Samsung HVAC Sales Conference: Big Plans and Product Innovations

Samsung is getting around. Now established as one of the key players in the burgeoning HVAC ductless air conditioning/VRF market, Samsung managers are letting the rest of the industry know they came to play in variety of comfort categories.

Quietside/Samsung HVAC held its annual sales conference at The Gaylord Texan Grapevine Resort in Dallas, Tx., during the final week of October. On Wednesday, October 28th, the 2015 Samsung HVAC Product Expo was held in a ballroom space at the resort, providing more than 100 contractors and distributors with a preview of Samsung's newest HVAC products for 2016.

John Harrington shared milestones in Samsung's journey to its position of leadership. Photos by Terry McIver

The Samsung awakening to greater possibilities began in 1993, when CEO/president Sang Lee discovered only 5 percent of the world had heard of the company. 

"Mr. Lee then said we 'have to change everything,'" related John Harrington, senior vice president and general manager of Samsung Electronics, in remarks to attendees.

"His mission was to determine how to accelerate, build the brand, bring new innovations across the world and change the way we do business overall," Harrington said. "So from 1993 to today, Samsung represents the most compelling innovations of any company in the world, in mobile phone innovations, digital television, components and semi-conductors. As a result of this investment and Mr. Lee’s challenge, Samsung has earned a number of global market share: #1 in refrigerators and televisions, 32 percent of smart phones, 26 percent of LCD displays."

Samsung CEO/president Sang Lee: began reinventing the company in 1993.

And now, the company has turned its attention to building its presence in the commercial and residential HVAC ductless product sector.

"Samsung is very interested in partnering with HVAC contractors, and figuring out how we can accelerate into this business," Harrington said, and the team had a wide variety of both older and newer products on display that will fuel that engine.

Among Samsung's established products now operating in the field, are the DVM-S, which sources claim provides the world's largest heating and cooling capacity, and a hybrid heat exchanger that provides a 49 percent larger heat transfer area; and residential and commercial 

Samsung product offerings for HVAC contractors and distributors were positioned the length of the hotel ballroom, for plenty of time to review and discuss features and benefits.

single or multi-zone systems driven by a variable speed Samsung inverter-driven compressor. The newest innovations for 2016 are still in development, and will not be revealed to the industry at large till a later date in the not-to-distant future. But this crowd got a first look, and seemed to be impressed by what they saw.

When Lee addressed the audience, he spoke of his goals for Samsung's HVAC unit.

"It has been a little more than a year since Quietside became a subsidiary of Samsung America. Changing Quietside operations to a larger location in Houston, and changes in the leadership team has been a difficult process over the past 16 months. But as the days go by, things are improving, and I can see that we’re going in the right direction," Lee said.

"Moving forward, we have the opportunity to do some great things. With Samsung’s brand and support behind us, my goal over the next two years is to change this industry, to triple the market for mini-splits and VRF. So, please stay tuned."

According to Lee, the VRF market's unit sales are about 750,000 per year.

Lee was clear that he was seeking dealer and distributor help to start this Samsung "movement," — "a movement that shows 

Samsung products on display at the sales conference included the Pearl and Whisper mini-splits.

determination and commitment to our brand. I want you to act with confidence, when it comes to working with us, and creating a mutual relationship based on a vision to become the industry leaders," Lee said. "Today, we are taking the first step in that movement with our 2016 stocking program. I hope you take advantage of this program, to prepare yourself for a successful season."

Lee said he wants the relationship between Samsung and its HVAC customers to be mutual, in which the success of one is a reflection of the success of the other.

"I hope the time you spend and the knowledge you gain will help your business reach new heights," Lee said.

John Harrington said Samsung's corporate vision is, "to inspire the world, and create the future, through innovative technologies, products, and designs that make people's lives better." The five pillars of that vision are:

• great people operating with excellence across our businesses,
• always changing.
• desire to change and make things happen.
• operating with complete integrity
• co-prosperity, for dealers and Samsung.

"Ninety percent of the company’s products are manufactured within Samsung facilities. It operates 36 research and development 

Throw in some fun: the Samsung conference included a tour of Dallas Cowboys AT&T Stadium.

centers across the world," Harrington said. "One-quarter of our sales force is employed in research and development. In 2014, we invested $13.7 billion in R&D across the business portfolio. From 2009 to 2014 we invested from five to seven percent of revenue in R&D."

