of the HPBA folks were commenting that one of the biggest things is the elimination, if it happens, of standing pilots. Do you see that as a major concern for you?

Bauer: “Yes. While everyone is focusing on CPSC this time of year because all the screens had to start going out with the units right now, the DOE is the 10,000 lb. gorilla hanging around everyone’s neck and it is not going away.

“Sometime this year or in the future, I fully expect the DOE to ban standing pilots. We’ve already heard whispers of it and, while that would help some of the bigger competitors in the industry, from an overall industry standpoint that would be horrific. Consumers may think they want it, but the type of problems that we’ve had with non-standing pilots are much more complex.

“I think the DOE situation is that they need something they can go to their boss with and tell him that they won so they can get an award in the future for saving some energy. I’m afraid HPBA will take that and say, ‘All right, we’ll give you standing pilots if you go away.’ That to me is a very short-term view.

“At some point in my career I believe gas appliances will have efficiency ratings on every single one of them. At some point in the future, the DOE is going to come back and fix this whole decorative and non-decorative heater-rated stuff. They’ve already tipped their hand. That’s what they want to do. I still feel it’s up to the HPBA to get us together; either we regulate ourselves or we’re going to be regulated by them. As you can see from the CPSC affair, when we allow someone to regulate us, it’s not the greatest outcome.”

Are you as a company making an effort to create products at a lower price-point?

Bauer: “Yes. We’re trying to be as competitive as possible. We need to be as aggressive as we can on our cost structure to price a competitive product. We’re more of the value-price guy; we will never be the $15,000 fireplace guy. That’s just not who we are.

“So we tend to price ourselves more on the value side and definitely more on the heating side. I believe fireplaces first and foremost are put in the home for heat. While there are some that are bought for aesthetic reasons, we sell more for heating purposes. We have been a heating company for 82 years and intend to be a heating company for the next 82 years.”

You mentioned previously that your Broilmaster line didn’t have a very good year. Is that true of the rest of the barbecue industry or were you a bit of an anomaly?

Bauer: “I’m not sure I know. I’ve talked to some distributors who said their gross sales were off. I’ve learned that our sales reps and salespeople are more than willing to take credit when sales are good, but it’s always somebody else’s fault when sales are bad. So the only answer I get when I push them on why our grill sales are off is because it was too cold, which I can understand.

“Broilmaster has been around since the ’60s. It has a very unique look and the Big Boxes and the stainless-steel guys have definitely taken a substantial market share from us, and obviously the weather didn’t help. But I would much rather we had the weather help the hearth side, which is a substantial part of our business. Grills make up only about five percent of our business now. So I do think that it was many factors.”

What do you have coming for new products this year? What will we see at the Trade Show?

Bauer: “I took over the New Products side six or seven years ago and, while our sales and the economy were going down, we made a conscious effort to introduce about four to six new products each year. We really have hit that the last five years and that’s why we’ve seen such a substantial growth these last couple of years.

“We are going to continue that course. We are going to continue to come out with new stuff in 2015. We have a 60 in. direct-vent linear fireplace, and a 60 in. outdoor linear. There is a cool little vent-free, slim line unit that can fit between a 2 x 4 or 2 x 6 wall. We have several new products coming out over the next six months.”

What’s your forecast for 2015?

Bauer: “I fully expect the first three quarters to be pretty solid. We’re carrying over a lot of sales from 2014. People are still installing. Inventory is pretty low in the field. I expect preseason to be very strong. I also believe residential new construction in the second and third quarters should be at least where it was last year, if not up a little bit.

“If it gets cold I think 2015 is shaping up to do well. If it doesn’t, we may have some carry-over issues in 2016, but we’ll deal with it then. So it’s the best I’ve felt going into a year in the seven years since I’ve been doing this. We’ve added a lot of talent here on the manufacturing side and on the sales side. Now we’re going to start addressing some of our process issues to get better and to get the on-time delivery up. We’re staffed now. Going into last year we weren’t staffed. So I’m definitely more optimistic going into 2015.”

It sounds as if you’re pretty well-positioned now, doesn’t it?

Bauer: “Yes. You can position yourself as well as you can guess the future, and then you’ve got to adjust as the future turns into reality and what you thought was going to happen didn’t or did. You can’t be married to any one strategy. We try to be as flexible as possible. We look at it on a weekly, if not daily, basis and if we’re wrong, we’re wrong; we admit to it and go to Plan B.”

Is there anything that you would like to get out that I haven’t asked?

Bauer: “I want to thank all of our customers for an amazing 2014. We freely admit our on-time delivery was a problem and it’s something we’re actively working very hard to improve. I want to thank them for their patience, and promise they will see an improvement in 2015.”

Back To Top