Harrington said the shared vision of Samsung's executive team has always been for Samsung to be a premium brand, a brand that people aspire to and one that has an emotional connection with consumers.

He shared the news that Samsung’s U.S. market is growing at a faster rate than the rest of the it's worldwide markets, and reached 18 percent in 2014.

"The US market is a very important and strategic market for Samsung because of our size and because of the opportunity that exists in the United States," he said.

HVAC Industry Keeps Truckin’ Along

One thing almost all contractors have in common is the continual need to buy, sell, and maintain their trucks. These workhorses of the industry take a beating, racking up significant mileage as service and installation crews haul themselves, and a significant amount of tools and parts, from one job to the next.

Because trucks are a crucial part of any HVAC contractor’s business, it’s imperative that they be kept in good working condition, which requires constant oversight and, of course, money.

“Fleet acquisition, maintenance, and repairs can cost a lot more than necessary if you don’t monitor the expenses,” said Eric Knaak, vice president and general manager of Isaac Heating and Air Conditioning in Rochester, New York. But, if you keep a close eye on costs, he said, it’s definitely possible to reduce a company’s overall fleet expenses.

ACQUISITION

The Isaac Heating fleet consists of approximately 165 Chevy cargo vans, a handful of Ford Transits, several Chevy City Expresses, five box trucks, and a couple of stake body trucks. The company buys all its vehicles outright, then amortizes the expense over five years to the appropriate department. “This allows us to maintain our fleet while not carrying any debt on our fleet acquisition,” said Knaak.

All Isaac Heating vehicles are ordered without cargo area windows along with “hockey puck” locks on the side and rear cargo areas, which have drastically reduced problems with theft. Each vehicle is also equipped with a bulkhead, so that if someone were to gain entry to the cab, that person would not be able to access any items in the rear cargo area. “We do ask our drivers to keep electronic devices [and their power cords] and valuables out of sight when vehicles are parked overnight or in any of the more crime-prone areas of the city. For the most part, when these procedures are followed, we seem to do pretty well.”

Grand Rapids, Michigan-based Schaafsma Heating & Cooling purchased all 24 of its vehicles outright because leasing just does not make sense, said company president, Kevin Walsh. “We keep our vehicles a long time, and I’ve looked at leasing before, but, compared to purchasing and breaking down the cost of the van out over seven years plus the residual value, it doesn’t make sense. We also wrap our vehicles and install shelving that may not fit into the next van, and amortizing that cost out over seven years versus a three-year lease can save us $60 to $70 per month.”

The service and install vehicles at Schaafsma are cargo vans that range in age from 2009 to 2015. Preventive maintenance technicians drive smaller vans, such as the Ford Transit Connect, while salesmen drive cars with fold-down rear seating for extra storage. Being in the heart of the automotive industry, all vehicles purchased are American-made and use regular gas, said Walsh. “Our acquisition costs might be higher than most because we want certain items on the vehicles that we view as safety-related or as employee perks.”

For example, Walsh has been ordering all vehicles with backup sensors, and he recently started equipping vehicles with backup cameras, as well. “Many years ago, we had an employee who accidentally backed over his son in his personal vehicle. We would never want anyone in the company to experience that tragedy, nor would we want it to open us up for liability. Our vans also come with drop-down ladder racks, which help prevent back injuries and make employees’ jobs a little easier. We also typically equip vehicles with hands-free communication.”

Flock’s Heating and Air Conditioning in Cashton, Wisconsin, also owns its four service trucks and six install trucks outright, and all are manufactured by Chevrolet, said Mark Flock, president. “We purchase all our vehicles from a dealer who also gives us his HVAC business. We put about 30,000 miles on each service truck and 20,000 on the install trucks every year. We try to keep them until they have 200,000 miles on them, but salt on the roads during winter can be very hard on their bodies. If the vehicle has major mechanical problems after 100,000 miles, we will consider replacing it then.”

MAINTENANCE AND REPAIR

Walsh used to like keeping his vehicles as long as possible — typically until they died — but when he started reviewing their repair histories, he noticed a trend of higher repairs at the 125,000 mile mark. “Whether to repair or replace always boils down to what is the life expectancy after the repair and the future cost of ownership compared to buying a new vehicle — much like a homeowner needs to decide when facing that decision for their furnace or air conditioner. We try to use the same criteria we ask our employees to use when guiding customers through this decision, because how can we ask our employees and customers to do this if we don’t do it ourselves?”

To make the Schaafsma fleet last as long as possible, cargo vans start out as service vehicles until they reach about 2 years old or 45,000 miles. Then, they become installation trucks, which usually average about 12,000 miles a year. “We sell them around 120,000 miles, because they still have a decent resale value at that point,” said Walsh. “Michigan roads are in bad shape, and, with the loads we carry, the front suspension usually needs to be replaced around that time.”

Normal maintenance also helps cut down on major repairs. Walsh uses two preferred vendors to do this, and tracks the repair histories of the vehicles. “We do not do on-site maintenance, because we feel these vendors can do a better and more thorough job, as they have all the necessary tools.”

Knaak tries to keep vehicles until they reach the 150,000-mile mark, but, if a significant repair is needed sooner than that, the vehicle may be retired early. “Service vehicles typically get to 150,000 miles in a seven- to eight-year period. Installation trucks are usually only around 80,000 to 100,000 miles at the eight-year mark, so they may get retired based on age. Commercial service vehicles can achieve 100,000 miles in the first three to four years because of the area that we cover, so they may only last six or seven years — it just depends.”

Most repairs are handled at one of two locations, said Knaak, which allows the company to work with a vendor that has an understanding of fleet services. “There are required services, and there are suggested services. As a vehicle ages, it’s important to have an understanding with your repair shop as to what’s needed and what’s suggested. Any item related to safety should never be compromised.”

Technicians at Flock’s Heating and Air Conditioning live and work in a rural area, so they take their trucks home at night and are responsible for keeping their vehicles clean and maintained on time. “They lose the benefit of taking the vehicles home if they don’t take care of them,” said Flock.

This has not been a problem, said Flock, as vehicles under warranty are taken to the dealer they were purchased from. After that, technicians normally have service performed by a repair shop near their homes so it’s convenient for them to drop off the vehicle on a Saturday. “We also try to use repair shops that have us do their HVAC repair and installation work.”

To keep track of his fleet and make sure it’s safe and secure, Knaak relies on a GPS system, which is used in about 70 percent of company vehicles for dispatching and sending assistance as well as ongoing monitoring. “The dashboards are accessible by management through a smartphone or PC, so vehicle details are always readily available.”

Walsh also uses GPS to track maintenance and monitor driving habits. “Items like GPS, backup sensors, backup cameras, and other items add to the upfront costs of our vehicles, but we think they pay for themselves in the long run.”

SIDEBAR: Keeping Vehicles Safe and Sound

The value of stolen vehicles and inventory does not take into account the significant costs associated with theft, especially if you are a contractor. Along with the painstaking process of filing reports with police and insurance agencies, there’s also a significant loss in job productivity, a void in transportation methods, and added business expenses to replace. Thus, securing vehicles and tools at all times needs to be a priority for contractors.

It’s imperative that contractors protect their assets by locking all equipment when not in use, and, if possible, keeping inventory in a location that is off the street, such as a locked shed. The job site itself should also be secured, either leveraging secure fencing, posting no-trespassing signs, or employing a security guard to patrol the area on holidays and/or weekends. Contractors also need to keep in close contact with local police so they are aware of the area and can be monitoring it during off hours. Trucks should remain locked when not in use, and employees should never leave the keys inside or nearby the vehicle. It sounds obvious, but more than 40,000 vehicles were stolen last year with their keys in them, according to the National Insurance Crime Bureau.

Contractors also need to be aware of the surrounding areas to understand the risks regarding theft and must be vigilant where the risk is higher. States like California and Texas have the highest rates of equipment theft. In addition, booming housing markets can also impact theft as a lot of equipment is available for thieves to target. Newer equipment has an increased risk of being stolen because of its resale value. According to LoJack’s “Annual Construction Equipment Theft & Recovery Report,” 54 percent of equipment stolen and recovered in 2014 was less than 5 years old.

Contractors may also want to invest in a telematics device, like LoJack Fleet Management, which can help alert owners to unauthorized use during off-hours and give them a jump on reporting the situation to law enforcement. To complement telematics, contractors may also consider adding a vehicle recovery device, like LoJack Stolen Vehicle Recovery System, which can help law enforcement find and recover stolen vehicles and equipment.

Above all else, contractors must remain constantly vigilant when it comes to making sure their vehicles are kept safe and sound.

How video is pushing the marketing industry to innovate

Need to get away? Try flying over the snow-capped peaks of Jasper, dogsledding on the trails of Spray Lakes near Canmore or exploring dinosaur fossils in the Canadian Badlands. If you don’t have the cash to make the trip, just go online and pretend.

For the past 18 months, Travel Alberta has been wooing would-be sightseers to the picturesque province through a series of interactive 360 videos that put them in the virtual driver’s seat. Facebook users simply choose a destination and then take control of the adventure by moving their cursor or finger or turning the screen to view the scene from every angle. They may not be there physically, but it’s much more fun and life-like than reading about the experience or flipping through photos.

“The ultimate goal of any marketer is to create and foster two-way dialogue with your audience,” says Phil Klassen, Travel Alberta’s vice-president of global consumer marketing. “Video allows us to connect with travellers’ interests using inspirational content and destination messaging in a more intimate and compelling way than other different forms of media. The imagery is very powerful.”

Video has been part of the marketing mix for a while, yet the constant need to produce compelling content for online channels has pushed the industry to innovate. According to ComScore, online viewing has grown 44 per cent since 2013 and is up across the generations. YouTube boasts more than one billion users − almost one-third of all people on the Internet − who watch hundreds of millions of hours and generate billions of views. Last year, four of YouTube’s biggest trending videos in Canada were from Canadian advertisers including Nike, Budweiser and 20th Century Fox. Users crave experiences, which is why 360 video, virtual reality and Choose Your Own Adventure videos are particularly popular. The viewer becomes active, not passive, because the content is engaging. In return, marketers gain eyeballs, build brands and make money.

“No matter what it is, the role of online video is to accomplish one of three things: educate, entertain or inspire,” says Bob Cornwall, Google Canada’s head of brand activation. “It should be integrated into every single campaign. When you complement online video with other traditional efforts, we see much more incremental impact of the collective media compilation than we do otherwise.”

It doesn’t have to be complicated or costly. YouTube now supports 360 and virtual reality, Facebook is rolling out 360 in News Feed and camera prices have come down to make in-house filming possible. Andrew McGovern, vice-president of media and entertainment at 360 video experts Immersive Media in Kelowna, B.C., who produced Travel Alberta’s videos, says costs are comparable to shooting traditional video and can run anywhere from $20,000 to $1 million if “big-time actors” are involved.

“Taking something that was once very elite and hard to get your hands on is now available to the masses － that’s incredibly exciting,” adds Cornwall. “You’re telling really great stories at a completely new level, with more engagement, creating a bigger experience that’s memorable.”

But whether a video is 15 seconds or two minutes long, it’s important to get it right from the get-go. Cyrus Mavalwala, founding partner of Advantis Communications in Toronto, spends a great deal of time working with clients on scripting and shooting angles because every word and frame counts. And he’s quick to warn that the work doesn’t stop when the film crew packs up.

“It doesn’t end with posting a video on YouTube,” he says. “A lot of platforms can measure videos in very detailed ways. With interactive video, you can understand what people are clicking on, and that goes directly into the sales system. Marketing is more about big data, and you can get a lot of data from various digital channels. Video is certainly one of them.”

Travel Alberta expects to produce additional 360 videos in the next 12 months as costs come down further and virtual reality goes mainstream. The goal, says Klassen, is to grow the province’s business economy to more than $10 billion by 2020. Combining interactive video with traditional advertising banners and social media channels may do just that.

“At the end of the day, video is one of the content formats that really allows us to create an emotional connection with travellers and ultimately make them aware of what Travel Alberta has to offer,” he says. “There’s not another type of content that has that same level of impact.”